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(Economy) GMR-Maldives Airport Controversy, IFC, AAI: Meaning, Reason, Implications, Explained
(Economy) GMR-Maldives Airport Controversy, IFC, AAI: Meaning, Reason, Implications, Explained
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[Economy] GMR-Maldives Airport Controversy, IFC, AAI: Meaning, Reason, Implications, Explained
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. What is GMR? Delhi Airport Management What is Airports Authority of India (AAI)? What is GAGAN? Male International Airport, 2009 What is International Financial Corporation (IFC)? Coup, Feb 2012 Singapore Court, Dec.2012 Indian Governments response Should India stop giving ca$h to Maldives? Should India be Assertive? Conspiracy Parts The Chinese angle The Crony Capitalism Angle The Rajnikanth angle The Funny Parts Mock Questions
What is GMR?
An Indian company dealing with infrastructure related business: airport Management, coal mining, highways etc. It operates the airports in Delhi, Hyderabad and Turkey. Grandhi Mallikarjuna Rao founded this company, hence the name GMR.
What is GAGAN?
GPS Aided Geo Augmented Navigation (Gagan). GAGAN GPS devices help pilot to fly in difficult weather, fog, tough terrains. They also help in efficient Air traffic Management= less fuel burned by aircrafts= less pollution. Anyways enough sidetalk, back to the issue. First question: Why the hell would GMR want to run airport in Maldives? Well, for the same reason Ekta Kapoor makes Saas-Bahu serials= to make truckload of ca$h. When you own an airport, you can make money via 1. 2. 3. 4. Car Parking fees. Renting rooms to Jet-Airways, Kingfisher to run their ticket booths. Open or rent food-stalls, duty-free liquor stores etc. Charing money on airlines to use the air-strip, fuel refilling,.
Besides Maldives Government itself did not have enough money to develop or modernize the airport, they were looking for some foreign private investment. Therefore Government of Maldives (under President Nasheed) decided to invite Biddings/tenders for privatization of Male Airport: Whichever foreign company agreed to share maximum profit with the Government, will get the contract to run the airport. But the bureaucrats of Maldives= had no prior experience of how to evaluate the financial, legal and technical worthiness of foreign bidders. So, Government asked International Financial Corporation (IFC) to oversee the bidding process.
Give loans @ZERO interest rate to poor countries. +knowledge sharing, health education etc.
3. Multilateral Investment Loans and insurance to private companies, when they invest in Guarantee Agency Developing countries. (MIGA) 4. International Centre for Settlement of To settle investment disputes between foreign investors and Investment Disputes their host developing countries. (ICSID) When foreign investor, wants to start business in developing country, IFC provides financing and technical advice and assistance, works as a catalyst. So, Aim of IFC= boost private investment in developing countries.
Anyways IFC was tasked to manage the bidding process for privatization of the Male airport to ensure fairness. Big players such as GMR, Reliance and other companies from Switzerland etc. were in the competition. The whole bidding process, checking applications etc. went on for 10 months (which is roughly the same time itd take UPSC to declare official answer key for any exam under R.T.I.)
Finally GMR of India, won the contract in 2010 (when Nasheed was the President of Maldives). They got the right to run Male Airport for 25 years. And the contract had provision: If there is any dispute in future, either party (Government or GMR) can approach the High Courts of London or Singapore for settlement.
Rich nation gives aid to poor nation, for three main reasons 1. Whenever there is voting in UN general assembly or other forum, the poor nation will vote in favor of rich nation. (e.g. Kashmir or Arunanchal pradesh border dispute, or WTO, Climate-change agreements). 2. Poor nation will allow the rich nation to construct military, naval bases, radars, missile defense system etc. in its territory. 3. Poor nation will allow rich nations companies to get mines, mineral and other contracts. Indian Government was planning to cancel financial aids to Maldivian Government, to force them into settling issue in favor of GMR. Experts are against this move because 1. If India stops giving money to Maldivian Government, then China (or US) will step in, start playing big-brother and giving cash to Maldives. 2. Loss of good will among Maldivian citizens. 3. Apart from GMR, Indian companies like Tata, Taj etc. invested in Maldives. So if Indian Government stops financial aid, then Waheed could start harassing them also.
Other necessary things for stable Maldives: Independent media, judiciary, penetration of internet, cable-TV, powerful civil society.
Conspiracy Theories:
The Chinese angle
Behind the curtains, China had played role in it. First getting Nasheed replaced and then Getting Waheed to cancel the GMR deal. And (perhaps) later, itll get the contract to manage the airport. Maldives is of strategic interest for both China and India, because of its location in the Indian Ocean alongside major oil and shipping lanes. More than 80% of international trade to and from Asia passes through Maldivian territory. Even USA has plans of building a military base in one of the islands of Maldives. China doesnt want this. China has recently opened an embassy in Male= proves theyre interested in the Maldives. China has been consistently expanding its own influence in island nations on Indias periphery the Maldives, Sri Lanka, Seychelles and Mauritius by giving several millions of dollars in aid and infrastructure projects.
So far GMR had invested about 500 million dollars in Male Airport. But all of that money didnot come from its own pocket. GMR had taken loans from Axis Bank and Indian Overseas Bank (IOB) worth approx 160 million dollars. Some experts believe that GMR will now refuse to pay interest rate on loan until matter is settled! (SBI must be feeling happy for not being the only bank loosing money on airline related loans.)
Mock Questions
Q1 which of the following, is not a function of Airports Authority of India (AAI)? 1. Air traffic management over Indian air space. 2. Arbitration of Labour disputes involving airline staffers. 1. 2. 3. 4. Only 1 Only 2 Both None
Q2. Which of the following, is a function of GAGAN? 1. Weather forecasting 2. Aiding pilots to navigate and land in difficult weather and terrain. 3. Aiding Air-traffic Management. 1. Only 1 and 2 2. Only 2 and 3 3. Only 1 and 3
4. All of them Q3. Which of the following is correctly matched? 1. International Bank for Reconstruction and Development (IBRD) 2. International Development Association (IDA) 1. 2. 3. 4. Only 1 Only 2 Both None Give loans @ZERO interest rate to poor countries. Give loans @market rates to middle class and poor countries.
Interview
1. How do you rate Indias handling of GMR crisis? 2. Apart from GMR, are you aware of any recent disputes involving Indian Businessmen vs Foreign Governments? 3. Are you in favor of Privatization of Airports? Yes/No and why? 4. What do you understand by Crony Capitalism? 5. Can you think of any solutions to tackle Crony Capitalism?