US embassy cable - 03COLOMBO1240

C O N F I D E N T I A L COLOMBO 001240 
 
SIPDIS 
 
DEPARTMENT FOR SA, EB, IO; NSC FOR E. MILLARD 
 
E.O. 12958:   DECL: 07-15-13 
TAGS: PREL, PGOV, ECON, ETRD, MV, Maldives 
SUBJECT:  In Charge's visit, Maldivians again press for 
retention of Lesser Developed Country (LDC) status 
 
Ref:  Colombo 1197 
 
(U) Classified by Donald Camp, Charge d'Affaires. 
Reasons 1.5 (b,d). 
 
1.  (C) SUMMARY:  During Charge's July 13 meetings in 
Male, GoRM officials made another pitch that the 
Maldives' not be graduated from LDC status.  Some 
concern was expressed about radical Islam gaining a 
beachhead in the island nation, a problem which would be 
heightened by an economic downturn.  Embassy recommends 
that Washington support the Maldivian request for 
deferral of the LDC decision.  END SUMMARY. 
 
2.  (SBU) VISIT TO MALE:  Charge and poloff visited the 
Maldives, July 13.  The U.S. team met with Foreign 
Minister Fathulla Jameel, Deputy Foreign Minister 
Hussain Shihab, Foreign Secretary Dr. Ahmed Shaheed, and 
Deputy Minister of Home Affairs Abdul Azeez Yoosuf.  The 
team also met with Indian High Commissioner S. Gavai. 
 
3.  (SBU) PRESSING TO RETAIN LDC STATUS:  During 
separate meetings, FM Jameel and DFM Shihab both 
reiterated previous GoRM requests that the USG oppose 
the withdrawal of LDC status for the Maldives (see 
Reftel).  They stressed that the withdrawal of such 
status for the Maldives could harm its economy in a 
serious way.  (Note:  This issue is slated to be 
reviewed in Geneva at the 2003 Substantive Session of 
the Economic and Social Council later this month.  In 
previous UN reviews, the Maldives has only narrowly 
avoided losing its LDC status.) 
 
4.  (SBU) Explaining the GoRM's position, Jameel stated 
that the Maldivian economy is a "vulnerable" one, 
reliant on the vagaries of international tourism and 
fragile fisheries industries.  The economy depended on 
trade concessions available under LDC status, he said. 
He added that losing LDC status would make the country 
ineligible for concessional lending from the major 
development banks.  This loss would be especially severe 
given the Maldives' unusual infrastructure needs -- 
building breakwaters around inhabited islands against 
tidal surges and reclaiming lagoons to increase land 
mass near Male.  Both interlocutors wanted the UN to 
conduct an independent study of the economic damage that 
would result from the Maldives' loss of LDC status 
before taking any hasty steps to withdraw that status. 
Shihab further argued that graduation criteria continued 
to evolve and the UN should examine the effect of 
graduation on "Small Island Group" economies.  Charge 
told Jameel and Shihab that he would share their 
comments with Washington, as the U.S. was carefully 
studying the issue. 
 
5.  (C) CONCERN OVER RADICAL ISLAM:  In additional but 
related remarks regarding the local political situation, 
Shihab and Shaheed spoke frankly about what they 
considered to be a growing problem with radical Islam in 
the Maldives.  In their opinion, one source of the 
problem was Maldivian students returning from abroad; in 
particular, those receiving their education in Saudi 
Arabia.  Shaheed stated the GoRM took efforts to ensure 
that students attended legitimate schools abroad, but 
said some students subverted the system and attended 
radical religious schools.  Indian High Commissioner 
Gavai told Charge that white collar jobs were in short 
supply for the increasing numbers of educated 
Maldivians.  This was creating an environment where 
radicalism could possibly grow.  An economic downturn of 
the kind the GoRM predicts in the wake of LDC graduation 
would only exacerbate this threat of Islamic extremism. 
 
6.  (C) COMMENT:  This visit only reinforced Mission's 
recommendation that we should defer, at least beyond 
July, Maldives' graduation from LDC status.  Too much is 
at risk in this small economically and politically 
vulnerable nation.  END COMMENT. 
 
CAMP