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India warns Maldives over airport deal row

05 december 2012, 11:16
Photo courtesy of stockwatch.in
Photo courtesy of stockwatch.in
India warned its neighbour the Maldives on Monday that it might freeze annual aid worth $25 million amid anger over an attempt to kick out the Indian firm managing the main airport in the country, AFP reports.

Last week, the new Maldives government gave five days to Indian infrastructure company GMR to leave after prematurely ending a 25-year management lease signed for the archipelago's international airport in the capital Male.

In a further blow over the decision, the Maldives government lost a case in the Singapore High Court on Monday where GMR won an injunction that stays the cancellation of the contract, the company said.

The move over the airport angered New Delhi and raised concerns about the investor climate at a time when the Maldives is seeking foreign financing for tourism projects after a year of political turmoil.

"We are not happy with the way Maldives cancelled the GMR airport deal. This has surely left an impact on our bilateral ties," an Indian foreign ministry official told AFP, asking for anonymity.

A second official in the ministry said next year's financial aid of $25 million would be provided only "after every aspect of the airline deal is reviewed".

"A decision whether the money should be given or not will be taken soon," he said, also on condition of anonymity.

Bangalore-based GMR Infrastructure had signed the deal to manage the airport in 2010 under former President Mohamed Nasheed, the country's first democratically elected leader who was ousted after violent protests in February this year.

Nasheed's deputy, Mohamed Waheed, assumed the presidency in what the former government initially described as a "coup" but which has since been judged a legal transfer of power.

Waheed's government, which has aligned more closely with a hardline Islamist party, objected to the privatisation of the airport carried out by Nasheed and said the deal was corrupt.

GMR, which won a contract to upgrade and operate the international airport in Male and build a new terminal, said in a statement that it had won "injunctive relief" against the applicability of the cancellation order.

The Singapore High Court, where arbitration was ongoing "was pleased to grant this stay in favour of GMIAL", GMR said in a statement referring to the consortium running the aiport which includes Malaysia Airports Holdings.

Officials at GMR termed the Singapore court verdict a "victory of light over darkness".

"The government of Maldives had made a unilateral move and completely irrational move and the court recognised it," a senior GMR official told AFP.

Earlier this month, senior Indian officials in New Delhi welcomed an injured opposition Maldivian politician who claimed he was beaten up by police in what was viewed by some as a sign of concern in India about political violence in its neighbour.

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