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Maldives (09/08)


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For the most current version of this Note, see Background Notes A-Z.

Flag of Maldives is red with a large green rectangle in the center bearing a vertical white crescent; the closed side of the crescent is on the hoist side of the flag.

PROFILE

OFFICIAL NAME:
Republic of Maldives

Geography
Area: 298 sq. km. (115 sq. mi.), over 1,100 islands; twice the size of Washington, DC.
Cities: Capital--Male' (pop. 70,000).
Terrain: Flat islands.
Climate: Hot and humid.

People
Nationality: Noun and adjective--Maldivian(s).
Population: 370,000 (plus 31,000 expatriate laborers who are not counted in the census).
Population growth rate: 1.66%. Population growth rate has dropped dramatically in recent years.
Ethnic groups: Maldivians.
Religion: Sunni Islam.
Languages: Dhivehi (official); many government officials speak English.
Education: Years compulsory--none. Attendance--primary (grades 1-5) 99%; secondary: (grades 6-10) 51%, (grades 11-12) 5%. Literacy--98%.
Health: Infant mortality rate--18/1,000. Life expectancy--73 years male; 74 years female.
Resident work force: Community, social and personal services--21%; manufacturing--13%; fishing--11%; tourism--11%; transport, storage, and communication--9%; other--35%.

Government
Type: Republic.
Independence: July 26, 1965 (formerly a British protectorate).
Constitution: August 7, 2008.
Branches: Executive--president, cabinet. Legislative--unicameral Majlis (parliament). Judicial--Supreme Court, High Court, Civil Court, Criminal Court, Family and Juvenile Court, and 204 general courts.
Administrative subdivisions: 19 atolls and capital city.
Political parties: Adhaalath Party, Dhivehi Raiyyethunge Party, Islamic Democratic Party, Maldivian Democratic Party, Social Liberal Party, Maldives National Congress, Maldives Social Democratic Party, Republican Party, others in formation.
Suffrage: Universal at age 18.

Economy
GDP (2006 est.): $907 million.
GDP growth rate (2006 est.): 18.5%.
Per capita GDP (2006 est.): $3,000.
Inflation (2006): 2.8%.
Percentages of GDP (2006 est.): Tourism--28%; transport and communications--17%; government--15%; manufacturing--7%; real estate--6%; fishing--7%; construction--6%; agriculture--2%; other--12%.
Trade (2006 est.): Exports--$147 million: fish products. Major markets--U.S., Thailand, EU, Sri Lanka, Japan (source: Maldives Customs Service). Imports--$832 million: oil, construction material, prepared foodstuffs, vegetables, animal products, electrical appliances, wood products, computers, transport equipment. Major suppliers--Singapore, Sri Lanka, EU, India, Malaysia, U.A.E.

PEOPLE, HISTORY, AND CULTURE
Maldives comprises 1,191 islands in the Indian Ocean. The earliest settlers were probably from southern India. Indo-European speakers followed them from Sri Lanka in the fourth and fifth centuries BC. In the 12th century AD, sailors from East Africa and Arab countries came to the islands. Today, the Maldivian ethnic identity is a blend of these cultures, reinforced by religion and language.

Originally Buddhists, Maldivians were converted to Sunni Islam in the mid-12th century. Islam is the official religion of the entire population. Strict adherence to Islamic precepts and close community relationships have helped keep crime low and under control.

The official and common language is Dhivehi, an Indo-European language related to Sinhala, a language of Sri Lanka. The writing system is from right to left. English is used widely in commerce and increasingly as the medium of instruction in government schools.

Some social stratification exists on the islands. It is not rigid, since rank is based on varied factors, including occupation, wealth, perceived Islamic virtue, and family ties. Members of the social elite are concentrated in Male'.

The early history of the Maldives is obscure. According to Maldivian legend, a Sinhalese prince named KoiMale was stranded with his bride--daughter of the king of Sri Lanka--in a Maldivian lagoon and stayed on to rule as the first sultan.

Over the centuries, the islands have been visited and their development influenced by sailors from countries on the Arabian Sea and the Indian Ocean littorals. Mopla pirates from the Malabar Coast--present-day Kerala state in India--harassed the islands. In the 16th century, the Portuguese subjugated and ruled the islands for 15 years (1558-73) before being driven away by the warrior-patriot Muhammad Thakurufar Al-Azam.

Although governed as an independent Islamic sultanate for most of its history from 1153 to 1968, the Maldives was a British protectorate from 1887 until July 25, 1965. In 1953, there was a brief, abortive attempt at a republican form of government, after which the sultanate was re-imposed. Following independence from Britain in 1965, the sultanate continued to operate for another 3 years. On November 11, 1968, it was abolished and replaced by a republic, and the country assumed its present name.

