US embassy cable - 05NEWDELHI1424

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 001424 
 
SIPDIS 
 
E.O. 12958: DECL: 02/22/2015 
TAGS: ECON, KISL, PGOV, PHUM, PINR, PREL, IN, PK, Indian Domestic Politics 
SUBJECT: THE BJP PROMISES FIREWORKS FOR BUDGET SESSION 
 
REF: A. NEW DELHI 1282 
 
     B. MUMBAI 370 
 
Classified By: A/DCM Geoff Pyatt, for Reasons 1.4 (B, D) 
 
1.  (C) Summary: The BJP leadership is determined to disrupt 
Parliament when the Budget Session convenes on February 25, 
insisting that the agitation will not end until the UPA 
"restores" the deposed Goa government (Reftel B).  Congress 
plans to undercut the agitation by convening the Goa Assembly 
for a floor vote to confirm the new UPA government there.  No 
other issues (e.g. Kashmir or a government report on the 1984 
Sikh riots in Delhi) are sufficiently emotive or substantive 
to rattle the UPA.  Should the unpredictable Laloo Prasad 
Yadav fare badly in the Bihar elections, he could 
dramatically withdraw from the UPA while Parliament is in 
session, plunging the government into crisis.  The BJP has 
also pushed its former Foreign Ministers Jaswant Singh and 
Yashwant Sinha to the foreground to criticize the recent UPA 
initiative to establish a bus service across the LOC in 
Kashmir.  Congress has called a series of leadership meetings 
and Parliament will likely remain nervous until the 
announcement of poll results on February 27 puts the election 
issue to rest.  Crisis would be averted if Congress and Laloo 
bury their differences to keep him in power in Bihar, 
allowing MPs to turn their attention to the budget.  End 
Summary. 
 
The BJP is Out For Blood 
------------------------ 
 
2.  (U) The BJP leadership has orchestrated street protests 
and held news conferences to signal its outrage at UPA 
behavior in Goa, and has promised to disrupt the Budget 
Session of Parliament (March 23-May 13) until a BJP 
government is "restored" there.  On February 8, the National 
Democratic Alliance (NDA) leadership led an all day sit-in in 
New Delhi to protest the UPA's February 2 dismissal of the 
NDA government in Goa.  BJP President and former DPM L.K. 
Advani noted that, "The question is not about the dismissal 
of the Goa government.  It is about the Congress' attitude 
towards democracy."  BJP General Secretary Sushma Swaraj 
promised that "In a situation like this, when democracy has 
been murdered, the Parliament may not be able to function 
normally." 
 
3.  (U) NDA leaders returned to the streets of New Delhi on 
February 16, promising not to allow Parliament to function 
properly until the UPA government releases the Nanavati 
Report on the 1984 Anti-Sikh riots to the public and punishes 
those responsible.  New Delhi BJP Chief Harsh Vardhan claimed 
that those guilty of the massacre "continue to roam free and 
are holding important positions in the Government," accusing 
Congress of "avoiding any action...in view of the alleged 
involvement of some of its leaders." 
 
Kashmir May Also Provide an Issue 
--------------------------------- 
 
4.  (U) Some within the BJP leadership have also expressed 
anger at the February 16 announcement of a bus service 
between Srinagar and Muzaffarabad (Reftel A), and the 
Congress leadership is bracing for nationalist criticism.  On 
February 17, Former NDA Foreign Minister Jaswant Singh 
criticized the UPA for not "keeping India's security concerns 
in mind," noting that "if passports and visas have been done 
away with, where is the need for fencing along the LOC and 
the deployment of security forces?"  Pro-BJP journalist 
Kanchan Gupta echoed the sentiments of the party's 
hard-liners on February 21, claiming that "the Government of 
India has virtually abdicated India's sovereignty and 
sovereign rights," Gupta described the bus agreement as, "a 
sellout" that is "heavily loaded against India's national 
interests," as it provides tacit recognition to "a patently 
illegitimate and bogus institution called the 'Government of 
Azad Kashmir,'" and allows Pakistani nationals to enter India 
without a passport. 
 
5.  (U) Another Pro-BJP journalist, Ajay Bose, was not 
certain, however, that Kashmir would provide a ready-made 
issue to disrupt Parliament.  He claimed in a February 22 
column that "the BJP, which has traditionally represented 
ultra-nationalist sentiments against a compromise on Kashmir, 
is now of two minds on the Srinagar-Muzaffarabad bus."  He 
pointed out that the party leadership has been "muted" in its 
criticism, and ascribes this to the crucial role played by 
former PM Vajpayee in launching the peace initiative with 
Pakistan.  He pointed out that this "would make it difficult 
for the BJP to unleash a frontal attack on the bus accord." 
 
