2016 Country Review
Table of Contents
Chapter 1 1
Country Overview 1
Country Overview 2
Key Data 3
Indian Ocean Islands 5
Chapter 2 7
Political Overview 7
Political Conditions 9
Political Risk Index 21
Political Stability 36
Freedom Rankings 51
Human Rights 63
Government Functions 65
Government Structure 67
Principal Government Officials 70
Leader Biography 71
Leader Biography 71
Foreign Relations 73
National Security 76
Defense Forces 77
Chapter 3 79
Economic Overview 79
Economic Overview 80
Nominal GDP and Components 82
Population and GDP Per Capita 84
Real GDP and Inflation 85
Government Spending and Taxation 86
Money Supply, Interest Rates and Unemployment 87
Foreign Trade and the Exchange Rate 88
Data in US Dollars 89
Energy Consumption and Production Standard Units 90 Energy Consumption and Production QUADS 91
World Energy Price Summary 92
CO2 Emissions 93
Agriculture Consumption and Production 94
World Agriculture Pricing Summary 96
Metals Consumption and Production 97
World Metals Pricing Summary 99
Economic Performance Index 100
Chapter 4 112
Investment Overview 112
Foreign Investment Climate 113
Foreign Investment Index 116
Corruption Perceptions Index 129
Competitiveness Ranking 140
Stock Market 150
Partner Links 150
Chapter 5 151
Social Overview 151
Human Development Index 154
Life Satisfaction Index 157
Happy Planet Index 169
Status of Women 178
Global Gender Gap Index 180
Culture and Arts 190
Travel Information 191
Diseases/Health Data 199
Chapter 6 205
Environmental Overview 205
Environmental Issues 206
Environmental Policy 208
Greenhouse Gas Ranking 209
Global Environmental Snapshot 221
Global Environmental Concepts 232 International Environmental Agreements and Associations 246
Bibliography 271 Seychelles
Seychelles Review 2016 Page 1 of 283 pages
Seychelles is a country of the Indian Ocean archipelago. A lengthy struggle between France and Britain for the islands ended in 1814, when France ceded the islands to Britain. Seychelles achieved independence in 1976. The country has remained a multi-party democracy with the adoption of a new constitution in 1993. Since independence, Seychelles has experienced impressive economic growth and achieved prosperity with the highest per capita income (around US$10,000) in Africa. Its main economic activities are tourism and fishing, with tourism contributing about 70 percent to foreign exchange earnings.
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Region: Indian Ocean Islands
Tropical marine; humid; cooler season during southeast monsoon (late May to September); warmer season during northwest monsoon (March to May).
Languages: French (official)
Currency: 1 Seychelles rupee (Sre$) = 100 cents
National Day is 18 June (1993), Independence Day is 29 June, Liberation
Day is 5 June
Area Total: 455
Area Land: 455
Coast Line: 491
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Indian Ocean Islands
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The French were the first regular inhabitants of the Seychelles. British attempts to take possession th of the Seychelles in the late 18 century were confounded by the pacifying tactics of Governor
Queau de Quinssy, who several times surrendered to British aggressors, then after their departure, raised the French flag again.
After the Napoleonic wars, by the Treaty of Paris (1814), the Seychelles was ceded to Britain, together with Mauritius. From then until 1903, it was administered from Mauritius.
The Seychelles had long provided a transit point for slaves from Africa. It was this bringing of slaves to the Seychelles that gave birth to the mixed decent majority population. Britain abolished th trade in slaves at the beginning of the 19 century (abolishing slavery itself in 1834), and British vessels were active in attacking Spanish, Arab and other slaving vessels.
About 3,000 Africans rescued from Arab slave traders on the east African coast between 1861 and 1874 were removed to Seychelles where they ultimately became laborers on British-owned plantations. The Seychelles was also a common place of exile for West African chiefs who resisted th
British control. In the late 19 century there was also a small immigration of Chinese and Indian traders who formed settlements and comingled with the rest of the population.
Vanilla was a predominant export crop of the Seychelles at the turn of the century. However, in
1918 an artificial substitute was discovered and vanilla prices collapsed worldwide. Poverty became widespread for Europeans and Creoles alike. New cash crops such as cinnamon and copra were then introduced. In the 1940s, the Association of Seychelles Taxpayers protested against
Britain's management of the islands.
