DEVELOPMENT: Maldives Declines Graduation from Poorest to Poor

By Thalif Deen Reprint | | Print |

Thalif Deen

UNITED NATIONS, Aug 2 2000 (IPS) - The tiny Indian Ocean country of the Maldives, which has been threatened with extinction due to a potential sea level rise, has fought back an attempt to remove it from the list of least developed countries (LDCs), described as the poorest of the world’s poor.

Challenging a ruling by the UN’s Committee for Development Policy (CDP) – which decides on the eligibility of UN member states to be included among the 48 LDCs – the Maldives said that it had been made to look more affluent and less vulnerable than it really is.

“The decision was totally unfair and unreasonable,” says Maldivian Ambassador Hussain Shihab.

“We have one of the world’s most vulnerable economies. We have coral bleaching which has reached catastrophic proportions. And our development efforts have been severely constrained by low level of human resource development,” he said.

The decision to remove the Maldives from the list of LDCs, he said, was based on a CDP economic profile which did not conform to reality.

Following an appeal made by the Maldives, the UN’s Economic and Social Council (ECOSOC) Friday deferred its graduation until July next year in order to further review the status of the island nation.

With a population of a little over 250,000 people scattered across 200 small islands, the Maldives depends heavily on tourism and fishing for its export earnings. Both sectors are considered unsustainable over a long period of time.

Additionally, the Maldives faces the threat of a sea level rise, which according to environmentalists, could wipe the country off the face of the earth in the next 20 to 30 years.

Of the 44 LDCs, 33 are in sub-Saharan Africa, nine in Asia, one Caribbean and five in the Pacific region. Although the number of LDCs has virtually doubled over the years, only one country, namely Botswana, has graduated from the poorest to the poor, namely from an LDC to a developing nation.

Last week, the CDP recommended that three other countries, the Congo, Ghana and Senegal, were eligible to be included in the list of LDCs because their economies have continued to deteriorate.

Any country that is removed from the list is deprived of concessionary loans, debt relief and tariff concessions, among other economic privileges granted by the World Bank, the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD) and other international financial institutions.

In a letter to ECOSOC President Ambassador Makarim Wibisono of Indonesia, the President of the Maldives Maumoon Abdul Gayoom said that the loss of preferential access to markets is likely to lead to the collapse of the country’s tuna industry which, given the inability to exploit economies of scale, is largely dependent on tariff concessions for competitiveness.

“The fisheries sector is at the present time beset with the worst crisis that it has had to face for a number of years, and loss of a market for canned tuna will have far-reaching impacts on the economy,” Gayoom argued.

Foreign direct investment (FDI) flows, he said, are likely to slow down owing to the loss of preferential access, thereby magnifying the difficulties imposed on attracting foreign private capital due to high unit factor costs.

Gayoom said the vulnerability of the Maldivian economy is represented by the fact that imports account for 90 percent of gross domestic product (GDP); and by the fact that the fisheries sector has had to face a series of severe shocks during the past 30 years.

Vulnerability is further exacerbated by high dependence on a single sector – tourism. While the direct contribution of tourism to GDP is 18.7 percent, he said, the dominance of the industry is, in fact, overwhelming, with travel and tourism constituting 68.4 percent of the country’s total exports.

Just Faaland, chairman of the CDP, told delegates last week that the Committee had introduced some methodological and statistical improvements, and had constructed and applied an economic vulnerability index (EVI), as one of the criteria for identification of LDCs. As a result, he said, the Committee had recommended that the Maldives be removed from the list of LDCs.

Faaland said he agreed that Maldives was vulnerable. Nevertheless, compared with other countries, it well exceeded the quality of life index for LDCs.

Shihab said that while the CDP had noted the Maldives’ vulnerable environment, with coral bleaching and beach erosion as major problems, it had failed to recognise the island as a country with a fragile ecology because of conditions less familiar to outside investigators.

Most of these vulnerabilities and constraints, he said, were absent from the economic profile of the Maldives on which the CDP decision was based.

“The CDP was aiming to identify performance in arbitrarily chosen areas, rather than identifying the extent and impact of long-term structural handicaps and problems of sustainability,” he noted.

Shihab said the Maldives remained one of the world’s poorest nations although the economic indicators used by the CDP had not captured the extent of poverty and the level of regional disparities, nor were they sensitive enough to the special circumstances of the Maldives that impose severe structural constrains to development.

Addressing ECOSOC last week, Ole Peter Kolby of Norway said that although the CDP had recommended the graduation of Maldives, it had at the same time, also recognised the consequences of a possible sea level rise on that country. He said he believed that the question of graduating Maldives merited further consideration.

Anund Priyay Neewoor of Mauritius said the vulnerability of the Maldives was well known. The country was faced with a difficult situation, and it was not the right time to upset them further by allowing the graduation, which would deny them a number of benefits vital for economic development.