The Jharkhand/Bihar Election Issue 
---------------------------------- 
 
6.  (C) The perpetually chaotic situation in Jharkhand and 
Bihar may also provide grist for the BJP mill.  Election 
results are to be released on March 27.  Exit polls and press 
reports suggest that no single party is likely to win a clear 
margin of victory in either state (Reftel A).  There are 
growing indicators that the assemblies could be hung, leaving 
the formation of the government to complicated multiparty 
negotiations.  This lingering uncertainty could provide the 
BJP with an issue, especially if the inter-party squabbling 
becomes particularly messy or there is an upset in either of 
the two states.  Given the tradition of rough politics in 
Jharkhand and Bihar, allegations of vote-rigging, political 
violence, and electoral corruption are possible. 
 
The Economic Issues 
------------------- 
 
7.  (C) FinMin Chidambaram's presentation of the federal 
budget to Parliament on February 28, is likely to elicit 
opposition from the UPA's Left allies.  Since coming to power 
last May, Congress has repeatedly crossed swords with its 
Communist allies on economic issues, and Left MPs will be 
highly critical.  In a February 24 meeting with PolCouns, 
Congress spokesman Anand Sharma described a meeting that 
morning in which Sonia Gandhi and Manmohan Singh south to 
placate the Left parties.  Predictably, the Communist 
leadership attacked the GOI's moves on foreign investment, 
airport privatization and banking reform.  However, their 
greatest complaint, Sharma reported, was the UPA's tendency 
to deploy policies without consultation, forcing the Left 
parties to read about developments in the newspapers.  The 
UPA has promised to do better in this area.  Chidambaram has 
been tasked by the Congress leadership with pushing reforms 
while not alienating the Left.  We expect the Left to engage 
in vocal public opposition to market-based reforms, but 
ultimately allow core reform measures to go through in 
exchange for social spending programs -- so long as their 
support is tacit and not overt. 
 
8.  (C) The interim budget adopted July 2004 aimed to relax 
foreign investment restrictions in the civil aviation, 
telecoms, and insurance sectors.  The GOI overcame Communist 
opposition to raise FDI in civil aviation and telecoms, but 
cannot raise the FDI cap on insurance without an act of 
Parliament.  The GOI also will likely take additional steps 
toward the BJP government's stated goal of aligning the 
tariff schedule with that of the ASEAN countries. 
Chidambaram wants to &rationalize8 the USD 11 billion a 
year that the GOI spends on subsidies for wheat, rice, 
fertilizer, LPG, and kerosene to free up resources for 
increased spending on social issues.  The Left will likely 
oppose these measures.  Congress Spokesman Sharma predicted a 
"balanced" budget with benefits for both Left and reformist 
camps.  Chidambaram reportedly plans to mollify the Left by 
boosting public spending on health and education, and 
unveiling a guaranteed rural employment program.  These 
issues are the heart and soul of the Common Minimum Program, 
the UPA's manifesto, that was hammered out by Congress and 
the Left last spring.  The Left realizes, however, that it 
cannot obtain the funding it seeks for social programs 
without allowing key reforms to proceed, preferably without a 
political debate. 
 
A Congress View Point 
--------------------- 
9.  (C) On February 22, Congress MP Rashid Alvi told Poloff 
that he was certain the BJP will disrupt parliament, that the 
Goa government's dismissal would be the principal cause, and 
that the agitation would likely end abruptly on February 28, 
when the Congress government in Goa will prove its majority 
on the floor of the Legislative Assembly.  Since Congress 
will likely win this floor vote, he said, the BJP will then 
call off the agitation and promptly get down to parliamentary 
business. 
 
10.  (C) Alvi dismissed the Nanavati Commission issue as an 
example of poor judgment by the BJP.  According to Alvi, the 
BJP has not seen the report and is only bluffing when it says 
that the report will prove Congress involvement in the 
anti-Sikh rioting.  Alvi claimed that Sonia Gandhi told him 
that no serving Congress Ministers are named in the report, 
and Congress will quickly introduce it on the floor of 
Parliament to take the wind out of BJP sails. 
 
