Statement by Ambassador Ahmed Sareer, Charge’ d’affairs of the Permanent Mission of the Maldives to the United Nations on Agenda Item 24 (a) – Follow-up to the Fourth United Nations Conference on Least Developed Countries, 17 October 2012
Thank you Mr. Chairman,
At the outset, I wish to thank the Secretary-General for his comprehensive reports on this agenda item, and commend Mr. Gyan Chandra Acharya, Under-Secretary General and High Representative for the Least Developed Countries, landlocked Developing Countries and Small Island Developing States for his presentation on the subject.
The Maldives would also like to thank the Ad Hoc Working Group to further study and strengthen the smooth transition process for countries graduating from the least developed country category, for the report they produced on the basis of their work. In particular, my Delegation wishes to record our appreciation to the distinguished permanent representatives of Belgium and Malawi for guiding the deliberations of the working group as co-chairs.
Let me also express our appreciation to the Committee for Development Policy (CDP) for their recent report produced during the fourteenth session earlier this year.
Being the most recently graduated country, the Maldives is in the second year of a three-year smooth transition process. Unfortunately, due to the daunting challenges arising from the inherent vulnerabilities of the country, the infancy of this program, and the lack of a coordinated commitment from our bilateral partners, this process has, up to now, been far from smooth.
The national transition strategy put in place to see us through this graduation proves to be hugely deficient, with the process requiring unexpected and uncalculated drastic changes to our national developmental policy and economic framework, thereby negatively affecting every sector of Maldivian society. As we argued, prior to our graduation, and as has become abundantly clear from our experience, graduation policy needs to be revamped and the creation of a greater role for the UN in donor monitoring is necessary.
The smooth transition strategy developed for the Maldives focused primarily on trade development with a secondary objective of maintaining development financing. Maldives has engaged extensively with the World Trade Organization (WTO), paving the way for measures that gave preferential treatment to LDC graduates. Efforts of the Maldives has been extended to all LDCs, such as our campaign for an extension on the application of the TRIPS agreement, which once won for the Maldives was then extended for all LDCs thereby moving the bar forward seven years.
The Maldives has been an advocate of Small and Vulnerable Economies, gaining access to the Enhanced Integrated Framework, and utilizing our Trade Policy Review to draw the attention of World Trade Organization Member States to the consequences of graduation and negotiate an Everything But Arms trade agreement with the European Union. We now also have a similar zero tariff agreement with China for 60% of Maldives’ exports.
The Maldives reiterates its intention to join the EU’s Generalized System of Preferences (GSP+) scheme in an effort to ensure market access. However, it should be noted that the cost of meeting the eligibility requirements of this scheme will be substantial, requiring compliance with 27 international conventions on good governance, environment and labor.
The efforts expended by the Maldives to ensure that our trade options remain open were extensive but ultimately insufficient. When the Maldives first started contemplating graduation, our primary export item, tuna, contributed to more than 15% of our GDP. Today, due to the decline of the industry, in large part resulting from the depletion of tuna stocks in Maldivian waters, it now contributes an estimated 1.5%. By the time of our graduation in 2011, the primary focus of supplementing our trade agreements begun to have less impact on relieving the gap left by the loss of LDC status, particularly in official development assistance.
While the Maldives was able to hold a successful donor conference in 2010, with pledges of $313 million US dollars linked to the conference’s key themes of macro-economic reform, public sector reform, good governance, social development and climate change; the Maldives has seen only a fraction of those pledges fulfilled.
The withdrawal of official developmental assistance from some major traditional donors and lack of access to concessionary finance, as well as the inability to reassess the situation in the country, has led to massive shortfalls and the formation of risky economic policies, some of which have proven to be harmful to the nation’s economic stability.
Instead of being an indicator of a robust business environment conducive to increased private and public sector investment, graduation from LDC status has led to greater economic uncertainty. Substantial Foreign Direct Investment did not materialize in non-traditional sectors, meaning any sector except the tourism industry. The fact remains that even today, the Maldives consists of a number of islands without even the most basic sewerage and water systems, with a geography that makes internal trade almost prohibitively expensive, and a fishing industry that is on the decline.
A smooth transition plan needs to be continually reassessed, and we must ensure that it is both effective and relevant. Graduation from LDC status is not meant to threaten the success of LDCs but rather to help them in the next logical step of their national development. While the formulation of our strategy was adequate for the time, it was not adaptive to the rapidly changing situation of the Maldives economy in the face of world economic slow-down. Indeed, the Maldives had success in pioneering new measures to mitigate the effects of graduation, however the question of whether those efforts were enough has not been answered in the positive. While a coherent formation of a national strategy, completed with the input of all stakeholders, is paramount, the execution of that national strategy must be monitored and supported as well. It is my Delegation’s proposal that this is done annually after graduation for the first three years and then triennially after that.
The Maldives emphasizes the need for a consultative mechanism that brings together multilateral agencies and donor states with the graduating country. We emphasize the need for this mechanism to be enduring in that it should remain active during the entire transition process and integrated with other consultative process between the graduating nation and its development partners.
The Maldives further believes that the vulnerabilities of nations must be taken into account as well. Though we enjoy a robust world-class tourism industry that has become the backbone and foundation of our economy, the Maldives remains extremely vulnerable to external shocks. Further, given the dispersed geographical nature of my nation, infrastructure development costs are often prohibitively high. As with most Small Island Developing States (SIDS), the Maldives’ key productive capacity is inextricably linked to its natural environment and the durability of its fragile ecosystem. Given common measures for development, this means that our relatively high per-capita income often masts our high economic vulnerability and structural handicaps.
When it comes to the world’s least developed nations, it must be an obligation of the international community, in particular the United Nations, to ensure that the progress made by graduating countries is not reversed during the transition process. Yet the existing guidelines are lacking and unable to meet the burden they were designed for. It is in this spirit, and as a result of the arduous work of the Ad Hoc Working Group and drawing from their recommendations, together with the support of the LDC Group, that the Group of 77 and China will be submitting before this Committee a draft resolution on this subject, with the full support and endorsement of the Maldives. The draft resolution is aimed at easing access to concessionary finance, development assistance, technology transfer, and capacity building, while reinforcing procedural monitoring mechanisms of the entire process.