Update Country Report Maldives 11 Jan 2022

Event

On January 8th China's foreign minister, Wang Yi, concluded his two-day official visit to the Maldives. The trip commemorated the 50th anniversary of diplomatic ties between the two countries.

Analysis

During the visit, Mr Wang met with his Maldivian counterpart, Abdulla Shahid, and paid a courtesy call on the president, Ibrahim Mohamed Solih. Bilateral talks touched upon exploring new avenues of co-operation and strengthening existing ones. Some of the main agreements reached include visa exemption for Maldivian citizens visiting China, a US$63m grant aid to be used for social and infrastructure projects, implementation of a micro-grid deep-water desalination project and a feasibility study for the maintenance of the China-Maldives Friendship Bridge-China's flagship project in the islands.

The visit to the Maldives, as part of Mr Wang's five-nation tour in the Indian Ocean, signals China's continued interest in the country owing to its strategically important location. Blossoming ties between the two nations had been effectively put on hold in 2018, when the then incumbent, Abdulla Yameen Abdul Gayoom, was replaced as president and subsequently imprisoned in 2019 on graft charges. Mr Yameen had drawn the Maldives closer to China during his tenure, while the current administration's "India first" foreign policy has replaced this with a deepening of trade, tourism and investment ties with that country.

Mr Yameen has recently made a political comeback, after being acquitted by the Supreme Court in late 2021, and has already begun rallying support for his "India Out" campaign. Although not our forecast, a realignment of the Maldives' foreign policy away from India and towards China is likely if Mr Yameen is voted into power in the 2023 presidential election. This will be a highly calibrated move, however, given that both India and China represent key tourism and investment sources for the Maldives.

Impact on the forecast

The strategically important location of the Maldives in the Indian Ocean means that the archipelago will continue to garner interest from both China and India, who are competing for influence in the region. India will remain the main ally under the current Maldivian administration, but an opposition win in the 2023 general election could trigger the country's realignment towards China.