Environmental Concerns
There is growing concern about coral reef and marine life damage because of coral mining (used for building and jewelry making), sand dredging, and solid waste pollution. Mining of sand and coral have removed the natural coral reef that protected several important islands, making them highly susceptible to the erosive effects of the sea. The practices have recently been banned. In April 1987, high tides swept over the Maldives, inundating much of Male' and nearby islands. That event prompted high-level Maldivian interest in global climatic changes, as its highest point is about 8 feet above sea level. The Asian Brown Cloud, a U.S.-sized area of pollution over the Indian Ocean, has the potential of wreaking havoc on the tourism- and fishery-based Maldivian economy.

Investment in Education
The government expenditure for education was 20% of the budget in 2004. Both formal and nonformal education have made remarkable strides in the last decade. Unique to Maldives, modern and traditional schools exist side by side. The traditional schools are staffed by community-paid teachers without formal training and provide basic numeracy and literacy skills in addition to religious instruction.

The modern schools, run by both the government and private sector, provide primary and secondary education. As the modern English-medium school system expands, the traditional system is gradually being upgraded. By early 2003, every inhabited island was equipped to provide primary school education up through grade seven. Secondary schools (grades 8 through 10) are available in atoll capitals and on the islands with larger populations. Five schools have higher secondary classes, two in Capital Male and in three atolls. Only around 5% of students go to high school, but literacy is high at 98%.

Seven post-secondary technical training institutes provide opportunities for youth to gain skills that are in demand. The World Bank provided $17 million for education development from 2000-2004. It plans to commit a further $1.5 million for education development, as well as $9 million for an education-related component under an integrated human development project. Over 2000-2006, the Asian Development Bank (ADB) committed $7 million to support post-secondary education development in Maldives. ADB has committed $6.5 million for employment skills training over 2004-2009.

GOVERNMENT AND POLITICAL CONDITIONS
A 1968 referendum approved the constitution, making Maldives a republic with executive, legislative, and judicial branches of government. The constitution was amended in 1970, 1972, and 1975 and is again under revision.

Ibrahim Nasir, Prime Minister under the pre-1968 sultanate, became President and held office from 1968 to 1978. He was succeeded by Maumoon Abdul Gayoom, who was elected President in 1978 and reelected in 1983, 1988, 1993, 1998, and again in October 2003. The president heads the executive branch and appoints the cabinet. Nominated to a 5-year term by a secret ballot of the Majlis (parliament), the president must be confirmed by a national referendum.

The unicameral Majlis is composed of 50 members serving 5-year terms. Two members from each atoll and Male' are elected directly by universal suffrage. Eight are appointed by the president. A special Majlis session began meeting in mid-2004 to review constitutional reform issues. Regularly scheduled Majlis elections took place in January 2005.

The Maldivian legal system--derived mainly from traditional Islamic law--is administered by secular officials, a chief justice, and lesser judges on each of the 19 atolls, who are appointed by the president and function under the Ministry of Justice. There is also an attorney general. Each inhabited island within an atoll has a chief who is responsible for law and order. Every atoll chief, appointed by the president, functions as a district officer in the British South Asian tradition.

On November 8, 1988, Sri Lankan Tamil mercenaries tried to overthrow the Maldivian Government. At President Gayoom's request, the Indian military suppressed the coup attempt within 24 hours. In September 2003, following the death of an inmate, a brief prison riot broke out on an island near the capital Male'. Three other inmates were killed during the incident. In response to the killings of the inmates, brief rioting took place on the streets of Male'. The government often prevents opposition rallies from taking place. Throughout 2006, the opposition faced restrictions on freedom of assembly, and the government continued to arrest opposition activists. The government also keeps a tight rein on expressions of Islamic extremism. The government is investigating links between religious extremists and a September 2007 bombing in a Male' park that injured several tourists.

President Gayoom's commitment to introduce political reforms in June 2004 was widely welcomed. A human rights commission was established, and a special Majlis, or parliament, was convened to consider changes in the constitution, including the legalization of political parties. In August 2004, however, a demonstration in the capital turned violent and the government declared an emergency and arrested a large number said to be connected to the protest. Some of those arrested were prominent in the reform movement, including several members of the special Majlis. Most were released a few months later.

The Maldives were badly hit by the Asian tsunami of December 26, 2004, which killed 82 and caused substantial damage to Maldives tourism, housing, and fishing infrastructure. The U.S. provided $1.6 million in immediate relief assistance. Despite the disaster, the Government of the Maldives held parliamentary elections, originally scheduled for December 31, on January 22, 2005. Reform candidates performed strongly. Following the poll, President Gayoom announced plans to establish multiparty democracy within a year.

