Statement by Republic of the Maldives Delivered by H. E. Aslam Shakir, 
Minister of State for Finance and Treasury

11 January 2011

Mr. Chairman,

Secretary-General of the Conference


Distinguished delegates

Ten days ago, on January 1st, the Maldives graduated from the list of Least Developed Countries.

As my President, H.E. Mr. Mohamed Nasheed made clear shortly after this historic moment, graduation should be seen first and foremost as an achievement – following many years of strong growth; and as an opportunity for the Maldives to move to the next levels of its socio-economic development.

That said, the President also made clear that the Maldives must not move forward into the reality of life as a Middle-Income country with its eyes wide shut, hoping for the best. Rather he stressed that we must be aware of the new challenges that we will face with the loss of LDC benefits; and strive to overcome those challenges by speeding up its market-based and private sector-led economic reforms.

A young, dynamic, competitive economy such as the Maldives, with a world-class tourism sector, has nothing to fear from the greater competition that will come with its full integration into the world economy. On the contrary, we have much to gain.

That said, the Maldives Government has also made clear on many occasions that graduation must not occur in an overly abrupt or haphazard manner, but rather as part of a carefully calibrated process based on the UN-endorsed concept of “smooth transition”.

And in the longer-term, we have argued that the well-known and well-documented vulnerabilities of Small Island Developing States do not disappear the moment we are taken off a certain UN list. Our deep economic, social and environmental vulnerabilities, which were largely ignored by the Committee on Development Policy, ECOSOC and the General Assembly when the decisions were taken to graduate us, will persist and challenge us for as long as we remain a sovereign State. We cannot avoid those

vulnerabilities; all we can do is acknowledge them and overcome them. To do so will require efforts on our part to ensure that our economy and society are as resilient and as flexible as possible, so that we can face-up to the socio-economic and environmental shocks that will surely come our way. But it will also require greater recognition, at UN level, of the particular vulnerability of SIDS, and a better and more efficient UN framework for responding to those vulnerabilities. This is why the Maldives supports the establishment, as soon as possible of an officially recognized SIDS category at UN level.

However, I would like to focus my statement today on the aforementioned issue of smooth transition.

In this regard, I will make 2 points.

First, although the concept of smooth transition is endorsed by the UN, in resolutions 46/206 in 1991 and 59/209 thirteen years later in 2004, they have not been implemented in practice for the reason that there is no common understanding of what it means, and there is no clear idea of who is responsible for it. This means that countries like the Maldives are essentially left to fend for themselves, to press, cajole and negotiate with our international partners to ensure that LDC benefits and privileges were not abruptly discontinued on January 1st, but rather are phased out in a manner that does not risk engendering development reversal.

On this point, I think it is important that I say here today, frankly and honestly, that the experience of the Maldives in preparing for and ensuring a smooth transition has not been rife with difficulties. With the exception of advice from UNCTAD, we have received almost no UN support in preparation for graduation, either in terms of capacity-building, advice, impact assessments, or in terms of very important and concrete issues such as the phased withdrawal of UN travel support.

I say this not to play a blame game, but because the Maldives is only the 3rd country to graduate from the list of LDCs and thus it is important that we, as a community of nations, learn from our mistakes, acknowledge our deficits, and work to improve the system so that future graduating countries will not face the immense challenges and uncertainties that we have.

It is true that many of our international partners have been extraordinarily helpful in supporting us through graduation. For example, the EU kindly agreed to extend its “Everything but Arms” preferential trade regime for a further 3 years, Switzerland has agreed to continue providing us with budgetary support for our Permanent Mission in Geneva, while the WTO has taken a range of steps to ensure that LDC preferences are not abruptly severed. I would like to take this opportunity to thank these and other partners for their kind support.

However, the fact is that these measures were taken in an ad-hoc, rather than a systematic manner. The EU’s decision has not been mirrored by other trading partners, and the WTO’s considered and structured approach has not been mirrored by the UN.

Which brings me to my second point – namely the need to clarify, at UN level, what precisely “smooth transition” should mean in practice, what should happen to support

countries going through graduation, and who is responsible for what.

We believe that OP 4. of resolution 59/209 is quite clear in the General Assembly’s intent. We believe that smooth transition is meant to take place immediately after graduation, and is grounded in the notion of a phasing of those benefits identified as required to prevent the disruption of the country’s development, and does not refer to the 3-year grace period between the time the General Assembly makes its recommendation for graduation and the time a country.

Additionally, we believe that a smooth transition mechanism should reassess the county’s socioeconomic situation relatively close to its formal graduation date in order to examine the effectiveness of its transition plan. Since graduation is not meant to threaten the success of LDCs, or the investments directed towards them by the international community, assurance that transition plans are effective is in the best interest of the identified country, its development partners, and the UN-system.

Had this framework been operationalized as part of the graduation process, Maldives would have been better prepared to deal with its graduation. Thus, we hope to see the new Program of Action embrace this need to institutionalize this concept once and for all, so that those identified for graduation in the next decade will face it with the certainty and confidence required for a more sure footing in the international market.