Business & Tourism – Page 61 – Minivan News

Comment: Nasheed’s messy democratic revolution

Before we go to the ballot box again, we must understand why the first elected government was so short-lived. Some point to Nasheed’s activist personality, others to Gayoom’s control over the judiciary, and many cite political opponents’ impatience to attain power. All these highlight the dominance of personalities in our political landscape, and the lack of institutionalism in political behavior and state affairs. One underlying factor, that has received little attention in the public domain, but is emerging as Waheed’s ministers dissect Nasheed’s policies, is the economy.

Incumbents generally avoid talking about sovereign debt, budget deficits, and budget cuts, unless they are criticising their opponent’s budget in a campaign trail. And the few times that a sitting president talks about his own budget, it is a glossed over version of how well the economy is doing, how the GDP will double in the coming year, how inflation is expected to fall, and how food and fuel prices will drop to affordable levels. The electorate is usually unaware of how serious the budget deficit is, and ignorant of the perplexities involved in budget cuts under a democratic government. So it is no surprise that the electorate judges its government unfairly when it comes to economic management. Most accept the hollow promises, and expect results, but governments that are strapped for cash, more often than not, cannot deliver.

This poses big problems for a developing country struggling to implement democracy. First, the pressure on incumbents to deliver in times of deficits threatens democratic institutionalisation. Nasheed, who was up for re-election, tried to deliver at any cost, and chose to bypass democratic practices to achieve quick results. Take for example the airport lease. To meet budget needs, Nasheed chose the bidder who offered the largest sum up front, not the bidder with the best plan. When the airport board resigned, he put together a new board overnight to force the deal amidst allegations of foul play. The opposition was no doubt disloyal and irresponsible under Nasheed, and attempted to block and discredit his administration on all fronts. Nasheed tackled these problems by choosing to interpret laws and regulations in his favor, which meant there was little conformity in the state of affairs. Alas, the process of democratic institutionalization was nipped in the bud.

But the deeper problem for democracy in Maldives is not this.

Corrupt practices, and the dominance of personalities over institutions are merely manifestations of a problem that runs deeper: It essentially boils down to the dilemma of maintaining democracy without its protectors, saviors, and messiahs, in other words, a middle class; a middle class that will prop up democracy because it is the most conducive system to protecting its economic interests, and values of individual autonomy and self-expression.

If a middle class exists in Maldives, it has neither the numbers, nor the voice, to stand up for democratic principles.

Agents of Democracy

Middles classes are central to democratic analyses for two reasons: they install democracy, and ensure that it is “the only game in town” and there to stay.

Historically, democracy was born out of revolutions led or hijacked by the bourgeois, the land-owning middle class. In the UK, democracy followed the Glorious Revolution of the 17th century where the bourgeois who had accumulated wealth over time, gained enough power in the Long Parliament to demand that the king trade some political power in return for the right to tax. Likewise, in France, a revolution planted the seeds of democracy. In the 1700s, the French bourgeoisie, aided by a peasant revolution, formed the Constituent Assembly in opposition to the Estates General, abolished feudalism, and established the first French Republic.

Several centuries later, the salience of the middle class for democracy is not lost on us. Political Scientist Francis Fukuyama wrote a paper recently asking, “Can liberal democracy survive the decline of the middle class?” In it, he argues that one of challenges to democracy today is the left’s inability to articulate a realistic agenda that has any hope of protecting a middle-class society.

A multiparty election in 2008 in Maldives was not a result of a mass movement, or a middle class led revolution. It was as much a coup from within against Gayoom by his own ministers, and pressure from outside by a group of courageous and determined individuals, and by foreign governments. For a short key duration, this medley of actors took upon themselves, the responsibilities of a middle class, and installed democracy in Maldives.

The Middle Class Dilemma

If the role of the middle class as initiators has been lacking in second and third wave democracies, its absence is all the more apparent in the aftermath of the first free and fair elections. Political scientists concede that the statement “No bourgeois, no democracy,” holds true in most cases. The theory goes that, industrialisation sets in motion a process of modernisation that penetrates all aspects of life, “bringing occupational specialisation, urbanisation, rising educational levels, rising life expectancy, and rapid economic growth.” In short, industrialisation sets in motion modernization that gives birth to a middle class that at once demand “their right to have rights.” The order is important: development leads to democracy, because it creates a middle class in whose self-interest it is to support democratic values. The history of democracy in the West suggests that the growth of a middle class must precede the successful installation of democracy.

This sequence of events- industrialisation, modernisation, democracy- poses a grave problem for us.

To create a middle class, there has to be development. But fostering development within a democratic framework is a serious challenge in low-income countries. Nasheed was handed this gargantuan task when he came to power in 2008. Indian Scholar Ashutosh Varshney explains India’s struggle to do the same: “India is attempting a transformation few nations in modern history have successfully managed: liberalising the economy within an established democratic order.It is hard to escape the impression that market interests and democratic principles are uneasily aligned in India today. The two are not inherently contradictory, but there are tensions between them that India’s leaders will have to manage carefully.”

Why? Because “market-based policies meant to increase the efficiency of the aggregate economy frequently generate short-term dislocations and resentment. In a democratic polity, this resentment often translates at the ballot box into a halt or a reversal of pro-market reforms.” Successful western democracies, the US, the U., and France installed democracies after their countries transitioned to capitalist modes of production and modernised. They liberalised their markets before universal suffrage.

Nasheed’s struggle

Absent development or a revolution that transforms the economy in favor of the many, the onus of creating a middle class falls on the nascent democratic government. Nasheed’s policy objectives were in line with creating a middle class. Whether he implemented market reforms because of serious budget deficits or because of a genuine concern with redistribution, is beside the point. Head on, and fully aware who held the reigns to campaign funds, Nasheed tackled the loaded question of how to shift from an economy that enriches a few, to one that increases the pie and divvies it up more equally.

All said and done, and numerous controversies over lease agreements, minimum wage bills, and the right to strike, his tax reforms were a revolutionary break with the past. It was a first attempt at usurping the status quo. There were more. The barter system- trading an island for a harbor, a sewerage system, or a housing project- drove down the value of uninhabited islands, threatened to increase supply, and drive down the value of existing tourism products. Not only did Nasheed increase supply, but islands were handed left and right to new entrants to the tourism industry, threatening the existing oligarchy. In short, if there was a democratic revolution in Maldives, it was during Nasheed’s administration, encapsulated in his controversial market reforms that attempted to usurp the status quo, and re-distribute wealth. It was messy, it was fraught with corruption, but it was the closest we came to one.

