US embassy cable - 05NEWDELHI1519

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 001519 
 
SIPDIS 
 
E.O. 12958: DECL: 01/27/2015 
TAGS: PGOV, IN, Indian Domestic Politics 
SUBJECT: NO CONGRESS KNOCKOUT - BJP BACK IN THE RUNNING 
FOLLOWING STATE POLLS 
 
REF: A. NEW DELHI 1304 
 
     B. NEW DELHI 796 
     C. CALCUTTA 72 
 
Classified By: DCM Robert O. Blake, Jr. for Reasons 1.4 (B, D) 
 
1.  (C) Summary: Despite a decisive victory in Haryana, 
Congress and its United Progressive Alliance (UPA) allies 
have emerged chastened by the elections in Jharkhand, and 
Bihar.  Although the Jharkhand/Bihar outcome has given the 
BJP and its National Democratic Alliance (NDA) partners a new 
lease on life, the UPA is still securely in place in New 
Delhi.  In Jharkhand and Bihar Congress pulled defeat from 
the jaws of victory, and let over-confidence, and infighting 
get the best of it.  Congress also revealed itself to be less 
competent at managing regional alliances than the BJP.  Bihar 
regional satrap Laloo Prasad Yadav is the big loser in this 
process, although he is down but not out, and will fight on. 
Over the long term, Congress will be more comfortable with a 
chastened and more humble Laloo who is unlikely to challenge 
the UPA.  The bright spot for Congress is Haryana, where it 
scored a clear victory.  The BJP is likely to form the 
government in Jharkhand in a matter of days.  The situation 
in Bihar remains murky, with the most likely outcome being a 
period of President's rule followed by a UPA coalition 
government.  Congress, now must focus on cementing its UPA 
alliance and facing a revived NDA, and will likely be more 
cautious and less inclined to take dramatic economic and 
foreign policy initiatives.  End Summary. 
 
The UPA Falls Short in Bihar 
---------------------------- 
 
2.  (C) Congress arrogance and inability to stem infighting 
amongst its allies cost it a chance to score a three state 
sweep against its NDA opponents in recently concluded 
elections in Bihar, Jharkhand and Haryana.  Instead, 
snatching defeat from the jaws of victory, Congress provided 
a much-needed shot in the arm to the BJP and its NDA 
alliance, which has been in a downward spiral since the 2004 
elections.  Congress has proved less adept than the BJP at 
managing coalition politics, and has paid a heavy price.  In 
Bihar, divisiveness among UPA allies at the state level 
resulted in a hopelessly hung assembly, with no party or 
coalition in a position to form the government. 
 
3.  (SBU) In Bihar, Laloo's weakness and that of his 
Rashtriya Janata Dal (RJD) was already quite apparent (Ref 
A).  Not only did he fail to keep his winning caste 
combination (Yadavs and Muslims) together, he needlessly 
antagonized Dalit leader Ram Vilas Paswan by taking the 
Railways portfolio in the national cabinet for himself.  As a 
result, Paswan announced his intention to depose Laloo and 
his willingness to work with practically anyone to establish 
a non-RJD government.  For the first time in many years, 
Bihar's Dalits had a clear choice and many of them voted for 
one of their own, giving 30 seats to Paswan's Lok Janshakti 
Party (LJP).  Instead of trying to maintain unity, Congress 
saw an opening to humble Laloo and to distance itself from 
one of its tainted ministers.  The result was a three-sided 
contest, with voters choosing between Congress/LJP, RJD, and 
the NDA. 
 
4.  (U) There was no "Congress wave" in Bihar.  As a party, 
it won only 10 seats, two less than it had before.  The RJD 
(73 seats) and its Communist allies control 77 seats, far 
short of a majority in the 243 seat house.  The BJP, like 
Congress, merely held its own with 39 seats, while its Janata 
Dal United ally won 54, for a total of 93.  This leaves no 
party in a position to form the government. 
 
...And Cripples Itself in Jharkhand 
----------------------------------- 
 
5.  (C) Congress repeated the same pattern in Jharkhand, 
where it chose to ally with Coal Minister and tribal leader 
Shibu Soren and his JMM and to the exclusion of those parties 
needed to win.  UPA candidates undercut each other in crucial 
contests, handing unexpected victories to the BJP, with Laloo 
accusing Soren of having "destroyed the whole scene," by 
allying with Congress against him.  Soren's blatant nepotism 
also alienated his supporters, resulting in the defeat of 
both of his sons, and reducing the JMM to only 17 seats in an 
81 seat assembly.  Congress won only nine seats, meaning that 
the combined Congress/JMM total of 26 seats is far short of 
the required 41. 
 