In 1964 the Seychelles Democratic Party (SDP), led by James Mancham, and the Seychelles
People's United Party (SPUP), led by France Albert René, were founded. The SDP favored retaining close ties with Britain; the SPUP campaigned for autonomy.
Universal adult suffrage was introduced in 1967 for elections of members of the Legislative
Council. The council became a 15-member Legislative Assembly (later National Assembly) in 1970 and general elections were held in which the SDP won six seats and the SPUP five. Mancham
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Seychelles became chief minister. At the next elections in 1974, the SDP won 52.4 percent of the vote, the SPUP 46.7 percent.
Seychelles achieved internal self-government in 1976. The parliament then voted for independence, finalizing a new constitution shortly thereafter. The Seychelles became an independent republic within the Commonwealth with Mancham as president and René prime minister.
Note on History: In certain entries, open source content from the State Department Background
Notes and Country Guides have been used. A full listing of sources is available in the Bibliography.
Political Chronology --
In 1964 the Seychelles Democratic Party (SDP), led by James Mancham, and the Seychelles
People's United Party (SPUP), led by France Albert René, were founded. The SDP favored retaining close ties with the United Kingdom (U.K.); the SPUP campaigned for autonomy. After independence was achieved in the 1970s, Mancham as became president and René became prime minister.
Mancham's policies favored development based on tourism and offshore financial services, and close relationships with the West; this was opposed by the SPUP, which favored a non-aligned policy and the development of a self-reliant economy centered on nationalized industry. While
Mancham officially followed a policy of non-alignment, his close relations with France and the United States extended to assisting with strategic agreements including an American military radio tower and docking rights for naval vessels.
Mancham, 36-years-old in 1976, was known throughout Europe and Africa as a playboy. His famed image riding in the back of his convertible presidential Rolls Royce with scantily clad
Scandinavian women surrounding him preceded his every political move. While he was not accused of shirking his presidential responsibilities, there is no doubt that he used his position to leverage extravagant vacations throughout the world.
In June 1977, while Mancham was at a Commonwealth Summit in London, Prime Minister René
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Seychelles launched a successful coup. The coup was ostensibly carried out by a make-shift army of two hundred teachers, clerks, truck drivers and dockworkers. However, a few highly trained Tanzanian soldiers led the attack. The first destination of the rebels was the police armory where they could obtain rifles and automatic weapons. A brief shootout with police led to one death on each side before the bulk of the police joined in storming the State House. Commandeered radio broadcasts announced throughout the day that anyone venturing into the streets of the capital would be shot on site.
There was significant evidence to support the idea that there was at least some Soviet involvement in the overthrow. Suspicions of this sort notwithstanding, René took power immediately following the coup. He consolidated power, renaming the SPUP the Seychelles People's Progressive Front
(SPPF) and banning all other parties. Despite his socialist leanings, he assured the international business community that it would not be harassed and that business would continue as usual in all sectors including tourism. Further, he said that the new government would respect existing agreements with other countries and would remain non-aligned. He brought in 400 Tanzanian troops to help him build an army and he instituted a 1:00 a.m. to 5:00 a.m. curfew. The international community, including those in the West, were quick to recognize the new Rene government.
France, the United States (U.S.) and the United Kingdom (U.K.) saw this shift of government in the Seychelles as a crisis. Despite its tiny size, the Seychelles is located in strategically important neighborhood. The U.S. and U.K. had removed the inhabitants of nearby island of Diego Garcia in the late 1960s, in order to build a substantial naval base. Decades later, it would be from this base that the U.S. and U.K. most famously launched strikes against Iraq during the Gulf War.
With Comoros home to a pro-Western government, Reunion remaining a French territory, and Madagascar's new socialist government showing no signs of allowing a significant Soviet military presence, the Soviet Union had been frustrated in its attempts to establish its influence in this region of Indian Ocean Africa, thus limiting its access to east Africa, the Indian sub-continent and Oceania. The West now feared that this political shift in the Seychelles would enable Soviet warships to counter the American buildup in the Indian Ocean and threaten the sea-lanes that carried Persian Gulf oil to Europe and Japan.
