US embassy cable - 04COLOMBO432

UNCLAS SECTION 01 OF 02 COLOMBO 000432 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR SA/INS, EB, IO/EDA 
 
E.O. 12958: N/A 
TAGS: ECON, PREL, MV, ECOSOC, Maldives 
SUBJECT: ATOLL TRIP UNDERSCORES VULNERABILITY AND PROMISE 
OF MALDIVES ECONOMIC DEVELOPMENT 
 
Ref: Colombo 00360 
 
Sensitive but Unclassified, please handle accordingly. 
 
1.  (SBU) Summary: Ambassador traveled with UNDP reps to 
Felidhoo Island in the Felidhe Atoll (the atoll just south 
of the South Male Atoll) on February 26.  During a two-hour 
visit to the island, Ambassador was greeted by Maldives' 
only female Atoll Chief and saw local handicraft 
production, the village medical center, the school (K-10), 
a village-sponsored pre-school and the power station.  The 
visit highlighted some of the issues Maldives has raised in 
its bid to delay graduation from LDC status in the UN. 
Nonetheless, the level of development on such a small 
island is also indicative of some of the more sophisticated 
policy and implementation mechanisms available to the 
country and the generally higher level of resources 
available for distribution than normally found in a lesser 
developed country. It is important that we continue to 
explain our position of a "two-year transition period" and 
show a commitment to helping Maldives navigate its post-LDC 
status.  End Summary 
 
2.  (U) On February 26, UNDP Maldives office 
representatives hosted Ambassador Lunstead, other members 
of the Ambassador's family, conoff and econoff to a visit 
to Felidhoo Island, the capital of the Felidhe Atoll, just 
south of the South Male Atoll in Maldives (a two hour trip 
from Male by very fast speedboat, the 42 nautical mile trip 
can take up to 10 hours in the typical Maldivian Dhoni). 
Felidhoo has 526 inhabitants (169 under 16 years old). 
Maldives' only female Atoll Chief, Ms. Haseena Moosa, and 
members of her staff met the Ambassador and party and 
accompanied throughout the tour. 
 
3.  (U) As a result of its proximity to several resort 
islands, Felidhoo does receive some tourist attention, with 
tour groups visiting twice a week during the high tourist 
season (November-April).  Some villagers make local 
handicrafts to sell during these visits.  (Note: the GORM 
tries to keep contact between its all-Muslim population and 
tourists to a minimum. End note.) 
 
4.  (U) The school compound, a modern, well-built facility 
with clean rooms and at least three computers, houses a 
nicely appointed library and a single story building with 
classrooms.  152 students attend the school.  In addition 
to Maldivians, the teaching staff includes one Sri Lankan 
and four Indian expatriates.  The school is for grades K- 
10.  Student who wish to complete their "advanced" level 
(London A levels, the equivalent of a US high school 
diploma) must attend classes either in Male or one of the 
other islands with an available school.  All children on 
the island attend school (as one can see every place on the 
island from any one spot, truancy is not much of a 
problem).  Twenty-five students are studying on other 
islands. 
 
5.  (U) The health clinic, which is slated for expansion 
into a hospital in the next year, is clean, modern and well 
equipped.  The facilities included an examination room, a 
delivery room, laboratory and consultation office.  The 
waiting room was stocked with information on health issues, 
much of which revolved around pre- and post-natal care. 
The doctor is an Indian expatriate who resides on the 
island.  There are three nurses, one midwife, one family 
health worker and one community health worker. 
 
6.  (U) Three diesel generators supply power on the island. 
Power is extremely expensive, by the team's calculation the 
equivalent of about US$ 0.33 per kilowatt-hour (in 
comparison, Sri Lanka is considered to have extremely high 
energy prices at US$ 0.07 per kilowatt-hour).  (Note: There 
would seem to be enormous wind and solar potential on the 
islands, and most new resorts use solar hot water tanks. 
To spur efforts on this front, the USG provided USAID- 
funded wind and solar maps to the GORM late last year.  The 
GORM is using the information to lay the foundation for 
government and private sector efforts to extend their 
renewable energy base.  One US solar-power company and one 
US wind-power company are also pursuing viable 
opportunities.  End note.) 
7.  (U) Almost all water is collected from rainfall in 66 
public and private water tanks around the island.  Other 
infrastructure includes a jetty, a mosque, the Atoll 
chief's office and the island office.  There is no 
motorized transport on the island.  The 77 bicycles are the 
second most prevalent means of transportation (after 
walking). 
 
8.  (U) The GORM provides small enterprise development 
loans through the Atoll Development Fund.  In the last 
three years approximately 37 loans have been disbursed on 
Felidhoo.  Loans average about Rufiya 50,000 (approximately 
USD 3,900) at 10 percent interest with a four-year term. 
Loans are primarily to be used for income generation.  One 
loanee Ambassador met built a small retail shop adjacent to 
his home property.  He sells various sundry items to the 
community and some tourist related products (t-shirts, 
local handicrafts, snacks and water-sport related 
products). 
 
9. (SBU) The Island administration is financed by the GORM. 
The bulk of GORM revenues come from import duties.  There 
is no personal income tax and no sales tax or VAT.  There 
is also a recently imposed tourist tax of USD 10/night/bed. 
The school and the hospital, financed by the GORM, are 
examples of the Government's commitment to atoll 
development and efforts to distribute resources, though 
they have expressed concerns in the past about their 
ability to reach even more remote and less populated 
islands.  The small size of the island population leaves a 
strong impression of the need for creative solutions to 
deal with the problem of serving a disparate population and 
creating sufficient employment opportunities to meet the 
demands of the next generation. 
 
10.  (SBU) Comment: In all, the visit provided a good 
perspective on the GORM's concerns about the lack of depth 
to the country's economy and validated its concerns over 
the potential graduation from LDC status.  Socio-economic 
indicators in Maldives are at high-levels.  However, the 
challenge and costs of bringing development to these far- 
flung islands are quite high.  Felidhoo is an island that, 
in the Maldivian context, is close to Male, with a large 
population.  The country stretches some 600 miles north to 
south and some islands have populations of 50 persons or 
less.  According to UNICEF, access to proper nutrition and 
sanitation remains a key challenge.  Almost 20% of babies 
are born with a low birth weight and 44% of children under 
five are classified as "underweight or wasting" (UN 
measures that indicate less-than-two and more-than-two 
standard deviations away from the median weight-for-age 
respectively). 
 
11. (SBU) The visit also pointed to the considerable 
resources and talent that the GORM has to deal with this 
situation and its impending graduation.  While there should 
be no illusion that Maldives will have smooth sailing after 
LDC graduation, they do have the resources and talent to 
deal with their problems effectively and through more 
appropriate mechanisms than the LDC framework. 
Nonetheless, we need to remain steadfast in our commitment 
to work with them to make the transition from LDC 
successful. 
 
12. (SBU) The US two-year "transition period" idea remains 
unclear to the GORM.  The GORM believes we see the two-year 
period as sufficient time to solidify their economic gains. 
We need to continue to reiterate that the two-year period 
provides time to negotiate and establish transition 
mechanisms with the various players (bilateral friends and 
donors, IFIs and UN agencies) who use LDC status as a 
prerequisite for assistance and/or preferential treatment. 
We should also be committed to helping Maldives pursue 
these transition mechanisms, as it is not in our interest 
to see Maldives, or any other LDC graduate, only to slip 
back into LDC status at some later point.  End comment. 
LUNSTEAD