Tag: economy

“Dire economic outlook” as budget deficit estimated to reach 27 percent of GDP

Parliament’s Financial Committee has projected that the Maldives budget deficit will reach  27 percent of the GDP by the end of year 2012, a 175 percent increase on earlier forecasts.

While the 2012 budget put the deficit at less than 9.8 percent of Gross Domestic Product (GDP),  the figures revealed by the committee last week shows that the amount will increase up to a staggering 27 percent.

These figures confirm the International Monetary Fund (IMF)’s earlier warnings that the Maldives had “substantially understated” its budget deficit, by underestimating its spending and “probably” overestimating tax revenues.

Head of the Majlis’s Financial Committee, Deputy Speaker and People’s Alliance (PA) MP Ahmed Nazim, revealed to the reporters that government revenue for 2012 will be Rf2.6 billion (US$168.6 million) less than the projected amount of Rf10.87 billion (US$704 million) – a 23 percent plunge.

Meanwhile, government spending in 2012 is expected to increase by almost 24 percent, reaching Rf17.45 billion (US$1.13 billion) at the end of the 2012.

With the shortfall of revenue and increased government spending, Nazim observed that the budget deficit will exceed from Rf 3.9 billion (US$ 252 million) to Rf9.1 billion this year (US$590 million), amounting to 27 percent of the country’s GDP.

“The information shared by the Finance Minister Abdullah Jihad shows a dire economic outlook for the Maldives,” he warned, echoing the IMF’s recent predictions on the Maldives’ economic frailty.

Chief of the IMF mission in the Maldives, Jonathan Dunn, warned parliament in April  that if the country does not reduce its expenditure, it risks running out of reserves and miring the country in poverty.

Although 2012 budget put the deficit at less than 10 percent of GDP, Dunn told Minivan News that “the IMF team sees the figure as more likely to be 17.5 percent of GDP, and perhaps larger than this.”

As a result of this, he warned that the economic growth and stability in the Maldives were unlikely to be maintained “in the medium term” unless the government substantially cut spending.

Dunn emphasised that the only sustainable solution was for relevant parties to rationalise the budget by boosting revenues and cutting expenditure, despite the political difficulties.

“These may be politically difficult measures, but the consequences of not reducing the budget deficit are likely to be even more difficult,” he warned.

New government increases spending

Despite urgent calls to reduce spending to curb widening deficits, parliament’s finance committee projects the government spending will have to be increased to cover additional costs which were not included in 2012 projections.

These expenses include food subsidies worth Rf270 million (US$17.5 million), electricity subsidies worth Rf250 million (US$16.2 million), capital expenditure by government institutions Rf735 million (US$47.6 million) and an allocation of Rf200 million (US$12.9) to the Aasandha Health Insurance  scheme’s budget, according to Nazim.

Visiting Hirimaradhoo island last weekend, President Waheed said he would allocate Rf 30 million (US$1.9 million) in the 2013 state budget for development.

A total of Rf3.4 million (US$220,500) is also said to be allocated as benefits to former President Mohamed Nasheed of Maldivian Democratic Party (MDP) which alleges that Nasheed was ousted in a coup on February 7.

However, committee member and MDP MP for Kulhudhufushi, Abdul Ghafoor Moosa, told reporters that unplanned spending on police and military personnel and  planned reimbursement of civil servants pay cuts  in 2010, are both significant causes for rising costs to the government.

He observed that the largest shortfall in revenue is a direct result of the US$135 million pulled out from the budget with new government’s recently revised policy on lease extension payments for resort islands.

Maldives Inland Revenue Authority (MIRA) anticipated receiving a total of Rf375 million (US$ 24 million) for lease extensions, however the income received dropped to Rf23 million (US$1.5 million) as a result of the decision to accept the lease extension fees in an annual installment instead of a lump sum as decided by former  administration.

The loss of concession fees from Ibrahim Nasir International Airport (INIA), the result of a successful Civil Court case to block the Airport Development Charge (ADC) filed by the Dhivehi Qaumee Party (DQP) while it was in opposition, also saw the government receive only US$525,355 from the airport for the quarter, compared to the US$8.7 million it was expecting.

The government-aligned PA’s Deputy Leader Nazim however contended that the the 23 percent drop in government income was caused by unrealised revenue from privatisation schemes and a shortfall of Rf 166.7 million and Rf435 million (US$28 million) from the projected dividends of Dhiraagu and import duties respectively.

He noted that the committee has decided to increase the treasury bond limit up to Rf1 billion following a request by the  Finance Ministry to increase the limit from Rf727 million to Rf 1.5 billion. The ministry says that all monetary transactions will be halted if the limit is not extended, according to Nazim.