Whereas market reforms disproportionately affect the poor in neighboring India, the unique Maldivian economy dictated that the grand oligarchy, the tourism tycoons, bore the brunt of market reforms in Maldives. A backlash was to be expected.

Nasheed’s mistake

Nasheed administration’s struggles demonstrate the dissonance in democratic theory when applied in a postindustrial world. But he also made calls that were unnecessary, and aggravated the problem of consolidating democracy without a middle class.

One of Nasheed’s biggest mistakes was in trying to modernise the masses overnight, before his policies yielded results. In a parallel process (to his market reforms), and too late in the game, Nasheed attempted to modernise through rhetoric (the likes of “Medhumin Rally”), poor decision-making (SAARC monuments), and behavior that cast him as not Islamic enough. He challenged the majority’s most dearly held identity, which is growing to be a stronger Islamic identity. The process of modernising a people is a carefully measured process that requires a special focus on reform in the economic and social realms, so that wealth and intellect are distributed more equally. And it takes time.

So it is no surprise that despite building several harbors, installing a health post on every inhabited island, increasing housing units in urban areas, and implementing a tax system, people in the outer islands, who benefited more under Nasheed than Gayoom, continues to support Gayoom’s party over the MDP. In the local council elections, which served as a referendum on the MDP government, the MDP lost most of the council seats in the outer islands, despite a well-organised campaign, and over 100 island visits by Nasheed himself.

Given such realities, the next elected government should expect no immediate rewards from the masses at the ballot box contingent on policy successes, and must be wise enough to withstand a backlash from the wealthy in the face of controversial yet necessary market reforms. The next government we elect will face the same challenges Nasheed’s did, but it can avoid ad hoc and impulsive decision-making that contributed to his accelerated downfall.

Fostering development that creates a middle class within a democratic framework is a serious challenge, perhaps one that has very few success stories. But one thing is for certain: it requires a strategising leadership that is strong enough to stand up to the business elite, yet thoughtful enough to understand the nuances dictating democratic consolidation.

The way things are moving in Maldives, I doubt we will have an election before 2013. But a bigger threat for democracy in Maldives is, come Election Day, we may not have a strong and serious leadership to vote for. If the focus is only on an election date, we are giving our politicians a free ride to power, and passing on a second chance at democracy.

All comment pieces are the sole view of the author and do not reflect the editorial policy of Minivan News. If you would like to write an opinion piece, please send proposals to [email protected]

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Government’s changes to resort lease payments will cost Maldives US$135 million: MDP

The new government’s decision to allow extended resort leases to be paid in installments, rather than upfront at the end of the lease, will immediately take US$135 million of the country’s coffers, the Maldivian Democratic Party (MDP) has claimed.

New Tourism Minister Ahmed Adheeb was not responding at time of press. Former Tourism Minister Dr Mariyam Zulfa explained that Nasheed’s government had offered resorts the option of extending resort lease periods from 25 to up to 50 years.

“Under the regulations the resort lease period was extended to 50 years, with a clause that this would cost US$100,000 every year. But the regulations left open to interpretation how this was to be collected,” she said.

“The Nasheed government had requested that those resorts extending to a 50 year lease pay in a lump sum,” she said, “but while I was Tourism Minister, Gasim Ibrahim and Ahmed ‘Redwave’ Saleem kept pressuring me to let them pay on a yearly basis. They didn’t want to give any money to the government, and soon after the government changed they got what they wanted. [The installments] will only be payable at the end of the current lease periods – it is a huge loss to the treasury.”

According to the MDP, 25 parties had paid the new lease under Nasheed’s government, while a further 90 parties had signed up to extend the lease.

“Some of the resorts wanted it because it increased the value of the property, and therefore increased the value of the government’s asset,” Dr Zulfa explained. “Properties with a 50 year lease paid up front are much more attractive to investors, and encourage development.”

Dr Zulfa contended that not only did the change in policy forgo the country future earnings, “but now they’ve taken a sovereign loan of US$50 million – Tourism Minister Ahmed Adheeb was boasting about it on his Facebook page.”

“They said they need it to finance the budget shortfall – but what shortfall? There was no shortfall – not until they gave this loophole to the coup people who now won’t have to pay anything. They don’t care about the common people – infrastructure projects all over the country have stopped and contractors have been sent home. People [on the islands] are angry, upset and despairing,” Zulfa claimed.

Secretary General of the Maldives Association of Tourism Industry (MATI), ‘Sim’ Mohamed Ibrahim, said he couldn’t speculate on the impact of the decision, but said that negotiations to pay leases in advance had begun during Gayoom’s tenure as President.

“Resorts were willing to pay the government in advance for extensions of their lease,” he explained. “It was not just for development, but because it increases the value of a property and gives investors confidence. We recognized in good faith at the time that the government was in serious need of a cash injection.”

“Obviously, some people don’t agree with that. This came into effect during Nasheed’s government, which argued that if the lease was going to be paid annually, it would be renewed annually. Obviously the interpretations of the law are different.”

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Richard Branson calls for early elections “as soon as feasibly possible”

Founder of the Virgin empire, multi-billionaire Sir Richard Branson, has again delved into Maldivian politics with a third blog post on the subject, declaring his support for early elections “as soon as feasibly possible”.

Branson first wrote an open letter calling on “interim” President Dr Mohamed Waheed Hassan to “do the right thing” and hold free and fair elections before the end of the year, describing it as “completely astounding that you have been part of an overthrow of a democratically elected government that has effectively let the old regime back into power.”

Several days later he had a phone call with Dr Waheed, and subsequently said he believed the new president was “determined to be an honest broker” who “had nothing to do with [the coup]. He watched the situation unfolding on television.”

Branson’s third and most recent post came after “a lengthy conversation with former President Mohamed Nasheed”, who “wanted to be sure that it was completely clear what had happened in the Maldives.”

