Copyright (c) 2005, 
Dow Jones & Company Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.MALE, Maldives -- While many remote fishing communities on this country of 1,190 small coral atolls were decimated in last week's tsunami, tourists are once again heading to its exclusive resorts. Overall, the economic impact of the disaster here appears less than initially feared -- exposing deep inequalities in the way the Maldives' tourist-driven economy has evolved.
A day after the earthquake-generated waves hit the Maldives, the stock exchange reopened for trading. "There was no big selloff" in the three stocks traded on the exchange, said Fathimath Shafeega, who oversees the bourse. "In fact, there wasn't much trading at all, but that's not unusual for us."
In other parts of the 508-mile-long archipelago, the Dec. 26 tsunami wreaked havoc. At least 80 people died and thousands more lost their homes as the ocean submerged their islets. Shacks, makeshift schools and rudimentary medical clinics were swept away by the sea.
Indonesia, Sri Lanka, India and Thailand have seen a much bigger loss of life and property in the catastrophe. But in the Maldives, a third of the country's 270,000 people need relief aid of some kind, said United Nations resident representative, Moez Doraid. Half the archipelago's schools have been destroyed. Fishing fleets have been wiped out or damaged. Government officials estimate the cost of reconstruction could reach $1 billion -- roughly equivalent to two years of the Maldives' gross domestic product.
Yahya Yusof lost his life savings when the tsunami swept away his new chicken farm on Himmafushi Island. "Chickens don't fly very well," he sighed. Also gone is a banana grove that generated nearly $700 a month, cash that helped support and school his five children. Mr. Yusof estimated it would take 18 months for his salt-encrusted land to recover sufficiently to resume cultivation.
But his fate has little to do with the economic backbone of the country: tourism, which contributes a third of the Maldives' GDP and is by the far its biggest earner of foreign exchange.
Since the 1970s, tourism has evolved as the dominant industry underpinning the Maldives' economy. Wealthy executives and celebrities prize the country's seclusion and beauty. Their spending power provides 40% of government revenue, which has helped the country achieve some impressive successes. During the past 25 years, the average life expectancy has risen to 73 years from 44. Annual per- capita income has climbed to $2,500 from about $200.
"There is very little that happens in the Maldives economy that doesn't have some connection to tourism," said Ms. Shafeega, the stock-exchange manager. The stock exchange, for instance, is focused on companies in the tourism industry.
While local communities struggle to cope with the devastation, foreign tourists continue to pour into the Maldives. Two days after the catastrophe, resort occupancy levels were a robust 61%. A couple of days after that, on Dec. 30, the number of tourists arriving in the islands exceeded those departing. Ten thousand visitors -- mainly from Europe and Asia -- spent New Year's Day windsurfing, snorkeling and relaxing on the beach at one or another of the Maldives' 59 unscathed resorts, many of which were protected from the tsunami by the coral reefs that lure so many visitors.
"My first impression was 'we're done, we're history,' " said Joerg Limper, the general manager of the Full Moon Resort on Furna Fushi Island. "There was no power, no water, no nothing. But then we found we could restore power, that we could restore our services. We were serving drinks again within 30 minutes."
The contrast underscores how separate the Maldives' two worlds are. In the wake of the tsunami, some observers and aid agencies are urging that more be done to ensure that wealth generated by the Maldives' pristine beaches and coral reefs trickles down to the country's poorest people.
The first thing some are pointing to is the political system. The country's president, Maumoon Abdul Gayoom, has been in office for 26 years. While the government has begun a gradual process of liberalization, there are no political parties, and the parliament usually carries out Mr. Gayoom's will.
"The country needs to be more inclusive and improve rule of law and participation in the political system," said the U.N.'s Mr. Doraid, pointing out that the introduction of full democracy has often accompanied long-term economic improvement in other countries.
In the wake of the disaster, the government has made some moves toward openness. Shortly after the waves struck, Mr. Gayoom took the unusual step of leaving his heavily guarded palace to speak with ordinary Maldivians and to seek to reassure them. Then on Dec. 31, Mr. Gayoom announced that charges had been dropped against 24 people arrested after a violent antigovernment demonstration, including four charged with high treason.
Ahmed Shaheed, Mr. Gayoom's chief spokesman, said the charges were dropped to foster national unity. "This is a defining moment in our political evolution," he said. "Now we need to focus everyone on reconstruction."
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