The IMF’s Dunn has however stated that further domestic borrowing “will be difficult to achieve, as it is unclear whether the banks have much more appetite for buying treasury bills.”

Meanwhile,  in a bid to address spiraling costs, the committee is reviewing the Aasandha universal health scheme to block the Rf200 million extension of its budget, cut the budget of all institutions by 10 percent to save nearly Rf 1.5 billion, and save a further Rf300 million by issuing a moratorium of the further employment of staff.  These measures will reduce state costs by Rf 2.2 billion (US$142 million), Nazim estimated.

However, recently released figures from Finance Ministry show that between January 1 to April 26, state expenditure exceeded over Rf 4 billion (US$259 million) while the income remained at Rf 2.10 billion (US$136 million), a deficit of Rf 1.5 billion (US$100 million).

Likes(0)Dislikes(0)

Rise in female unemployment, growth in gender pay disparity

A woman working in the Maldives between 2006 and 2010 monthly earned a third less than her male counterpart in the same job, according the results of a new survey by the Department of National Planning, while young female entrants  are struggling to find jobs.

High female unemployment

According to the ‘Household Income and Expenditure Survey 2009-2010’, 38,493 people (28 percent) were unemployed in 2010, of which 14,142 (37 percent) were male while 24,351 were female – almost double the male rate of unemployment.

The report highlights that between 2006 and 2010 unemployment increased by 20,000 – an increase of over 100 percent. The number of jobless women and men rose by 93 percent and 141 percent respectively.

According to the report, unemployment continued to be highest among females. In 2006, the overall unemployment rate for women was 15 percent, increasing to 39 percent in 2010, while male unemployment increased 10 percent to 19 percent in the same period.

Furthermore, nearly half the population of working-age women (45 percent) were recorded as not economically active, while only a fourth of the male working age population fell in this category. However the study did not take into account the high proportion of women working in small household-manufacturing activities, or those working on industrial islands or resorts – which if included, will significantly affect the results drawn under this survey.

While 40 percent women surveyed reported the reason for their unemployment as “unable to find suitable employment”, the second highest reason for female joblessness was due to their “engagement in household chores”. This was followed by “lack of opportunities” and “school attendance”.

The report also concluded that most unemployment existed in the young age groups, with the 15- 19 years and 20 – 24 years age group accounting for about 43 percent of the unemployment in the country. Out of the 17,083 unemployed youth, 51 percent are males, and 49 percent female.

The planning department stated that “for policy purposes, it is very important to decipher the reasons for the high levels of unemployment, in the youth age group as well as among the females, and understanding the differences between locations.”

Among the reasons for unemployment in the youth group (15 – 24 years), “unable to find suitable employment” ranks the highest followed by “lack of opportunities” and in third “youth engaged in studies”, according to the survey.

Struggle for work

Employment of males increased four percent during the four year period, while employment of women fell seven percent.

The planning department concluded that “this indicates a huge influx of ‘new working age population’ to the labour force, of which more male entrants succeeded in obtaining a job while the fairer sex did not.”

“It is clear from the rising levels of unemployment that the Maldives has been unable to create jobs to accommodate new job seekers. Particularly young new entrants, and specifically females in the job market, struggle to find a job.”

“For males, it is the age groups at both ends that experience significant unemployment, while for the females, all age groups have similar unemployment rates except for the 65 years and above,” the department added.

Between 2006 and 2010, the total working age population increased significantly, however, “new jobs did not emerge to absorb this huge increase, boosting unemployment,” the report observed. “In fact compared to 2006, in 2010 there were close to 600 fewer jobs in the labour market.”

The total larbor force amounted to 136,886 people in 2010, of which 45 percent were women.

According to a UNDP report “Women in Public Life in the Maldives” published last year  a “considerable gap”  exists in women’s opportunities in taking active part in economic and political life” while “there were no policies in place that provide equal opportunities for women’s employment.”

“The absence of childcare facilities make it difficult for women to remain employed after they have children. The HRCM also received reports that some employers discouraged women from marriage or pregnancy, as it could result in employment termination or demotion,” the report said.

Restriction on women’s mobility and reluctance from family members to allow women to travel alone to other islands for work were also identified as key obstacle to employment.

While the tourism industry contributes indirectly to over 70 percent of the national income, a report published in September 2011found that social stigma prevented women from working in the sector.

According to the study, “Women in Tourism: Challenges of Including Women in the Maldivian Resort Sector”, Maldivian women accounted for only three percent of all women working in the sector – which was already 92 percent male dominated.

Gender earning gaps

The planning department found during the survey that “similar work  paid different remunerations depending on sex and location.”

According to the report, on average a male earned Rf7036 (US$456) per month, whereas a female earned about a third less of what a male earned – Rf4674 (US$303). This discrepancy is observed across Male’ as well as the atolls.

