Maldives: India and the Maldives resumed defence dialogue for the first time since the island nation withdrew its uniformed military personnel earlier this year. The crucial talks come amid growing concerns over the Maldives’ economic situation, including a potential default on its $500 million sukuk debt, and after a period of strained relations following the election of President Mohamed Muizzo, who campaigned on an “India Out” platform. The discussions were led by India’s Defence Secretary Giridhar Aramane and Maldives’ Chief of Defence Force General Ibrahim Hilmy. The two sides focused on ongoing defence cooperation projects and future military exercises. An official statement from India’s Defence Ministry described the talks as “productive”, emphasising that they would enhance mutual interests and contribute to stability in the Indian Ocean region. The resumption of defence dialogue is seen as a significant step after President Muizzo requested India to withdraw its military personnel from the island nation late last year.
By early 2024, India had completed a phased withdrawal of 80 military personnel, replacing them with technical staff to operate helicopters and aircraft still deployed in the Maldives. Bilateral relations, which had cooled after Muizzu came to power, are now showing signs of renewal. Foreign Minister S. Jaishankar’s visit to Male in August was the first high-level contact since Muizzu’s election, and this defence dialogue is another step towards improving strained ties. Meanwhile, the Maldives is grappling with economic challenges, as sukuk bonds issued by the country are trading at record lows. Investors are concerned about the island nation’s ability to service its debt, with the next coupon payment on a $500 million sukuk due on October 8. “Default risk in Maldives’ sukuk has increased as the country has large external payments coming due and does not have sufficient foreign reserves to pay them,” said Poorvi Haralalka, a senior emerging markets sovereign debt strategist at M&G.