In June 2005, the members of the People's Majlis unanimously voted to legally recognize political parties. In order of registration the first parties were the opposition Maldivian Democratic Party, the government's Dhivehi Raiyyethunge Party, the Adhaalath (Justice) Party, and the Islamic Democratic Party. More recently, a number of other parties have formed, including the Social Liberal Party, the Maldivian National Congress, the Maldives Social Democratic Party, and the Republican Party. Some of these appear to have minimal public backing. Another political formation is the New Maldives group, but it has not registered as a party. Although no elections have been held since the party system was implemented, members of parliament have declared their political affiliations.

In March 2006, the government introduced a "Roadmap for Reform" and subsequently introduced several bills in parliament. In August 2007, voters decided via referendum that the Maldives' new constitution should provide for a presidential system of government (vice parliamentary). Although the special Majlis missed the original November 2007 deadline for completing the new constitution, a final version was completed in May 2008 and ratified by President Gayoom on August 7, 2008. According to the new constitution, a presidential election must be held before October 10, 2008.

Principal Government Officials
President--Maumoon Abdul Gayoom
Minister of Defense and National Security--Ismail Shafeeu
Minister of Economic Development and Trade--Mohamed Jaleel
Minister of Finance and Treasury--Abdulla Jihad
Minister of Home Affairs--Abdullah Kamal Deen
Minister of Foreign Affairs--Abdullah Shahid
Ambassador to the United States--Mohamed Hussain Maniku
Ambassador to the United Nations--Ahmed Khaleel

ECONOMY
The Maldivian economy is based on tourism and fishing. Of the Maldives' 1,191 islands, only 200 are inhabited. The population is scattered throughout the country, with the greatest concentration on the capital island, Male'. Limitations on potable water and arable land constrain expansion.

Development has been centered upon the tourism industry and its complementary service sectors, transport, distribution, real estate, construction, and government. Taxes on the tourist industry have been plowed into infrastructure and used to improve technology in the agricultural sector.

GDP in 2006 totaled $907 million, or about $3,000 per capita. The Maldivian economy has made a remarkable recovery from the tsunami, which inflicted damages of about $375 million, excluding $100 million in damages to resorts, the bulk of which was covered by private insurance. A rebound in tourism, post-tsunami reconstruction, and new resort construction helped increase GDP by about 18% in 2006 from a contraction of 4.5% in 2005. Inflation has moderated to about 3%. As tourism staged a speedy recovery and government borrowing increased, the balance of payments recorded a surplus of about $40 million in 2006 from a deficit of $17 million in 2005. Fiscal control has deteriorated due to tsunami reconstruction as well as an increase in non-tsunami-related government expenditure. Government expenditure was estimated at 74.5% of GDP in 2006, compared to 36% of GDP in 2004 before the tsunami. The budget deficit was 18% of GDP in 2006. While reconstruction is ongoing, the recovery process remains underfunded.

The Maldives has been running a merchandise trade deficit in the range of $200 to $260 million annually since 1997. The trade deficit ballooned to $386 million in 2004, $493 million in 2005, and reached an estimated $618 million in 2006, largely the result of increased oil prices and increased imports of construction material.

International shipping to and from the Maldives is mainly operated by the private sector with only a small fraction of the tonnage carried on vessels operated by the national carrier, Maldives Shipping Management Ltd. Over the years, the Maldives has received economic assistance from multilateral development organizations, including the UN Development Program (UNDP), Asian Development Bank, and the World Bank. Individual donors--including Japan, India, Australia, and European and Arab countries (including Islamic Development Bank and the Kuwaiti Fund)--also have contributed.

A 1956 bilateral agreement gave the United Kingdom the use of Gan--in Addu Atoll in the far south--for 20 years as an air facility in return for British aid. The agreement ended in 1976, shortly after the British closed the Gan air station.

Economic Sectors
Tourism. In recent years, Maldives has successfully marketed its natural assets for tourism--beautiful, unpolluted beaches on small coral islands, diving in blue waters abundant with tropical fish, and glorious sunsets. Tourism now brings in about $450 million a year. Tourism and related services contributed 28% of GDP in 2007.

Since the first resort was established in 1972, more than 90 islands have been developed, with a total capacity of some 17,500 beds. Maldives has embarked on a rapid tourism expansion plan. The government has awarded tenders for the development of about 40 new resorts. Over 650,000 tourists (mainly from Europe) visited Maldives in 2007. The average occupancy rate is over 80%, and reaches over 95% in the peak winter tourist season. Average tourist stay is 8 days.

