Brics: How an evolving and expanding bloc benefits India

Getty Images OSAKA, JAPAN - JUNE 28: (RUSSIA OUT) Russian President Vladimir Putin (L), Indian Prime Minister Narendra Modi (C) and Chinese President Xi Jinping (R) pose for a group photo prior to their trilateral meeting at the G20 Osaka Summit 2019 on June 28, 2019 in Osaka, Japan. Vladimir Putin has arrived in Japan to participate in the G20 Osaka Summit and to meet U.S.President Donald Trump. (Photo by Mikhail Svetlov/Getty Images)Getty Images

For years, Western critics have dismissed Brics as a relatively inconsequential entity.

But this past week, at its annual summit in Russia, the group triumphantly showcased just how far it has come.

Top leaders from 36 countries, as well as the UN Secretary General, attended the three-day event, and Brics formally welcomed four new members – Egypt, Ethiopia, Iran, and the United Arab Emirates. More membership expansions could soon follow. Brics had previously added only one new member – South Africa in 2010 – since its inception (as the Bric states) in 2006.

There’s a growing buzz around Brics, which has long projected itself as an alternative to Western-led models of global governance. Today, it’s becoming more prominent and influential as it capitalises on growing dissatisfaction with Western policies and financial structures.

Ironically, India – perhaps the most Western-oriented Brics member – is one of the biggest beneficiaries of the group’s evolution and expansion.

India enjoys deep ties with most new Brics members. Egypt is a growing trade and security partner in the Middle East. The UAE (along with Saudi Arabia, which has been offered Brics membership but hasn’t yet formally joined) is one of India’s most important partners overall. India’s relationship with Ethiopia is one of its longest and closest in Africa.

Brics’ original members continue to offer important benefits for India too.

Delhi can leverage Brics to signal its continued commitment to close friend Russia, despite Western efforts to isolate it. And working with rival China in Brics helps India in its slow, cautious effort to ease tensions with Beijing, especially on the heels of a border patrolling deal announced by Delhi on the eve of the summit. That announcement likely gave Prime Minister Narendra Modi the necessary diplomatic and political space to meet with Chinese President Xi Jinping on the summit’s sidelines.

Additionally, Brics enables India to advance its core foreign policy principle of strategic autonomy, whereby it aims to balance relations with a wide spectrum of geopolitical players, without formally allying with any of them.

Delhi has important partnerships, both bilateral and multilateral, inside and outside the West. In that sense, its presence in an increasingly robust Brics and relations with its members can be balanced with its participation in a revitalised Indo-Pacific Quad and its strong ties with the US and other Western powers.

More broadly, Brics’ priorities are India’s priorities.

Getty Images Ethiopian Prime Minister Abiy Ahmed, Egyptian President Abdel Fattah al-Sisi, South African President Cyril Ramaphosa, Chinese President Xi Jinping, Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, The United Arab Emirates' President Sheikh Mohamed bin Zayed Al Nahyan, Iran's President Masoud Pezeshkian and Brazilian Foreign Minister Mauro Vieira pose for a family photo during the BRICS summit in Kazan on October 23, 2024. (Photo by MAXIM SHIPENKOV / POOL / AFP) (Photo by MAXIM SHIPENKOV/POOL/AFP via Getty Images)Getty Images

The joint statement issued after the recent summit trumpets the same principles and goals that Delhi articulates in its own public messaging and policy documents: engaging with the Global South (a critical outreach target for Delhi), promoting multilateralism and multipolarity, advocating for UN reform (Delhi badly wants a permanent seat on the UN Security Council), and criticising the Western sanctions regime (which impacts Delhi’s trade with Russia and infrastructure projects with Iran).

And yet, all this may appear to pose a problem for India.

With Brics gaining momentum, inducting new members, and attracting global discontents, the group is seemingly poised to begin implementing its longstanding vision – articulated emphatically by Beijing and Moscow – of serving as a counter to the West.