The vocal Franco-American disdain of the new government led René to fear a Western-backed counter-coup. René's fears were well founded. In November 1979, mercenaries recruited in South
Africa invaded the Seychelles in an attempt to unseat Rene. There was some evidence that special services of the U.S. and France were directly involved in planning and preparing the attempted coup d'etat. Ultimately, it failed -- however, the mercenaries managed to escape. Two years later, in November 1981, another coup attempt was made. Forty-three South Africa-based mercenaries landed at the Victoria airport as tourists and attempted to enter the country. The plot was foiled when a curious customs inspector detected a false bottom on a suitcase. Opening it, he found an Seychelles Review 2016 Page 10 of 283 pages Seychelles automatic weapon. A shootout ensued and the customs inspector and one of the mercenaries were killed. The mercenaries successfully hijacked an Air India aircraft and headed back to South Africa where they were arrested.
The leader of the attempted coup d'etat was the legendary Michael Hoare. Hoare gained fame leading the CIA-backed coup that overthrew Patrice Lemma and installed Mobutu Sese Seko as the president of Zaire (now known as Democratic Republic of Congo) in the mid-1960s. At his
South African trial in 1982, Hoare implicated France and the U.S. in the botched coup attempt and argued that South Africa not only knew about the plan beforehand but, in fact, supplied the arms.
While all three governments vehemently denied Hoare's claim, it was, indeed, supported by a former South African government operative, one of five of Hoare’s mercenaries captured at the airport, as well as various other sources. Hoare was eventually convicted of espionage and hijacking and sentenced to life in prison. He would, however, benefit from the fact that his sentence was commuted 18 months later. In 1989, he was seen in Zaire (now known as Democratic Republic of Congo) leading a small army. They were apparently scuffling with the army of his arch-rival, Bob Denary, who gained fame for his coup activities in the Comoros.
The Seychelles never allowed the Soviet Union to build a naval station on the islands. Instead, it allowed the U.S. to maintain its tracking station. However, it remained a tributary prize for the two superpowers for the duration of the Cold War. Writing about U.S. and Soviet strategic interests in the region, scholar George W. Shepherd quoted a Kiswahili proverb, "When two bull elephants fight, the grass gets trampled." That said, René's policies seemed more like vacillating strategic alignment than non-alignment, thus he was hardly a passive target. Shepherd, nonetheless, makes a convincing argument that the Seychelles was akin to the proverbial trampled grass during this period. In order to alleviate this crush, the Seychelles worked at maintaining good relations with the West, while strengthening its ties with the former Soviet Bloc and with Libya, Iraq, Algeria and North Korea.
Despite the failed coups, opposition from exiled political supporters of the SDP and Mancham continued throughout the 1980s. Indeed, opposition was reinforced by the turning of the international tide against centralized economic control and one-party rule towards the end of the decade. By 1990, opposition within the country also became vocal, and the government began to consider the need for change.
In December 1991, the government of President France Albert René passed legislation to provide for a multiparty alternative to the one-party system. Eight parties were registered by July 1992, when elections to the Constitutional Commission were held. René took 59 percent of votes in the presidential election and Mancham 36 percent. René's party, the Seychelles People's Progressive
Front (SPPF) gained a large majority-27 of the33 seats-in the National Assembly.
Two of the issues the Seychelles continued to confront were ethnicity and democratic
Seychelles Review 2016 Page 11 of 283 pages Seychelles consolidation. The Seychelles is comprised of people from African, European, Indian and Chinese origin. Ethnic identities, especially Chinese and Indian origins, play an important role in the formation of political alliances. While successful elections in the Seychelles have become commonplace, as a young democracy with significant centralist tendencies, the Seychelles was still facing many challenges of democratic institution-building and the cross-fertilization of the political roles of the judiciary, the legislature, and the still very strong executive.
These two meta-issues aside, another significant matter facing the Seychelles was the implementation of its economic liberalization program. With his new electoral mandate, René was forced to address the changing nature of the global economic system. Liberalization of the political system was thus followed by some moves to liberalize the economy; economic issues became prominent on the political agenda. The Economic Development Act of 1995 was passed to encourage private and foreign investment. However, the package of incentives it offered to investors did not find favor with the international business community and the program was withdrawn. Policy now allowed for shared control of economic resources between the public and private sectors. In the economically important sector of tourism, the government continued to retain a measure of control.
