US embassy cable - 04COLOMBO186

UNCLAS SECTION 01 OF 02 COLOMBO 000186 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, MV, Maldives 
SUBJECT: MALDIVIAN DEPUTY FM ASKS US TO RECONSIDER LDC 
GRADUATION STANCE 
 
REF: A) 2003 State 348197 B) 2003 New York 3228 
 
This telegram is Sensitive but Unclassified.  Please handle 
accordingly. 
 
1.(SBU) Summary: Maldivian Deputy Foreign Minister Shihab 
delivered a copy of FM Jameel's response to Secretary 
Powell on the issue of LDC graduation for the Maldives. 
The GORM believes the US offer of a two year adjustment 
period is insufficient, and asks the US to consider a 
recent UNCTAD study on the effects of graduation and to 
review its position.  Post said the US unlikely to change 
its position, but hopes to work with the GORM to address 
specific concerns.  End summary. 
 
 
2.(SBU) GORM Deputy Minister of Foreign Affairs Hussain 
Shihab delivered a copy of FM Jameel's response (full text 
at para 5 below) to Secretary Powell's December 29 letter 
(Ref A) on LDC graduation during a courtesy call with the 
Ambassador on February 2.  Shihab indicated the original 
had been sent directly to Washington.  The letter outlines 
the GORM's continued concern over the prospect of 
graduating from LDC status.  While Jameel assures the 
Secretary the Maldives is not opposed in principle to 
 
SIPDIS 
graduation, it has yet to outgrow the "need for the kind of 
assistance and preferences made available to countries on 
the LDC list."  It refers to a recent UNCTAD study that 
outlines particular preferences that should be extended and 
asks that the UNCTAD study be given due consideration by 
the members of the ECOSOC.  The letter further complains 
that the US offer of up to a two-year adjustment period is 
insufficient and requests the US reconsider its position on 
GORM graduation. 
 
 
3.(SBU) Shihab reiterated the main points of the letter, 
highlighting the GORM's desire for an "expert group" to be 
appointed to consider the affects of graduation on the 
Maldives' economy and to advise the GORM during the interim 
period.  The Ambassador recounted US concerns about the 
integrity of the graduation process and asked if the GORM 
had a specific timeframe for adjustment in mind.  Shihab 
made no specific proposal, but indicated two years was too 
short.  Econchief said the US position was firm and based 
solely on the integrity of the process, but that the US 
would like to discuss specific issues with the GORM to see 
if there was any scope for helping allay specific concerns. 
 
4.  (SBU) Comment: We understand the ECOSOC meeting on 
December 19 (Ref B) took up the graduation issue and that 
the chair announced its intent to name a facilitator for 
the issue.  It appears the GORM recognizes our concerns 
regarding the integrity of the graduation process but would 
like to find a means of extending some of the privileges it 
receives as an LDC to privileges based on its special 
circumstances (small, remote islands, not diversified, 
etc).  We continue to ask if there are specific areas of 
concern that we can help address, but the GORM continues to 
push for a study of the potential outcomes of graduation. 
It is in our interest to protect the integrity of the 
graduation process, but also to ensure that graduates 
succeed (or at least have every opportunity to succeed). 
GORM MFA Permanent Secretary Dr. Ahmed Shaheed is 
reportedly in New York for the upcoming ECOSOC meeting.  If 
possible, we would urge USUN to engage Shaheed and discuss 
options and timeframes that would make the GORM more 
comfortable with the graduation process.  End Comment. 
 
5.  (SBU) Full text of FM Jameel's letter to Secretary 
Powell.  Begin Text: 
 
Excellency, 
 
Thank you for your letter dated 29 December 2003 on 
the subject of graduation of the Maldives from the list of 
least developed countries. 
 
I would reassure you that the Maldives has no 
intention of remaining on the list of least developed 
countries longer than its(sic) is absolutely necessary for 
it do so(sic).  We agree that those countries that have 
outgrown the need for special status can be graduated in 
accordance with the procedures and processes laid out for 
that. 
The Maldives is in no way opposed to the principle of 
graduation, but the issue we are raising is that we have 
not outgrown the need for the kind of assistance and 
preference that are made available for countries on the LDC 
list.  The specific preferences that need to be continued 
for the Maldives have been identified by a study carried 
out by UNCTAD as required by the UN to assess the 
qualification of Maldives for graduation.  The report is 
now available as a UN document for use by the upcoming 
resumed session of the ECOSOC.  We believe it is imperative 
that the recommendations made in this document, which have 
e 
been formulated upon the express request of the ECOSOC and 
the General Assembly, are given due consideration by Member 
States when they decide to graduate the Maldives.  Our 
view, and that of UNCTAD, is that far from having outgrown 
the need for special assistance, there are certain 
categories of preferences that are essential if the 
Maldives is not to suffer serious economic damage. 
 
We are convinced that a two year period is too short 
to adjust to the loss of LDC benefits, for an economy with 
a GDP of only about 600 million dollars and with no 
immediate prospect of expansion or diversification.  I have 
no doubt that the flexible and pragmatic approach inherent 
in the US position expressed in your letter would be 
translated to a really practical time-frame and sequence 
for graduation.  If the question of graduation is 
approached in a manner fully consistent with the rules and 
procedures stipulated by the General Assembly, the ECOSOC 
and the CDP, rather than on a selective basis, we believe a 
fair and workable outcome would be possible. 
 
We have received in the past the support of the US 
delegation to the ECOSOC in convincing the Council that 
graduation does not take place before a proper assessment 
of the costs of graduation is made and ways to address them 
are determined. 
 
I would, therefore, like to humbly request you to 
reconsider the current US position on our graduation from 
the list of LDCs. 
 
I trust that this request would receive your 
considerate action. 
 
Please accept, Excellency, the assurances of my 
highest consideration. 
 
Fathulla Jameel 
 
End Text 
 
LUNSTEAD 
EAD