Additionally, Brics’ new members include Iran and, possibly further down the road, Belarus and Cuba – suggesting the future possibility of an outright anti-West tilt.

While India aims to balance its ties with the Western and non-Western worlds, it would not want to be part of any arrangement perceived as avowedly anti-West.

However, in reality, such fears are unfounded.

Brics is not an anti-West entity. Aside from Iran, all the new members have close ties with the West. Additionally, the many countries rumoured as possible future members don’t exactly constitute an anti-West bloc; they include Turkey, a Nato member, and Vietnam, a key US trade partner.

And even if Brics were to gain more anti-West members, the grouping would likely struggle to implement the types of initiatives that could pose an actual threat to the West.

The joint statement issued after the recent summit identified a range of plans, including an international payment system that would counter the US dollar and evade Western sanctions.

But here, a longstanding criticism of Brics – that it can’t get meaningful things done – continues to loom large. For one thing, Brics projects meant to reduce reliance on the US dollar likely aren’t viable, because many member states’ economies cannot afford to wean themselves off of it.

Additionally, the original Brics states have often struggled to see eye to eye, and cohesion and consensus will be even more difficult to achieve with an expanded membership.

India may get along well with most Brics members, but many new members don’t get along well with each other.

Iran has issues with both Egypt and the UAE, and Egypt-Ethiopia relations are tense.

One might hope that the recent easing of tensions between China and India could bode well for Brics.

But let’s be clear: despite their recent border accord, India’s ties with China remain highly strained.

An ongoing broader border dispute, intensifying bilateral competition across South Asia and in the Indian Ocean region, and China’s close alliance with Pakistan rule out the possibility of a détente anytime soon.

Getty Images KAZAN, RUSSIA - OCTOBER 24: President of Russia Vladimir Putin speaks at a press conference held as part of the 16th BRICS Summit in Kazan, Russia on October 24, 2024. (Photo by Sefa Karacan/Anadolu via Getty Images)Getty Images

Brics today offers the best of all worlds for Delhi. It enables India to work with some of its closest friends in an expanding organisation that espouses principles close to India’s heart, from multilateralism to embracing the Global South.

It affords India the opportunity to stake out more balance in its relations with the West and non-Western states, in an era when Delhi’s relations with the US and its Western allies (with the notable exception of Canada) have charted new heights.

At the same time, Brics’ continuing struggles to achieve more internal cohesion and to get more done on a concrete level ensure that the group is unlikely to pose a major threat to the West, much less to become an anti-West behemoth – neither of which India would want.

The most likely outcome to emerge from the recent summit, as suggested by the joint statement, is a Brics commitment to partner on a series of noncontroversial, low-hanging-fruit initiatives focused on climate change, higher education, public health, and science and technology, among others.

Such cooperation would entail member states working with each other, and not against the West – an ideal arrangement for India.

These collaborations in decidedly safe spaces would also demonstrate that an ascendant Brics need not make the West uncomfortable. And that would offer some useful reassurance after the group’s well-attended summit in Russia likely attracted some nervous attention in Western capitals.

Michael Kugelman is the director of the Wilson Center’s South Asia Institute in Washington

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Why Modi’s shifting India away from US toward China – Asia Times

On the heels of the 16th BRICS mountain, India and China have lately come to an agreement to end their protracted border standoff in the northern region of the India-China Himalayan border. Since the death of 20 Indian and an undetermined number of Chinese troops in a high-mountain conflict on June 15, 2020, conflicts have erupted.

After Prime Minister Narendra Modi took office and began boosting ties with the United States, China’s major grievance with India became public. India began putting together contracts that successfully made it a US partner and supporter in South Asia.

China perceived this as part of Washington’s broader” China containment policy”, which was central to former President Barack Obama’s” Pivot to Asia” strategy during his second term. China attempted to exert pressure on India in response, attempting to prevent it from aligning itself very strongly with the US.