“Mr Nasheed said that he had been overthrown by a coup. He said that the confusion about what happened in the first two days came about because he was forced to remain in the Presidential Palace in order to keep him away from the press, was therefore incommunicado, and only managed to escape after a couple of days,” Branson wrote.

“He said that he was very concerned the Maldives could become another Afghanistan. He believes that the way to resolve this is for interim President Waheed to step down and for The Speaker to hold court for two months.
He said he sees no reason why there shouldn’t be early elections during this calendar year, preferably within two-to-three months. The people of this country, he said, need to be asked as soon as possible who they want to rule them. The Maldives and the Maldivians urgently need to get back on track.

“He believed that there was is Islamic element of the military and mentioned that some of them chanted on the street “God is great”. He said that the new government had thrown out all human rights cases and corruption cases, which he felt was wrong. He said that some of his MPs had been removed, others had court cases brought against them.

“He ended by saying: ‘Governments should only be changed through the ballot box and not by any other means. No military in the world should be allowed to take over a Government and hold on to it.’

“We now have both sides of the story,” Branson declared.

“Having listened to both sides, it does seem wise for an election to take place as soon as is feasibly possible so that the people of the Maldives can begin to put this ugly chapter behind them.”

Branson attended the Slow Life Symposium at the upmarket Soneva Fushi resort in October 2011, a highly eco-conscious resort owned by Sonu and Eva Shivdesani.

Other attendees at the resort included actress Daryl Hannah, star of films including ‘Blade Runner’, ‘Kill Bill’ and ‘Splash’; Ed Norton, star of films including ‘Fight Club’ and ‘American History X’; Tim Smit, founder of the Eden Project; Maldives President Mohamed Nasheed; and an array of climate experts and scientists including Mark Lynas and Mike Mason.

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Analysis: Economy at stake as political turmoil grips Maldives

The tourism industry stands to lose as much as US$100 million in the next six months, the Maldives Association of Tourism Industry (MATI) has warned, due to widespread media coverage of the country’s political unrest.

“Potential visitors are questioning the safety and security in the island nation as the political turmoil in Maldives makes headlines in a large number of international media,” claimed MATI in a recent statement, adding that resorts had registered 500 cancellations in the first week following the change of government.

“Various allegations such as the installation of an Islamic regime, possible enactment of full Sharia law and Anti Semitic remarks made by politicians at public gatherings have also caught the attention of the international press,” MATI stated.

With no election date in sight, the economic consequences of the ongoing political turmoil in the Maldives are likely to be far reaching. The ongoing climate of uncertainty – anathema to business, foreign investment and especially tourism – is likely to persist while the ousted Maldivian Democratic Party (MDP) continues to challenge the legitimacy of the new government, which in turn has resisted setting a date for early elections despite pressure from a growing number of international bodies.

Image problem

The Maldives’ resort industry is so insulated from the rest of the country that few arriving tourists are likely to be even aware of the unfolding political crisis – let alone be impacted by it. Arriving guests are collected at the airport and whisked off by resort representatives the moment they step through the departure gate – Male’ is nothing more than an interesting piece of scenery as the seaplane lifts off.

“That message is not going out,” says newly appointed Tourism Minister Ahmed Adheeb. “People don’t know that the resorts are separate [from the rest of the Maldives], and international headlines have made people panic.”

The need for an economy is one of the only subjects the major parties agree on – and the US$3 billion tourism industry is by far the biggest earner, and indirectly responsible for over 70 percent of the economy.

“Tourism is so much connected to the economy. We cannot afford to involve politics in the industry,” Adheeb says.

MATI’s Secretary General, Sim Mohamed Ibrahim, agrees: “The travelling public don’t always know that it is one resort, one island, and that the resorts are cushioned from the unrest. This has mostly taken place in in Male’ and Addu. The resorts are far removed from the unrest.”

That policy of segregation is now being tested after weeks of turbulent headlines in international media, focusing not only on the political crisis and police crackdowns, but other issues such as the contrast between the Western hedonism of the resorts and rising religious fundamentalism in other parts of the country.

“The main problem is that the media is now portraying the Maldives as a hardcore Islamic country, which is putting people off,” reported Tourism Review.

MATI’s concerns appeared echoed in the new government’s aggressive response to negative media coverage on Friday, during a strident speech by the formerly demure President Dr Mohamed Waheed Hassan.

“We are not afraid to die as martyrs. We are not afraid of the enemies we face,” Dr Waheed told the crowd of over five thousand, while sharing the stage with several of the country’s wealthiest resort tycoons.

“We must be sad that the enemies and traitors of the Maldives are spreading lies in various places of the world to tarnish the country’s image. They are the real conspirators. Those who defame the Maldives to destroy its industries and tourism are enemies of this country,” he said.

The true impact of recent events on tourism is hard to gauge, amid the industry’s efforts to play down negative media coverage and preserve the country’s reputation as a safe, peaceful and relaxing travel destination for well-heeled visitors.

“There have been some reported cancellations, although no data is available yet,” a senior tourism official told Minivan News. “A lot of resorts are very concerned and are asking what’s around the corner. We’ve no answer to that yet.”

Adheeb said the Tourism Ministry was presently “crunching the numbers”.

Reports at the height of the crisis in early February suggested that tourists hardly put down their cocktails: “We are having a great time. We heard about the coup, but it doesn’t matter to us,” a professor of American literature told Reuters, between sips – “And even if there is trouble, the airport is on another island, so no trouble.”

The situation was not considered so severe that people were cancelling their holidays, the tourism official told Minivan News, but a lot of resort owners were expressing concern about forward bookings, he said.

Furthermore, while the guests might be unconcerned about the Maldivian political situation, many of the Maldivian staff serving them certainly were.

“The beauty of the Maldivian tourism product is that resorts are safe even if there are local problems,” the official told Minivan News. “But 50,000 Maldivians work in the industry, and they are largely from the Maldivian Democratic Party (MDP). Morale of the staff may be affected – staff are talking and unsettled, and they will pass that onto guests. Tourism is a contact sport and many visitors will build a rapport with their waiter or butler, and it will spill out.”

One resort manager expressed concern that the combination of staff morale and isolation was a “powder keg” for strike action.

