VZCZCXRO4552
RR RUEHBI RUEHLMC
DE RUEHLM #2132/01 3611206
ZNR UUUUU ZZH
R 271206Z DEC 06
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC 5031
INFO RUCPDOC/USDOC WASHDC
RUEHNE/AMEMBASSY NEW DELHI 0419
RUEHKA/AMEMBASSY DHAKA 9735
RUEHIL/AMEMBASSY ISLAMABAD 6673
RUEHKT/AMEMBASSY KATHMANDU 4739
RUEHKP/AMCONSUL KARACHI 2094
RUEHCG/AMCONSUL CHENNAI 7237
RUEHBI/AMCONSUL MUMBAI 5006
RUEHGV/USMISSION GENEVA 1649
RUEATRS/DEPT OF TREASURY WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP

UNCLAS SECTION 01 OF 03 COLOMBO 002132 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR SA/INS 
 
MCC FOR D NASSIRY AND E BURKE 
 
GENEVA PASS USTR 
 
E.O 12958: N/A 
TAGS: ECON EAIR ENRG EWWT SENV EINV ETRD MV
 
SUBJECT:  DEVELOPMENT GOALS FOR MALDIVES 
 
¶1.  (U) Summary:  The importance of creating a stable economy before 
Maldives' 2011 LDC graduation, diversification beyond the fisheries 
and tourist industries, and promoting environmental protectionism 
were the main topics of Assistant U.S. Trade Representative (USTR) 
to South and Southwest Asia, Ambassador Douglas A. Ambassador 
Hartwick's visit to Maldives. 
 
¶2.  (U) In a series of meetings held in Male', Maldives on December 
5-6, 2006, Ambassador Hartwick and USTR Special Assistant Manpreet 
Anand, accompanied by Econoff and Econ specialist, met with 
President Maumoon Gayoom, the Ministers of Tourism and Civil 
Aviation, Finance and Treasury, Economic Development and Trade, 
Atolls Development, and Foreign Affairs, and the Attorney General's 
Office to discuss the USTR's interest in promoting and strengthening 
bilateral economic links and trade opportunities between the U.S. 
and Maldives.  The Ambassador also consulted with U.N. and World 
Bank country representatives to follow-up on the tsunami-recovery 
programs related to the Bush-Clinton Fund.  End Summary. 
 
Economic Expansion 
------------------- 
 
¶3.  (U) Ambassador Hartwick articulated the USG's support of the 
Government of the Republic Maldives' (GORM's) goals of global 
economic expansion and the USG's interest in assisting the GORM to 
create a market-friendly environment that would increase trade 
between the two countries.  GORM officials responded favorably, 
noting that these ideas aligned with the GORM's national goal of 
becoming a top-ranking middle-income country by 2011, the year 
Maldives graduates from LDC status.  Driving forward its Reform 
Roadmap to achieve their "Vision 20/20" national goals, the GORM is 
proposing a plethora of new legislation to further their political 
and economic reform agenda. 
 
¶4.  (U) The GORM faces multiple economic challenges, including its 
attempt at simultaneous political (see septel) and economic reform, 
its disparate topography, its lack of specialized and vocational 
training, and its two-sector economy based on tourism and fishing. 
Nevertheless, some progress is being made in drafting economic 
legislation, establishing schools of higher education, and exploring 
ways to diversify its economy. 
 
Preparations for Graduation from LDC Status 
------------------------------------------- 
 
¶5.  (SBU) In late November 2006, the GORM participated in a workshop 
sponsored by the IMF, ITC, UNCATD, UNDP, World Bank and the WTO to 
develop an Integrated Framework to guide the GORM's graduation from 
LDC status.  Based on workshop recommendations, the GORM seeks to 
diversify its economic portfolio with its neighbors.  The GORM does 
not plan to pursue the recommendation of the workshop to peg the 
Maldives ruffiya against the euro.  Currently, it is pegged against 
the dollar. 
 
U.S. - Maldives Economic Links; a Mission in DC 
--------------------------------------------- -- 
 
¶6.  (U) Ambassador Hartwick noted that few of the 600-700,000 
tourists coming to Maldives each year are US citizens.  The GORM 
wants to develop a strategy to increase interest in Maldives for 
both the American tourist and investor.  Riding the wave of free 
publicity generated by Katie Holmes and Tom Cruise's recent 
honeymoon to Maldives, the Ministry of Tourism and Civil Aviation 
plans a Maldivian promotion night at the Four Seasons Hotel in 
Hollywood.  Further, the GORM plans to participate in more trade 
fairs in major cities across the U.S. which they have neglected in 
previous years.  Other areas of promotion Ambassador Hartwick 
suggested included media engagements, airline promotions, travel 
agents and the internet. 
 
¶7.  (U) To further enhance engagement with the U.S., Ambassador 
Hartwick was told that the GORM is establishing a mission with a 
trade office in Washington D.C. in January 2007.  The GORM also 
 
COLOMBO 00002132  002 OF 003 
 
 
plans to open missions in Japan and Switzerland in 2007.  Ambassador 
Hartwick praised this initiative, stressing that a physical presence 
in the U.S. capital city will greatly enhance both political and 
economic ties between the countries. 
 
American Investments and Opportunities 
-------------------------------------- 
 
¶8.  (U) Following are current or potential investment opportunities 
for US businesses: 
 
-- HOTELS:  Three major U.S. hotel chains are planning to build in 
Maldives in the next 3 to 5 years:  Sheraton/Westin, Ritz-Carlton 
(with Sri Lanka's Ceylinco managing the construction) and Holiday 
Inn.  Ambassador Hartwick stressed that the Maldives should focus on 
promoting to the longer-term tourists instead of the single or 
double night stop-over business executive. 
 