On August 29, 2016, India and the US signed an adapted version of the Logistics Exchange Memorandum of Agreement ( LEMOA ). In reply, China ramped up pressure on India, especially at the Doklam tri-junction, where the edges of Bhutan, China and India merge.

In an effort to relieve tensions, India’s then-foreign minister, Subrahmanyam Jaishankar, visited Beijing and assured his Chinese rivals that India was committed to resolving variations through a high-level system.

This led to the first casual conference between Modi and Chinese President Xi Jinping in Wuhan, China, on April 27–28, 2018, where both officials &nbsp, discussed and agreed on several issues to handle their differences.

On the eve of the first 2 2 dialogue between the two nations, India continued to sign another fundamental agreement with the US, the Communications and Information Security Memorandum of Agreement ( CISMOA ).

On October 11-12, 2019, the following casual conference between Modi and Xi took place in Mahabalipuram, Tamil Nadu. The mountain, however, appeared to be a disappointment, possible due to Modi’s determination to align more closely with the US by agreeing to a third basic deal. Xi of India’s purpose to define its relationship with the US may have been Modi’s blunt response during their conversations.

Xi later made this notion during a formal visit to Kathmandu, Nepal, shortly after the Mahabalipuram conference. Xi it warned that “anyone attempting to cut China in any part of the country may end in smashed body and shattered bones,” which could have been interpreted as a covert response to India’s growing ties with the US.

Following the deadly clashes in Galwan on June 15, 2020, the Indian media—often referred to as” Godi media” for its pro-Modi stance—launched an intense anti-China propaganda campaign. India continued to strengthen its ties with the US despite China’s concerns and Modi’s earlier assurances to Xi at the Wuhan summit.

India’s fourth foundational agreement with the US, known as the Basic Exchange and Cooperation Agreement for Geospatial Intelligence ( BECA ), was signed on October 26, 2020, further bolstering its partnership. This was done in response to the General Security of Military Information Agreement ( GSOMIA ) being signed earlier in 2002. By moving forward with these agreements, India formally aligned itself with the US, disregarding Chinese objections.

Modi sounded assured that his enticing relationship with then-US President Donald Trump would give India preferential access to US technology and markets. During his visit to the US, Modi even campaigned for Trump’s re-election at the” Howdy, Modi”! event in Houston, Texas, where he famously cheered,” ‘ Abki Baar, Trump Sarkar’, rang loud and clear”. ( meaning” Next term, Trump’s government” ).

High-ranking US officials at the time frequently predicted that an Indian caravan of American companies would move from China. However, this shift never substantially materialized, and US investment in India remains minimal. Instead, India’s trade dependence on China has increased significantly.

In his second term as prime minister, Modi appoints S. Jaishankar in 2019, hoping that his pro-American stance will encourage investment and technology in the United States as well as secure preferential access to Indian goods in American markets, as China did in the 1990s.

However, treaties and regulations that the US government has in place mostly limit the scope of the US government’s role in its economy to establishing a legal framework for international trade and investment. The host nation is responsible for creating a conducive investment environment, which American investors have long felt is lacking in India. Instead of increased US investment, major American companies like Ford, General Motors and Harley-Davidson exited the Indian market during this period.

Recently, it was hoped that assembling Apple’s iPhones in India would be a successful venture. However, the initiative experienced significant setbacks as a result of a high rejection rate of 50 %, concerns about E coli bacteria contamination, and lower worker productivity than in China. As a result, India’s economic gains from joining the US and becoming a partner did not materialize as planned.

On the geopolitical front, meanwhile, India lost significantly. It once regarded South Asia and the Indian Ocean as its main areas of influence, but none of its neighbors, who have since become US allies, still do so. India has arguably grown closer to the US as a subordinate ally.