Lack of information and fears for the safety of family members appears to be another factor – visiting a resort on Baa Atoll recently, Minivan News was approached by staff members concerned for family members in Addu Atoll, following the police crackdown after the destruction of their buildings on February 8.

‘Travel Advisory’

A travel advisory issued by Salisbury-based NGO Friends of Maldives (FOM), urging visitors to avoid Bandos and all Villa properties (Sun, Paradise, Royal and Holiday Islands), has received a mixed reaction.

“These are places linked to individuals or groups who we suspect to be involved in the subversion of democracy and in human rights abuses in the Maldives,” FOM said in its accompanying statement, but emphasised that it was not a blanket boycott of the Maldives.

“We appreciate the Maldives economy relies hugely on the tourism economy, and so we aren’t asking for tourists to avoid the Maldives – rather we are asking them to make an informed and ethical decision to choose out of around a hundred resorts that aren’t associated with the the coup d’état and the human rights abuses that occurred following the event,” said FOM’s founder, David Hardingham.

MATI meanwhile condemned “in strongest possible terms” the “call for a boycott of some Maldivian tourist resorts”.

“MATI believes that any action detrimental to the tourism industry of the Maldives will have serious implications for the country’s economy. We believe that those who refer to themselves as friends of the Maldivian people must realise that such damaging measures taken against he tourism industry result in harming public welfare and those most vulnerable in society.”

The travel advisory was “very hurtful”, added Adheeb.

“Something like this can really affect the whole industry and bring a lot of sorrow,” the tourism minister said. “A lot of Maldivians work in these resorts. We say to FOM that it’s too early to judge – there are a lot of negative things happening in our country, so let things unfold first. We request that they not play with our industry.”

The senior tourism official also expressed concern about the potential impact of the advisory on resort staff – many of whom were MDP. He also warned against rhetoric suggesting that resort owners were responsible “for the coup” – a theme begun by Nasheed after his ousting, and picked up by several international publications.

“This cannot blamed on resort owners,” he said. “That a few businessmen who own resorts toppled the government does not means that all resorts are ‘pro-coup’ – many actually supported Nasheed, and he still has a lot of support there.”

The official also questioned whether an ‘appeal-to-conscience’ would really affect tourists’ decision to come to the Maldives, regardless of whether it was a democracy or dictatorship.

“Most people don’t really make travel decisions based on ethical or moral concerns. It’s a small percentage of the market,” he said.

Sim agreed – “People do not travel to the Maldives based on questions of morality” – but said the impact remained to be seen.

“People do not travel to destinations that are in any way not peaceful, or are experiencing civil unrest,” he said.

The Maldives tourism industry began in the 70s and grew in a peaceful environment under the autocratic stability of former President Maumoon Abdul Gayoom.

Now, however, unhappy supporters of Nasheed have been bolstered by the growing ranks of the democratically disenfranchised, who seem in no hurry to relax their demands for early elections.

The uncertainty in such a climate of political statement can hardly be good for business – and the signs are beginning to show.

Investor confidence

On February 17, just over a week after the change of government, India’s Economic Times reported that the State Bank of India (SBI) had issued a moratorium on fresh loans in the Maldives until June.

SBI held a quarter of all deposits in the Maldives and had issued 42 percent of all loans, according to the Times.

“In 2009, SBI bailed out Maldives from a severe foreign exchange crisis when it subscribed to US$100million dollar-denominated treasury bonds issued by the Maldivian Monetary Authority (MMA),” the paper added, citing an Indian government official.

Given SBI’s contribution to the tourism industry in the Maldives, “that is something we are very concerned about,” Adheeb acknowledged.

“I would like to give confidence to investors that we will make sure we are stable and consultative, and will not bring politics into tourism,” he added.

Sim pointed out that if SBI had taken such a stance, “it is likely that other people will also view it this way. Stability in the country is most important to investors,” he said.

“SBI has also previously said they have a problem with the judiciary, and that this has contributed to a [lack of] investor confidence.”

Concerns about the impartiality of the justice system and its resistance to reform eventually led Nasheed’s government to detain Chief Judge of the Criminal Court, Abdulla Mohamed, and call for the UN and Commonwealth to help resolve the crisis. Two weeks later, opposition supporters and rogue elements of the police and military toppled Nasheed’s government, prompting his resignation.

“This is a problem for potential investors. If you invest and something goes wrong, all roads lead to a Maldivian court – and who’d want that?” the tourism official asked Minivan News.

In the immediate aftermath of what Nasheed’s supporters contend was a coup d’état, “a lot of contracts that are half completed have been stopped, and those by the previous government politicised and halted. We’ve become a nightmare client by not following through on agreements,” the official told Minivan News.

“Anyone who has not been paid for goods delivered is in a bad situation right now – it’s not good for our reputation,” he said.

Wider economic impact

The tourism industry is not only culturally insulated from the rest of the Maldives, but also economically.

Most resorts charge in dollars – a practice that technically contravenes monetary authority regulations but is widely overlooked – and bank overseas in more financially and politically-stable economies, such as Singapore.

Beyond import duties, credit card fees and assorted taxes, very little foreign currency trickles into the country, given the size of the tourism industry. Which, with the introduction of the 3.5 percent tourism GST last year, was found to be two to three times larger than previous estimates.

At the same time, with little to no demand for the local currency at even a transactional level, the rest of country suffers from an enduring dollar shortage.

Furthermore, 50 percent of tourism industry employees are expatriate and remit their income, while local staff are typically paid in Maldivian rufiya – tips and service charge aside.

The result is a troubled economy that remains dependent on foreign aid, despite having a per-capita income high enough to in 2011 see the Maldives become one of only three countries to ever graduate from the UN’s definition of a Least Developed Country (LDC), to ‘Middle Income’.

That progression limits the country’s access to concessional credit, removes certain trade concessions, and some donor aid – as well creating a perception in the donor community that the Maldives is ‘less deserving’ than countries still on the LDC list.

Swedish Ambassador accredited to the Maldives, Lars-Olof Lindgren, said as much in May 2011. Sweden, he said, “has very strict of GDP per-capita criteria and has decided to focus its aid elsewhere on least developed countries, particularly in Africa.”

