GMR ouster big blow to India's reputation in S Asia

The Maldives government of Mohamed Waheed Hassan has just terminated its largest foreign investment worth $511 million that had been won by GMR in 2010. But the real debacle beyond the dollars-and-cents loss to the infrastructure major is the big blow to India's reputation in the region and beyond.

The contract to GMR was awarded in 2010 under the previous dispensation of Mohamed Nasheed, the democrat president who defeated dictator Abdul Maumoon Gayoom in 2008.

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Soon after Nasheed came to power, India gave the Maldives a soft loan of $100 million to bail out the Treasury; the government was so broke it had not even paid salaries in the months before the election.

When Nasheed lost power in an attempted coup in February, the new government lost little time in using the GMR contract to indirectly strike a blow at India's self-avowed leadership of South Asia.

Considering India had recognised Waheed's government within 24 hours of the coup, it was hugely ironical that Waheed was not returning the compliment.

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External Affairs Minister Salman Khurshid has stated, in the wake of the contract's cancellation, that the Maldives has a sovereign right to do what it believes best for itself - truth is, he could hardly say anything else.

As for GMR, it is expected to now continue the legal fight for compensation. The Maldivian attorney general has said that this could amount to as much as $700 million in an international court of law, but the Maldivian government has stated that it will not pay a single dime.

India's first big mistake was to recognise the Waheed government within 24 hours of Nasheed being ousted in Male's bloodless coup.

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High commissioner D N Mulay was clearly unable to credibly assess the matter at the time - he has recently been promoted to one of India's choicest postings, as Consul-General in New York - believing that India could pick up the threads with anyone in power.

The realist school of thought currently employed by Delhi, that friendships don't matter as long as national interest is taken care of, is all very well to pursue, except in this case Nasheed exemplified both friendship and national interest.

He was not only the first democrat in that tiny Indian Ocean state, that too a younger man, with whom India found it easy to do business, he was also significantly inclined towards India.

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Fact is that Nasheed was the first Maldivian ruler who allowed India to install a string of radars along the Maldivian coastline, near the equator as well as the island of Diego Garcia on which the Americans have had a base for decades.

More to the point, the Maldives became a veritable listening post for Chinese activities in the Indian Ocean. In 2010, by awarding GMR the contract to build a new airport in the Maldivian capital, Nasheed was underpinning his friendship with India.

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The contract was managed by none other than the World Bank and the International Finance Corporation but the truth is that Nasheed nudged it in favour of the Indian company. He needn't have done that, but he did.

If India believed it was in its interest to dump Nasheed and go with Waheed after the coup, then that was its second mistake. Fact is that none other than Maldives former dictator, Maumoon Gayoom, was behind the coup provocation. In gratitude, Gayoom's daughter, Dunya, was made a junior minister in the Waheed government.

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In fact, Dunya has reportedly insinuated, in recent days, that the Indian government will not take action against her father because of his close association with Rajiv Gandhi. Dunya was referring to the 1988 coup attempt against her father by Sri Lankan terrorists, to which Gandhi responded by sending armed help and removing the coup plotters.

Clearly, Waheed has used the GMR contract to build himself up as a credible presidential candidate when elections are held in mid-2013, by challenging the regional power India.

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A former civil servant, Waheed knows the rules of the game, especially in matters of compensation. So far, though, he seems to have outwitted Gayoom, Nasheed as well as India. How long can these matters last? Having made so many errors of omission and commission, India's next opportunity will come when elections are held.

This is when it will have to decide who to back, behind the scenes, as the new ruler of the Maldives will steer the course of the India-Maldives relationship for the next five years. Until then, India will have to be content with learning from its mistakes.