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The Republic of Maldives is an archipelago of nearly 1200 coral islands located in the Indian Ocean of which only 200 are inhabited. Maldives was a major beneficiary of the Law of the Sea with an Exclusive Economic Zone on 900,000 sq kilometres. The islands form 26 natural atolls which are grouped into 19 administrative units. The Republic of Maldives has a population of 0.3 million and an estimated per capita income of US $732 per annum. Islam is the state religion.

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Maldives was long ago a sultanate, first under Dutch and then under British protection. It became a republic in 1968, three years after independence. President Maumoon Abdul Gayoom ruled for 30 years from 1978, elected to six successive terms by single-party referendums. In August 2004, the President and his government pledged to embark upon democratic reforms including a more representative political system and expanded political freedoms.

Political parties were legalised in 2005. In March 2006, the Government launched its Roadmap for Reform which sets out a two-year timeline to implement a number of reforms (e.g bills on freedom of assembly, the judiciary, police powers and the Human Rights Commission). A Special Majlis (parliament) was formed in July 2004 and charged with drafting a modern, liberal constitution. In June 2008, the Special Majlis - finalised a new constitution, which was ratified by then President Gayoom that August. The first-ever presidential elections under a multi-candidate, multi-party system were held in October 2008. Gayoom was defeated by Mohamed Nasheed, a UK-educated political activist who had several spells in gaol under the former regime. The first multi-party parliamentary elections were held in May 2009. In the People's Majlis there are 77 seats. Members are elected by direct vote to serve five-year terms. The the next elections will be held in 2014.

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Maldives is the lowest lying country in the world (with a maximum natural ground height of less than 3 metres). Maldives is very concerned about the threat posed by climate change and has been active internationally to bring attention to the issue. Maldives' officials have been prominent participants in international climate change talks due to the islands' low elevation and the threat from sea-level rise. Maldives wrote to the Australian Government to express its support for Australia's decision to ratify the Kyoto Protocol.

Maldives belongs to the Cartagena group, which is based on a group of developed and developing countries convened in Copenhagen by then Prime Minister Rudd and former UK Prime Minister Brown. The first meeting was held on 25-26 March 2010 in Cartagena, Colombia. The meeting discussed how to advance the international climate change agenda in 2010. Maldives will host the next meeting from 17-18 July 2010 with Australian cooperation. Other challenges facing the Maldives include strengthening democracy, institution building and drug abuse.

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Maldives is due to graduate from Least Developed Country (LDC) status at the end of 2010. Tourism and commercial fisheries form the basis of Maldives' economy.

Tourism is Maldives' largest economic activity and accounts for 28% of GDP and more than 60% of foreign exchange receipts. Tourism has largely recovered since the 2004 tsunami. Over 90% of government tax revenue comes from import duties and tourism-related taxes. Fishing is Maldives second largest sector. Agriculture and manufacturing play a lesser role in the economy, constrained by the limited availability of cultivable land and the shortage of domestic labour. Most staple foods must be imported.

Maldives government implemented economic reforms, beginning in 1989, that initially lifted import quotas, opened some exports to the private sector and liberalised regulations to allow more foreign investment. Real GDP growth averaged over 7.5% per year for more than a decade, and registered 18% in 2006, due to a rebound in tourism and reconstruction following the 2004 tsunami. GDP slowed in 2007-08 and then contracted in 2009 due to the global recession. Falling tourist arrivals and fish exports, combined with high government spending on social needs, subsidies, and civil servant salaries contributed to a balance of payments crisis which was eased in December 2009 by aUSD79.3 million dollar IMF standby agreement. Diversifying the economy beyond tourism and fishing, reforming public finance and increasing employment opportunities are major economic challenges facing the government.

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Australia and the Maldives share a warm and productive relationship. Australia is a significant supplier of fresh produce for the Maldives' tourist industry. Australia sees room to broaden ties in the areas of development assistance, climate change, counter-terrorism, maritime security and transnational crime.

President Nasheed visited Canberra and Sydney during a Guest of Government visit from 2-4 June 2010. Then Prime Minister Rudd also met President Nasheed twice in 2009 at Copenhagen (COP15) and Trinidad and Tobago for the Commonwealth Head's of Government Meeting (CHOGM). President Nasheed's visit to Australia provided a valuable opportunity to increase collaboration on key international and regional matters including on climate change and security, as well as to discuss new opportunities for closer cooperation. The Minister for Foreign Affairs also called on President Nasheed on 3 June 2010 during the President's visit to Australia.

Then Prime Minister Rudd also met President Nasheed in 2009 at Copenhagen (COP15) and Trinidad and Tobago for the Commonwealth Head's of Government Meeting (CHOGM).

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Australia has a long-standing program of development assistance to Maldives. Australia will provide $4.4 million in assistance to Maldives in 2010-11. Australia's development cooperation program to Maldives focuses mainly on scholarships for Maldivians to study in Australia in priority areas such as health, education, environment and social development. Australian assistance has included around 200 scholarships in the last 10 years. In 2010-11, Australia plans to increase the allocation of scholarships to Maldives and provide further volunteers to assist in teacher training. Australia also provides support for small-scale activities in the areas of governance, health (including HIV responses) and education (including teacher training and development of Maldives National Qualifications Framework).

An additional $500,000 was allocated to the Maldives in March 2010 to target climate change adaption. This assistance is managed by the World Bank.

The tsunami which struck north-western Sumatra in 2004 devastated neighbouring countries, including Maldives. Over five years, the Australian Government provided assistance to Maldives to complete post-tsunami reconstruction and rehabilitation through the provision of technical experts in construction management. Australia also provided significant immediate humanitarian assistance to the Maldives, including through the World Food Program and UNDP and funded Australian engineers to assist with constructing houses and funding for new infrastructure projects.

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Last Updated: February 2011

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