Unhappy at being dragged into Maldives’ internal political dispute, India wants it to take legal recourse to sort out the GMR issue or face action, which could include a freeze in bilateral military cooperation or annual aid.
Official sources also didn’t rule out a foreign hand in Maldives’ shock decision to cancel the $511 million (Rs. 2,800 crore) contract — its largest FDI project — with GMR to build and run the Male airport.
They said India would escalate diplomatic action if Male did not seek the Supreme Court’s advice on whether the airport development fee levied by GMR needed the approval of the majlis (parliament), as directed by a lower court.
The tough stand comes as India prepares to post its first defence attaché in Male.
"There could be serious deterioration in political ties between the two countries as the airport issue has been turned into a major issue by Maldivian parties to settle local scores, and India has been unnecessarily dragged into it," said a senior official.
The situation, the official explained, was complex because radical parties with links to Saudi Arabia and Pakistan were also involved in GMR's ouster, and even joint venture partner Malaysia wanted to go solo.
Officials said President Mohammed Waheed has been using the airport issue to whip up sentiments against India with the help of radical parties like Adhaalath. "The airport issue is not a commercial dispute, it is about politics," the official said.
The sources identified Hassan Saeed, advisor to Waheed, as the force behind GMR's eviction. The Indian government is also worried that other countries like China may take advantage of the temporary abrasion in ties. Chinese tourist arrivals in Male have shot up over the past two years, and Beijing wants to establish full-fledged diplomatic ties with Maldives.
"While the Waheed government could refer the fee ratification issue from the majlis to its apex court, it could, in the meantime, exempt Maldivians from the airport fee and only levy it on foreigners, so that income from the airport fills the virtually empty coffers of the island nation," the official said.