GMR contract termination`s impact `inevitable` on ties: India

After Maldives terminated USD 500 million GMR airport project, India made it clear that it would "inevitably" impact on bilateral ties given the "climate created" which was a matter of "concern".

New Delhi: Upset over the unilateral decision by Maldives to terminate the USD 500 million GMR airport project there, India on Thursday made it very clear that it would "inevitably" impact on bilateral ties given the "climate created" there which was a matter of "concern".
Terming as "extremely unfortunate" the campaign against the project, top government officials said it was made a political issue from purely a commercial one while noting that "many interests were at work" in Maldives.

The remarks came a day after Maldivian President Mohamad Waheed in an interview to PTI said he was confident that his government`s decision will not affect bilateral ties with India.

Asked if the termination of the GMR contract, which was a single largest Indian investment in that country, would impact the bilateral ties, the officials said, "It is inevitable, that it will...One, it is interest of an Indian company which is a matter of negotiations.

"If it can be sorted out, we would certainly encourage it and if it fails, certainly it will be a setback but those are setbacks which you deal with in the normal course" of diplomacy.

The officials made known New Delhi`s unhappiness with Male`s sudden decision based on political factors.

"What is a matter of concern is the kind of climate which has been created and kind of agitation which has been supported by some political parties using this as a lever to apply political power and authority" which cannot be taken "lightly", they said.

Maldives, on Tuesday, announced that it was terminating contract with GMR given by the previous regime for developing Ibrahim Nasir International Airport (INIA) at Male.

Asked if India, which has extended an additional release of USD 25 million from the Standby Credit Facility earlier this year, will review its decision to extend such assistance in future, the officials remained noncommittal and only said these are "ongoing" process.

Asked if there was a third country behind Maldivian decision, they said,"many interests were at work" there.

The officials also noted that the issue was made an election issue in that country by some "fringe elements".

The officials also said India has categorically asked Maldives to ensure that safety of Indian interests and its nationals are "fully protected" in that country.

They said Indian envoy D M Mulay there met Maldivian Foreign Minister today during which he was assured that there was no security issue and their safety will be ensured.

India has also conveyed to Maldivian government that it was keeping a close watch on the situation there, officials said.

They also noted that during his visit to India earlier this year, Waheed had given an impression that the matter could be resolved.

During his interview to PTI, Waheed had termed the airport development contract signed with GMR by his predecessor Mohamed Nasheed`s government as legally invalid.

The President`s remarks come in the backdrop of sharp reaction by India which said Maldives should ensure that safety of Indian interests and its nationals are "fully protected" in that country.

"We have always maintained that this is a commercial contract that was signed by the Mr Nasheed`s Government under dubious conditions. The actual signing was conducted despite Parliament`s objection," Waheed had said.

"We remain confident that India-Maldives relation will not be affected by the cancellation of the GMR contract by MACL (Maldives Airports Company Ltd). In the meantime two other contracts with Indian companies are been taken forward. The bilateral relation, especially in the fields of military, trade and business, is even stronger than before," he said.

The contentious GMR project was hanging in balance ever since the regime change in Maldives earlier this year. GMR along with its Malaysian partner Malaysia Airport Holding Berhad, had won the contract for developing the Male International Airport during Nasheed`s regime and it was the biggest single FDI into Maldives.

The issue had also cropped up during the talks between Prime Minister Manmohan Singh and Waheed, who visited India earlier this year. Waheed had then assured that Indian investments will remain "safe".