Event

On 23 September the opposition alliance, led by Ibrahim Mohamed Solih of the Maldivian Democratic Party (MDP), won the presidential elections with 58% of the votes. The voter turnout reached an impressive 89%. Incumbent President Abdulla Yameen has accepted defeat and is due to leave office in November. The Electoral Commission will confirm the official result by the end of the week.

Impact

Despite President Yameen’s great unpopularity, his possible defeat was far from certain and was considered potentially destabilising and violent. The climate had become tense since last February’s 45-day state of emergency. In addition, most foreign media and international observers were barred from respectively covering and monitoring the latest elections. Given the political control of key institutions such as the electoral commission, justice (the chief of justice was jailed and the country’s Supreme Court reshuffled earlier this year) and police while the opposition was considerably weakened, the elections were expected to be unfair and the result disputed.

The wave of support for the opposition has probably been too strong for the President to risk confronting street protests and a potential military coup. Yet, the coming weeks and months will tell whether the peaceful change of power is effectively endorsed and will lead to fundamental changes. This is certainly a great opportunity for this small archipelago to reverse the negative trend under Yameen’s 5-year mandate. Restoring democracy – a regime actually only experienced under Mohamed Nasheed’s term in 2008-2013 – and the rule of law, once again tolerating civil society and independent media and reducing the use of force are probably the number one hopes for the Maldives. Indeed, the country has been engaged in a race to the bottom, as Yameen’s regime has gradually turned into an autocracy. Moreover, the country has seen Islamist radicalism and militantism mushroom, which threatens domestic stability in the long term. The barely known new 54-year-old president was chosen to replace Nasheed, the exiled popular former MDP leader, to lead a united opposition. Among his first decisions, he is likely to set the tone of change by freeing Yameen’s political opponents from prison, including ex-president Gayoom. Nasheed is also expected to return home sometime in the future. Running the government could nevertheless be a hard task for Mr Solih as the opposition alliance was primarily formed to oust Yameen from power. Reconciling divergent coalition views on government policies could prove to be difficult.

Another consequence of this political change could affect the economic situation. During Yameen’s rule, the country has been actively developing port and airport infrastructure – to raise future tourism revenue – thanks to Chinese loans, albeit at great cost, as public debt has been rapidly deteriorating (from 57.1% of GDP in 2015 to an expected 71.1% in 2018) since works began. The lack of transparency regarding possibly unfavourable external debt terms is worrying as the Maldives’ external debt could be less sustainable than officially reported. Faced with the risk of a “Chinese debt trap” like some other Asian countries involved in China’s “Belt and Road” projects, the opposition announced during the campaign that it would review those financing terms. This would go together with a normalisation of relations with the West and a rebalancing of foreign policy too as the MDP is said to be closer to India, its traditional ally. Unsurprisingly, after years of Malé being more inclined towards Beijing, New Delhi was quick to congratulate the opposition on their victory. Despite the improved political outlook, Credendo’s MLT political risk rating is not about to change given persisting downside risks such as weak public finances, a deep current-account deficit and uncertain actual external debt levels.

Analyst: Raphaël Cecchi – r.cecchi@credendo.com