Wake-up call

Protests against the soaring prices of essential items and the economic mismanagement of the government rock Male.

in Colombo

AS Maldivian President Mohamed Nasheed turns 44 on May 17, he will be searching for a lot of answers: how did the popular revolution, ushered in through the first democratic elections in over 30 years, wither away? What unpopular steps did he, the youngest head of state in the region, initiate since he assumed office on November 11, 2008, to antagonise so many people in his country in such a short time?

After all, until as recently as two and a half years ago, he was one of them. Repeatedly jailed from 1990 on one pretext or the other, including a charge relating to terrorism, this Amnesty International Prisoner of Conscience, who was at one point forced to become a political refugee in England, is now compelled to handle protesters in the same Republican Square where he once sat to observe Black Friday (August 13, 2004), a day that commemorates the people who suffered at the hands of the Maldivian National Security Service.

Looking back, it all seems from another era: the Maldives, an archipelago of almost 1,200 coral islands, with a population of 370,000 Muslims, has been on the boil for over a week. Protests began from the evening of May 1 in Male, on busy streets and in public spaces, by a handful of youngsters expressing their dissatisfaction over soaring prices of consumer goods and essential items and the economic mismanagement of the government. The main catalyst for the price rise was the government decision to allow the Maldivian currency, the rufiya, to float in a 20 per cent band.

In fact, this was among the measures that the International Monetary Fund (IMF) had wanted to shore up an economy that was virtually disintegrating. Since the Maldives imports all its needs, the move resulted in all imports overnight becoming 20 per cent more expensive.

Earlier this year, the government also introduced a 3.5 per cent goods and services tax (GST) for the tourism industry and passed legislation to introduce a business profits tax. The government also introduced a package of measures to restructure the civil service through voluntary redundancies. None of these measures was popular.

Quoting the World Bank, Nasheed's supporters say that his government inherited the worst economic situation of any country undergoing democratic transition since the 1950s. The budget deficit stood at 31 per cent of the GDP, inflation stood at 12 per cent, and the economy was reeling from a massive fiscal expansion, which saw the government wage bill increase by almost 400 per cent between 2004 and 2009.

For the Maldives, the belt-tightening could not have come at a worse time: it had barely recovered from the effects of the devastating Indian Ocean tsunami when the slowdown in the West (which affected the flow of tourists) hit home. This was followed by the serious disturbances in the Arab world, a region that the Maldives is tied to historically.

The protests were organised by the opposition parties even though these were labelled as youth-led. This led to a bizarre situation. Since the main opposition, the Dhivehi Rayyithunge Party (DRP), claimed that it had nothing to do with the protests, the government was left with no one to talk to. The government had maintained that a faction of the DRP [Z-DRP], led by former President Maumoon Abdul Gayoom, was behind the protests. It said that Gayoom was inspired by the events in Cairo's Tahrir Square and that he was hoping to overthrow the government after crippling its functioning.

There are indications that the current violence taking place in Male has everything to do with a political struggle for who should lead the main opposition party, the DRP, into the next presidential election. It is unfortunate that that struggle is being played out on the streets of Male rather than, as should be the case, by holding an open and transparent primary, the Maldivian Foreign Minister, Ahmed Naseem, said in Colombo last fortnight when asked about the protests.

Reports indicated that the number of people detained was about 300, but the Foreign Minister dismissed it. Only 16 persons have been held, he said. The Maldives Police Service said on May 8 that of all those arrested during the previous week of protests, six remained in detention under judicial warrant. All six had previous criminal records, it said.

The government understands that many people are concerned about the economy and the recent price rise, and is committed to working to address these concerns through a process of dialogue. For example, yesterday [May 5] the Cabinet decided to halve the import duty on diesel fuel. However, the current economic difficulties reflect, at their heart, deep-seated structural problems inherited from the former government. The government is working closely with the IMF to address these problems. This has already resulted in the deficit being reduced from 31 per cent to 16 per cent, the Foreign Minister added.

