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India threatens to freeze Dh91m in aid over airport dispute

India warns its neighbour the Maldives that it might freeze annual aid worth US$25 million (Dh91m) amid anger over an attempt to kick out the Indian firm managing the main airport in the country.

NEW DELHIi //India warned its neighbour the Maldives yesterday that it might freeze annual aid worth US$25 million (Dh91m) amid anger over an attempt to kick out the Indian firm managing the main airport in the country.

Last week, the new Maldives government gave five days to Indian infrastructure company GMR to leave after prematurely ending a 25-year management lease signed for the archipelago's international airport in the capital Male.

In a further blow, the Maldives government the lost a case in the Singapore high court yesterday where GMR won an injunction that stays the cancellation of the contract, the company said.

The move over the airport angered New Delhi and raised concerns about the investor climate at a time when the Maldives is seeking foreign financing for tourism projects after a year of political turmoil. "We are not happy with the way Maldives cancelled the GMR airport deal. This has surely left an impact on our bilateral ties," said an Indian foreign ministry official.

A second official in the ministry said next year's financial aid of $25 million would be provided only "after every aspect of the airline deal is reviewed".

"A decision whether the money should be given or not will be taken soon," he said.

Bangalore-based GMR Infrastructure had signed the deal to manage the airport in 2010 under former president Mohamed Nasheed, the country's first democratically elected leader who was ousted after violent protests in February this year.

Mr Nasheed's deputy, Mohamed Waheed, assumed the presidency in what the former government initially described as a "coup" but which has since been judged a legal transfer of power.

Mr Waheed's government, which has aligned more closely with a hardline Islamist party, objected to the privatisation of the airport carried out by Nasheed and said the deal was corrupt.

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