Operation opportunities: How India is gaining influence regardless of shifts in neighbourhood
But India has made a strong comeback in Sri Lanka, wresting significant advantage from China. And going by the grammar and tone of S Jaishankar's just-concluded visit to Maldives, Muizzu, too, seems to be course-correcting. So, there's more than what meets the eye — a fresh dynamic that reflects changing geopolitical and economic realities.
Take the Maldives. In May, IMF warned the country against a ballooning Chinese debt folio. A month later, Fitch downgraded its rating on grounds of 'increased risks associated with the country's worsening external financing and liquidity metrics'. It assessed that weakening foreign-reserve buffers and rising external government debt 'increase the challenges for the new government to meet its substantial upcoming external debt-servicing obligations and keep the currency peg to the US dollar'.
According to the 2023 World Bank International Debt Report, 30% of the Maldives' external debt is with China, which exceeds $4 bn. The debt trap that Sri Lanka found itself with China, accentuated by the economic slowdown during the pandemic, has engulfed many small economies. Muizzu realised soon that he needed New Delhi's help. Warning signs of a Lanka-type crisis were writ large. GoI obliged by easing debt repayment schedules and helping with currency swap arrangements.
Further, Muizzu's attempt to reduce dependency on India by sourcing essential food supplies from West Asia raised prices within the Maldives. It soon became clear that India remains the most affordable option for food