11.  (C) In Jharkhand, Alvi predicted that the 
JMM/Congress/RJD alliance will win a clear majority, and 
Congress will keep the JMM happy by naming Shibu Soren Chief 
Minister.  However, Congress is worried about Bihar, where 
the BJP could engineer Laloo's ouster and come to power.  If 
Laloo does poorly, Ram Vilas Paswan could rejoin the NDA in 
exchange for becoming Chief Minister.  The BJP would then 
trumpet its great achievement while Parliament is in session. 
 Alvi pointed out, however, that since Paswan has only three 
MPs, his departure will have little impact outside Bihar. 
 
12.  (C) Congress is hoping that Laloo and Paswan both fail 
to form the government and turn to Congress, which has 
already promised to install a Muslim Chief Minister.  Alvi 
maintained that Minister of State Shaqeel Ahmed has been 
selected for the post, should Congress succeed.  Alvi opined 
that such an outcome would solidify Congress in Bihar and 
could end Laloo's political career, as the Muslims and Dalits 
would desert him for Congress, permanently ending his 
election-winning caste combination, and opening the 
possibility that he could be dropped as Railway Minister. 
 
13.  (C) Alvi predicted that the BJP would not raise the 
recent agreement to open bus service across the line of 
control, saying that with Vajpayee as the architect of bus 
diplomacy, this issue is out of bounds.  Alvi also maintained 
the BJP may attack the UPA over the issue of F-16 sales to 
Pakistan. 
 
The BJP Insider's View 
---------------------- 
 
14.  (C) On February 24, BJP National General Secretary and 
MP Gautam Shri Singh Priya confirmed to Poloff that his party 
plans to disrupt Parliament unless the UPA "restores" the BJP 
government in Goa.  Maintaining that the BJP is tired of the 
UPA "undermining democracy," Priya noted that Goa is one of 
three issues that will form the heart of the BJP's disruption 
campaign, (the others being the budget and fallout from the 
assembly elections).  Priya insisted that the UPA has made 
too many concessions on the economy to its Communist allies, 
and that this is resulting in growing deficit spending and 
economic instability that will lead to a new election within 
the next year. 
 
15.  (C) According to Priya, Bihar represents an opportunity 
for the BJP to make gains against the UPA, as Laloo is the 
coalition's Achilles' heel, and there is little damage 
control that Congress can implement.  Since Paswan and Laloo 
are sworn enemies, it will be difficult for the UPA to form 
the government if Laloo does not win enough seats.  If 
Congress and Paswan form the Bihar government without Laloo 
or do not pay him due deference, he could turn on Congress, 
and withdraw from the UPA.  Without Laloo's 24 seats, the UPA 
is within 12 seats of losing power.  Priya predicted that in 
such a scenario, Laloo would join with Uttar Pradesh's 
Mulayam Singh Yadav and announce the formation of a "third 
front" aimed at unseating the UPA.  In Priya's scenario, this 
major parliamentary shake-up can only benefit the BJP. 
Priya confided that the electoral situation was very fluid 
and that the BJP leadership was ready to accept defeat in all 
three states if that should be the outcome.  Noting that his 
was a "cadre-based party," Priya insisted that it would 
"bounce back" in the next election with former PM Vajpayee as 
its standard-bearer. 
 
16.  (C) Priya dismissed both Kashmir and the Nanavati 
Commission report as viable issues, as they "are only 
temporary."  In Kashmir, he said, the long-term trend is in 
India's favor, as it has "restored democracy."  The BJP sees 
no benefit from undermining this trend or trying to make 
Kashmir policy a partisan issue.  Likewise, the BJP fully 
expects the UPA to table the Nanavati Commission report on 
the opening day of Parliament, quickly putting the issue to 
rest. 
 
Comment 
------- 
17.  (C) With its fortunes fading, the BJP is looking for 
issues it can use to spark a revival during the Parliament 
session, lest it slip deeper into irrelevancy.  The party is 
hoping to mount a disruptive agitation around Goa, the 
Kashmir bus initiative, the Nanavati Commission Report and 
other issues, but Congress has already devised effective 
counter-strategies for most of these.  The most potent 
political issue overhanging Parliament is the Assembly 
Elections in Jharkhand, Haryana, and especially Bihar. 
Congress insiders have described to an unusual series of high 
level conclaves over the past few days, suggesting that Sonia 
Gandhi and the rest of the party hierarchy are aware of the 
possible fireworks ahead.  The BJP hopes that growing 
anti-Laloo sentiment could cause a faultline within the UPA 
that it can exploit.  If this does not happen, and the UPA 
agrees to work with Laloo to keep him in power, the BJP could 
come up empty once again. 
MULFORD