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GMR row: India to withhold aid to Maldives

Authorities say govt in Male is only an interim one and therefore, unrepresentative

Aditi Phadnis  |  New Delhi 

India will proceed with extreme caution in its relations with the Maldives because of ‘concerns that the situation in the Maldives is unstable and rule of law is not being followed'.

Persons familiar with developments in the tiny atoll state say $25 million in standby credit that India had offered to the Maldives may have to be held in abeyance lest "it fall into the wrong hands".

“It is not India’s obligation to support the pay and allowances that the government of the Maldives offers to its employees," said the source, when asked if it was true that Male might not be able to pay salaries of government servants and police officials if India were to withhold aid to that country.

India is concerned that the government in Male is only an interim one and therefore, unrepresentative. There are concerns over the recent legal attack on the Indian company GMR and the stated intention of the Maldivian government to neither respect arbitration proceedings, nor verdicts given in international courts.

“Arbitration proceedings are already on. GMR has got an injunction against an order of a lower court. If even after that, the government is saying ‘nationalise this project’ it is not following its own rules,” said the source.

In the circumstances, India is unsure if funds meant for normal development activities would be put to the purpose they are meant for. “Maldives currently has an interim government. There are political groupings which are obviously fundamentalist in their outlook. Money that belongs to the Indian taxpayer should not subsidise this kind of activity,’ said the source.

There is only one other project – a tourism and hospitality centre – that is being funded by new delhi. This is nearly complete.

“So far, of the 300 Indians there, all are safe. But some of the statements made by Maldivian leaders are frankly alarming,” the source said.

Elections in the normal course should be held in July. Maldives follows a presidential system of government. An early election means the tenure of the government will only be till July. To give a full five-year term to the government, the constitution will have to be amended.

India shares a maritime boundary with the Maldives. Its other closest neighbour is Sri Lanka. Colombo has neither shown the appetite nor the desire to fan the fires and has issued no formal statement so far.

“Things are moving very fast. We are watching the statements and moves of the Government of Maldives very closely. But we do believe that the government must be one which has the authority and the capacity to utilise funds,” a source said.

First Published: Mon, December 03 2012. 21:16 IST