A Tale of Two Small Countries


This August 13 marks the notorious Black Friday in the Maldives. There is still a long way to go till the country becomes a decent democracy.

In another small country, Seychelles, things seems to be going smoothly at least on the democratic front;

To the casual eye, Seychelles seems both fortunate and well-governed. The 115 islands, most of them uninhabited, cover a mere 445 square kilometres (175 square miles) of the Indian Ocean, north of Madagascar, and enjoy several advantages over most of the rest of Africa. The weather is never extreme. There is no malaria. The islanders have free education and health care. Their multiracial society is pretty harmonious. With GDP at around $8,000 a head, there is almost no discernible poverty.

But this standard of living has come at a cost: the IMF says its public debt is too high and may be unsustainable. Mr Michel's main opposition, the Seychelles National Party, which scored 46% in the elections, claims that Seychelles, per person, is the world's most indebted country; with some $590m of external debt for just 82,000 people, it is certainly one of them. A black market in foreign currency already exists as speculation persists that the government, unable to meet its obligations, may be forced to devalue. Basic consumer goods sometimes run out. If, as the IMF predicts, GDP falls by over 1% this year, Mr Michel may find his next five years in power more testing than he had hoped.

The country needs more ways of making money. In the cold war, it was easy. The Seychelles played each side off against the other, remaining a member of the Commonwealth as well as the Non-Aligned Movement and taking military aid from the Soviet Union while leasing a satellite tracking station to the Americans. Since those streams of revenue dried up, the main Seychellois streams of revenue have been from tourism—leasing land to foreign hoteliers—and from tuna: the government earns about $200m a year from selling tuna-fishing licences to Spain, France and South Korea.

For Discussions; Does bigger neighbors have a role to play in promoting democracy in small countries?
* Figures above from WDI 2006.

Fisheries Sector in of Seychelles and Maldives
“We’ve Been Lied To For 30 Years”
The Impact of Globalisation - a Maldivian Perspective
Virtual Seychelles
Australia and the South Pacific: roles and responsibilities; lessons from pacific


I share your (and the IMF's) concerns about the future of the Seychelles economy. I think that the country has failed to unlock the potential of the local private sector, to diversify its economy and to introduce reforms to encourage work and dynamise the economy. It seems that the absence of democracy in the newly democratic Seychelles has had its toll on the economy. Nearby Mauritius, on the other hand, has done extremely well, particularly given the lower endowment in natural resources. A good democracy does bear its fruits.

Throughly enjoy your blog, notably the diversity of the posts.

Fazeer, you're right. I've great admiration for Mauritius.


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This page contains a single entry by Paul published on August 11, 2006 1:48 PM.

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