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Maldives Seeks “Smooth Transition” for World’s Poorest Nations

Thalif Deen

UNITED NATIONS, Mar 17 2011 (IPS) - When the environmentally-threatened Indian Ocean island of Maldives “graduated” from the ranks of least developed countries (LDCs) to a middle-income country last January, the graduation was characterised as a milestone in the country’s socioeconomic development.

But was it a cause for celebration in the streets of the capital of Male?

“Not really,” says Ambassador Abdul Ghafoor Mohamed, permanent representative of Maldives to the United Nations.

The graduation is not without costs, he said, even as the cash-strapped country tries to cope with “staggering” unemployment, a rising debt burden and little or no capital to invest in development programmes.

“We have graduated when we can least afford it,” Mohamed told IPS, as the Maldives is still struggling to recover from the 2004 tsunami that wiped out about 60 percent of the island’s economy, which is dependent primarily on fishing and tourism.

The major benefits of LDC status include trade preferences – mostly duty-free LDC exports to industrial nations – and the increased volume of official development assistance (ODA) from Western donors.

The benefits fall into four main areas, according to the United Nations, and include preferential market access; special treatment regarding World Trade Organisation-related obligations; technical cooperation; and financial support for participation of LDC representatives at U.N. meetings and the General Assembly sessions.

Last week, at a briefing focusing on the negative impact of “graduation” – and sponsored by the Maldives in collaboration with the Office of the U.N. High Representative for LDCs – the Maldivian envoy made a plea for a “smooth transition” in order to prevent economic hardships for graduating countries.

The existing benefits, he said, should be gradually phased out, not cut off abruptly.

Mohamed made a case not only for his own country but also for countries that are due for graduation shortly.

When the U.N. General Assembly decided in 1971 to create a new category of LDCs, there were only 25 who were deemed the poorest of the world’s poor. Currently, there are 48 LDCs – 33 in Africa, 14 in Asia and one in the Caribbean – and comprising over 800 million people.

The LDCs range from Angola, Afghanistan and Benin to Bhutan, Uganda and Zambia.

Botswana was the first LDC to graduate back in 1994, and since then only two other countries have graduated: Cape Verde and the Maldives.

The Maldives was originally due to graduate in 2007. But due to the tsunami disaster of December 2004, the General Assembly deferred its graduation by three years through January 2011.

A fourth country that is expected to graduate is Samoa, scheduled for 2014.

The U.N.’s Committee for Development Policy (CDP) sits in judgment over the status of LDCs, and its decisions are eventually endorsed by the General Assembly.

A Programme of Action to be adopted at the Fourth U.N. Conference on LDCs, due to take place in Istanbul, Turkey in May, seeks to reduce the number of LDCs by almost 50 percent: around 24 countries in the next decade.

But in a “concept paper” on graduation, the United Nations admits that despite the “widespread recognition of the importance of smooth transition, a coherent process of the phasing out and eventual cessation of special measures granted to LDCs, identified for graduation, is yet to be established as part of the institutional framework for graduation.”

Given the objectives of the Istanbul Programme of Action to make graduation a priority, the paper points out, “the need to address the current inadequacies of the institutional framework and processes related to smooth transition becomes all the more important and urgent.”

Addressing delegates at last week’s briefing, the Maldivian envoy pointed out his country has met five of the eight Millennium Development Goals (MDGs), with increased expenditures on health and education, with the support of the international community.

But the lack of smooth transition during graduation, he warned, may jeopardise his country’s progress towards achieving all of the MDGs.

“Scratch the surface of the pool of aggregate data that paints a rosy picture, and you will see that the extent of Maldives development successes are concentrated in the capital region of the country,” he said.

“However, the capital area still endures issues of poverty, a concentration of poverty in the outer atolls has yet to be addressed, while a still unacceptable malnutrition rate of over 14 percent, and staggering unemployment rates and social challenges that confront our young people, erect barriers for a real future in the global economy,” he noted.

It is clear, Mohamed said, that making inroads on the remaining MDGs will require expanding the social services and development programmes that enabled Maldives to meet the criteria for graduation.

“Moreover, our ability to mute the challenges to our development posed by geography and climate change will require real investment in critical social infrastructure to facilitate poverty alleviation in the outer islands,” he declared.

But much of this will be difficult to accomplish in the foreseeable future.

A rise in sea level caused by climate change has threatened to “wipe the country off the face of the earth” perhaps in the next couple of decades, driving Maldivians to be “environmental refugees” of the future.

Mohamed said the increases in spending, along with the costs of political transformation towards democracy, have resulted in high levels of total public debt.

According to the U.N. Development Programme (UNDP), public debt has almost doubled over the last six years: from 55 percent in 2004 to an estimated 97 percent of gross domestic product (GDP) in 2010.

Worse, the country will have little capital to invest in development programmes and employment creation, and will have little maneuver room to weather economic shocks like those experienced this decade, he added.

Meanwhile, the United Nations has held three major global conferences on LDCs: the first and second in Paris in 1981 and 1991, and the third in Brussels in 2001 – all of them aimed at mobilising global support for the upliftment of LDCs.

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