This was made clear when the US carried out a Freedom of Navigation Operation ( FONOPS) in the Indian Ocean on April 7, 2021, which sparked a strong backlash in Indian academia and media despite India being a US partner. Additionally, the US has been accused of fueling anti-India sentiment in neighboring countries and covertly helping to oust pro-Indian governments in Sri Lanka, Nepal, and the Maldives.

This made India realize that Washington expects it to renounce its” strategic autonomy” and that its assertions of a regional sphere of influence in South Asia are unacceptable.

Henry Kissinger famously remarked,” It may be dangerous to be America’s enemy, but to be America’s friend is fatal”. This sentiment seems to fit India’s experience perfectly. At regional gatherings, the US continued to press India politically.

Meanwhile, despite India’s rhetorical trade restrictions on Chinese goods, its trade with China continued to grow. India’s increased trade with the US was largely driven by its rising imports from China. This interaction revealed that while China is required by China for its economic growth, China is not required by India.

Ultimately, after four years of experimenting with foreign policy, the Modi government came to understand that China’s cooperation is essential for India’s economic development. The economic adviser to the prime minister claimed that because of its dependence on India and the possibility of growing Chinese investment, China would likely refrain from intervening in border issues.

On the other hand, the West put more pressure on India to oppose Russia following the conflict in Ukraine. India was persuaded to abandon its relationship with Russia by the US, promising in exchange for arms if it continued to purchase Russian oil.

Despite this pressure, India has continued to buy cheap Russian oil and is currently Russia’s largest oil buyer. Russia accounts for approximately 36 % of India’s arms imports. India’s national interests are at odds with the US’s pressure on it to refrain from purchasing arms and oil from Russia.

Recently, the US and Canada have been pressing India to cut off from China and leave the BRICS. Following the murder of Hardeep Singh Nijjar, Canada’s expulsion of Indian diplomats highlighted this effort. In addition, the US Department of Justice has started legal action against an Indian government employee in connection with Gurpatwant Singh Pannun’s alleged attempted murder.

Modi’s allies now recognize that maintaining a relationship with China is crucial for India’s economic development. India would face significant challenges if China placed trade restrictions on it. India can no longer expect the benefits the US provided China in the 1990s.

Additionally, the US-US alliance agreements have proven ineffective in putting pressure on China. Due to India’s protectionist industrial and international trade policies, which favor the return of manufacturing to America, Modi has come to terms with this country’s ability to obtain preferential market access, technology, or investment from the US. Consequently, he has also acknowledged that India can seek technology, investment and market opportunities from China.

Dr. Manmohan Singh’s government was arguably more resilient than any other administration in India to withstand American pressure. Before the 2014 elections, the US exerted significant pressure on India to support its” Pivot to Asia” policy.

However, Singh’s government resisted these demands. When the US detained and conducted Indian diplomat Devyani Khobragade, there was a significant backlash in India. In response, the Singh administration withdrew the privileges of US Ambassador to India, Nancy J Powell. She resigned as ambassador and went through immigration the same way she would any other US citizen upon her return to the US.

In a show of defiance, Delhi Police erected barricades in front of the US Embassy in New Delhi, and associated institutions and organizations were subject to restrictions. Singh continued to oppose becoming a US ally despite losing the subsequent election six months later. He instead chose to temporarily put the border dispute aside in favor of pursuing a policy that promoted economic development through partnerships with China.

Conversely, Modi’s policy aimed at becoming a steadfast ally and partner of the US, which was intended to serve India’s interests, has proven to be fundamentally misguided. India’s national priorities have been squandered and given up by the ongoing border tensions with China. Modi has come to understand the truth in Kissinger’s words about the dangers of being America’s friend.

One of the worst decades in India’s history in terms of international relations was witnessed by the first and second terms of Modi’s administration. India has experimented with international and geopolitical strategies for unprecedented opportunity costs during this time. Modi is shifting from the US to China in his third term, aiming to change course.

