Expert Speak Terra Nova
Published on Nov 28, 2023

Yameen’s withdrawal raises the immediate question if it could encourage President Muizzu to shed his reluctance to do business with India

Deciphering Muizzu’s India policy

The jailed former President Abdulla Yameen has parted ways with incumbent Mohammed Muizzu weeks after the latter took office, citing wanton lack of communication with the mentor as the reason. Yameen, who had earlier launched the ‘India Out/India Military Out’ campaign against the predecessor regime of President Ibrahim Solih, has since registered a new political party, People’s National Front (PNF), with his son, Zain Abdulla, as the founder.

Yameen, who had earlier launched the ‘India Out/India Military Out’ campaign against the predecessor regime of President Ibrahim Solih, has since registered a new political party, People’s National Front (PNF), with his son, Zain Abdulla, as the founder. 

In this context, the immediate question is if Yameen’s exit could encourage President Muizzu to shed his reluctance to do business with the Indian neighbour and find ‘workable solutions’ to his persistent demand for the withdrawal of  77 military personnel—75 pilots and two technicians —acknowledged to be doing a good job in emergency evacuations from distant islands and aerial surveillance against drug-smuggling. 

Or, at least that was the direction of the discussions Muizzu had with vesting Earth Sciences Minister Kiren Rijiju who represented India at his swearing-in ceremony, where again Muizzu reiterated his known position on the matter. Foreign Minister Moosa Zameer, in his social media response to External Affairs Minister S Jaishankar, describing Maldives’ relations as ‘special’ for India, said that he too was looking forward to ‘working together on issues of mutual interest’.

In the immediate, Maldivian politics centred on the ‘Gayoom family’ has come a full circle. After losing power in 2008, Yameen’s half-brother and President for 30 years, Maumoon Abdul Gayoom, left the Dhivehi Rayyathunge Party (DRP) that he had founded earlier, to launch the Progressive Party of Maldives (PPM). He lost the party to Yameen following a court ruling and floated the Maumoon Reforms Movement (MRM), only to be de-registered by the Election Commission for not having the mandated minimum of 3,000 members.

With fears of losing the PPM to the Gayoom camp ahead of the parliamentary polls in 2019, months after he had lost the presidency, Yameen floated the People’s National Congress (PNC) and continued as the common head of the PPM-PNC combine. This unique arrangement continued until ahead of the presidential polls this year, when the Supreme Court upheld the EC’s rejection of Yameen’s presidential nomination, during the pendency of the 11-year jail term, ordered by the criminal court. After hearing Yameen’s appeal through the presidential poll period, the high court has since reversed the verdict.

Within this narrow time window, Muizzu got the ‘senate’ of Yameen’s PNC to nominate him as its presidential candidate almost overnight won the presidency, and ‘hijacked’ the party for good. Yameen then tried changing the PPM leadership from his home prison but has given up since. 

Twin focus 

Notwithstanding intra-alliance politics, the Muizzu presidency is focussing on the economy and foreign policy, both in a way centred on the Indian neighbour. During their meeting, Muizzu and Rijiju also discussed the status of the India-funded development projects across the country. Muizzu’s spokesman later said that only 27 percent of the targeted 77 percent of the prestigious, India-funded US$ 500-million Thilamale sea bridge had been completed under the previous regime. 

Muizzu’s spokesman later said that only 27 percent of the targeted 77 percent of the prestigious, India-funded US$ 500-million Thilamale sea bridge had been completed under the previous regime. 

A PhD-holder in structural engineering with seven years of experience as Minister of Housing and Infrastructure, Muizzu inspected the bridge work as among his first tasks in office. His Infrastructure Minister Dr Abdulla Muthalib, declared that they had no intention to award the project to another company

The same cannot be said about the overall status of the economy. Appearing before Parliament’s budgetary committee on day four of his assuming office, new Finance Minister Shafeeq said that any failure by the Muizzu dispensation to secure US$ 200 million in foreign aid this year, followed by US$ 550 million next year, as projected by the previous government, could ‘result in an economic shock’. Worse still, he said, 80 percent of the estimated aid for the current year has not materialised thus far. 

To this end, Muizzu planned a trip to Saudi Arabia as President but it had to be last minute after the hosts sought more time. He has since followed it up with an official visit to Türkiyé, where he met President Recep Tayyip Erdogan. Türkiyé was the only nation to invite and host Muizzu in his days as Malé City Mayor, ahead of becoming president. However, there are no reports of any immediate economic cooperation/aid from Türkiyé. Incidentally, Maldivian Presidents since the 2008 advent of multi-party democracy, including the later-day adversarial Yameen, had made New Delhi their first overseas port-of-call after becoming president. 