For example, in the ‘Financial Intermediation’ and ‘Extra-territorial’ industries, which account for highest monthly incomes, a male earned more than Rf11,000 (US$713) whereas a female in this same industry earned 19 percent less – Rf9000 (US$583). Men earned more than women in almost all industries studied.

Meanwhile, legislators, senior officials and managers across the board on average earned the highest monthly income, with males in this occupation category earning more than Rf13,000 (US$843) while females earned only a little more than Rf 9000 (US$583).

“Those employed in Male’ earn more than those in the atolls for all industries except quarrying and the financial intermediation industries,” noted the Planning Department in the report. “This signifies that across all industries, males are paid higher than females and earners in Male’ are paid higher than those in the atolls.”

“It is interesting to study the returns to employment for wage earners by occupation, by location, and gender. The question why males are paid higher incomes than females, for the same jobs and in the same occupation or same industry, is worth additional research,” the department suggested.

Financial intermediation sector and extra-territorial organizations and bodies sector were found to have the slightest indication of gender balance in the workforce, while all other industries were dominated by male or female.

More women were employed in elementary occupations with a substantial 21 percent increase while male employment decreased in this occupation by three percent, the report noted. A high proportion of these jobs are concentrated in the public administration, with a higher share of women amongst the government employees.

Likes(0)Dislikes(0)

Budget deficit “substantially” underestimated while spending still unaddressed: IMF

The Maldives has “substantially understated” its budget deficit, the International Monetary Fund (IMF) has warned, by underestimating its spending and “probably” overestimating tax revenues.

“Moreover, not all of the financing for even the approved budget has been identified, and additional risks exist as well – including the need to clear reported unpaid bills carried over from 2011 and the possible loss of lease extension payments (Rf 700 million, or US$42.4 million) assumed in the budget,” the IMF’s mission chief for Maldives, Jonathan Dunn, told Minivan News.

While the 2012 budget put the deficit at less than 10 percent of GDP, “the IMF team sees the figure as more likely to be 17.5 percent of GDP, and perhaps larger than this,” Dunn said.

“The financing gap for 2012 is thus at least 7.5 percent of GDP, or about US$160 million, and possibly substantially larger than this,” he added.

As a result, economic growth and stability in the Maldives were unlikely to be maintained “in the medium term” unless the government substantially cuts spending.

Meanwhile, government revenue for the first quarter of 2012 has fallen 15.5 percent below projections, the Maldives Inland Revenue Authority (MIRA) has reported.

Revenue from tourism land rents fell 18.6 percent on the previous quarter, however the largest contributor to the drop were the new government’s changes to resort lease extension payments, which saw a 76.1 percent drop in revenue below projected figures.

Inflation meanwhile spiked 13.4 percent in February, with the price of food increasing 28 percent.

Government revenues for the quarter has nevertheless increased 76.2 percent compared to the same period in 2011, “mainly because of the significant increase in Business Profit Tax (BPT) and Goods and Services Tax (GST) collections”, MIRA noted: Rf 361.7 million (US$23.4 million) and Rf 721.9 million (US$46.8 million) respectively.

However, Dunn warned that revenue collection by MIRA “does not provide a full picture of total revenue performance in the country.”

“Revenue from import duties – previously the single largest revenue – collected by Customs and is not reported by MIRA. Due to implementation of the 9th Amendment to the Maldives Export Import Act, revenue collection from import duties is expected to decline substantially in 2012, fully offsetting the increase in tax revenues from GST and BPT.”

Solutions?

Dunn observed that printing money would only facilitate the much-larger-than-expected 2012 fiscal deficit.

“This, in turn, would imply that national imports would be substantially larger than expected, because in the Maldives, where most goods are imported, almost any spending by either the government or the private sector turns, directly or indirectly, into import demand,” he noted.

As a result, the imbalance between the demand for dollars and the supply would become even larger, “and the MMA would likely have to supply dollars from its own reserves to meet the shortfall.”

“Usable reserves at the MMA are low, so if the fiscal gap this year is financed via money creation, it is likely that the MMA’s usable reserves would soon dry up,” he said.

Another option, Dunn suggested, was for the Maldives to borrow more money. However borrowing from domestic sources “will be difficult to achieve, as it is unclear whether the banks have much more appetite for buying treasury bills.”

Obtaining foreign grants “would be helpful but is probably not realistic.” Foreign loans, meanwhile, “would have to be considered carefully, given that Maldives already has a very high debt-GDP ratio, but they may be needed in the short run to avoid the consequences of printing money.”

Dunn emphasised that the only sustainable solution was for relevant parties to rationalise the budget by boosting revenues and cutting expenditure, despite the political difficulties.

“These may be politically difficult measures, but the consequences of not reducing the budget deficit are likely to be even more difficult,” he warned.