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Trump or Harris, US-India relations can’t afford to drift – Asia Times

This article originally appeared on Pacific Forum, and it has since been republished with authority. Read the original below.

In one of the most contentious White House elections in recent memory, the US is only a few days away from electing its 47th leader. Countries around the world closely monitor the results every four centuries as the American public casts their ballots to choose the people who best serve their interests.

The impact of this vote on foreign policy cannot be ignored, even though the primary focus of the American presidential election is on social and economic issues that immediately affect the lives of the Americans. Given America’s social, economic, and surveillance traces across the world, foreign policy matters significantly in the US vote.

An extraordinary time shattered the election campaign, opening the earth to a new electoral competition between former president Donald Trump and Vice President Kamala Harris, even as the rest of the world considered the benefits and drawbacks of a Trump movie or a second word for President Joe Biden. A Trump 2.0 is the cause of a lot of stress and tension around the world, despite the uncertainty surrounding a Harris administration.

Regardless of who wins in November, there is a sense of comparative calm and trust in Delhi that the bilateral relationship between India and the US has bipartisan help.

The Delhi-Washington collaboration could be characterized as a political Goldilocks with an untapped proper alignment to counter China’s extensive and assertive rise, reshaping the Indo-Pacific’s security and economic landscape. From business to engineering, and Taiwan to Tibet, China is on incident style with India, the US, and their like-minded lovers.

The US and India have a favorable environment thanks to the corporate principles, which cover both military and non-military matters.

A quick glance at the joint statements from bilateral leadership meetings or the fact sheets from multilateral summits like the Quadrilateral Security Dialogue (” Quad” ) reveal engagements across the spectrum, from defense to infrastructure, from new technologies to public health, and from space to maritime security.

No day for proper fall

It is obvious that Washington and Delhi prioritized this marriage highly. The difficulty will be in navigating the tensions between delivering agreements and turning convergences into assistance.

Who will win the election in Washington will have the task of moving this marriage ahead while addressing sporadic annoyances and preventing operational risks.

Beyond its conventional group of allies, Washington maintains and envisions a relationship with Delhi. But, Delhi and Washington’s political imperatives will place them on proper axes that might challenge alignment and stifle traction.

The second-order result of individual foreign policy decisions needs to be handled keeping in mind the larger image of a “free, available, equitable and rules-based” get in the Indo-Pacific.

For example, the Delhi-Washington tango’s growing US-Russian animosity and the growing Sino-Russian ally create a more sophisticated complex powerful of commission and omission.

Besides, the US-China opposition is global in scope, while the India-China contest is a local one, more concentrated in western South Asia and the sea Indian Ocean area.

Both Washington and Delhi agree that collaborating and utilizing one another’s capabilities and intentions to address the China problem is beneficial. However, both also employ their own playbooks of “de-risking without decoupling” from China.

Therefore, whether India is a good bet for Washington vis-à-vis China and vice-versa will remain a pivot point in India-US engagement.

Delivering the deliverables

The most significant impact of cooperation in this area is probably the defense sector cooperation.

Both sides demonstrate a willingness to go above and beyond to improve ties between the two, which include co-development and co-production. Given the private sector’s growing involvement in India’s defense modernization, there are significant links between the two nations ‘ defense industrial conclaves.

Initiatives like the India-US Defense Industrial Roadmap and India-US Defense Acceleration Ecosystem ( INDUS-X ) are significant milestones in this effort because the budding synergy needs to lead to timely deliveries for induction into India’s armed forces.

Two new agreements have been signed, one relating to ensuring resilience of supply chains to meeting national security demands, namely&nbsp, Security of Supply Arrangement&nbsp, ( SOSA ) and a memorandum of agreement regarding&nbsp, Assignment of Liaison Officers&nbsp, to increase interoperability between the two militaries.

Moreover, overarching agreements like the&nbsp, Initiative on Critical and Emerging Technology&nbsp, (iCET ) show a multi-sectoral and multi-agency partnership cutting across commercial and military technologies that are going to shape the security and economics of the 21st century.

