US embassy cable - 03COLOMBO1266

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 001266 
 
SIPDIS 
 
DEPARTMENT FOR SA, SA/INS 
NSC FOR E. MILLARD 
 
E.O. 12958:  DECL:  07-21-13 
TAGS: PREL, PGOV, ECON, ETRD, SOCI, MV, Maldives 
SUBJECT:  Excitement over Maldivian economic growth 
tempered by development worries 
 
Ref:  (A) Colombo 1244; (B) 02 Colombo 2329 
 
(U) Classified by James F. Entwistle, Charge d'Affaires. 
Reasons 1.5 (b, d). 
 
1.  (C) SUMMARY:  During recent Embassy meetings in the 
Maldives, government and business interlocutors spoke 
about the positive social and economic developments in 
the country in recent years, spurred especially by the 
growth of the tourism industry.  These contacts worried, 
however, about the government's ability to continue this 
development trend and generate opportunities for the 
growing youth population.  The government will face some 
serious logistic and social challenges to provide for 
all Maldivians, a task which contacts feared would 
become extremely difficult if LDC status were lost.  END 
SUMMARY. 
 
2.  (C) VISIT TO MALE:  Charge Camp and emboffs visited 
the Maldives, July 13-15.  The U.S. team met ministry 
officials, as well as business and non-governmental 
organization contacts.  The meetings took place in the 
Maldivian capital of Male, an island that is home to 
one-quarter of the country's population of approximately 
300,000 people.  During the visit, Male was bustling and 
its streets were full of life.  There was also much 
evidence of construction, especially of apartment 
buildings to house the city's expanding population. 
(Note:  Though the government tries to discourage it, 
there is considerable migration from other islands to 
Male, which is part of the most prosperous atoll in the 
country.) 
 
3.  (C) PROS OF DEVELOPMENT:  Our contacts in the 
government, non-governmental organizations (NGOs) and 
business sectors all spoke of the positive economic 
developments within the country in recent years.  The 
Ministry of Planning cited a tripling in GDP per capita 
income over the last decade while several sources 
reported that electricity, phone service, primary 
education and health clinics are now present on all 200 
inhabited islands.  The tourism industry continues to 
expand -- numbers suggest annual visitors will soon be 
double that of the population -- and recent new 
investment has led many interlocutors to feel that these 
development trends are likely to continue in the near 
future. 
 
4.  (C) NEW "ISLAND" IN ATOLL:  Some of this economic 
prosperity can be seen in the opportunities available in 
Male, and its attraction to residents from other 
islands.  As a result, the increasing population on Male 
has created a serious problem of overcrowding.  (Note: 
Male, on a .77 sq. mile island, is home to 74,000 people, 
resulting in a population density 50 percent greater 
than that of Manhattan.)  In response to this issue, 
government contacts were eager to share plans about a 
neighboring "island" that is being reclaimed from a 
lagoon in the sea.  Called Hulhumale, the development 
project is scheduled to continue for the next 15-30 
years on this former lagoon located two islands 
northeast of Male.  Government plans call for the first 
250 houses, with municipal infrastructure and some local 
business, to be completed by the end of 2003.  When 
finished, the island will have triple the area of Male 
and many of its residents are expected to commute by 
ferry to Male.  One foreign ministry official said he 
was already looking forward to moving there, to have 
more space than he currently had on Male. 
 
5.  (C) WORRIES ABOUT CONTINUED DEVELOPMENT:  At the same 
time, many sources expressed reservations about the long- 
term ability of the government to sustain such 
development trends.  The unique problem of having a 
population spread over 540 miles from north to south on 
200 inhabited islands makes many development efforts 
economically challenging and commercially infeasible. 
Ministry officials said that telecom service on an 
island, for example, may be limited to a single public 
pay telephone and the cost of building an island school 
was six times that of a comparable Sri Lanka one.  NGO 
and government contacts stated that some economic figures 
were misleading, as they included expatriate wages and 
foreign corporate profits which do not get recycled in 
the Maldivian economy.  Rather, some NGO officials said 
20 percent of the population is estimated to live on less 
than one USD a day.  (Note:  Official statistics cite an 
average 2100 USD per capita annual income.)  Ministry 
officials were also concerned that continued investment 
funding by major development banks and favorable trading 
status crucial to this pace in growth would be in 
jeopardy if the country lost its LDC status. 
 
6.  (C) SOCIETAL PROBLEMS IN THE WAKE OF GROWTH: 
Perhaps the most significant problem mentioned by all 
interlocutors was a lack of opportunities for young 
Maldivians.  More students are now able to go abroad for 
higher education opportunities, but return to find very 
little productive work.  Even those who complete only 
secondary education find their liberal arts-focused 
curricula lacking in necessary trade skills.  With 55 
percent of the population under 20, contacts admitted the 
employment problem would only increase.  Foreign Ministry 
officials feared that a growing population of idle youths 
could eventually provide fertile ground for Islamic 
fundamentalist movements to gain a foothold in the 
moderate Islamic country. 
 
7.  (C) COMMENT:  A number of factors stand in the way of 
the development of the Maldives.  Among these are vast 
inequalities in wealth between residents of Male and 
those of the outer atolls, and the enormous costs of 
providing even basic services to the distant communities 
which make up the majority of the country's population. 
The achievements of the last decade look impressive on 
paper and have indeed benefited the Maldivian people. 
Realistically, however, the development of the Maldives 
continues to hinge on the international aid and 
favorable trading agreements it receives as a result of 
its LDC status.  END COMMENT. 
 
8.  (U) Minimize considered. 
 
ENTWISTLE