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India will Give Maldives $1.4 Billion

India will Give Maldives $1.4 Billion

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GS 2 || International Relations   || India & it’s Neighbours||   Indian Ocean Geopolitics

Why in news?

  • The President of the Republic of Maldives Ibrahim Mohamed Solih visited India on a state visit from 16-18 December 2018.
  • This is the first foreign visit by President
  • of Maldives after assuming office in November 2018.
  • Outcome of the visit : The two countries signed the following Agreements/MoUs/Joint Declaration of Intent during the visit :
  • Agreement on the facilitation of visa arrangements.
  • Memorandum of understanding on cultural cooperation, improve the ecosystem for agribusiness.
  • Cooperation in the field of communications technology and electronics.
  • Countries agreed to work together in the following areas, health, mutual legal assistance, investment promotion, human resource development, and tourism
  • India announced financial assistance of US$ 1.4 billion in the form of budgetary support, currency swap and concessional lines of credit to fulfill the socio-economic development programmes of the Maldives.
  • The Maldives reaffirmed its “India-First Policy”, and commitment to working together closely with India.
  • Both countries agreed on the importance of maintaining peace and security in the Indian Ocean Region.
  • The two countries reaffirmed their commitment and support for increased cooperation in combating terrorism.

Trouble for Maldives :

  • Direct debt, or direct bilateral government-to-government debt is one thing, but there is on top of that sovereign guarantees for the private sector.
  • And there is also on top of that our state owned enterprises who have gone into debt

Prelims bits – Location of Maldives :

Mains Bits : Importance of the Maldives for India –

  • The Maldives is an important aspect of Indias Neighbourhood First
  • Strategically located in the Indian Ocean, Maldives archipelago comprising 1200 coral Islands lies next to key shipping lanes which ensure uninterrupted energy supplies to countries like China, Japan, and India. More than 97% of India’s international trade by volume and 75% by value passes through the region.
  • As the pre-eminent South Asian power and a ‘net security provider’ in the Indian Ocean region, India needs to cooperate with the Maldives in the security and defense sectors.
  • India is also a preferred destination for Maldivians for education, medical treatment, recreation, and business.
  • Maldives is also a member of SAARC. It is important for India to have the Maldives on board to maintain its leadership in the region.
  • Since Chinas naval expansion into the Indian Ocean – Maldives significance has steadily grown and now it’s at the heart of international geopolitics.
  • There is significant Indian diaspora in the Maldives. Innumerable Indians work across the hospitality, education, and health-care sectors of the Maldives economy.