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23 August 2024 at 4:29:04 pm

Chaos Diplomacy

Donald Trump has always understood one thing better than most modern politicians that markets respond to perception. In the grinding drama over Iran, the American president appears to have weaponised uncertainty itself. One day he hints at a diplomatic breakthrough with Tehran and signals the reopening of the Strait of Hormuz which causes investors to breathe a sigh of relief. However, hours later, he reverses course by declaring there is “no rush” for a deal and that restrictions will remain...

Chaos Diplomacy

Donald Trump has always understood one thing better than most modern politicians that markets respond to perception. In the grinding drama over Iran, the American president appears to have weaponised uncertainty itself. One day he hints at a diplomatic breakthrough with Tehran and signals the reopening of the Strait of Hormuz which causes investors to breathe a sigh of relief. However, hours later, he reverses course by declaring there is “no rush” for a deal and that restrictions will remain until Iran bends fully to American conditions. The markets wobble again Trump’s defenders may argue that unpredictability is a negotiating tactic. Henry Kissinger once cultivated strategic ambiguity during the Cold War. Richard Nixon perfected the so-called ‘madman theory’ to keep adversaries guessing. Yet Trump’s oscillations differ in both scale and intent. In recent weeks, analysts and ethics experts in the United States have raised uncomfortable questions about whether political messaging is increasingly shaping market volatility in ways that benefit insiders, speculators and politically connected traders. When geopolitical brinkmanship begins to resemble a financial instrument, public trust in democratic institutions erodes. Nearly a fifth of the world’s oil passes through Hormuz. A closure or blockade affects fuel prices in Mumbai as much as manufacturing costs in Shanghai or inflation in Berlin. Trump’s repeated shifts between escalation and reconciliation have had grave implications for India, which imports more than 80 percent of its crude oil requirements. Any prolonged instability in Hormuz translates directly into higher import bills, inflationary pressures and stress on the rupee while ratcheting prices of essentials. India has spent years carefully balancing its ties between Iran, the Gulf monarchies and the United States. Tehran remains important for connectivity projects such as Chabahar Port and for India’s access to Central Asia. But allies and adversaries alike are forced into a perpetual state of recalibration because American policy itself appears unstable. Trump’s Iran manoeuvring reflects a dangerous transformation in global politics, which is the merger of geopolitics with spectacle capitalism. International crises are increasingly consumed like market-moving entertainment. This may generate short-term leverage for him or even produce tactical victories at the negotiating table. Iran, under immense economic strain, reportedly agreeing in principle to surrender its highly enriched uranium stockpile is no small development. Yet diplomacy built on volatility carries long-term costs and lead to the weakening of institutions. Markets become addicted to chaos and chaos, once normalised, rarely remains controllable. The world’s largest economy cannot afford to conduct foreign policy like a reality television script, with cliffhangers designed to manipulate sentiment every news cycle. Great powers are supposed to provide stability, not amplify uncertainty for strategic theatrics. Trump may believe that time is on America’s side. But for an anxious global economy already strained by wars, inflation and fragmentation, time spent trapped in manufactured uncertainty is becoming increasingly expensive.

The Return of the Prodigal Isle

After a brief estrangement, Narendra Modi’s deft diplomacy has again pulled the Maldives closer into India’s orbit.

 

Just three years ago, the Maldives seemed to be slipping from India’s embrace. Anti-India slogans echoed across Maldivian politics and President Mohamed Muizzu, then in the opposition, rode a wave of nationalist anger to power with the incendiary chant of “India Out.” But during Prime Minister Narendra Modi’s recent state visit to Malé, that tide turned dramatically. Four new agreements, a hefty line of credit and a raft of joint initiatives later, India has not only weathered the storm but steered the relationship back on course. In a region where Beijing’s shadow looms large, New Delhi has managed to reclaim strategic space with unusual finesse.

 

The history of ties between the two nations is long and deep. India and the Maldives established diplomatic relations shortly after the latter gained independence from Britain in 1965. But the roots go further still to over two millennia of civilisational exchange marked by trade, migration, and cultural diffusion. The Maldives, whose name is sometimes thought to derive from ‘Maladvipa’ meaning “a garland of islands,” was touched by the currents of Buddhism from the Indian subcontinent as early as the third century BCE. Later, as Arab traders came to dominate Indian Ocean commerce in the medieval period, Islam became the dominant faith on the islands, a religious identity that remains central to Maldivian life.