Furthermore, ongoing dollar shortage would not be resolved while the Maldives continued to substantially increase spending, Dunn added.

The foreign currency crisis – the bane of many of the country’s importers, who are forced to use unofficial channels outside the banking system to obtain currency necessary to purchase overseas – was exacerbated by the number of unrestricted foreign exchange licenses issued to resorts and other private businesses, “without the requirement that they hold substantial capital to back up that business.”

This practice allowed such nonfinancial businesses to conduct large-value foreign exchange operations outside the banking system, “an unusual arrangement and sustains the parallel foreign exchange market,” Dunn noted.

“In a more typical situation, nonfinancial businesses [such as resorts] would have licenses only for the exchange of small-value cash transactions and would be required to channel large-value foreign exchange transactions through the banking system. In the case of Maldives, this would substantially increase liquidity in the official foreign exchange market,” he suggested.

However, “as long as the government continues to inject substantial amounts of new spending into the economy, the foreign exchange situation in the country will not be resolved.”

Growing expenditure

Dunn emphasised that “fiscal imbalances in the Maldives have been present for many years and that fiscal adjustment remains necessary”.

Faced with increasing pressure from the IMF to lower expenditure after failed attempts in 2010 to cut the salaries of civil servants – a maneuver blocked by the Civil Services Commission (CSC) and backed the then opposition – former President Mohamed Nasheed’s administration insisted that increased revenue from the new taxes would match expenditure, and boasted that the 2012 budget was the first in many years to balance income and expenditure.

Following the police mutiny and controversial change of government in what the MDP contends was a coup d’état, spending by President Dr Mohamed Waheed’s administration has escalated as it seeks to shore up support in a fractious political environment.

Newly-announced expenditure in the last few months includes:

  • The promotion of 1000 police officers – approximately a third of the force – and plans to both recruit 200 new officers in 2012 and appoint four new Assistant Commissioners;
  • Lump sum payment of two years of allowances to military personnel;
  • An unspecified amount for an international public relations firm, to combat negative publicity and “rally an alliance of support” in the international media following the controversial change of power and coverage of police crackdowns;
  • Rf 100 million (US$6.5 million) in fishing subsidies;
  • A proposal to create two new ministries, including the Ministry of Gender, Family and Human Rights, and the Ministry of Environment and Energy;
  • The reimbursement of Rf 443.7 million (US$28.8 million) in civil servant salaries from July 1, following cuts by Nasheed’s administration in 2010. In addition, civil servant working hours have been reduced to 8am-3pm;
  • The doubling of the budget for the Maldives Marketing and Public Relations Corporation (MMPRC) to US$S4.5 million.

Lost income has also increased, with MIRA warning in March of unrealised revenue from the new government’s recent decision to accept resort island’s lease extension payments in installments, an amendment that former Tourism Minister Dr Mariyam Zulfa contends was pushed through by several local resort owners with vested interests, that immediately cost the treasury US$135 million.

In March, MIRA anticipated receiving a total of Rf375 million (US$ 24 million) for lease extensions, however the income received dropped to Rf23 million (US$1.5 million) as a result of the decision.

Meanwhile today the publicly-owned State Trading Organisation (STO) dropped legal attempts to reclaim a US$1.2 million debt owed by the Meridian Services owned by MP Abdulla Riyaz of the new ruling coalition. The STO justified the decision in a letter to the court, by stating that it did not have enough board members to meet quorum and make decisions.

In a bid to address spiralling costs, the government is reviewing the Aasandha universal health scheme introduced by Nasheed’s administration on January 1 this year, which “is and will always be completely financially unsustainable in a country such as the Maldives”, according to President Waheed’s Special Advisor, Dr Hassan Saeed, in an article for newspaper Haveeru.

“The introduction of unrestricted, universal free healthcare with no agreed regulation or management was an act of folly, recklessness and irresponsible political immaturity that rivals any of the actions of Mr Nasheed’s administration,” Dr Saeed contended.

“And what’s more he knew this but still went ahead with it. And the consequence is that we now have the IMF breathing down our necks and a budget deficit that threatens to derail all government social programmes,” Dr Saeed wrote.

Likes(0)Dislikes(0)

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]

Likes(0)Dislikes(0)

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.

Likes(0)Dislikes(0)

“Be courageous; Today you are all mujaheddin”: President Dr Waheed

The following is a speech given by President Dr Mohamed Waheed Hassan at the pro-goverment ‘National Symposium” at the artificial beach on February 24.

In the name of Allah, the Most Compassionate and the Most Merciful… Assalaam Alaikum.

All praise and thanks are due only to one: Allah Subahanahoo Wata-aalaa.