Fishing. This sector employs about 11% of the labor force. The fisheries industry, including fish processing, traditionally contributes about 7% of GDP. Due to a drastic drop in the fish catch, the industry's contribution to GDP was only about 4.5% in 2007. However, international tuna prices increased in 2007, thereby increasing export earnings to about $100 million. The use of nets is illegal; all fishing is done by line. Production was about 115,000 metric tons in 2007, most of which was skipjack tuna. More than 60% is exported, largely to Sri Lanka, Japan, Hong Kong, Thailand, and the European Union. Fresh, chilled, frozen, dried, salted, and canned tuna exports account for about 90% of all marine product exports.

Agriculture. Poor soil and scarce arable land have historically limited agriculture to a few subsistence crops, such as coconut, banana, breadfruit, papayas, mangoes, taro, betel, chilies, sweet potatoes, and onions. Almost all food, including staples, has to be imported. The December 2004 tsunami inundated several agricultural islands, which could take a significant amount of time to recover. Agriculture provides about 2% of GDP.

Manufacturing. The manufacturing sector provides less than 7% of GDP. Traditional industry consists of boat building and handicrafts, while modern industry is limited to a few tuna canneries, a bottling plant, and a few enterprises in the capital producing PVC pipe, soap, furniture, and food products. Five garment factories that had exported principally to the United States closed in 2005, following the expiration of the Multi-Fiber Arrangement (MFA) that had set quotas on developing country garment exports to developed countries. The loss of these factories has not proven an insurmountable hurdle, however, as most of the profits were repatriated and most of the labor was expatriate.

Other. The construction sector contributes approximately 6% of GDP due to tsunami reconstruction and new resort construction.

FOREIGN RELATIONS
Maldives follows a nonaligned policy and is committed to maintaining friendly relations with all countries. According to the Foreign Ministry, the country has a UN Mission in New York, embassies in the United States (Washington, DC), Sri Lanka, China, the United Kingdom, Bangladesh, India, Japan, Singapore, and Malaysia, as well as diplomatic missions in Geneva and Brussels. India, Pakistan, Bangladesh, and Sri Lanka maintain resident embassies in Male'. Denmark, Norway, the U.K., Germany, Turkey, and Sweden have consular agencies in Male' under the supervision of their embassies in Sri Lanka and India. The UNDP has a representative resident in Male', as do the UN Children's Fund (UNICEF) and the World Health Organization (WHO). Like the United States, many countries have nonresident ambassadors accredited to the Maldives, most of them based in Sri Lanka or India. The Maldives is a member of the Organization of the Islamic Conference (OIC) and the Non-Aligned Movement (NAM). In 2009, Maldives will host the 16th annual South Asian Association for Regional Cooperation (SAARC) summit.

U.S. MALDIVIAN RELATIONS
The United States has friendly relations with the Republic of Maldives. The U.S. Ambassador and some Embassy staff in Sri Lanka are accredited to the Maldives and make periodic visits. The United States supports Maldivian independence and territorial integrity and publicly endorsed India's timely intervention on behalf of the Maldivian Government during the November 1988 coup attempt. U.S. Naval vessels have regularly called at Male' in recent years. The Maldives extended strong support to U.S. efforts to combat terrorism and terrorist financing in 2001-2002.

U.S. contributions to economic development in the Maldives have been made principally through international organization programs. Following the December 2004 tsunami, the U.S. and Maldives signed a bilateral assistance agreement for $8.6 million in reconstruction assistance. This assistance will help in the rebuilding of harbors, sewerage systems, and electrical generation facilities and in the development of aid absorption capacity in the Ministry of Finance. The United States has directly funded training in airport management and narcotics interdiction and provided desktop computers for Maldivian customs, immigration, and drug-control efforts in recent years. The United States also trains a small number of Maldivian military personnel annually. About 10 U.S. citizens are resident in the Maldives; some 5,000 Americans visit the Maldives annually. The Maldives welcomes foreign investment, although the ambiguity of codified law acts as somewhat of a damper. Areas of opportunity for U.S. businesses include tourism, construction, and simple export-oriented manufacturing, such as garments and electrical appliance assembly. There is a shortage of local skilled labor, and most industrial labor has to be imported from Sri Lanka or elsewhere.

Principal U.S. Embassy Official
Ambassador--Robert O. Blake

The U.S. Embassy in Sri Lanka is at 210 Galle Road, Colombo 3; tel: +94 (1) 244-8007; fax: +94 (1) 2437-345.



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