Update Country Report Maldives 14 Sep 2020

• The ruling Maldivian Democratic Party (MDP) holds firm control of the presidency and executive in the Maldives.
• The danger of factional splits within the party poses the biggest threat to political stability.
• This threat has increased recently, following a disagreement between Mohamed Nasheed, leader of the MDP, and Ibrahim Mohamed Solih, the president, over the future of a member of the cabinet.
• The Economist Intelligence Unit does not expect heightened tensions to cause a factional split. That said, the chances of further party infighting have risen.

Mr Nasheed, a former president of the Maldives (2008-12) and current speaker of the People's Majlis (the legislature), has raised allegations of corruption against the Ministries of Finance and Economic Development over the implementation of the National Single Window Project, an electronic platform enabling stakeholders engaged in foreign trade to submit all the standard information and documents necessary to meet the statutory requirement through a single entry point.

Mr Nasheed moves to clamp down on corruption

The Asian Development Bank (ADB), which is funding this US$6.7m project, has also put it on hold, claiming that the government has awarded the turnkey contract to an ineligible party. In light of these developments, Mr Nasheed has demanded the resignation of the minister of economic development, Fayyaz Ismail, from his post in the legislature. While Mr Ismail has denied any wrongdoing in the matter, a spokesperson for the ministry has admitted that, owing to a technical oversight, the project was awarded to an ineligible party.

In August Mr Nasheed tried to initiate a no-confidence motion against Mr Ismail. Despite Mr Nasheed managing to secure signatures from 30 legislators (at least 10 signatures are needed to table a no-confidence vote against a cabinet minister), the motion was not introduced in the Majlis because Mr Solih firmly backed Mr Ismail, stating that Mr Ismail had his full confidence and that he saw no reason to have him dismissed.

Following this unsuccessful attempt, Mr Nasheed submitted an open letter to the chairperson of the MDP, Hassan Latheef, in early September. In his letter, he sought the party's support in compelling Mr Ismail to resign from his ministerial post, arguing that the MDP's scandal-free public image is at risk of being tarnished by the minster's refusal to accept responsibility for the lack of oversight at the ministry of economic development. Mr Ismail continues to deny these allegations, and has refused to step down as long as he has Mr Solih's trust.

Disunity within the MDP will threaten political stability

These recent developments have elevated the risk of political infighting within the MDP. We have long highlighted this risk, as we believe that Mr Nasheed is not likely to be comfortable accepting a secondary role in the government. While we do not expect the current escalation in tensions between Mr Nasheed and Mr Ismail (and, by extension, Mr Solih) to spiral out of control and cause a factional split in the MDP, the chances of further such clashes within the party, particularly between Mr Nasheed and Mr Solih, have risen.

Our core forecast remains that, recent bickering notwithstanding, the MDP's firm control over the executive and legislature will aid policy effectiveness of the government. Despite the threat to his leadership posed by Mr Nasheed, we expect Mr Solih to complete a full term in office to 2023.