All praise and thanks be to Him for brining the Light of Islam to the Maldives and for sustaining the Maldives as an Islamic nation. All praise and thanks be to Allah for protecting till now the Maldivian nationhood, customs and Maldivianness.

Why are you all here today, coming from various places? You have come here because you love the nation; in order to maintain Islam in the Maldives; in order to maintain its nationhood and customs; and to overcome strife in the nation.

We can’t allow strife in the Maldives. Anyone who loves the Maldives will not incite strife in the Maldives. Anyone who loves this nation will not torch public places and destroy them. There is no place for such people in this nation. There is no place in this land for those who cause strife.

We are steadfast… to defend the nation and to protect Islam and nationhood. Till the last drop of our blood, we will defend this nation. We are not afraid. We are not afraid to die as martyrs. We are not afraid of the enemies we face.

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. Such people have no place in the Maldives.

You all be courageous. This is no longer the age of colonialism. Today no foreign country can influence the Maldives. Today we will maintain our sovereignty with bravery.

Be courageous. We will not back down an inch. Today, the change [in power] in the Maldives is what Allah has willed. This did not happen because of one or two people coming out into the streets. Nobody had been waiting for this. Nobody even saw this day. This change came because Allah willed to protect Islam and the decent Maldivian norms.

Be courageous. Today you are all mujaheddin [those who fight jihad] who love the nation. We will overcome all dangers faced by the nation with steadfastness.

Today’s government will be kind to the people and love the people. It will bring justice to the people. This government will do everything possible to ensure that the people would enjoy all rights enshrined in the Constitution. It is the duty of every government to provide housing, healthcare and education. We will also do that.

Be courageous. Never be frightened. Never be swayed. We are fulfilled. We are brave. We are steadfast. Two or three people who want to cause strife in the Maldives can’t sway us. When [they] see all of you who are gathered here, [they] will feel nervous. With your help and God’s will this nation will advance forward. [Gasim Ibrahim: “Be careful…”]

Our government will be a lawful government. We are upholding the Constitution and obeying the laws. We are ready to maintain justice. We will be steadfast in continuing the journey of democracy that we started.

Never step back. Be brave. We are with you. If you remain determined, we will be too.

My prayer is for the Light of Islam to shine in the Maldives forever, and for all Maldivians to have good health and well-being. I pray there be sense of brotherhood in the hearts of all Maldivians and there be the spirit of unity and oneness. I pray the Maldives be a prosperous, peaceful and harmonious place. May Allah bless all Maldivians. Wasallaamalaikum…

Maldivian Democratic Party (MDP) response:

In response to Dr Waheed’s speech, the MDP issued statement expressing “alarm at the use of extremist Islamic rhetoric at the heart of the governing regime, including on the part of Mohamed Dr Waheed who appears increasingly beholden to religious groups and known extremists.”

“There is now a clear pattern whereby supporters of the former autocratic president, Maumoon Abdul Gayoom, are using claims of internal and external threats against Islam as a means of reasserting political control. There is now a very real threat of the democratic gains of the last few years being rolled back,” the party stated.

“Sheikh Imran, President of the religious Adhaalath Party and a man who has in the past called for a jihad against the MDP Government and its supporters and for “the slaughter of anyone against Islam”, said: ‘They are [now] on their knees in front of their constitution as a result of their attempt to get rid of Islam from the Maldives’; while Gasim Ibrahim, a leading financial backer of the new regime, called MDP supporters ‘mentally disabled’, and said ‘we are ready to sacrifice everything for Dr Waheed’,” the MDP claimed.

Other figures addressing the crowd on February 24 included the leader of the Dhivehi Qaumee Party (DQP) Dr Hassan Saeed, Attorney-General under former President Gayoom and now Nasheed’s political advisor, and Deputy Leader of DQP, Dr Mohamed Jameel, former Justice Minister under former President’s Gayoom’s administration and now Home Minister.

Saeed, Jameel and their DQP party were the authors of a political pamphlet entitled “President Nasheed’s devious plot to destroy the Islamic faith of Maldivians”, in which they invoked perceived attacks against Islam in the Maldives, especially by “Christians and Jews”.

“Never has the dividing line been clearer between those who believe in democracy and tolerance, and those who believe in power through force and religious dogma,” said MDP’s spokesperson Hamid Abdul Ghafoor.

Likes(0)Dislikes(0)

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]

Likes(0)Dislikes(0)

Supreme Court backs down from issuing ruling on legality of selling pork and alcohol

The Supreme Court has rejected the government’s request for a consultative opinion over whether the Maldives can import pork and alcohol without violating the nation’s Shariah-based constitution.

Pork and alcohol are prohibited items under Shariah law.

The judges unanimously rejected the case on the grounds that the matter did not need to be addressed at the Supreme Court level.