“At the same time, certainly I think we have to look at other aspects of the Maldives – the fact the country taking first steps as a democratic country, steps towards getting the party system to work – that is one reason why the international community should support this – support not only government, but the whole society,” he told Minivan News last year.

Climate aid to a great extent filled the void, with countries ranging from Denmark to the US lining up to commit to infrastructure projects – harbours, water treatment plants, waste management centres – under the banner of climate adaption and mitigation.

Much of that was prompted by Nasheed’s high profile on the world stage as an environmental campaigner, with wealthy countries happy to share the limelight and demonstrate eco-credentials to their own, increasingly climate-conscious public.

That environmental focus also “absolutely changed how the destination was marketed”, the tourism official told Minivan News.

“Nasheed was synonymous with that, and the photo of the underwater cabinet meeting is one of the most famous in the Maldives. It was a brilliant gimmick that summed up the challenges,” he said.

Now, several foreign diplomats from current donors have privately expressed concern that with the political instability, Commonwealth jitters and contentious legitimacy of the new government, such funding will be a harder sell to the public and aid agencies in their home countries: “We will fulfill our existing commitments,” one promised.

The Chinese bellwether

The weathervane on the Maldivian tourism economy is likely to be the Chinese market. With belts tightening in the Maldives’ traditional lucrative markets in Europe – particularly Italy and the UK – surging interest in the Maldives tourism product from China has cushioned the industry in the wake of the 2008 financial economic crisis.

In the first seven months of 2011, Chinese visitors accounted for 19.9 percent of the total arrivals. By the end of the year the figure had increased to 23 percent – figures backed by Beijing’s stamp of approval that the Maldives was an acceptable destination for Chinese tour operators to send customers by the thousand.

“We don’t deal with numbers like that from any other country,” the tourism official told Minivan News.

“Chinese guests tend to respect authority – and currently the Chinese government is saying that the situation is OK. As soon as the Chinese authorities say they are concerned, 23 percent of the market will disappear. We can regard the Chinese as either directly in or out,” he said.

Adheeb observed that the Chinese market was “sensitive to international headlines”.

There had been a dip in Chinese arrivals, he noted, but this could be attributed to the aftermath of Chinese New Year.

Sim said the Chinese market was “particularly vulnerable, as they make decisions based on information they are given. It has been Chinese New Year so the dropoff in numbers is hard to separate from those put off by the political unrest,” he said.

Most Chinese arrivals come through package tour operators, who are extremely sensitive to travel warnings. The Chinese government currently has no warning for the Maldives, however neighbouring Hong Kong on February 8 placed the country on an “amber alert”, alongside Pakistan, Russia and Iran.

The language barrier can complicate efforts to reassure the market, particularly on the Chinese side.

One Shanghai-based travel agent, Sun Yi, told Minivan News she was faced with many cancellations just two days after the events of February 7.

”It has seriously affected our business. Many guests cancelled the Maldivian holiday package which used to be very popular,” she explained, adding that her company had suspended plans to hold a commerical event at a Maldives resort this spring.

“Quite a lot of Chinese customers are very concerned of this situation. Some of them are hesitant to make reservations now,” said Emy Zheng, a Chinese national working at Villuxa Holidays.

Recent reports in Chinese media have been reassuring: one honeymooner, Zhou Xiaoyi, told China Daily that he had considered cancelling his trip, but had only been offered a 2.5 percent refund on his prepaid ticket.

“The travel agency said most of our prepayment had been spent on reservations on flights and hotels,” Xiaoyi told China Daily. “So we decided to come anyway and found that our honeymoon was little influenced. We also saw other Chinese people here.”

Much of the tourism industry in the Maldives maintains a wary distance from Maldivian politics, but ongoing political turbulence, protests, confrontational rhetoric, dark mutterings from the staff quarters and ultimately an economic threat such as a loan crisis or plunge in Chinese interest could haul the problem into the industry’s backyard.

With 70 percent of the economy at stake, were that to happen the matter of the government’s legitimacy and the colour of the flag in the President’s office would fast become the least of the country’s worries.

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“Do the right thing”: Virgin founder Richard Branson to President Waheed

Head of the Virgin empire, multi-billionaire Sir Richard Branson, has called on President Dr Mohamed Waheed Hassan to “do the right thing” and hold free and fair elections before the end of the year.

In an open letter to Dr Waheed, addressed to the “interim” President, Branson recollected his recent meeting with the former Vice President, who he said had told him about about the need for a truth and reconcilliation commission “to examine past misdeeds and the people who perpetuated them”.

It was, Branson wrote to Dr Waheed, “completely astounding that you have been part of an overthrow of a democratically elected government that has effectively let the old regime back into power.”

“Knowing you, I would assume that you were given no choice and that it was through threats that you have ended up in this position,” Branson said. “I do very much hope that was the case rather than you doing it of your own free will.”

Branson attended the Slow Life Symposium at the upmarket Soneva Fushi resort in October 2011.

The three day event brought together big names in business, climate science, film and renewable energy to come up with ways to address climate change.

Other attendees included actress Daryl Hannah, star of films including ‘Blade Runner’, ‘Kill Bill’ and ‘Splash’; Ed Norton, star of films including ‘Fight Club’ and ‘American History X’; Tim Smit, founder of the Eden Project; then President Mohamed Nasheed; and an array of climate experts and scientists including Mark Lynas and Mike Mason.

Branson’s letter follows the Commonwealth’s temporary suspension of the Maldives from its democracy and human rights arm – the Commonwealth Ministerial Action Group (CMAG) – and its call for President Waheed and former President Nasheed “to commence an immediate dialogue, without preconditions, to agree on a date for early elections, which should take place within this calendar year.”