Trade and technology will be increasingly intertwined in times to come and a new&nbsp, memorandum of understanding&nbsp, aims to strengthen supply chains for lithium, cobalt, and other critical minerals to be used in green energy transition efforts such as electric vehicles. A Harris and Trump presidency may have a more significant impact on the trade front.

Delhi would have to prepare for trade agreements with strong climate and environment components if Harris wins. On the other hand, a Trump 2.0 will most likely be more hostile toward multilateralism and focused on reciprocity of trade and tariffs, regardless of allies and adversaries. Trump, during his presidency, and more recently, as well, has often called out India as a “very big abuser” of tariffs.

Global aspirations and regional challenges

Regional challenges closer to home in its neighborhood throw up more looming challenges as India attempts to take over the global south and finds itself at the center of many pressing global issues.

The volatile political climate in Myanmar, the chaotic regime change in Bangladesh, the foreign policy choices of neighboring Sri Lanka, Nepal, Bhutan, and the Maldives, as well as the uncertain transition in Afghanistan, will necessitate sober discussions between Washington and Delhi.

Although the geopolitics and geoeconomics of South Asia are generally understood as being related to the India-China conflict, the US’s role is significant because it is a distant power in terms of geography but not in terms of strategy.

How the region fits into the India-US partnership will be a crucial issue for the next American presidency as Washington navigates South Asia following 20 years of shaping its regional policy through the Afghanistan lens.

More specifically, it will be important to discuss how Washington and Delhi collaborate on financing and building infrastructure in the region, and how both sides would coordinate efforts to improve maritime security in the Indian Ocean region.

The India-US relationship, currently called a defining partnership of the 21st&nbsp, century, has seen all kinds of highs and lows in its journey. It would have been difficult to imagine the level of cooperation the two countries had had in all sectors and domains two decades ago.

However, the relationship between these two complex democracies, each with its own unique worldviews and priorities, will also experience a number of ups and downs in the years to come.

Moreover, the world is going through seismic geopolitical, geo-economic, and technological transitions. The key to putting together a partnership that is aspirational yet grounded in realpolitik will be to use the political support on both sides and the institutional links built over the years.

Monish Tourangbam&nbsp, ( [email protected] ) &nbsp, is director at the Kalinga Institute of Indo-Pacific Studies (KIIPS), India.

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Sri Lanka arrests over 230 Chinese in cybercrime raids

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SINGAPORE: The Singapore government did contribute&nbsp, US$ 100, 000 as grain money for&nbsp, the Singapore Red Cross ‘&nbsp, people fundraising efforts for Nepal, where the capital&nbsp, Kathmandu has been affected by severe storms. The contribution will help with humanitarian relief efforts and the immediate needs of Nepal’s affected communities, accordingContinue Reading

Debt forces Maldives to pivot back to India from China – Asia Times

The Maldives, known for breathtaking resorts and serene beaches, is battling an escalating debt crisis and attempting a delicate balancing act between its two largest creditors: India and China. As the island nation braced for an impending debt default, President Mohamed Muizzu’s leadership will be tested by how he steers his country through this turbulent economic and geopolitical landscape.

As of August 2024, the Maldives’ foreign currency reserves totaled $437 million, which could cover only about a month and a half of import bills. The country is projected to arrange $600-$700 million of debt service expenses in 2025 and more than $1 billion in 2026. The island nation owes China about $1.3 billion and India about $130 million.

Against this backdrop, the Maldives president met Indian Prime Minister Narendra Modi in New Delhi on October 7, in a bid to secure much-needed financial assistance, amid fears that the island nation may default on a crucial $25 million bond payment. Reuters reported that India approved a $400 million currency swap agreement, a much needed lifeline for the debt strapped country of half a million people in terms of accessing short-term liquidity.