Counter-protests

Acting on the advice of his peers and fed up of the daily protests since May 1, President Nasheed gave the green signal to organise a counter-protest. At a pro-government rally, some 3,000-4,000 strong, on Friday afternoon (May 6), he challenged the Z-DRP faction to seek power through the ballot box. If you want power, face me in the 2013 presidential elections, he said.

The President vowed to continue the government's economic reforms to reduce the budget deficit and balance government spending and income. But an indication of what the future holds came from the crowd. Many people in it chanted for the arrest of former President Gayoom on charges of corruption and human rights abuses during his 30 years in power. In other words, they want Nasheed, who was once among the oppressed, to become the oppressor.

U.S. steps in

India, Sri Lanka and the United States have kept a close watch on the situation in the Maldives. Nasheed is an old friend of Sri Lankan President Mahinda Rajapaksa, and Nasheed had, in fact, fled to Sri Lanka when President Gayoom's police were after him around 2005. India has strategic interests in the Maldives and its Joint Secretary in the External Affairs Ministry (in charge of Bangladesh, Myanmar, Sri Lanka and the Maldives) spends a disproportionately large amount of time speaking to various players in the country.

Concerned over the situation, the U.S. dispatched its Assistant Secretary of State for South and Central Asian Affairs, Robert Blake Jr., on April 30. This was Blake Jr.'s second visit to the Maldives in less than a year, and he was the second high-ranking U.S. official to touch down in Male in less than four months. Blake Jr. was U.S. Ambassador to Sri Lanka from 2006 to mid-2009 and was also accredited with the Maldives. In January, U.S. Deputy Secretary of State James Steinberg, who is on a whirlwind tour of the major capitals of Asia and Africa, found time to visit the Maldives on January 28 and 29.

In a telephonic press conference with South Asian journalists on December 15, 2010, Blake Jr. said: It's going to be very important now for, I think, all of the parties to work together to find common ground and to work to help the interests of the Maldivian people. So it's important, again, I think, for all the parties to work together. It's important to set aside a lot of the rancour and, again, focus on what is going to benefit the Maldivian people.

This time, Blake Jr. had a strong message to the opposition in the Maldives: work with the government or allow the government to handle the crisis. According to the Maldivian news website Miadhu news, Blake Jr., commenting on the protests, said he encouraged the government and the opposition to work together to try and tackle some of the problems that Maldives was now facing.

Even in older, more established, democracies such as our own, politicians can find it difficult to work together across party lines in the spirit of fairness and bipartisanship for the sake of governing well. They do however when everyone benefits, Miadhu news quoted him as saying.

Uneasy calm

The protests finally ended on May 8. That day, the government met with a small group of opposition representatives from the Z-DRP faction and a few other smaller parties. The government was represented at the meeting by Minister of State for Finance and Treasury Ahmed Naseer and officials from the President's Office. The meeting took place at the Ministry of Home Affairs.

During the meeting, the government delegation explained to the opposition that the current economic difficulties were caused by the expansionary fiscal policies pursued by former President Gayoom. These expansionary fiscal policies have created a huge structural imbalance in the economy, which needs to be rectified through the government's economic reform programme.

The government delegation noted that in the short run the government would work with the State Trading Organisation (STO) to keep the prices of basic goods stable in order to cushion the effects of exchange rate fluctuations. In the long run, it said, the government would help balance the budget by submitting new legislation before parliament to raise tourism goods and services tax, introduce a wider goods and services tax, and to tax the income tax of high earners. The government also noted its intention to remove the import duty on a number of essential goods from January 2012.

The government looked forward to receiving credible, alternative economic proposals from the opposition, said Mohamed Zuhair, Press Secretary with the President's Office.

For now, the protesters have gone home. But with better ferry connectivity, ironically put in place by President Nasheed, they can come back anytime and paralyse Male.

For Nasheed, the clock is ticking. Aloud.