In contemporary geopolitics, however, culture takes a backseat to strategic interest. The Maldives’ position in the Indian Ocean places it at the heart of India’s maritime security calculus. It is a buffer, a waypoint for shipping lanes, and a potential bulwark against China’s encroachments in the region. Unsurprisingly, China has invested heavily in Malé in recent years, building infrastructure, issuing loans and forging defence ties, all part of its Maritime Silk Road ambitions. This has made India jittery.

 

The “India Out” campaign, launched during Muizzu’s days in opposition and amplified by anti-India voices online, seemed to confirm India’s worst fears: that China’s cheque-book diplomacy was winning the hearts of India’s backyard.

 

Matters worsened when Muizzu took office in 2023 and demanded the withdrawal of Indian military personnel stationed in the country. Nationalist sentiments in Malé began to eclipse the pragmatic logic of partnership with New Delhi.

 

Yet, the wheel has turned again. It would be naïve to attribute this solely to a change of heart. The reversal is the product of steady, quiet diplomacy by South Block. India’s Ministry of External Affairs kept channels open, patiently worked with intermediaries, and relied on economic carrots rather than political sticks. The turnaround also reflects Muizzu’s recognition that a workable relationship with India is not just preferable but necessary.

 

India’s economic footprint in the Maldives is considerable. Over 200,000 Indian tourists visit the archipelago annually, making India the single largest source of visitors. During the “India Out” rhetoric, many Indians had chosen to boycott Maldivian resorts, hurting the country’s post-COVID tourism recovery. The decline was so severe that its economic effects were immediately felt. India’s re-engagement, marked by resumed tourist flows, aid disbursements, and a raft of infrastructure projects, has been a salve.

 

More tangibly, India has committed to extending lines of credit for urban infrastructure and building roads and defence facilities. These projects represent real gains for Maldivians.

India’s pledge of $850m in credit, announced during Modi’s visit, is earmarked for infrastructure, defence and climate resilience.

 

Unlike Beijing’s loans, which have been accused of entangling small nations in debt traps, India’s approach has leaned on grants, soft loans and collaborative execution.

Defence cooperation, too, has been quietly reinforced. India has helped establish coastal surveillance systems and donated patrol vessels, vital for a country spread across more than 1,000 islands. India has also built a naval dockyard, cementing strategic interoperability. Though Indian troops are being withdrawn as per Maldivian demands, the broad defence partnership remains intact.

 

Climate change was another key focus. As low-lying coral islands, the Maldives are among the most climate-vulnerable nations in the world. India and the Maldives agreed to deepen cooperation on environmental protection and sustainability, including afforestation efforts. A joint initiative to plant five million trees across the islands is emblematic of a shared commitment to eco-conscious development.

 

Beyond the concrete deliverables, however, the most significant outcome of Modi’s visit was the restoration of trust. By sidestepping past tensions and looking ahead, both countries have signalled a maturity that has often been missing in India’s neighbourhood diplomacy. Modi’s statement that India-Maldives ties are “as deep as the Indian Ocean” underscores a strategic reality that the two countries are bound by geography and shared interests.

 

For India, the stakes are higher than ever. As China consolidates its presence in Sri Lanka, Bangladesh, and the wider Indo-Pacific, New Delhi must ensure that it is not edged out of its own periphery. Winning back the Maldives is thus not merely a diplomatic victory but part of a broader contest for regional primacy.

 

The Maldives needs India for economic sustenance, strategic support and cultural proximity. But it also needs China’s capital and investment. A shrewd balance, not strategic subservience, will determine how the island nation navigates the years ahead.

 

Still, as state visits go, this one has set a new benchmark. From icy standoffs to warm handshakes, from social media spats to defence partnerships, the India-Maldives story has come full circle for now. In the choppy waters of the Indian Ocean, staying anchored to India might just be Malé’s safest bet.

 

(The writer is a foreign affairs expert. Views personal.)

 


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