In between, the Parliament voted a substantially high supplementary budget of MVR 6.5 billion, taking the total from MVR 42.8 billion to MVR 49.3 billion for fiscal 2023, ending 31 December. Including the supplementary provision of MVR 3.1 billion, recurring expenditure for the year now stands at an unsustainably high MVR 31.7 billion. In consultation with the transitional team of President-elect Muizzu, the outgoing government also presented an MVR 49.7-billion budget for fiscal 2024, beginning 1 January 2024 

In this background, Economic Affairs Minister Mohammed Saeed told the media that the new government aimed at boosting the mainstay tourism revenue from US$ 4.5 to US$ 6 billion, which is the total size of the nation’s economy, and achieve it in the short term. The President has appointed a Visitor Economic Council with Minister Saeed as chair to diversify the tourism sector, secure a sustainable revenue stream and cash flow, and provide good services to the people at affordable cost.

Negative outlook 

A fortnight after Muizzu’s election, Hong Kong-based credit rating agency Fitch fixed Maldives’ at ‘B-’ with a ‘negative outlook’. The facts-based Fitch reiteration, predicted by the International Monetary Fund (IMF) and the World Bank a year earlier, shows that external debt-servicing would cost more in the coming years—US$ 232 million in 2024, US$ 363 million in 2025 and a peak US$ 887 billion in 2026, including a US$ 500 million in ‘sukuk’ repayment—a reference to lease-backed assets sold to the creditor. It remains to be seen if Muizzu will keep his poll promise of disclosing all past agreements with foreign governments and entities. 

Available figures show that the government also has US$298 million in publicly-guaranteed obligations due in 2024. Fitch has predicted that foreign reserves and reserves buffer to ‘continue under considerable pressure’, owing to higher energy and food prices, and also frequent intervention by the Maldivian Monetary Authority (MMA), to support the ‘currency-peg’. The MMA—the nation’s central bank—which has warned of an imminent crisis, also drew a USUS$ 100-million on a US$ 200-million currency swap with the Reserve Bank of India (RBI) in December 2022. Gross foreign reserves fell by 16.6 percent in 8M23 to US$ 694 m, and the forex coverage was 1.1 months, well below the expected median of 3.5 months. Any immediate implementation of the poll promises by Muizzu and Solih could add to the overall deficit.

Vibrant democracy

For all predictions of a possibly tottering democracy, Maldives has sailed through presidential polls and transitions with ease and poise. Muizzu is the sixth-elected President in 15 years of multi-party democracy since 2008. At 45, he is also the first ‘new generation’ President not directly involved in the ‘democracy movement’ on either side. 

Among the five veterans, predecessor Solih, his estranged one-time party boss and childhood friend, Mohammed ‘Anni’ Nasheed and the latter’s successor, Dr Mohammed Waheed Hassan Manik, were present at Muizzu’s inauguration function on 17 November. Yameen stayed away after declaring that his presence on such a ‘grand occasion would not be acceptable to civil societies’. Subsequent developments have shown that there was more than meets the eye. 

At first look from a purely domestic political perspective, Muizzu has begun his presidential journey, with new Parliament Speaker Mohamed Aslam, Solih’s running-mate and Leader of the House in the earlier dispensation, guaranteeing full cooperation. Implied in it was the Opposition MDP of former President Solih, which has an absolute majority in the House, clearing Muizzu’s relatively large cabinet of 22 ministers without hiccups, and clearing legislative and administrative initiatives. 

Aslam was elected Speaker after incumbent Nasheed quit at the last minute after the Supreme Court ruled that the majority MDP-initiated no-trust vote should not be held back on technical grounds. It remains to be seen how far would Aslam’s guarantee would go, if Muizzu, begins acting on his poll promises on probing corruption charges against the previous government, ahead of the parliamentary polls, due in April. However, the parliamentary panel has sought to postpone this beyond the Islamic fasting month of Ramadan

Yameen equations

Muizzu has given himself 172 tasks to be completed in a hundred days, but unlike predecessors, he has included weekly government holidays in the first 14 weeks. For now, he seems to have overcome internal dissensions, both within the country and within his party/alliance. A lot (more) depends on foreign policy linked to the economy, or the other way round—and by extension, India through the short, medium, and long terms. His government is known to have sought the rescheduling of Indian debts, and continuation of committed developmental funding, and is believed to be expecting budgetary support, as in the past. His credible handling of India will be keenly watched by other aid-giving nations.

N Sathiya Moorthy is a Chennai-based Policy Analyst & Political Commentator    

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N. Sathiya Moorthy

N. Sathiya Moorthy

N. Sathiya Moorthy is a policy analyst and commentator based in Chennai.

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