The government has had an impressive record in developing the economy, and a large percentage of the population enjoys a relatively high standard of living. In 2000 the GDP per capita was well above that of neighboring African countries. In his June 2001 address celebrating 25 years of Seychelles independence, René renewed his assertion that development would be fundamental to the government agenda. However, a slowed economic growth rate (to 1.2 percent) and fiscal instability created new challenges for the archipelago.
In an effort to overcome economic vulnerability, and to encourage development, the government of the Seychelles has tried to draw on its strength as a small country by focusing on key industries in which it can excel. For instance, in 1995 René's passed legislation that would allow anyone investing $10 million or greater in Seychellois banks to protect their anonymity and to receive a Seychellois diplomatic passport. As a United Nations-member country, the passports would provide diplomatic immunity to the holders throughout the world.
While this was done in an effort to attract much needed foreign currency, and to bolster the Seychelles' position as an international offshore tax haven, in effect, the law gave criminals a safe haven. Western government immediately accused the Seychelles of legalizing international money laundering and lending to the increase of international cartels. The legislation was immediately challenged by the major political party, United Opposition (UO).
Under significant international pressure, the René government repealed the "Economic
Development Act" after three months. However, the Seychelles has continued to work towards attracting foreign investors. In 1997, a study by the Group of Eight concluded that the Seychelles
Seychelles Review 2016 Page 12 of 283 pages Seychelles was one of 40 offshore paradises that have become magnets for dirty money. In July 2000, an Organization for Economic Cooperation and Development (OECD) report further identified
Seychelles as a country where the investor does not have to account for the source of the money invested. The OECD, therefore, accused Seychelles of being a tax haven for illegally sourced funds.
For its part, the Seychelles government argued that as a destination for investment funds, the Seychelles had become an important member of the borderless economy and was a leader in the transformation of the once border-bound economy. Nonetheless, under significant international pressure, the Seychelles reached an agreement with the OECD in February 2001. In particular, the Seychelles agreed that by December 2001 it would propose a program for eliminating what the OECD calls "harmful tax practices" by 2005. The country agreed to abolish the non-transparent features of its offshore taxation system, such as the regulation allowing for certain investors to negotiate a personal tariff directly with authorities. Offshore oil companies would also be allowed access to the local market but preferential treatment for companies would be abolished. In exchange, the OECD did not include the Seychelles in its July 2001 report recommending retaliation against nations with rogue tax structures.
It was clear that as the economic landscape of the Seychelles shifts, taxation and monetary policy will both continue to be vexing issues in the Seychelles throughout the next several years.
In 2000, Seychelles entered into a foreign exchange crisis. In January 2001, foreign exchanges holdings in the national bank totaled less than the value of two weeks of imports and external payments amounted to between $50million and $60 million. The government tried to stem the crisis by getting foreign companies to pay their taxes in foreign currency instead of rupees.
However, the largest foreign operators in the country, airlines, were unable to repatriate funds due to the lack of foreign currency.
One of the more controversial measures the government took in reaction to the foreign exchange crisis was intervention into the exchange rate of the rupee, effectively pegging the currency at or near US$1 to 5.8 rupees. Almost immediately, a parallel exchange market began to form. In
January 2001, the International Monetary Fund (IMF) Management Committee on the Seychelles started putting pressure on the government to devalue the currency. However, six months later,
President René continued to hold a firm line that devaluation was not in the interest of his country.
The rupee continued to be overvalued and the black market continued to expand. Also aggravating the situation was the need of the government to hold on to 60 percent of hard currency in order to maintain scheduled debt service. In effect, the lack of hard currency was strangling the growth of a viable business sector. President René announced plans to institute foreign currency mechanisms such as currency declaration forms. The IMF, however, viewed this as a regressive measure.
When considering liberalization, perhaps the most significant sector of government attention
Seychelles Review 2016 Page 13 of 283 pages Seychelles remained that of tourism. The government needs to tax the tourism sector since it has been one of the primary sources of foreign exchange. But the business sector has argued that only an unfettered environment will lead to the expansion of entrepreneurial activity. As such, tourism operators protested the new tax on hotel beds imposed in the 1997 budget.