-- BANKS:  Qasim Ibrahim, Minister of Finance and Treasury, 
requested Ambassador's Hartwick's assistance in organizing American 
investors from the financial sector to visit the Maldives.  A 
visibly excited Ibrahim described the opportunity to establish 
full-fledged banking services in the Maldives as a "golden 
opportunity" since international banks in-country "have yet to lose 
1 USD since arrival."  He specifically requested the U.S. Embassy to 
ask the Mumbai-based Bank of America to establish a full-scale 
branch in Male'.  (Post is working on this.) 
 
-- OPPORTUNITIES "FOR ALL:"  The Minister of Atolls Development, 
Mohamed Deen, said that there are opportunities for U.S. products in 
all sectors.  He said that his own company, Orchid Group, uses many 
U.S. based products such as generators and water plants.  These 
products, however, are brokered through another foreign national 
agent (usually from Singapore), instead of directly from the U.S. 
Additionally, Deen noted that both local and tourist consumers are 
demanding higher-quality products than before; especially from 
Australia, U.S. and the E.U. 
 
Possible Leadership in Environmental Concerns 
--------------------------------------------- 
 
¶9.  (SBU) Ambassador Hartwick stressed to President Gayoom the 
opportunity for Maldives to become a leader in environmental 
protectionism, emphasizing that the tourism industry is based on its 
unique and pristine environment.  Maldives can be the spokesman in 
leading the region to promote eco-friendly tourism.  Ambassador 
Hartwick suggested that Maldives join regional cooperative efforts 
and organizations that focus on regulating environmental 
protectionism requirements. The Minister of Tourism expressed 
interest in pursuing this topic and asked for additional guidance 
from Ambassador Hartwick. 
 
¶10.  (SBU) Ambassador Hartwick was informed that the GORM has 
drafted environmental regulations as a part of its reform roadmap. 
These regulations would institute heavier fines for littering the 
sea, establish a professionally-designed dumping area for each 
atoll, reclaim Garbage Island (informally named this since garbage 
has been used to significantly increase its size), research viable 
alternative energy and sewage treatment plans, set height 
restrictions for buildings, and initiate a reef conservation 
project.  The regulations have met with some resistance due to 
correspondingly higher investment costs.  To help mitigate this 
impact, Ambassador Hartwick suggested that the GORM create economic 
incentives such as duty-free importation of viable technology and 
environmental-friendly goods that would ensure support and 
effectiveness of the programs. 
 
Transportation Development Goals 
-------------------------------- 
 
¶11.  (U) International and national transportation issues continue 
to challenge Maldives as it seeks to unify the country by easing 
travel for locals and tourists.  The government hopes that the 
 
COLOMBO 00002132  003 OF 003 
 
 
expansion of Male' International Airport and the newly-constructed 
airport in Gaan Adu Atoll (to be open for chartered planes in 2007) 
will significantly increase the number of tourists.  The GORM is 
investigating the establishment of a national airline and more 
direct flights from New Delhi, Beijing, Kuwait, and Dubai.  Resorts 
have proposed five new regional airports with private aviation and 
have offered to subsidize their development.  The Ministry of Atoll 
Administration also plans to build 5-10 public airports to provide 
nighttime as well as daytime connections between the atolls.  The 
GORM plans to send students to the U.S. for pilot training to 
support these efforts. 
 
¶12.  (U) The GORM also plans to expand Male' port and construct one 
or two new transshipment ports in the North.  As Maldives is 
strategically located on major oil shipping lanes, China and India 
have expressed interest in the construction of a transshipment port. 
 Currently only 40,000 containers pass through Male' port.  The cost 
of constructing a new port, according to the World Bank, could be as 
high as half of Maldives' GDP, making private investment essential. 
 
 
Tsunami- Reconstruction 
 
SIPDIS 
------------------------ 
 
¶13.  (U) Ambassador Hartwick consulted with the UNDP on the status 
of Dhiggaru Island, adopted by the Bush-Clinton Fund. 
Reconstruction delays are blamed on the high cost of materials and 
transportation, island capacity constraints, and a shortfall in 
funding.  The UNDP considers Dhiggaru Island a model island because 
it exemplifies UNDP best practices in integrating the community into 
the reconstruction process, empowering the community to take 
responsibility, installing a system of peer-pressure and reducing 
dependency on donors.  Reconstruction and rehabilitation programs 
were prioritized in the following order: shelter, livelihood 
(fisheries, vegetation); and infrastructure (harbor, soil erosion, 
sea protection).  Almost all of the 161 damaged or destroyed houses 
on the island are completed.  The Dhiggaru harbor rehabilitation 
project, managed by the MT Hojgaart firm, is completed with a new 
quay wall and breakwater.  Construction of a fish market and 
community training to boost production of alternative, value-added 
fish products is underway. 
 
¶14.  (U) COMMENT:  Ambassador Hartwick's meetings further confirmed 
the intensity with which the GORM seeks to develop economically.  As 
a small island nation, Maldives has utilized its most obvious assets 
for economic development:  its sand and palm trees (tourism) and its 
blue waters (its fishing industry).  Embassy will continue seeking 
ways to assist Maldives in its economic diversification and 
development, while identifying opportunities for US business and 
investment. 
 
¶15.  (U) Ambassador Hartwick did not have the opportunity to clear 
this cable. 
 
BLAKE