Sir Richard Branson’s open letter to Mohamed Waheed Hassan Manik, “interim President of the Maldives”:

Dear Mr Waheed
It was a real pleasure meeting you and your delightful wife when I was last in the Maldives. At that time there was a democratically elected government in the Maldives, after many years where that certainly wasn’t the case and where opposition members languished in prison and were even subjected to torture.
You personally said to me that the Maldives needed a truth and reconciliation commission to examine the past misdeeds and the people who perpetuated them, and asked if I would speak with The Elders to see whether they would set one up.
Therefore, forgive me for finding it completely astounding that you have been part of an overthrow of a democratically elected government that has effectively let the old regime back into power. From knowing you, I would assume that you were given no choice and that it was through threats that you have ended up in this position.
Anyway, I do very much hope that was the case rather than you doing it of your own free will. With the world moving towards democracies, how dreadful it is to see the beautiful Maldives moving in the opposite direction.
As interim President, you are in a position to do the right thing. We beg you to make sure that there are fair and free elections held this year, as the Commonwealth Ministerial Action Group have called for. I look forward to renewing our friendship after those elections.
Richard Branson. Founder of Virgin Group

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Comment: The Maldives will not survive just on fish and tourists

The world is watching how Dhivehin are struggling to shape up their future by fighting seriously to give up their banana republic and become a player in the big league of democracy.

This is not an easy task, as we in Europe, heirs from ex-fascist countries, know. Changing a system and a mindset requires effort, dignity, time and a strong will to not want to go back in time. Democracy maybe is not perfect but it is by far the best and the most respectful ruling system we can have in a globalised world.

A democratic party system, that necessarily goes hand by hand with respect for the law, is the way to up the value of a country by giving its citizens a determinant role and thus use all the existing potential in the country.

It is clear that under a dictatorship regime this is not feasible. Dictators, like all authoritarian and nepotistic rulers, have only one main goal: become the owners of the country and sponsors of the body and soul of their people, thus owning their life by shaping up slavery either physically or psychosocially, just like old fashioned little kings. The Maldives has already had enough of this.

It is not easy to move from dictatorship to freedom as, like the dog that has been beaten for years, people when free from the hand of the master will tend to go wild and think that anything is possible. That is not democracy. Certainly a coup d’état is not democracy. Dictatorship always gives a false feeling of peace not because there is real peace but because the leash is on, permanently struggling people’s throat.

It is not possible to develop a country in a state of permanent harassment even if disguised of social peace. The core indicators of a country willing to develop are: work for all, freedom, law and respect for people, culture, health and intellectual development. At the moment Maldives lacks from all these in one way or another.

The Maldives – with a basic income from fish (sea resources) and tourism (food will always be an asset, nut tourism is a volatile business), will not be able to develop without offering more to the world. Strategies might be to attract different casts of tourists, with more or less money, but still, tourism is a fairly young industry in the country – only 30 years old. So far so good, however, it cannot be seen as the permanent chicken of the golden eggs. One day the chicken will get old and no more eggs will enter into the basket.

The Maldives, to survive in years to come, needs to offer added value beyond sea protein and nice sunny water bungalows, and it is a fact that in the present industrial and commercial world panorama that is not possible without an evolution of the Dhivehi society. The Maldives is condemned to develop, yes or yes. There is no way back.

The leash, sort of saying, cannot be on anymore and needs to be released unless the population wants to go back in time. That doesn’t seem to be the case.

In a global market, a country is no longer free, certainly neither from a production-commercial point of view nor from a political one as the world has become small, and it will be even smaller in 30 years’ time with supersonic jets and the communication generation. The only way to progress is by enhancing the development of society, opening up the creativity that will lead to discover new resources, give added value to the world and play accordingly.

Maldives is today in a cross roads, and its people need to take a decision on where to go. The possibilities are not that many, I’m afraid.

The author lives in Spain, has a business and marketing degree from ESADE, is the CEO of an international management coach company and a former owner of a Maldives private company.

All comment pieces are the sole view of the author and do not reflect the editorial policy of Minivan News. If you would like to write an opinion piece, please send proposals to [email protected]

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Former finance minister Inaz leaves MDP

Former Finance Minister Ahmed Inaz has confirmed his decision to leave the Maldivian Democratic Party (MDP).

Inaz did not give a reason for his decision, but told local newspaper Haveeru that the move “puts an end to my political career for now”.

In a response to Minivan News, he said he would “always remain independent and serving the national interest”.

Inaz was appointed after the then-opposition majority parliament unseated Finance Minister Ali Hashim in November 2010, along with six other cabinet ministers.

That vote came after three weeks of disruption in parliament, a stalemate ended only when MPs of the ruling Maldivian Democratic Party (MDP) boycotted the sitting before voting began.

Inaz’s resignation followed an incident in December 2011 in which MDP activists “dragged” him from a car in which he had been spotted hold holding a covert meeting with former president Gayoom’s half brother, MP Abdulla Yameen.

MDP activist Ibrahim ‘Dhonbeli’ Haleem told Minivan News afterwards that he had observed Inaz and Yameen holding a discussion “for two hours” near Male’s South Harbor, “a dark area poorly lit that is only really frequented by boys and girls, not for official business.”

“I told Inaz it was wrong, that Yameen is an enemy and why is he going to this area to hold a business meeting. If he needs to discuss business he should do it in his office.

“Inaz admitted it was wrong, and the MDP activists were yelling and shouting so I took him on my bike to Haruge (MDP headquarters),” claimed Dhonbeli.

Inaz would not confirm that this was the reason for his resignation at the time.

Tax advocate

Inaz’s term as finance minister was characterised by swiftly-enacted tax reforms, passed amid juggling many conflicting political interests and a campaign to sell the concept to the public.

Inaz noticeably took the time to meet with businessmen, parliament and opposition party delegations to explain the reasons and rationales for the various reforms he was implementing.

“All the businessmen I have met – all the reasonable businessmen I have met – believe that the country has to move to a much more structured, predictable and more coherent system of governance. And to do that we need an economic system that supports social change, and supports the change we have brought politically,” he told Minivan News, in an interview in May 2011, shortly after becoming minister.

“To sustain their businesses it is important that they have social and political stability. It would be a grave mistake if one stands up and says they don’t support [income tax], because that will bring instability to the country and harm businesses,” he said.

Under Inaz, the Maldives implemented a tourism goods and services tax (TGST), general GST and business profit tax, and was working towards an income tax for those earning over Rf 30,000 (US$2000) a month. Nasheed’s government maintained that combined, these elements would give a full picture of the money and assets in the country, and avoid the hiding of company tax revenue with individuals.

New Economic Minister Ahmed Mohamed announced at a press conference yesterday that policy of income tax would temporarily be halted, according a report in Haveeru.

