ATOLL TRIP UNDERSCORES VULNERABILITY AND PROMISE

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
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