U.S. Department of State Background Note

Maldives

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Maldives

GOVERNMENT AND POLITICAL CONDITIONS

A 1968 referendum approved the constitution, making Maldives a republic with executive, legislative, and judicial branches of government. The constitution was amended in 1970, 1972, and 1975 and is again under revision.

Ibrahim Nasir, Prime Minister under the pre-1968 sultanate, became President and held office from 1968 to 1978. He was succeeded by Maumoon Abdul Gayoom, who was elected President in 1978 and reelected in 1983, 1988, 1993, 1998, and again in October 2003. The president heads the executive branch and appoints the cabinet. Nominated to a 5-year term by a secret ballot of the Majlis (parliament), the president must be confirmed by a national referendum.

The unicameral Majlis is composed of 50 members serving 5-year terms. Two members from each atoll and Male' are elected directly by universal suffrage. Eight are appointed by the president. A special Majlis session began meeting in mid-2004 to review constitutional reform issues. Regularly scheduled Majlis elections took place in January 2005.

The Maldivian legal system--derived mainly from traditional Islamic law--is administered by secular officials, a chief justice, and lesser judges on each of the 19 atolls, who are appointed by the president and function under the Ministry of Justice. There is also an attorney general. Each inhabited island within an atoll has a chief who is responsible for law and order. Every atoll chief, appointed by the president, functions as a district officer in the British South Asian tradition.

On November 8, 1988, Sri Lankan Tamil mercenaries tried to overthrow the Maldivian Government. At President Gayoom's request, the Indian military suppressed the coup attempt within 24 hours. In September 2003, following the death of an inmate, a brief prison riot broke out on an island near the capital Male’. Three other inmates were killed during the incident. In response to the killings of the inmates, brief rioting took place on the streets of Male’. The government often prevents opposition rallies from taking place. Throughout 2006, the opposition faced restrictions on freedom of assembly, and the government continued to arrest opposition activists. The government also keeps a tight rein on expressions of Islamic extremism.

President Gayoom's commitment to introduce political reforms in June 2004 was widely welcomed. A human rights commission was established, and a special Majlis, or parliament, was convened to consider changes in the constitution, including the legalization of political parties. In August 2004, however, a demonstration in the capital turned violent and the government declared an emergency and arrested a large number said to be connected to the protest. Some of those arrested were prominent in the reform movement, including several members of the special Majlis. Most were released a few months later.

The Maldives were badly hit by the Asian tsunami of December 26, 2004, which killed 82 and caused substantial damage to Maldives tourism, housing, and fishing infrastructure. The U.S. provided $1.6 million in immediate relief assistance. Despite the disaster, the Government of the Maldives held parliamentary elections, originally scheduled for December 31, on January 22, 2005. Reform candidates performed strongly. Following the poll, President Gayoom announced plans to establish multiparty democracy within a year.

In June 2005, the members of the People’s Majlis unanimously voted to legally recognize political parties. In order of registration the parties are the opposition Maldivian Democratic Party, the government’s Dhivehi Raiyyethunge Party, the Adalath (Justice) Party, and the Islamic Democratic Party. Although no elections have been held since the party system was implemented, members of parliament have declared their political affiliations.

In March 2006, the government introduced a "Roadmap for Reform" and subsequently introduced several bills in parliament. However, as of January 2007, parliament had not yet enacted any of the reform legislation.

Principal Government Officials
President--Maumoon Abdul Gayoom
Minister of Defense and National Security--Ismail Shafeeu
Minister of Economic Development and Trade--Mohamed Jaleel
Minister of Finance and Treasury--Qasim Ibrahim
Minister of Home Affairs--Ahmed Thasmeen Ali
Minister of Foreign Affairs--Ahmed Shaheed

ECONOMY

The Maldivian economy is based on tourism and fishing. Of the Maldives' 1,191 islands, only 200 are inhabited. The population is scattered throughout the country, with the greatest concentration on the capital island, Male'. Limitations on potable water and arable land constrain expansion.

Development has been centered upon the tourism industry and its complementary service sectors, transport, distribution, real estate, construction, and government. Taxes on the tourist industry have been plowed into infrastructure and used to improve technology in the agricultural sector.

GDP in 2006 totaled $907 million, or about $3,000 per capita. The Maldivian economy has made a remarkable recovery from the tsunami, which inflicted damages of about $375 million, excluding $100 million in damages to resorts, the bulk of which was covered by private insurance. A rebound in tourism, post-tsunami reconstruction, and new resort construction helped increase GDP by nearly 18% in 2006 from a contraction of 4.5% in 2005. Inflation has moderated to about 3%. As tourism staged a speedy recovery and government borrowing increased, the balance of payments recorded a surplus of about $40 million in 2006 from a deficit of $17 million in 2005. Fiscal control has deteriorated due to tsunami reconstruction as well as an increase in non-tsunami-related government expenditure. Government expenditure was estimated at 74.5% of GDP in 2006, compared to 36% of GDP in 2004 before the tsunami. The budget deficit was 18% of GDP in 2006. While reconstruction is ongoing, the recovery process remains underfunded.

The Maldives has been running a merchandise trade deficit in the range of $200 to $260 million annually since 1997. The trade deficit ballooned to $386 million in 2004, $493 million in 2005, and reached an estimated $618 million in 2006, largely the result of increased oil prices and increased imports of construction material.

International shipping to and from the Maldives is mainly operated by the private sector with only a small fraction of the tonnage carried on vessels operated by the national carrier, Maldives Shipping Management Ltd. Over the years, the Maldives has received economic assistance from multilateral development organizations, including the UN Development Program (UNDP), Asian Development Bank, and the World Bank. Individual donors--including Japan, India, Australia, and European and Arab countries (including Islamic Development Bank and the Kuwaiti Fund)--also have contributed.

