Megaphone diplomacy

Khurshids fulmination is intriguing. What is at stake is not a foreign policy issue but only the GMR Groups chance to make profits.

To crack a nut with a sledgehammer remains an option. The first occurrence that option to human ingenuity can be traced to 15th century England.

But the problem with that medieval option is three-fold: it looks horribly clumsy today; it is wasteful; and, most important, it misses the target more often than not, since the powdery delicious nut and the crushed shell inevitably leave a bitter aftertaste.

New Delhi’s handling of the decision by Maldives government to cancel the contract with the GMR Group to develop and run Male International Airport is appalling.

True, GMR Group is a powerful Indian business conglomerate and the crème la crème of the Indian political elites will come under immense psychological pressure to be seen reacting forcefully when the company’s interests in Male are challenged.

Prima facie, there is indeed something arbitrary about the Maldivian decision to boot out GMR.

But any truth digger would come across the startling templates of this row. For example, what is at stake here is the GMR’s investment of some Rs 126 crore in Male (via its subsidiary), which is a mere 1.4% of its consolidated shareholders’ funds and 1.7% of its market capitalisation. Even if Maldives retracts from its assurance to compensate GMR, the Indian company won’t go bust.

So, why such adrenalin flow to hold on to the Male project? It’s a milch cow, Stupid! The Male airport holds the potential to contribute about Rs150 crore in annual profits for the company in the coming two-year period alone.

Now, multiply that figure by 25 or 35 – the lease is for 25 years and extendable by another 10 years – and one gets an impressive figure.

But the catch is that because of a court ruling Maldives can no longer permit GMR to collect an airport development fee from passengers. And the agreement stipulates that Maldives should offset the anticipated revenue loss for GMR.

Which, of course, works out to an astronomical amount of hundreds of millions of dollars through the 25-year lease period. Thus, instead of generating revenue, GMR’s Male project has become an albatross round the Maldivian neck. It has since sought the abrogation of the agreement with an offer to compensate GMR for its investments so far.

From a commercial angle, it may seem deceptively simple to resolve the tangle. But politics has crept in. New Delhi has made this a ‘prestige issue’ and to teach the present government in Male a thing or two about the bitter harvest of offending GMR.

However, several salients are struggling to surface. To be sure, the alacrity with which external affairs minister Salman Khurshid waded into the GMR row is rather intriguing, since what is at stake here is the Indian company’s potential to make windfall profits in the Male economy that is at stake here rather than India’s foreign policy.

Order to retaliate

Second, Khurshid has ordered the South Block to ‘retaliate’ – by suspending India’s aid programme in Maldives worth the princely sum of $ 25 million! Surely, South Block diplomats must be having a macabre sense of humour to think Maldives would get frightened. President Mohammed Waheed would say, “Thank you, Mr Khurshid, keep the change in your pocket.”

The point is, Maldives will engage another foreign party to replace GMR and the caravan will move on. It is venturing into the ‘unknown unknown’ and there is always a swagger about such moments. The United States is the rising star in Maldives.

The Pentagon is desperate to gain control of the fabulous military base in the islands of Addu Atoll – known as Royal Air Force Station Gan – which Britain (foolishly) vacated in 1975 as the last leg of its pullout as an imperial power from the east of Suez.

The Gan is located right in the middle of the Indian Ocean between Diego Garcia and Singapore and in the ‘great game’ India looming ahead in the region, its possession enables the US to be the perfect balancer between China and India. (This is the thrust of Robert Kaplan’s recent book Monsoon.) Simply put, Waheed comprehends that if the US assistant secretary of state Robert Blake is a frequent flyer between Washington and Male, it is for good reason.

These are facts of life and our ill-conceived hubris in preparing a road map for Maldives to become a truly liberal democracy stands exposed. India lives in a tough neighbourhood, but there are no al-Qaeda guys lurking behind the coconut trees in the Maldivian atolls. India can’t do much about the rise of Islamism in Maldives, which is a phenomenon in evidence in the Muslim countries, and it is not to be confused with the al-Qaeda affiliates.

A clean slate approach is needed. One, India should grasp the virtues of low-key diplomacy from Blake. At any rate, do not compound the trust deficit by resorting to bullying. Two, be clear-headed about the strategic objectives. India and the US’s interests in the region may grate against each other – just as they do over David Headley and Tahawwur Rana. Three, the GMR row can be viewed as a commercial dispute.

Four, preserve whatever little leverage still exists to influence this impoverished country of 3 lakh islanders for whom India is and shall ever remain a Big Brother (who owns good hospitals, schools and shopping malls in Thiruvananthapuram). Finally, shelve this on-again-off-again democracy project in Male – even as pressure tactic.

(The writer is a former ambassador)