The Court did note, however, that pork and alcohol have been imported under provisions of the Contraband Act and that there is a regulation in favor of the trade. As no law has declared the regulation unlawful, the import of pork and alcohol is indeed legal, the court claimed.

Meanwhile, Article 10 of the Constitution states that “No law contrary to any tenet of Islam shall be enacted in the Maldives.”

The Constitution also states that any law not struck down by the courts is valid.

The government last week requested a consultative opinion from the Supreme Court on the matter to level a heated debate over the compatibility of resort tourism and Maldives’ national religion Islam, prompted by protests on December 23, 2011 in defense of Islam.

Responding to demands made of the government by the protesting coalition of religious NGOs and opposition parties, the government issued a circular closing spas in all resorts and announced it was considering a ban on pork and alcohol, in a move to align government policies with Islamic standards.

While the trade of alcohol is not conducted by the government, the government receives a significant profit of the trade from the Goods and Services Tax (GST).

In particular, opposition Jumhoory Party (JP) Leader and MP ‘Burma’ Gasim Ibrahim owns Villa Hotels resort chain and is allegedly one of the biggest beneficiaries of the alcohol trade.

A tolerant society with a dependent economy

Since resorts first opened in the Maldives in the 1970s, tourism has been the core of the island nation’s economy. To accommodate the industry as well as the national Islamic faith, in 1975 the Ministry of Economic Development regulated the sale of pork and alcohol to tourist establishments (Act 4/75).

While there is no regulation or set of guidelines specific to spa operations in resorts, Article 15(a2) of the Goods and Services Tax Act stipulates that spas are legally accepted in the Maldives as tourism goods, and therefore may be operated in compliance with tourism regulations.

After its formation in 2009 the Parliament had nine months to reject any legislation which did not conform with the Constitution.

Parliament did not reject the regulation on the sale of pork and alcohol in 2009, thus allowing it to stand by default.

Speaking to Minivan News last week, Attorney General (AG) Abdulla Muiz believed that although the regulations were clear, legal clarification would mitigate concerns. He suggested that the recent debate has had more to do with internal politics than the oft-cited public preference.

“We are quite a tolerant society, although there a few elements which walk a hard line,” he observed. “I don’t think there is a public concern over the sale of alcohol and pork in resorts.”

The AG pointed out that the majority of the nation’s citizens are primarily interested in the quality of their daily life. He added that the population of 350,000 is annually trumped by the over 700,000 tourists would come to- and invest in – the Maldives.

“If there is a decision prohibiting the sale of alcohol in the tourism sector, it will have a great impact on the economy. The 2012 State Budget of Rf14 billion [US$946.8 million] is very much based on the estimated revenue from the tourism sector. And the government has obligations to investors–it has leased 100 resorts and awarded 5o to 60 islands for development. I hope the Supreme Court will take the economy into account,” he said prior to the Court’s decision.

Muiz said a court ruling would assure investors that the current system is valid.

A problematic profile

Two months ago, protestors demanded that UN Human Rights Chief Navi Pillay be “slain” for her comment against flogging as a punishment for extra-marital sex. One month ago, the coalition formed by religious groups and opposition parties for the “defend Islam” protest called for stricter regulations in keeping with Shariah law, notably stricter regulations on the sale of pork and alcohol and the closure of massage parlors “and such places where prostitution is practiced.”

International media subsequently reported the story with varying degrees of accuracy, presenting a Maldives starkly different from widely-marketed white sand and turquoise waters.

Noting that the tourism sector had suffered many cancellations in past weeks, MATI Secretary General Sim Ibrahim Mohamed previously pointed out that “people get jittery when you talk about fundamentalism, radicalism, extremism–since 9/11 these have been very sensitive words.”

Speaking to Minivan News last week, religious conservative Adhaalath Party chief spokesperson Sheik Mohamed Shaheem Ali Saeed said, “Maldivians are very nice people, you don’t see any country like the Maldives in the Islamic world, so why would we want to damage these people? These are Muslim people and they like moderate views.”

Calling tourism “the backbone of our national economy”, Shaheem said he was “100 percent sure there is no prostitution in the tourism industry here. It is very professional, it is the most famous tourism industry in the world and is accepted by the international community. Why would we want to attack ourselves?”

Likes(0)Dislikes(0)

Comment: “No animal shall sleep in beds…with sheets”

One can’t help but recollect the lines from George Orwell’s brilliant 1946 satire, Animal Farm, after listening to the agitators on stage during the ‘big protest’ held in Male’ on 23rd December 2011 in order to “protect Islam”.

In the classic novel, the farm animals rise in revolt against their drunken owner and take over the running of the farm. They write down their Seven Commandments on the wall of the barn but, over time, as a totalitarian dictatorship takes root at the farm, they find mysterious qualifiers added to those commandments.