Maldives debt troubles are related to Sukuk bonds. Sukok is a special type of financial instrument that is often referred to as an Islamic bond, which operates quite differently from conventional bonds in order to comply with Islamic principles, particularly the prohibition of interest.

Unlike traditional bonds, which are debt instruments setting out that investors have lent money in exchange for interest payments, Sukuk represents ownership in a tangible asset or a pool of assets. Investors receive returns not from interest but from the revenue generated by the asset. If Maldives default on its Sukuk debt, that will be the first such event of sovereign default for Sukuk.

Absent much needed financial rescue from the likes of India, the ramifications of Maldives missing its Sukuk payment would be devastating: it could block access to international capital markets, shake investor confidence, and tip the Maldives into deeper economic turmoil.

While the Maldives with the latest assurances of help from India may have avoided an immediate default on its Sukuk debt, the country’s broader economic troubles remain unresolved, with significant debt payments looming in the coming years.

Geopolitical rivalries, structural weaknesses

The Maldives’ economic distress is deeply intertwined with the geopolitical rivalry between two major players in the region, India and China. Over the past decade, the country has borrowed extensively from both nations, but the two offer assistance with different goals in mind.

China’s loans have largely funded infrastructure projects tied to its Belt and Road Initiative, helping Beijing expand its strategic footprint in the Indian Ocean. India, on the other hand, sees the Maldives as a critical part of its regional security and has provided financial aid to counter China’s growing influence.

President Muizzu in his ‘India Out’ T-shirt. Photo: X

Muizzu’s rise to power in 2023 was underpinned by an “India Out” campaign, aimed at reducing the Maldives’ reliance on New Delhi and drawing the country closer to Beijing.

On his way to electoral victory, Muizzu promised that, once elected, he would expel Indian soldiers who were deployed in the Maldives on humanitarian assistance engagements.

Bowing down to such political pressure, India replaced dozens of its soldiers – exchanging them with civilian experts. However, as Maldives continued its plunge towards a debt crisis, shortly after coming to power, President Muizzu’s government caved in to pragmatism and softened its stance toward India, recognizing that Maldives’ immediate survival hinges on securing financial support from both China and India.

Maldives’ real challenges lie in its unsustainable debt burden and the structural vulnerabilities that underpin its economy. The country is overwhelmingly dependent on tourism, an industry highly susceptible to global economic shocks, as evidenced by the downturn following the Covid-19 pandemic. Furthermore, Maldives imports most of its essential goods – and rising global commodity prices have compounded its financial woes, draining foreign reserves and making it even harder to service debt.

This situation places the Maldives in a precarious position between the two competing powers. India and China both have significant economic and strategic interests in the Maldives, and their financial aid comes with expectations.

For China, the Maldives is an important link in its maritime strategy, while for India, the Maldives represents a key part of its efforts to counterbalance Chinese influence in the region. As President Muizzu navigates these tricky diplomatic waters, he must find a way to secure financial support without compromising the country’s sovereignty.

As for India, there are strong incentives to take President Muizzu into its fold, given that India sustained a series of diplomatic setbacks as several pro-India governments lost power in South Asia recently.

In Sri Lanka, a marxist politician, Anura Kumara Dissanayake, became president. In Bangladesh, Prime Minister Sheikh Hasina, arguably the most Pro-Indian Prime Minister in Bangladesh’s history, fled to India after being forced to resign by student-led protests. In Nepal, K.P. Sharma Oli, a pro-China politician, was elected as prime minister.

Reversing any of the recent diplomatic failures in India’s backyard will be viewed as a political victory for Indian Prime Minister Modi.

The goal: long-term solutions that leave sovereignty intact

The Maldives’ economic problems are structural, and addressing them will require more than temporary currency swaps and loans. The country needs a comprehensive strategy to diversify its economy away from tourism and reduce its dependency on imports, but such changes will take time – and political will.

