Economy Dec 5, 2012
The Maldivian government's standoff with GMR, and speculations as to what will happen in three days when the company has to vacate the Ibrahim Nasir International Airport in the capital Male, are perhaps the only chatter among the Maldivian middle class and the country's diaspora.
The government of the archipelago seems to be quite certain that it will be able to wrest control of the airport from the Indian infrastructure major despite the Singapore High Court's injunction; but GMR says it is not going anywhere.
Some speculate that the big discount sales at the airport's duty-free shops are a sign of defeat of the Indian company.
Will the government send its army, the MDNF, to the airport if GMR refuses to vacate? Will that be the climax that will make an average Maldivian nationalist happy?
Even if the government comes anywhere close to that, its relationship with India would have turned a full circle in a strange way. More than two decades ago, the Indian army was called in to save the country, which was then under Maumoon Abdul Gayoom, from a rag-tag band of mercenaries. India was a hero among the Maldivians then.
Whatever is the merit of the GMR case - the present government saying that the deal with GMR was illegal and that it was approved without the AG's permission and parliament's approval, while people close to the pro-India Nasheed government vouching for its bonafide intentions - the controversy is not new. Right from the beginning, it has been an emotive issue of sovereignty and the deal, hugely political.
We in India are hearing about it only now because things have reached a precipitation point and we are annoyed that a tiny country of 300,000 people, to whom we have given a lot, has dared to question our big-brother authority.
There is nothing else in Male, other than the airport, that that Maldivians are proud of. And giving it away to an Indian company, that is allowed to charge its users $25 every time they fly out, has been a huge affront to them. For nearly two years, GMR figured in every conversation that I had with a Maldivian, particularly when it came to privatisation, public private partnerships or government policies on employment.
There are a few reasons for this.
One: Maldives is all about tourism, its tourism industry is a complete sell-out, and common people are really sore about it.
Although Maldives has been associated with breathtaking white-sand and blue-water postcard images and ultra-luxury resorts that attract people like Tom Cruise, they are hardly Maldivian and have nothing to do with the people of the country.
They occupy whole islands and are literally private sovereign territories - they import everything, have their own infrastructure for power, water and other amenities, and serve the highest end of international tourists. Most of the Maldivians are too crude to work there, let alone visit them.
A 2010 survey by UNDP and the Ministry of Economic Development showed that the share of tourism-related small and medium enterprises was only one percent outside capital Male. That nothing trickles from these investments to improve the livelihoods of the majority, is also reflected by the fact that more than 90 percent of the souvenirs sold in the resorts are imported from South East Asia.
The government cannot do much about this because 30 percent of its GDP still comes from tourism and it also employs roughly one-third of the country's workforce, however menial and lower-category jobs they are. With roughly one-third unemployed and a large number dependent on government jobs and fishing, there is practically no big private sector employer other than tourism.
People, therefore, have a major grouse against the private companies that have been running the country's tourism industry over the last four decades. It may have generated a super-premium brand equity for their country and 60% of its foreign exchange, but for a majority of the islanders (who mostly live on tiny strips of lands with nothing but some coconut trees and huts, away from Male), it's an issue of their sovereignty which cannot be rolled back. It is therefore not surprising that majority of the islanders have never visited a resort.
The successive governments have been trying to reduce its over-reliance on tourism, but have ended up depending more on it than ever before.
Therefore, in an environment of elitist exclusion, the Male airport has enormous emotional appeal to people. It's the only piece of the big tourism pie that the people, namely the State, owned. Selling it to a private company and paying a rather hefty fee to use it is certainly hard to stomach for a population in search of national pride.
They have been equally peeved about Cable and Wireless controlling the telecom sector. Apparently the deal was signed long ago and it has thwarted the growth of a domestic telecom industry. However, the company recently has announced that it would exit Maldives, along with a clutch of other countries.
Two: the rise of radical Islam and nationalism
There has been an increasing trend of nationalism and radical Islam in Maldives that even the previous president Nasheed had allegedly tried to capitalize upon. However, the present President Mohamed Waheed Hassan Manik has been more effective in harnessing the nationalistic and radical sentiments to usurp power and was inextricably committed to playing their card.
Perhaps without being explicit, axing GMR was such a default commitment for Waheed the day he walked into the Presidential palace. Wresting control of a public icon, in a country low on national institutions, from a foreign company and handing it over to the state-run Maldives Airports Company Limited has enormous political symbolism.
With GMR not giving up easily and the government of India sending backroom messages, the impasse is not likely to end quickly. There are a number of documents doing the rounds which indicate that the agreement with GMR was bonafide and there was no violation of rules.
From Waheed's perspective, acting against GMR is politically inevitable because he will not be able to crack his whip against the tourism big-wigs. There are about 100 resorts that are owned by about six groups, which many resentfully call "oligarchs". The resort companies had been so defiant that they, until recently, had not been receptive to ideas such as CSR and community involvement.
If the GMR deal falls through, India will have a number of reasons to be miffed. Our own State Bank of India was the first bank to set shop in Maldives. When nobody was willing to lend him money, it was with an SBI loan that Koli Manik, the father of Maldivian tourism industry, transformed his country from a fishing village to a luxury-destination. Not to mention, the country's biggest hospital, the Indira Gandhi Memorial Hospital, and its Indian staff are the country's mainstay in healthcare.
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More From G Pramod Kumar.