A 1956 bilateral agreement gave the United Kingdom the use of Gan--in Addu Atoll in the far south--for 20 years as an air facility in return for British aid. The agreement ended in 1976, shortly after the British closed the Gan air station.

Economic Sectors
Tourism. In recent years, Maldives has successfully marketed its natural assets for tourism--beautiful, unpolluted beaches on small coral islands, diving in blue waters abundant with tropical fish, and glorious sunsets. Tourism now brings in about $400 million a year. Tourism and related services contributed 28% of GDP in 2006.

Since the first resort was established in 1972, more than 87 islands have been developed, with a total capacity of some 17,000 beds. Maldives has embarked on a rapid tourism expansion plan. The government has awarded tenders for the development of 41 resorts. Over 650,000 tourists (mainly from Europe) visited Maldives in 2006. The average occupancy rate is over 80%, and reaches over 95% in the peak winter tourist season. Average tourist stay is 8 days.

Fishing. This sector employs about 11% of the labor force and contributes 7% of GDP, including fish preparation. The use of nets is illegal, so all fishing is done by line. Production was about 183,000 metric tons in 2005, most of which was skipjack tuna. About 50% is exported, largely to Sri Lanka, Japan, Hong Kong, Thailand, and the European Union. Fresh, chilled, frozen, dried, salted, and canned tuna exports accounted for 94% of all marine product exports. Total export proceeds from fish were about $84 million in 2005.

Agriculture. Poor soil and scarce arable land have historically limited agriculture to a few subsistence crops, such as coconut, banana, breadfruit, papayas, mangoes, taro, betel, chilies, sweet potatoes, and onions. Almost all food, including staples, has to be imported. The December 2004 tsunami inundated several agricultural islands, which could take a significant amount of time to recover. Agriculture provides about 2% of GDP.

Manufacturing. The manufacturing sector provides only about 7% of GDP. Traditional industry consists of boat building and handicrafts, while modern industry is limited to a few tuna canneries, a bottling plant, and a few enterprises in the capital producing PVC pipe, soap, furniture, and food products. Five garment factories that had exported principally to the United States closed in 2005, following the expiration of the Multi-Fiber Arrangement (MFA) that had set quotas on developing country garment exports to developed countries. The loss of these factories has not proven an insurmountable hurdle, however, as most of the profits were repatriated and most of the labor was expatriate.

FOREIGN RELATIONS

Maldives follows a nonaligned policy and is committed to maintaining friendly relations with all countries. The country has a UN Mission in New York, with the Permanent Representative to the UN in New York also accredited as Ambassador to the United States, an embassy in Sri Lanka and in the United Kingdom, a trade representative in Singapore, and a Tourist Information Bureau in Germany. India, Pakistan, Bangladesh, and Sri Lanka maintain resident embassies in Male'. Denmark, Norway, the U.K., Germany, Turkey, and Sweden have consular agencies in Male' under the supervision of their embassies in Sri Lanka and India. The UNDP has a representative resident in Male', as do the UN Children's Fund (UNICEF) and the World Health Organization (WHO). Like the United States, many countries have nonresident ambassadors accredited to the Maldives, most of them based in Sri Lanka or India. The Maldives is a member of the Organization of the Islamic Conference (OIC) and the Non-Aligned Movement (NAM).

U.S. MALDIVIAN RELATIONS

The United States has friendly relations with the Republic of Maldives. The U.S. Ambassador and some Embassy staff in Sri Lanka are accredited to the Maldives and make periodic visits. The United States supports Maldivian independence and territorial integrity and publicly endorsed India's timely intervention on behalf of the Maldivian Government during the November 1988 coup attempt. U.S. Naval vessels have regularly called at Male' in recent years. The Maldives extended strong support to U.S. efforts to combat terrorism and terrorist financing in 2001-02.

U.S. contributions to economic development in the Maldives have been made principally through international organization programs. Following the December 2004 tsunami, the U.S. and Maldives signed a bilateral assistance agreement for $8.6 million in reconstruction assistance. This assistance will help in the rebuilding of harbors, sewerage systems, electrical generation facilities and in the development of aid absorption capacity in the Ministry of Finance. The United States has directly funded training in airport management and narcotics interdiction and provided desktop computers for Maldivian customs, immigration, and drug-control efforts in recent years. The United States also trains a small number of Maldivian military personnel annually. About 10 U.S. citizens are resident in the Maldives; some 5,000 Americans visit the Maldives annually. The Maldives welcomes foreign investment, although the ambiguity of codified law acts as somewhat of a damper. Areas of opportunity for U.S. businesses include tourism, construction, and simple export-oriented manufacturing, such as garments and electrical appliance assembly. There is a shortage of local skilled labor, and most industrial labor has to be imported from Sri Lanka or elsewhere.

Principal U.S. Embassy Official
Ambassador-- Robert O. Blake

The U.S. Embassy in Sri Lanka is at 210 Galle Road, Colombo 3; tel: +94 (1) 244-8007; fax: +94 (1) 2437-345.

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Consular Information Sheets, Public Announcements, and Travel Warnings. Consular Information Sheets exist for all countries and include information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Public Announcements are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Public Announcements, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4USA-PPT (1-877-487-2778). Customer service representatives and operators for TDD/TTY are available Monday-Friday, 7:00 a.m. to 12:00 midnight, Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled "Health Information for International Travel" (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Revised: Jul. 2007

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