6.  (C) The BJP victory was not a result of its sterling 
record in Jharkhand.  Its performance as the state government 
incumbent has been lackluster, especially in the crucial area 
of economic development, and there was no undercurrent of BJP 
support in the state.  Instead, the divided UPA presented 
such an unattractive picture that many votes went to the BJP 
by default.  In other cases, the UPA votes were split, 
handing a de-facto victory to the NDA candidate. 
 
Haryana: Congress Bright Spot 
----------------------------- 
 
7.  (C) Haryana was the Congress bright spot, in that it won 
a clear two thirds majority of 67 seats in a house of 90, 
while reducing its regional opponents the Indian National Lok 
Dal (INLD) to only 9 seats.  The BJP contested all 90 seats 
and won only two.  In Haryana the BJP demonstrated that 
without a regional ally it could not be a viable party, while 
the INLD was a spent force that had alienated its supporters 
with heavyhandedness, nepotism, and corruption (Ref B). 
 
Congress Views 
-------------- 
 
8.  (C) Jaipal Reddy, Congress Minister for Information and 
Broadcasting, told us that the Jharkhand and Bihar elections 
were a "debacle for the UPA," blaming them on "our own 
bickerings."  He confided that the UPA did not have a well 
thought-out strategy in either state, and it was handled 
badly by "some of our overzealous leaders."  Reddy insisted 
that there was still a chance that the UPA could form the 
government in Jharkhand, as "the governor is our man," and 
confirmed that substantive talks with Paswan over the fate of 
Bihar will not start until March 1 or 2.  Reddy claimed that 
the elections would have no ill-effects on the national 
coalition and could even strengthen the Congress position 
within the UPA, as "Laloo will be a subdued man now." 
Congress MP Rashid Alvi called the Jharkhand and Bihar 
outcomes "big lessons" for Congress, which must retain a 
"united face" or "face the return of the NDA." 
 
The BJP View 
------------ 
 
9.  (C)  In a February 28 conversation, R. Ramakrishna of the 
BJP Election Cell, confirmed that the BJP and JD(U) would 
stake a claim on forming the government in Bihar, although 
the election outcome was a disappointment for the BJP, in 
that it had hoped to win over 100 seats in Bihar. 
Ramakrishna insisted that the party remained confident of 
forming the government and the BJP is actively recruiting 
"seven or eight independents."  In Jharkhand, the BJP 
legislators will meet on March 1 to select a candidate for 
Chief Minister.  He did not think that the election would 
have a serious impact on the UPA government in New Delhi over 
the short term, and could only cause problems if Sonia Gandhi 
failed to resolve the tension between Laloo and Paswan. 
 
Other Pundits Comment 
--------------------- 
 
10.  (C) D. Raja, the National Secretary of the CPI pointed 
out that this election was a serious wake-up call for the 
"secular parties" in that they must follow "coalition norms" 
or face a growing challenge from a revived NDA, and called 
for UPA parties to stop fighting among themselves.   Veteran 
journalist Zafar Agha claimed that Sonia Gandhi was working 
to engineer a face-saving formula to keep Bihar in UPA hands, 
which calls for Laloo to resign as Railway Minister and hand 
the portfolio over to Paswan.  In return, Paswan is to accept 
Laloo as Bihar Chief Minister.  Agha said the UPA needed to 
cultivate coalition allies with a clean image and not to name 
"tainted Ministers" such as Laloo to the Cabinet.  "Hindu" 
editor Harish Khare asserted that the Communists have also 
been humbled in this election, as they now see a new need for 
"secular" parties to unite and confront a revived BJP. 
 
Winners and Losers 
------------------ 
 
11.  (C) The biggest loser in the election was Laloo, who has 
been weakened and no longer has the nationwide political 
clout that he had before the election.  Although he continues 
to protest that he can form the government in Bihar, his wife 
Rabri Devi submitted her resignation as Chief Minister on 
February 28 and he does not have the required numbers.  The 
biggest winner in Bihar is Ram Vilas Paswan, the kingmaker 
for the government there, who is also a UPA Minister.  At 
present, he remains determined not to join any government 
with the BJP or the RJD and insists he is prepared for a 
period of President's Rule (Under the Indian Constitution, 
the Governor may dismiss the government and rule the state 
when no clear winner emerges from an election). 
 
12.  (C) Rather than accede to these demands, Mrs. Gandhi 
could decide to allow a protracted period of President's 
Rule.  In November 2004, she installed Congress war-horse 
Buta Singh as governor, and with him at the helm in the 
state, Congress would have its own administration in place 
for up to one year.  This scenario would provide Congress 
with a chance to tackle some of Bihar's intractable problems 
of governance and demonstrate competence, positioning the 
party to win on its own in the next state elections. 
 
