US embassy cable - 05CALCUTTA69

UNCLAS SECTION 01 OF 02 CALCUTTA 000069 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR SA/INS AND INR 
 
E.O. 12958: N/A 
TAGS: PGOV, ECON, SOCI, IN, Indian Domestic Politics 
SUBJECT: WEST BENGAL COMMUNISTS ACCEPT GLOBALIZATION 
 
 
1. (U) SUMMARY:  The 21st triennial State Conference of the 
Communist Party of India-Marxist (CPM) concluded on February 12 
after some lively debate on the Party's future road map - 
political and economic.  The CPM expressed concern about the 
radical Left (Septel) and advised its cadre to begin preparing 
for the West Bengal Assembly elections in 2006.  On the economic 
front, the Party's resolution welcoming foreign direct 
investment (FDI) and multilateral institutional loans in the 
state was carried, despite resistance from radical elements and 
the labor lobby.  This should mute - but not entirely silence - 
CPM opposition to FDI at the Center.  The Conference also 
revealed the metamorphosis of the CPM from a strident, 
revolutionary party to an organization of the middle class.  END 
SUMMARY. 
 
2. (U)  The State Conference of the CPM is held every three 
years to elect the policy-making body (State Committee in CPM 
parlance) that manages the Party in West Bengal.  It is the 
culmination of lower level conferences involving local 
committees, zonal committees and district committees that 
ultimately elect the State Committee.  This year, 599 delegates 
elected the 85-member State Committee that will frame the CPM's 
policies at the state level and will manage the 2006 Assembly 
elections.  The new State Committee will meet shortly to form 
the State Secretariat, the Party's executive body, although key 
positions (State Secretary Anil Biswas, Treasurer Nirupam Sen) 
have already been named. 
 
3. (SBU)  At the Conference, the issue of CPM support to the 
Congress-led UPA government in New Delhi (while opposing the 
Congress in West Bengal) was dealt with tactfully.  CPM 
General-Secretary-in-waiting Prakash Karat pointed out that the 
responsibility of ensuring the continuance of the Congress-led 
regime in New Delhi did not lie with the CPM alone.  Congen 
contacts interpret this as a strategy of unwavering support from 
the CPM coupled with an ongoing review of the UPA's performance, 
to be followed by agitation and criticism of the Center whenever 
the need arises.  While the Conference noted the "absence of 
evidence" that the UPA is implementing the pro-poor measures in 
the Common Minimum Program, veteran leader Jyoti Basu made it 
clear that stability at the Center would not be disturbed. 
However, in West Bengal, despite the rising Maoist challenge, 
the Congress will continue to be regarded as the main opposition 
party. 
 
4. (U)  The Conference dismissed overtures from India's 
second-largest mainstream Left party -- the Communist Party of 
India (CPI) -- for unification with the CPM.  The growth of 
Maoist and other divisive forces in the region was noted with 
concern (Septel).  The Party leadership acknowledged the 
socio-economic dimension of the problem, noting that government 
projects designed to benefit the "poorest of the poor" often did 
not reach them.  Karat even pointed out that the number of poor 
far exceeded numbers mentioned in official records.  The Party 
also expressed suspicion regarding the role of Christian 
churches and the quasi-Hindu religious organization ISKCON and 
directed Party workers to keep a watch on their activities. 
 
5. (U)  The CPM's resolution on FDI is seen as a major departure 
from the Party's so far ambiguous stand.  In recent months, 
ministers of the Government of West Bengal  -- many of them 
prominent CPM leaders - were vocally seeking to attract FDI, 
even though their action did not have the Party's formal 
endorsement.  The Conference has now made the CPM's position 
clear, at least in West Bengal.  The argument, spearheaded by 
Chief Minister Buddhadeb Bhattacharjee, and echoed by Industries 
Minister Nirupam Sen and Party boss Anil Biswas, is as follows: 
for better or worse, globalization is the order of the day; 
economic success in a globalized market requires infusions of 
foreign capital, FDI, and grants and loans from institutions 
like the World Bank and the ADB; and furthermore, other 
nominally Communist countries like China and Vietnam are 
accepting FDI and their economies are growing strongly. 
Unspoken in this debate is the fact that West Bengal could not 
maintain a statist economic philosophy even if it wanted to, as 
its coffers are empty.  Despite the clarification on FDI at the 
state-level, some opposition to FDI at the Center is likely to 
linger.  In recent meetings with CPM leaders, ConGen officers 
have been told that the CPM only opposes FDI in core and 
strategic sectors.  For example, FDI is not welcome where India 
has its own technology or in sectors involving the country's 
security.  According to this argument, since there is very 
little core or strategic sector investment in West Bengal, the 
CPM is going all out to welcome FDI in the state, whereas at the 
center, despite being a UPA ally, it is opposing FDI in several 
sectors. 
 
6. (U)  Having rejected the rigidity of Communist ideology, the 
CPM leaders have apparently tried to salvage what they consider 
the motivation behind that ideology - a desire to champion the 
cause of the poor and the exploited classes.  As such, the CPM 
Conference stressed that it will not accept funds from the World 
Bank and ADB with strings attached; that farmers should be 
compensated when urbanization shrinks agricultural land; and 
that worker rights should be protected.  The West Bengal CPM's 
reorientation of economic policy has come after a bitter debate. 
 The opposition came mainly from labor leaders and from those 
advocating the traditional socialist hard line.  Arrayed against 
them, the pro-reform lobby argued that investment - foreign and 
domestic - was needed to set up industries for the state's more 
than six million unemployed people.  Moreover, the party could 
take up labor rights issues only when there were industries 
employing labor.  It was argued that strident labor movements 
that led to a flight of capital from West Bengal were 
detrimental to labor in the long run. 
 
7. (U)  The CPM's policy shift also reflects the change in the 
Party's class character.  Of the 599 delegates who came to the 
Conference, 72 represented workers, 76 belonged to traders' 
organizations, 26 represented landless peasants, and 399 were 
representatives of the middle class.  Among the delegates, 76 
declared their monthly income to be more than USD 225 and an 
equal number did not declare their income at all.  With the 
State Committee of the CPM packed with representatives of middle 
and higher income groups, the party's strident and revolutionary 
character, built on the image of struggling masses of peasants 
and factory workers, is undergoing an inevitable - and quite 
probably irreversible -- change. 
 
8. (SBU)  COMMENT:  Having decided that the Party will welcome 
foreign capital in West Bengal, the CPM must try to positively 
correlate foreign/private investment with the welfare of the 
poor.  It will also need to provide a safety net for the people 
displaced from land under the new industrial initiative.  In the 
meantime, the distinction between FDI at the state level versus 
the Center smacks of sophistry and we have pointed out - in 
public and in private - that the positive arguments supporting 
foreign investment in the state apply equally well for the 
nation as a whole.  West Bengal's government must also 
understand that investors will be confused by inconsistent 
messages from the Party at the state and at the Center, and any 
confusion is bound to command a risk premium.  Nonetheless, the 
CPM needs to keep some political space between itself and the 
Congress Party in the run-up to West Bengal State Assembly 
elections in 2006, and FDI makes a convenient issue on which to 
differentiate itself.  A cynic might say that these contrary 
positions will allow the CPM to have it both ways in the 2006 
campaign depending upon which group of voters they are wooing at 
a particular time.  In any case, with no credible political 
opposition in West Bengal able to seize these issues in the 
short term, the CPM is sitting pretty for now.  END COMMENT. 
 
SIBLEY