Under Inaz, the Maldives Inland Revenue Authority (MIRA) also took over most of the Maldives’ government’s cash handling, greatly reducing petty counter-level corruption across the public sector and giving a single picture of government income.

Inaz also pushed – against subtle but solid opposition – for the rufiya to be used as legal tender for all transactions in the Maldives, aside from tax collection.

Most resorts continue to charge tourists in dollars, a practice which is contrary to monetary policy and technically illegal, but ignored by the Maldives Monetary Authority (MMA). Those dollars swiftly leave the country for more financially-stable shores, instead of generating a demand for the local currency at the point of sale. The country consequently has a dollar shortage, banks have little money to loan, and the average population benefits little from the tourism industry beyond employment – for which they are paid in rufiya.

“What other country has prices in another country’s currency?” Inaz asked Minivan News, in May 2011.

A key moment under Inaz’s term as finance minister came with the discovery that based on income from the TSGT, the tourism economy was 300-400 percent previous estimates.

“Previously we had thought tourism receipts for the country were around US$700 million. But since collection of the 3.5 percent Tourism GST it has come to light that the figure is around US$2.5-3 billion,” then President Nasheed said during a press conference in June 2011.

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“You are my brother and I will always love you”: Dr Waheed’s brother resigns from UK post, calls for President to follow

President Dr Mohamed Waheed Hassan’s brother, the Deputy High Commissioner of the Maldives to the UK, has announced his resignation and called for his brother to follow suit.

“I have resigned from my post of Deputy High Commissioner as of now. I have resigned because I cannot serve a regime that has brought down the democratically elected government of my country in a coup d’état,” said Naushad Waheed Hassan to media assembled on the steps of the High Commission in London.

“Some of you may question why I have not resigned before. When the coup was unfolding in the early hours of February 7, my initial reaction was to resign immediately. However, as you all know, the leader of the current regime, Dr Mohamed Waheed Hassan, is my own brother. So I decided to take time to make my own enquiries before I came to a conclusion. And it is with a heavy heart that I have to say that this is indeed an illegitimate government and I cannot be party to it.”

Minivan News spoke to Naushad this evening, seeking to confirm the report.

“This is not something I have discussed with my brother,” Naushad told Minivan News. “This is my own personal decision. I stood by him. But I after I saw the videos of the torturing, the police brutality, and saw what happened in the atolls, I decided it was not good for me to stay [in the government].”

Naushad said he did not know why his brother had taken the actions that he had.

“From our childhood days, I know he is a nice person. I still believe this. I don’t know why he is favouring Maumoon [Abdul Gayoom]. At this moment I don’t have the details. But I will find out why he took this step. He is someone who has been loved by people for so many years,” he said.

“And I say this to my brother – you are my brother and I will always love you. Do not rob our people of our right to choose our government. Do not be party to this police brutality that is ongoing in the country. Do not join with the people of the autocratic ruler (former) President Gayoom. Do the right thing – resign and hold fresh elections. Let the people of the Maldives decide.”

A staff member in the High Commission described Naushad as “quietly spoken and very friendly. His artwork was up in the commission until this morning so we should have seen it coming. I always noticed that he was happy to talk about his past incarceration [under Gayoom], but he never came across as too bitter.”

The staff member noted that the atmosphere in the High Commission had been a “little terse”, with “differences of opinion between staff that have stronger political, MDP affiliations than others, who see their role in a more purely diplomatic, apolitical sense.”

Maldives Ambassador to UN resigns live on Al Jazeera

Maldives Ambassador to the United Nations, Abdul Ghafoor Mohamed, has meanwhile resigned live on Al Jazeera, reading a statement in which he said he was unable to continue his duties due to “certain moral and ethical concerns I had that surrounded the departure of the former President [Nasheed].”

“I listened with much sadness and great pride to the resignation of [President Nasheed] and his decision to step down in the greater interest of the Maldives, bringing to a premature end the maiden term of the first democratically elected leader of the Maldives,” said Ghafoor, one of the Maldives top career diplomats who has also served as defacto non-resident Ambassador to the US.

“The Maldives had yet again shown the world it was able to handle peaceful transfers of power smoothly. I was proud of my President and my country. However the subsequent allegations by the former president – that he was forced to resign – have cast a shadow of doubt on events preceding his announcement,” he stated.

Ghafoor said he accepted Dr Waheed’s government as a legal and legitimate constitutional authority, but said he found himself “in a position that makes it difficult to execute my responsibilities without equivocation based on certain moral and ethical concerns I had that surrounded the departure of the former president.”

“I believe the new president should have the opportunity to have his views and policies served by representatives without reservations or equivocation,” Ghafoor said. “I have therefore conveyed my intention to step down from all my diplomatic postings so that the new president may be better served.”

Ghafoor said that Dr Waheed had accepted his resignation, and had agreed to stay on until a replacement arrived.

“He has also given me leave to speak my conscience in the meantime, and I thank him for that,” Ghafoor said.

Asked by Al Jazeera as to the nature of his “moral and ethical concerns”, Ghafoor reiterated that he had “no reservations about the legitimacy of the current administration.”

“But what has made my conscience troubled is the allegations made by the former President and subsequent events. One concern was the appointment of the current defense minister and police commissioner , who I believe were involved in the negotiations [surrounding Nasheed’s resignation]. This was a troubling event for me.”

Maldives High Commissioner to the UK resigns

Maldives High Commissioner to the UK Dr Farahanaz Faizal also announced her resignation earlier this week.

“They robbed the people of the vote and when I saw the brutality of the police last week, that was the final straw,” she said.

In a letter to the Foreign Minister, Dr Faizal resigned as High Commissioner of the Maldives to the UK and as Ambassador of the Maldives to France, Spain, Norway, Sweden, Denmark, Finland and Palestine.

“I regret to let you know that I cannot serve in a government that has toppled the
democratically elected government of Maldives, in a coup d’etat,” she said.

Honorary Consul to the Maldives, David Hardingham, also announced his resignation.

Minivan News sought to contact both Dr Waheed but he had not responded at time of press. Dr Waheed’s acting spokesperson Musood Imad said the President would be holding a press conference on Thursday at 4:30pm.