13.  (C) Coal Minister Shibu Soren is also a major loser, in 
that he failed to deliver Jharkhand for the UPA and failed to 
achieve his goal of becoming Chief Minister.  Only five seats 
short of forming the Jharkhand government, the incumbent 
BJP/JD(U) is confident of recruiting enough independents to 
put it over the top.  It will have to pay a price, however, 
most likely ministerial berths for those independents who 
sign on.  Shibu Soren's alienated deputy who ran against the 
JMM as an independent and won, is among those independents 
most likely to join the NDA.  Congen Calcutta reports that 
the BJP is also looking to replace Chief Minister Arjun 
Munda, whose performance has been mediocre at best, with 
Babulal Marandi, who was Jharkhand's first Chief Minister 
after the state was created.  The UPA seems resigned to 
defeat and has all but conceded that the BJP will stay on. 
 
14.  (C) Congress is a clear winner in Haryana, but there are 
no less than nine contenders for the Chief Ministership.  The 
Congress Assembly Party meets March 1 to select the next 
Chief Minister, but most acknowledge that the legislators 
will only rubber-stamp Sonia Gandhi's choice.  The 
front-runner is three-time Chief Minister Bhajan Lal, who 
controls the biggest block of legislators.  Sonia has said 
that she would prefer younger blood and reserves the option 
to select a youthful candidate.  One big winner is Haryana 
Congress politician Randeep Surjewala, who defeated Chief 
Minister Om Prakash Chautala in his own constituency. 
Surjewala has been thrust into national prominence and is 
among the contenders for Chief Minister, or State Party 
President and is set for a long and successful political 
career. 
 
The Immediate Future 
-------------------- 
 
15.  (C) Sonia Gandhi has called Paswan to New Delhi to 
convince him to join with Laloo and Congress to establish a 
"secular" government in Bihar.  While Paswan could well 
accede to her wishes, he would demand a heavy price, to 
include a Chief Minister not from the RJD or Laloo's family, 
and that Laloo step down as Railway Minister in New Delhi, 
and give the portfolio to Paswan.  The arrangement would also 
likely include a Deputy Chief Minister from the LJP who is 
hand-picked by Paswan.  A humbled Laloo may have no choice 
but to accept such an arrangement, lick his wounds and live 
to fight another day.  The BJP will also try to woo Paswan, 
offering him the post of Chief Minister in a coalition 
government.  As a Dalit leader who depends on Muslim backing, 
it would be very difficult for Paswan to accept such an 
offer.  The BJP/JD(U) will fall short without Paswan. 
 
Long-term Implications 
---------------------- 
 
16.  (C) This election has revived the rapidly-declining 
fortunes of the BJP, which has demonstrated that it can hold 
onto power in Jharkhand, humiliate Laloo on his home turf, 
and retain a base of support in the Hindi belt.  Despite its 
clear victory in Haryana, Congress has been sobered.  This 
election has ended its winning streak and its plans to extend 
its control over new states and further relegate the BJP to 
irrelevancy.  Congress will now have to re-examine its 
relations with the regional parties and devise ways to better 
manage regional alliances in future contests. 
 
17.  (C) While a setback for Congress, this election is 
certainly not life-threatening.  The UPA remains firmly in 
power in New Delhi and the NDA is in no position to unseat 
it.  At a time when many were predicting a break up of the 
NDA, the BJP and its allies have won a new lease on life and 
have regained some confidence, but remain weak.  Congress 
picked up the state of Haryana, the BJP will in all 
likelihood retain power in Jharkhand, and Bihar is headed for 
a period of President's rule.  In the end, Paswan is likely 
to be true to his caste loyalties and pragmatic instincts and 
patch together a UPA government in Bihar.  This means that at 
the end of the day, Haryana will have changed hands, while 
Jharkhand and Bihar remain where they were. 
 
18.  (C)  While Congress is now chastened, it could 
eventually conclude that it successfully humbled Laloo and 
removed his wife as Chief Minister.  Should Paswan prove to 
be a more pragmatic and reliable ally, some within Congress 
will determine that this was a small price to pay to rein in 
Laloo and Shibu Soren and their excesses. 
 
19.  (C) This election outcome has revived "two coalition" 
politics in India, as the BJP/NDA becomes more confident and 
upbeat.  Congress will now have to be more careful and 
cultivate its allies, while BJP has come back from the brink. 
 Future contests will involve these two parties and their 
allies, and Congress will have to be careful to not repeat 
its tendency towards arrogance and overconfidence. 
 
20.  (C) Having been presented with clear evidence of 
instability within its alliance, Congress will likely focus 
more attention on cultivating and placating its allies, 
including the Communists who have come forward in the wake of 
the election with renewed calls for "secular unity" to stem a 
possible NDA resurgence.  At least for the short term, this 
outcome is likely to make Congress more cautious in dealing 
with the economy and foreign affairs. 
 
21,  (U) This message was coordinated with Amconsul Calcutta. 
MULFORD