Curiously enough, one of the central demands made by the ‘protect-Islam’ brigade was to “Ban the sale of alcohol… on inhabited islands”.

The ‘…on inhabited islands’ qualifier has a lot of significance, for it reveals the unresolved contradictions that are central to the controversy currently raging in the shallow, but always turbulent waters of Maldivian politics.

No animal shall drink alcohol… in inhabited islands.

The term ‘inhabited’ is officially used in the Maldives to refer to commonly populated islands. The country’s famed beach resorts fall under the ‘uninhabited’ category, despite housing thousands of Maldivian staff for the larger part of the year, and a lot of the usual restrictions do not apply there.

While there is a general consensus among  Islamic jurists that both consumption and trade of alcohol is forbidden in Islam, the economic realities of heavy dependence on tourism has meant that certain un-Islamic vices like consumption of alcohol is permitted in the Maldivian resorts.

The issue of alcohol sales remains a controversial topic among Maldivians, and is wantonly exploited by every tin-pot politician seeking an audience.

Alcohol was one of the major “issues” highlighted at the recent protest on December 23 organized by seven opposition parties and a network of NGOs  who joined hands  against what they alleged were ‘anti-Islamic policies of the government’.

The turnout of over 5000 religious protesters was considerably less than the ambitious 100,000 originally anticipated by the organizers. The flags they carried were surprisingly not the bastardized offspring of the Maldivian and Saudi Arabian flags, as displayed on the protest’s official website.

Meanwhile, the ruling MDP had also called for another protest the same day, at a venue just a couple of hundred meters away, calling for ‘moderate Islam’.

Speaking at the MDP protest, President Nasheed claimed that the government was being accused of being ‘anti-Islamic’ simply for sticking up for traditional Dhivehi values, and rejecting the recently imported dogmatic versions of Islam that had room for concubines, marrying nine-year olds,  female genital mutilation and harsh punishments such as amputations and stoning humans to death.

The ill-advised protest concluded early, but gave enough ammunition for the opposition protesters to last through till midnight.

The opposition-allied mullahs tore into President Nasheed’s remarks against concubines and marrying children, claiming it amounted to a mockery of the Prophet. They steadfastly defended amputations and other punishments as being a central part of the Sharia penal code and – by extension – of Islam.

They demanded that the government to apologize for the UN Human Rights High Commissioner’s comments to Parliament condemning medieval punishments like flogging.

Swinging between Halal and Haram

One protestor on stage, criticizing the President, declared that one could not accept one part of the Qur’an, and reject the other.

“…unless it is the parts advocating religious tolerance”, one might presumably add, because the protesters demanded the removal of allegedly idolatrous monuments placed by neighbouring countries during the recently concluded SAARC summit in Addu City, amid repeated accusations that the government was trying to introduce ‘religious freedom’.

Leading the protesters in this righteous cause was DQP leader and former Attorney General Dr Hassan Saeed, who co-authored a book called ‘Freedom of Religion, Apostasy and Islam’, the opening paragraph of which curiously claims there is “a vast amount of Qur’anic texts in the favour of freedom of religion”.

The protesters further demanded that the Israeli airline El Al should be forbidden from landing in the Maldives with their Zionist crew.

The Cabinet Minister of Islamic Affairs, Dr Abdul Majeed Abdul Baree also threw his weight behind the idea, saying he was of the ‘personal opinion’ that Israel was ‘not a legitimate state’.  He nevertheless requested that his personal opinion be translated into a parliamentary resolution.

Also on stage was the cleric Dr Afrasheem Ali, who once had stones thrown at him at a mosque for his “liberal” remarks such as claiming that singing was permitted in Islam. Sharing the stage with him were pious clerics who all agree that music is ‘haraam’.

What was not haraam, however, was the official song of the protest, apparently sung by former pop-star and current Salafi posterchild Ali Rameez, extolling the sacrifices of the battles of Badr and Uhud, and calling upon good Muslims to take up Jihad to ‘protect Islam’.

… Some massage parlours are more equal

Another major demand made by the opposition speakers during the 8 hour long protest was that ‘spas and massage parlours’ should be banned, as they were clearly fronts for the flesh trade. One protest leader provided a surprisingly specific number of brothels in the capital, contrasting them with the number of mosques in Male’.

Leading the agitators on stage, without the slightest trace of irony, was MP Qasim Ibrahim, the business tycoon whose fortune was made on a business of selling liquor to tourists, and whose resorts proudly boast of luxury spas and exotic massage parlours.

He could have perhaps invoked the amended commandment from George Orwell’s book, and declared that ‘No animal shall drink alcohol…  to excess”.

Instead, he responded to the President’s call for moderate Islam by publicly retorting, “We don’t know there is a moderate, higher or lower Islam. We only know Islam, which is above all the religion. The only road we must follow is based on Allah’s callings”.