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GMR remains “politically neutral” as stock price shows short-term wobble amid political upheaval

The stock price of the Indian infrastructure giant operating Ibrahim Nasir International Airport (INIA) took a tumble on the Mumbai Stock Exchange following the ousting of former president Mohamed Nasheed last week, as images of the unfolding violence were beamed around the world.

GMR has made a US$511 million investment in the Maldives’ international airport. The price of shares in GMR Infrastructure, which was contracted to develop INIA by the previous government, dropped by almost five percent on February 7 following news that fierce clashes between security forces on the streets of capital Male’ had led to Nasheed’s resignation.

GMR’s share prices quickly recovered over the following few days, as Vice President Dr Mohamed Waheed Hassan Manik was sworn in, and rain tempered public demonstrations which on Wednesday turned violent after police attacked a march by members of Nasheed’s Maldivian Democratic Party (MDP).

Speaking on February 11 about foreign investments in the Maldives, Dr Waheed said that foreign investors should not be concerned about the political upheaval affecting their interests in the Maldives, but hinted that some investments may come under scrutiny.

“We will not target anybody for political reasons,” he said.

“If there are any reasons for concern over investment, of course any steps that need to be taken will be taken.”

Speaking specifically about the contract with GMR, Dr Waheed said he would not approach the deal “from a political perspective”, adding, “It is not our intention to harm GMR. Our objective will be to resolve concerns of the public [regarding the company].”

GMR’s stock price continues to teeter this week.

“Short term fluctuations”

Speaking to Minivan News, one of India’s leading political economists Paranjoy Guha Thakurta observed that the political situation in the Maldives has affected GMR to a certain degree but pointed out that “GMR is also politically influenced in the Indian state of Andhra Pradesh.”

Thakurta said that the fluctuations in GMR’s stock prices should be seen in a wider context.

“These are short term fluctuations,” he said: “By and large, the markets of the world have been in limbo for some time. India’s stock market has been politically prone in the past year. I wouldn’t read too much into it,” he said.

The multi-million dollar deal to operate and dramatically expand the Maldives’ international air hub has been the target of controversy from the political opposition, much of it flowing from the Dhivehi Qaumee Party (DQP), a member of which – Dr Mohamed Jameel – is now the country’s Home Minister.

Nasheed’s government offered GMR, in partnership with Malaysia Airports Holdings Berhad (MAHB), the 25-year contract in June 2010. Since that time, various opposition parties including Dhivehi Rayyithunge Party (DRP), Dhivehi Qaumee Party (DQP), Jumhooree Party (JP), and the People’s Alliance (PA) have questioned the contract’s legality while former airport employees have protested against what they have claimed is a foreign take-over of their business domain.

Opposition parties have accused MDP cabinet members of having “vested interests” in the deal. In late 2011 the DQP took their objections to press and produced a 24-page book claiming the deal would “enslave the nation”, while former DRP leader and current deputy leader of the Progressive Party of the Maldives (PPM) Umar Naseer said last year that his party would re-nationalise the airport if it came to power.

While Dr Waheed is not a member of PPM or DRP, Naseer’s recent actions indicate shared interests. On January 31, a delegation of the December 23 Coalition, including Naseer, declared its allegiance to Dr Waheed amidst protests against Nasheed’s government and called for all military and police forces to back Dr Waheed. Naseer also recently informed the public that he was instrumental in the events and discussions leading up to Nasheed’s resignation.

Speaking to press last week, Nasheed said he had been aware that his vice president was meeting with opposition leaders at his home.

Naseer also told Minivan News in June 2010 that “If [GMR] allowed it, an Israeli flight can come and stop over after bombing Arab countries”.

Nasheed’s government was criticised last year for entertaining a deal with Israeli airline El Al. Following demonstrations in defense of Islam on December 23, in which opposition party and religious NGO leaders spoke against relations with Israel, the National Security Committee advised against the deal.

Past events have shown that GMR is sensitive to political fluctuations in the Maldives. GMR’s price on the stock market saw a 7 percent fall in December, when the Civil Court blocked GMR from deducting an Airport Development Charge of US$25 (Rf385.5) from passengers departing on international flights, according to India’s Economic Times.

Thakurta said, “If they re-open the contract, it wouldn’t hurt them [GMR]. GMR is really big, they’re the company behind Delhi’s new airport, which is India’s biggest airport.

“As in the case of what happened in Mauritius, GMR has had some issues over the charging of airport development fees for passengers, and the same story is being replicated in the Maldives,” he concluded.

GMR unphased

Declining to comment on the stock market fluctuations, GMR CEO of Maldives operations Andrew Harrison said GMR expects the existing INIA deal to be upheld, despite the change of administration in the Maldives.

Speaking to Minivan News, Harrison stressed that the Indian company is “politically neutral” and added that it respects whichever party is in control of the government of the Maldives.

“We’ve always been politically neutral in that our remit is solely about developing and operating the airport,” he said.

“We respect whichever party holds the seat of government in the Maldives. The government change is a change we respect and we remain politically neutral. We’ve got a concession agreement and we are sure that any government in power will respect that agreement. We’ve not heard anything that would make us believe otherwise.”

Several foreign staff working in Male’ as GMR contractors were temporarily relocated to India after both they and their employers expressed concerns over their safety. The political situation in Male’ remains volatile.

Harrison said, “Our only concern is for the welfare of GMR staff, so we have advised them to avoid hotspots where it appears that riots and trouble is breaking out.”

He added that tourists traveling through INIA should not be too concerned about the events in Male’, as the airport and resorts are separated from the capital city.

Harrison said, “The resorts and the airport island are geographically separated from Male’, and we’re also fortunate in the fact that the Maldivian culture is both welcoming and friendly towards foreigners. We’ve seen demonstrations of great hospitality both at the airport and at the resorts, both during and prior to this situation.

“People visiting the Maldives are being made to feel very welcome in the Maldives, despite what’s going on in Male’. The Maldivians have a very warm and nurturing culture and a willingness to welcome visitors – and this won’t be affected by the political situation,” he added.

There have been no political protests at INIA or any of the resorts to date. As such, the majority of current travel advice issued by foreign embassies recommends that tourists specifically avoid visiting the island of Male’, but they are not issuing a blanket travel warning against visiting the Maldives, apart from the Ministry of Foreign Affairs of the Ukraine which advises it citizens to avoid the country as a whole.

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