In retrospect, the Indian government may be as muchresponsible as the GMR Group for the latter’s ejection from the airport projectin Maldives. The decision by the island neighbour had its roots in issuesrelated to corporate governance (GMR’s decisions), localsocio-politico-economic dynamics, and New Delhi’s diplomatic fiasco. Recently,Male terminated the Indian firm’s 25 years, $500 million deal to manage,modernise and expand its Ibrahim Nasir International Airport (INIA).
Days before GMR handed over the airport to Maldives at 12 amon the night of December 7, 2012, an attempt was made to find a last-minutesolution at the highest level. “Our president wrote a letter to India’s PM,Manmohan Singh, to ask for a meeting to clarify the issues. But there was noreply for several days. And time, as you know, waits for no one; it has neverwaited for anyone,” said Masood Imad, the media spokesperson for Maldivespresident, Mohamed Waheed.
All that India hinted through the local media was that itwould stop the $25 million annual aid to Maldives, which was later denied.
New Delhi’s blunders
For years, there have been anti-India sentiments simmeringin the neighbour’s polity and society. These got accentuated when the formerpresident, Mohamed Nasheed, took over power four years ago. The three-yearregime of his was seen as being too pro-India, although Nasheed did try tobalance his diplomatic act.
However, Nasheed’s government was projected as takingdiktats from New Delhi by the opposition political parties. India made mattersworse as it supported Nasheed on several occasions, both publicly andprivately.
Ever since it bagged the airport project in June 2010, GMRwas somehow painted as a ‘foreign (Indian)’ villain. Most of opposition partiescriticised the deal, and mass protests were held against it at regularintervals.
Once president Waheed took over in February 2012 with thesupport of parties that were against Nasheed, the opposition against India, andparticularly GMR, reached a new peak. By mid-2012, it was evident that GMR wasin trouble, but New Delhi did not try to mediate. Its role remained ambivalentuntil the night of December 7, 2012, when GMR was finally thrown out.
GMR’s arrogance
The confidence, and subsequent arrogance, of GMR stemmedfrom the controversial manner in which its contract was finalised, and acrucial clause that was included in it. The clause said that GMR could imposean airport development charge (ADC) of $25 on every passenger, who departedfrom Maldives, beginning January 1, 2012.
As per Maldives’ Constitution, any new tax had to beratified by its parliament (Majlis). This was proved when the Maldives civilcourt ruled on December 8, 2011, that this was indeed true.
First, no one “ neither GMR nor the Nasheed government “contested the court order. But the fact remains that within two weeks of thejudgment, on December 22, 2011, GMR requested Maldives to allow it to deductthe ADC from the concession fees paid to the government every quarter. Maleagreed.
Once Nasheed was gone in February 2012, and Waheed becamethe president with the support of the parties that had opposed GMR, ADC and itsdeduction from quarterly payments, GMR’s overconfidence came to the fore.
When the new regime decided to renegotiate the ADC clauses,GMR put its foot down. When Male threatened to terminate the deal, GMR optedfor arbitration in Singapore as it was confident of a legal victory.Unfortunately, the Singapore Supreme Court ruled that Maldives had the right toreclaim the airport from GMR.
