As India deals with the diplomatic challenge posed by a newly elected president in the Maldives, CIA documents from the early 1980s are a reminder of how this tiny atoll nation in the Indian Ocean has leveraged its strategic location with rival powers over the decades, at one time also allowing the Palestine Liberation Organisation to invest in a national airline company.

“The Government of the Republic of Maldives (GORM) maintains an international bargaining power denied to most small and poverty-stricken states”, notes a CIA report about the Maldives in 1983.

Tellingly titled “The Maldives: Small But Strategic Real Estate”, the report was prepared by what was then the Office of the Near East/South Asia Division of the CIA's Directorate of Intelligence. “Sanitised” and released in 2010, it is available online.

The analysis reveals how big powers were interested in tiny Maldives since the time of the Cold War, and how Maldivian leaders,who chose membership in the Non-Aligned Movement, dealt with both the US and the USSR.

“Astride major shipping lanes, this island nation offers natural sites for air bases and naval facilities in the protected anchorages of its atolls,” the document notes.

Of particular interest to both to the US and the then USSR was Gan Island, the southern most island in Addul atoll, and the southern most island of the Maldives. The British, who had a Royal Air Force base on Gan, vacated the island in 1976. Gan is 700 kms north of Diego Garcia, where the US set up a naval base in the 1970s.

Gan, the CIA report noted, “could provide a military airbase and deep sea harbors to any power hoping to dominate the Indian Ocean.”

Significantly, Gan Island is also where Dhruv helicopters donated by India to the Maldives were once based, though this might have changed now.

India has gifted Maldives a total of three aircraft – two Dhruvs, one in 2010, the second in 2016, and a Dornier surveillance aircraft in 2020.

President Mohammed Muizzu, elected last September on the back of an “India Out” campaign, wants to send back a contingent of Indian military personnel – a total of 88 are in the Maldives, according to him – who Delhi has said are part of the flying and maintenance crew of these aircraft.

After a row on social media in which three junior ministers in his cabinet used rude language against Prime Minister Narendra Modi not befitting their position as government leaders, India-Maldives relations have rapidly deteriorated, bearing no resemblance to what they were even a few months ago.

But Muizzu's apparent anti-India stand, his visit to China where he concluded several agreements to reduce dependence on India for essential commodities and health care, followed by smoke signals to Delhi in a conciliatory message on Republic Day, also recall a long history of a balancing act, in which the small nation consistently sought to get the best deal for itself from its location on the cross-roads of the Indian Ocean.

Back in 1977, the first president of Maldives, Nasir Ibrahim, had declared that his country was “not for sale”. In an interview to Reuters, he made the sensational disclosure that Moscow had tried to lease the abandoned British air base in Gan for $1 million a year, but he had turned down the offer.

Recalling that interview in the online South Asia journal of the London School of Economics last month , Elizabeth Colton, the Reuters journalist (she later joined the US State department and became a diplomat) to whom President Ibrahim made that remark, says Maldives's “dexterous diplomacy” from that time, through all its twists and turns, "demonstrates remarkable diplomatic balancing in a complex multilateral world, and in a strategic geopolitical terrain”.

China was nowhere on the horizon at the time, but the CIA report was prescient. Writing about the Soviet designs on Gan, it said “India undoubtedly would object to any outside power gaining a foothold in the Maldives, even though it has expressed no designs of its own on Gan, because in New Delhi's view the islands lie within the Indian security perimeter.”

Development of Gan's airbase and anchorages could allow a superpower gaining their control to assume a pre-eminent position in and over the Indian Ocean, the CIA noted. It said the Soviets made two more offers to Ibrahim's successor Maumoon Abdul Gayoom, only to be rejected again.

While Maumoon looked to the West for financial assistance, as a member of NAM, that did not stop him from making friends that western countries did not like. Another CIA report in 1985 said “the PLO and India have helped the Maldives Republic establish and maintain passenger air routes to help its fledgling tourist industry”. Gayoom and Arafat were friends, and Maldives was – and remains – a solid supporter of the Palestinian cause. According to media reports from the time, PLO, which had already invested in another airline in Guinea-Bissau, became a partner in Maldives Airways. It used to operate flights to Chennai and Trivandrum, as well as Colombo.

“As a result of their assistance to Maldives International Airlines, the PLO and presumably India have acquired access to the former British airbase and facilities on Gan, the Maldives' most southerly island, which lies only 700 kilometers north of Diego Garcia,” said the report, declassified and released in 2011.

Gan was used by the British during World War II, from the mid-1950s until 1976. At its height of activity, the base employed 1,200 island workers, many of them skilled or semiskilled.

The CIA noted that India was keeping “a watchful eye” on the growing US and Soviet naval activity in the Indian Ocean, but as the detailed CIA reports show, the US was as, if not more interested in the Maldives.

After many turns of the geopolitical wheel, it is China that the US and India are now concerned about, and Maldives once again finds itself in the middle of another churn in the Indian Ocean.