“An impact on ties is inevitable,” said a senior government source

India will consider whether to proceed with its generous aid package to the Maldives after its government disregarded New Delhi’s pleas and decided to cancel the contract given to a GMR-led consortium for managing the airport in Male.

“For the time being, we have to consider how things stand and how to proceed,” said an official source when asked whether India would continue assisting the Maldives in combating its financial difficulties, including paying salaries to civil servants and shoring up the surveillance and reconnaissance ability of its security forces.

“An impact on ties is inevitable,” said another senior government source but did not elaborate.

At the same time, the official source scotched speculation about China planning to step in the breach caused by cancellation of the GMR-Malaysian Airport contract. “This is uncorroborated. There is no basis for this. China is giving some development assistance but not much has come in,” said the source.

As the official put it, events in the Maldives took an unexpected turn after the National Inquiry Report upheld the transfer of power in February this year when then President Mohd. Nasheed resigned and Vice-President Mohd. Waheed took over as head of state.

With the danger posed by an adverse report over, Mr. Waheed, sans a political base of his own, began making moves to become the presidential candidate in the elections due next year. This ambition might have led him to disregard his assurance to Prime Minister Manmohan Singh during his visit here in May that the GMR controversy will be resolved and he decided to get closer to smaller political parties that had religious conservatism as their main plank and were vociferously calling for cancellation of the contract.

“It seems to be the path he has chosen which is different from that of the political parties,” said the senior government source.

Both the official source and the senior government source pinned their hopes on the presidential election due in October but could be advanced to July. “Stability can come only after elections. All of them [political parties] are looking for some cause célèbre. GMR has unwittingly become a major political issue in the Maldives,” said the official source.

He also discounted views suggesting that India should have militarily intervened after Mr. Nasheed was cornered by the Maldivian security forces in February and was told to resign. “How could we have done that? We would have been seen as a democracy that is not allowing other democracies to function, especially after the probe report has said the transfer of power is legal. And it would have served as a lightning rod for the opposition to mobilise people against us. In the long term, this would have become totally unsustainable,’’ reasoned the source.

In any case, the source revealed that the appeals for Indian military assistance by some of the ousted President’s colleagues were imprecise and most of them were made after Mr. Nasheed had gone on TV to announce his resignation.

The senior government source said New Delhi would back GMR’s case, especially because arbitration proceedings were on in Singapore when Male decided to pull the plug.

“Quite frankly, we were not involved, as we didn’t want to get into contract details. Our understanding was that GMR was ready to give explanations … some discussions took place and then this happened. We also rely on the International Finance Corporation report, which said the entire selection process was as per procedure,” said the source. At the sane time, he warned that India would not “take lightly” any activity that would hurt its interests in the Maldives.

Commenting on the repudiation of the GMR airport contract, and the new economic figures released on Wednesday, Mr. Nasheed said: “The government’s reckless decision to terminate GMR’s contract will scare off investors. It will have serious ramifications for the economy, at a time when we can ill-afford to see it falter. Right across the board, we are witnessing positive trends being dangerously reversed. Growth in tourism has flat-lined; GDP is projected to be just 3.4 per cent this year; and deficit is now ballooning at an alarming rate. If this continues, we risk setting back every aspect of our development. It is not those in the government but the Maldivian people who stand to lose most from President Waheed’s economic mismanagement.”

More In: National | News