The Maldives’ government has proposed several measures to address the crisis, including tax reforms, budget cuts and the restructuring of state-owned enterprises. These proposals aim to improve fiscal discipline and reduce the reliance on external borrowing. Yet, implementing these reforms will be a daunting task. Austerity measures such as tax increases and public service cuts have historically triggered protests in the Maldives, and Muizzu’s government may face significant resistance to these changes.

The question of whether the Maldives will turn to the International Monetary Fund (IMF) for a bailout also looms large. Although the government has thus far resisted this option, citing the temporary nature of its financial difficulties, many experts believe that an IMF intervention may be inevitable if the debt crisis worsens. However, an IMF bailout would come with stringent conditions including further austerity measures that could exacerbate social unrest and hurt the economy in the short term.

Unlikely to have a long term solution ready at hand, the Maldives will continue to depend heavily on India and China for financial support. But this dependence will come at a cost as both these regional powers are likely to use their financial leverage to push for greater political influence in the country.

India may seek to use its financial assistance as a way to reassert its strategic interests in the region, while China could leverage its economic investments to secure long-term control over key infrastructure projects.

The danger of this approach is that it could undermine the Maldives’ sovereignty. While financial support from India and China may help the Maldives avoid an immediate default, it risks entangling the country in the broader geopolitical rivalry between the two powers – thus endangering its own security. The delicate balancing act necessary to handle this geopolitical quicksand will require President Muizzu to be both a shrewd diplomat and a careful economic planner, as the stakes could not be higher.

A template for other small nations to follow?

The Maldives’ debt crisis is a cautionary tale for small nations that rely heavily on foreign loans and single industries such as tourism. Without a long-term plan for economic diversification and debt restructuring, the country will remain vulnerable to financial instability and external shocks.

President Muizzu’s recent mending of ties with India in exchange for accessing capital reliefs offers only a temporary solution, as it is not a substitute for the broader reforms that are needed to stabilize the economy.

The political cost of these reforms could be significant, but the alternative – continued dependence on foreign loans and increasing debt – is far more dangerous. To prevent a deeper crisis, the Maldives will need to enact tough but necessary reforms, build its foreign reserves and explore new sectors for economic growth.

President Muizzu must know that bold actions are needed at this critical juncture of his country’s national history. It is his time to take decisive actions to secure its financial future or risk being drawn deeper into the geopolitical currents that threaten to pull it under.

In a region marked by rising competition between India and China, the Maldives’ next moves could set a precedent for how small, debt-ridden nations handle the delicate balance between economic necessity and political independence.

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Commentary: No one wants an Asian NATO, except Japan’s new PM Ishiba

The Cold War, which began with the US and the Soviet Union working together to defeat Nazi Germany in World War II, came about as a result of NATO’s establishment in 1949. NATO’s second secretary-general Hastings Ismay reportedly said that NATO was created to “keep the Soviet Union away, the Americans in, and the Germans down”.

As part of Washington’s isolation policy, NATO worked not just to support its member states, but also to examine the spread of communism.

Not everyone was convinced. European President Charles de Gaulle withdrawn France from NATO’s integrated military command in 1966 because he desired more freedom from the US. Emmanuel Macron, the present French president, sees a European military that is American-uniform, despite Paris ‘ return to NATO in 2009.

Many people believed that NATO’s anti-communist vision was superfluous after the end of the Cold War with the political upheavals in Eastern Europe in 1989 and the Soviet Union’s breakdown in 1991.

Strangely, NATO reinvented itself to support democracy and stability despite the presence of significant Russian threats, including military activities in the Balkans, the Middle East, South Asia, and Africa.

Despite this, many in Europe also question whether the US can be trusted to fulfill its NATO agreements, especially if Donald Trump is elected president once more after the November US election. The beach country of Japan, Japan, and the United Kingdom continue to be the most fervent supporters of NATO.

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Nepal floods and landslides kill at least 38 people

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