The government of the Maldives is on Friday set to expropriate the country's main airport from an Indian firm, sparking a diplomatic crisis and fears over the direction of the politically unstable nation.
The administration of President Mohamed Waheed last week decided to revoke a 25-year lease of the airport serving the capital, asking Indian infrastructure firm GMR to quit by midnight on Friday, two years after it took over operations.
"There is no turning back, we will start running the airport from Friday night," Waheed's spokesman Imad Masood told AFP from Male, the capital of the country known as an upmarket honeymoon destination and celebrity hang-out.
"We will retain all staff. Even the Indian staff have been told that they can remain if they want to and have the same salary," he added.
Officials have also sought to reassure travellers they will be unaffected.
"We have already spoken to international airlines and assured them that there will be no disruptions," Mohamed Ibrahim, managing director of the Maldivian Airport Company, told AFP. "We will have a seamless takeover of the airport from the GMR."
Privatisation of the airport in 2010 has been targeted by Waheed over alleged corruption and for patriotic reasons, with the new government objecting to such a prominent national asset being run by foreigners.
The abrupt manner in which the nationalisation was proposed has caused fury in India, the regional power, and has raised serious concerns for foreign investors at a time when the country is seeking external funding.
The Male airport deal was expected to see GMR and its partner, Malaysia Airports Holdings, pour more than $500-million into the Indian Ocean archipelago, the biggest ever foreign investment.
New Delhi has warned its tiny south-western neighbour that it may freeze aid and is ready to "take all necessary measures to ensure the safety and security of its interests and its nationals".
The row has caused a reassessment in the Indian foreign ministry of Waheed, who took power in controversial circumstances last February when president Mohamed Nasheed was forced out by protests and a mutiny by police officers.
Nasheed, the first freely-elected Maldivian leader and an ally of India, claimed his then vice-president Waheed was part of a "coup", but New Delhi declined to intervene and gave its blessing to Waheed's ascent.
Underpinning India's concerns are claims by the Maldivian opposition that the country is tilting towards China, which set up an embassy in Male last year and is carrying out construction projects in the archipelago.
"It is a matter of national pride and ego"
Waheed's office denies any suggestion of Chinese influence being behind the airport nationalisation.
"The China card is a red herring to cause alarm in India," Masood said. "We will not give the airport to China, or for that matter to any other foreign power.
"The airport is our gateway to the world. It is a matter of national pride and ego and we want to manage it ourselves."
Under the original privatisation deal, GMR paid $78 million as a one-time fee to manage the airport for 25 years, during which they were to invest $510 million.
GMR was to pay the Maldivian government 1.0 percent of all airport revenues until 2014 and 10 percent thereafter.
However, a court ruling scuttled a vital part of the deal which allowed GMR to levy a fee of $25 on each passenger. The government then agreed to reimburse GMR the $25 charges.
"This is a ridiculous situation where we would end up paying three million dollars a year to GMR to run the airport when they were originally supposed to make money and give us a share of it," Masood said.
GMR says its contract has become a "football in a political arena" and has asked Male not to use force to take over the airport.
Its bid to freeze the expropriation in a Singapore court, where arbitration proceedings were launched, failed after a ruling in favour of the government.