Did The Maldives Pretend To Set Up A SWF?

Ashby Monk

If you’ve been reading this blog for a while, you’re aware that the Maldives was considering setting up a SWF in 2009 as a sort of ‘ultimate insurance policy’; if the Island nation was completely submerged, the idea was that a SWF could be used to buy new land in another country and move the country’s citizens to the other location. President Nasheed apparently saw a SWF as a way of sustaining some notion of the Maldives even if the Islands themselves disappeared.

While it’s a fascinating idea, I was under the impression that Nasheed had, in the end, decided not to set the fund up. However, in an interview from December, Nasheed described his new fund:

“The fund is now formulated. We will have to save for a rainy day. And during the worst case scenarios, as responsible politicians, we should be able to tap funds and money set aside for a rainy day. So the fund is going on, and hopefully we will have something when the going gets very bad…”

So the Maldives fund is up and running. Or is it?

I just came across a more recent article in which the Maldives UN envoy contradicts the above. He said that the Maldives is in no way planning for a relocation and he sought to clarify the President’s discussion of SWFs (…even though the above seems pretty clear already…). Apparently, Nasheed was simply trying to illustrate the seriousness of the situation by talking about how a SWF could be used to help the country.

“[Nasheed’s] statement on the setting up of the sovereign fund did have the desired effect of raising the awareness of the international community to the stark reality that the Maldives, along with many other small island countries, faced as they try to address the myriad of challenges posed by climate change.”

So does the country have a SWF or doesn’t it? I’m starting to think that this was another political stunt like the underwater cabinet meeting.

In any case, it appears that Nasheed viewed a (pretend) SWF as a way to add credibility and weight to his nation’s precarious position. Even if no SWF exists, it’s still interesting to see how policymakers are using SWFs…or just the idea of a SWF.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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