Scorched Earth politics

Despite the initial reactions from the MDP vowing to not give in to “the extremists”, the government somehow decided to one-up the opposition instead by ceding to their demands, and engaging in the dangerous game of political brinkmanship.

Following the protests, the government has issued a circular ordering the closure of hundreds of spas and massage parlours in the country, including the ones in resorts.

In doing so, the government has acted in a callous manner, with the maturity and foresight of a jilted adolescent.

The President’s Office has also said it is considering a nationwide ban on alcohol and pork – including in “uninhabited” islands. The unstated intention appears to be to call the Opposition’s bluff or, even worse, teach a lesson to political opponents such as Jumhooree party leader Qasim Ibrahim, DRP leader Thasmeen and PA leader Yameen Abdul Qayoom, who all have massive business interests in the tourism sector.

It is quite clear that the opposition leaders weren’t counting on the government to actually do anything about their demands; both Qasim and his political allies have condemned the government’s acceptance of their own unreasonable demands.

Confirming that the lunatics have indeed taken over the asylum, the principal opposition PPM has made a grand stand itself, saying it would “support” this move if ‘the government dares’ to actually go ahead and do it.

It appears both sides have decided to engage in a high-stakes game of Russian roulette, showing a disturbing willingness to put the even country’s economic lifeline at stake while they both dig deeper into their respective political trenches waiting to see who blinks first.

A Hotel in Medina, and other fairy tales

While the politicians engage in their scorched-earth politics, there are some realities that the Maldivian public has to learn to accept. The foremost among them is that, as detestable as the tourism industry maybe, we have grown to be dependent on it.

The income from tourism keeps the Maldivian economy afloat, pays the country’s bills and also props up other industries and employment sectors like telecom, health, education, catering and construction. It builds our roads, drainages, schools and hospitals, and pays for our fuel, electricity and drinking water.

It is not by accident that the average Maldivian’s life expectancy has jumped from under 45 years to over 76 years today since tourism was introduced.

When opportunistic politicians and clerics decide at their convenience that the bedrock of the country’s economy is no longer halal, then perhaps they owe the Maldivian public an alternate economic plan that does not involve alcohol or non-Muslims.

The last time any politician even attempted to offer such an alternative was when Adhalaath party leader Mohamed Shaheem Ali Saeed, then State Minister of Islamic Affairs, pointed out in March 2010 that the Intercontinental Hotel in Medina drew thousands of visitors every year, despite serving no alcohol.

Fortunately, it doesn’t take the Nobel Committee to figure out that the holy city of Medina would continue to see hundreds of thousands of visitors irrespective of whether there’s any alcohol – or even a hotel for that matter.

If only Sheikh Shaheem would clarify how he intends to replicate the ‘Medina hotel’ model of economic development in the Maldives, the issue of alcohol laced tourism would be forever settled.

Rewinding the clock

There are, of course, orthodox clerics who outright condemn the idea of progress itself, and advocate just living off the fish from the sea.

But would Maldivians who today complain of the rising prices of coffee willingly go back to living in huts, defecating by the sea, and starving in stormy weather?

In the 21st century, the nations of the world are interconnected and interdependent in ways that simply weren’t true a hundred years ago.

Could these orthodox ideologues point out to the public just ONE example of a developing country that is able to live in such romantic seclusion? There is a reason why isolated nations like the North Koreans aren’t able to just live off rabbits and groundnuts.  There is a reason why Pol Pot’s Cambodia became a blood-soaked failure.

Economies don’t run on hollow slogans, nor do romantic ideals feed the hungry.

Dr Hassan Saeed was right when – speaking at the protest – he paraphrased the Qur’an, stating that people’s conditions can only improve when they themselves take up the challenge of improving their own plight.

To do that, Maldivians need to settle on what kind of Islam we’re going to follow, and demand solutions from the elected officials, instead of mere slogans. We cannot afford to put up with politicians who wilfully destroy our country’s peaceful image, and complain about a suffering economy in the same breath.

As the Police Commissioner Ahmed Faseeh said recently, we’re living under the threat of becoming another Afghanistan – except, unlike Afghanistan, the Maldives produces no food to feed its own people. We’re dependent on international goodwill, and simply cannot afford to have leaders who engage in harmful rhetoric aimed at destroying our country’s standing in the international community.

The last few weeks of 2011 have set the precedent of hard line, no holds-barred brand of politics that could easily prove fatal to the country’s democracy, economy and social stability.

President Nasheed has recently made grand promises that 2012 will be a ‘year of happiness’. But it will take much greater political maturity and statesmanship from the country’s elected leaders to achieve this goal.

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]

Likes(0)Dislikes(1)