<B>AT LUXURY</B> tourist resorts fringing the sun-kissed beaches of the Seychelles, waiters murmur about their unhappiness with the ruling party. Vendors selling mangoes at the market in the capital Victoria complain about the high cost of living on the Indian Ocean islands, but look over their shoulder before they criticise the government.

Taxi drivers complain candidly about tax increases as they drive passengers along roads lined with palm trees on the main island of Mahe. Talking politics is a sensitive business in Seychelles, especially when it comes to criticising the ruling Seychelles People?s Progressive Front (SPPF). ?It?s obvious that people are unhappy with the government and the opposition is more popular at the moment,? said one diplomat. ?But they won?t openly criticise the government as there seems to be some kind of fear over the people.?

President Albert Rene?s SPPF party has dominated island politics for almost three decades, but disillusionment among the 80,000 Seychellois over the government?s economic policies and excessive state control is creeping in. Along with widespread allegations of corruption, cronyism and a lack of transparency, the government faces the challenge of pulling the economy out of recession before elections in 2006.

Since Rene seized power in a coup in 1977, his socialist government has enjoyed support among the majority by spending generously on social welfare, education, health and housing. Seychelles now ranks top of Africa in the United Nation?s Human Development Index, boasting a per capita income of $8,000 and literacy rates of more than 90 percent. But the spending has come at a cost. The central bank says the government owes $200 million to foreign creditors who have suspended further loans to the islands.

Government critics say an acute shortage of foreign exchange has been compounded by state control of the economy which has stifled the private sector. The import-dependent country, which relies on tourism and tuna exports for revenue, now has little hard currency to pay for imports of even the most basic goods.

Seychellois complain of having to travel overseas to buy tyres and spare parts for their vehicles. X-ray machines at the local hospital have only recently been fixed after being out of service for the past three years. Milk for babies was unavailable for months ? causing a national scandal ? and cigarettes and chocolate are considered luxuries.

The introduction of a 12 per cent goods and services tax, as well as tight foreign exchange controls which prevent most Seychellois from owning hard currency and allow them only $400 when going overseas, have undermined SPPF support. ?I used to support the SPPF as they have given us a very high standard of living. Everyone has electricity, water, a decent house, television, a DVD player and washing machine,? said Jean, a waiter at a tourist hotel in Mahe. ?But now, the state?s control over the people is killing our pockets and our country?s economy.?

<B>Albert René to retire shortly</B>

The opposition Seychelles National Party (SNP) has exploited the government?s growing unpopularity with its free-market policies, gaining 45 per cent of the votes in parliamentary and presidential elections in 2001 and 2002. The SNP, led by an Anglican priest, harnesses most of its support from young, educated urban dwellers and businessmen. The SNP says the SPPF won the last election because 50 per cent of the workforce is employed in public service jobs.

?People are paid off or intimidated by the SPPF if they support us,? said SNP leader Wavel Ramkalawan. ?They are scared to openly criticise the SPPF, lest they lose their jobs or their relatives are somehow discriminated against when they apply for housing or permits,? he added.

With Rene, 68, due to retire from the presidency in the next few months, his successor James Michel who is currently vice president and finance minister has inherited the task of resolving the country?s economic woes.

Critics and diplomats expect Michel to struggle to free himself of Rene?s influence, although Rene denies that he will try to use Michel to exert behind the scenes control. Michel is already showing signs of wanting to assert himself and bring in liberal policies to kick-start the economy to the expected delight of the private sector, foreign investors and the International Monetary Fund. ?The world environment is changing and there is no way that we can continue with the monopolies,? Michel told Reuters. ?Socialist principles have given much to the people, but more and more, the government should become the regulator and the private sector should be economic motor of the country.?

Analysts say that if Michel is to succeed in winning back the support of the people and keeping the SPPF together, he will have to walk a tightrope promoting liberalism on one hand, while remaining true to socialist principles. ?The opposition is gaining ground every day,? said former Seychelles government economist Robert Grandcourt. ?If Michel can?t turn the economy around and liberalise, the opposition is more than likely to win the elections which are only two years away.?

Nita Bhalla