US embassy cable - 05NEWDELHI3505

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 003505 
 
SIPDIS 
 
E.O. 12958: DECL: 03/30/2015 
TAGS: PGOV, PHUM, PINR, ECON, IN, Indian Domestic Politics, Indo-US 
SUBJECT: BJP LEADER REAFFIRMS US-INDIA COMMITMENT 
 
Classified By: Charge Robert O. Blake, Jr., for Reasons 1.4 (B, D) 
 
1. (C) Summary: BJP spokesman and former Commerce Minister 
Arun Jaitley warned us recently that the Modi controversy 
continues to fester among the party rank and file, who see 
the Chief Minister's visa revocation as a personal attack on 
a leader of the party that began the transformation of 
US-India relations.  One of several aspirants to direct the 
next generation of BJP leadership, Jaitley was otherwise 
upbeat on the US-India relationship, and quietly confident 
that the party would eventually find its feet.  End Summary. 
 
2. (C) In an May 6 meeting with the Charge and PolCouns, a 
relaxed and self-assured Arun Jaitley predicted that current 
BJP President LK Advani would lead for another two to three 
years, after which one of five next generation leaders 
(Jaitley among them) would take the reins.  Dismissing the 
speculation about Advani's successor as being no more 
relevant than predictions about Gordon Brown's accession to 
power in the UK, Jaitley argued that the BJP remained a force 
to contend with in Indian politics, notwithstanding the 
party's current public squabbling.  Pressed on the question 
of Hindutva, Jaitley argued that Hindu nationalism "will 
always be a talking point" for the BJP.  However, he 
characterized this as an opportunistic issue.  In India's 
northeast, for instance, Hindutva plays well because of 
public anxiety about illegal migration of Muslims from 
Bangladesh.  With the recent improvement of Indo-Pak 
relations, he added, Hindu nationalism is now less resonant 
in New Delhi, but that could change with another cross-border 
terrorist attack, for instance on the Indian Parliament. 
 
3. (C) Jaitley was upbeat on the US-India relationship, 
emphasizing that ties with the US are no longer a point of 
controversy in Indian politics.  Citing his own situation as 
typical, Jaitley noted that he has several nieces and sisters 
living in the US, "and five homes to visit between DC and New 
York."  Despite this upbeat context, Jaitley was distressed 
about the US visa denial to Gujarat Chief Minister Narendra 
Modi, complaining that he could not understand how the US 
could take such an action against the party that began the 
transformation of US-India relations.  Charge explained the 
rationale and legal basis for the US decision.  Jaitley 
agreed with the Charge's point that Modi was a polarizing 
personality, but argued that it would have been better for 
the US to let the Chief Minister visit the US, where he would 
have attracted a few demonstrators and then nothing more 
would be said.  Regardless of US explanations, Jaitley 
warned, the Modi decision has hurt the US reputation among 
BJP rank and file. 
 
4. (C) Reflecting on several weeks spent in Bihar leading the 
BJP's state election campaign, Jaitley expressed concern 
about growing gaps in the quality of governance across India. 
 Virtually all new investment, he argued, is concentrated in 
the four southern states, two western states (Gujarat and 
Maharashtra) and "within 100 kilometers of Delhi."  He 
lamented the "Robin Hood" syndrome that prevails in Bihar, 
arguing that caste politics lend a "social sanction" 
criminalization of politics that drives away investment. 
Recalling helicopter flights over Bihar, Jaitley described an 
economic desert, with brick kilns constituting virtually the 
only form of industrial infrastructure.  He also decried -- 
but sympathized with -- the mass exodus of Bihari 
professionals from that state to cities like Delhi and 
Mumbai, and to the ranks of the Indian Administrative 
Service. 
 
5. (C) Putting on his hat as a former Commerce Minister, 
Jaitley confessed that the BJP's opposition to a Value Added 
Tax (VAT) at the state level was based on a narrow political 
calculus, and predicted that the BJP states would adopt the 
VAT soon in order to protect their revenue streams.  He gave 
the Congress government generally positive marks for its 
handling of economic policy issues, but focused on the 
contradictions inherent in the UPA coalition.  Jaitley was 
relatively relaxed in response to the Charge's pitch for 
opening of the Indian services sector.  He agreed that legal 
services should be opened to foreign competition, noting that 
the performance of the Indian bar has begun to improve, even 
though the quality of judges suffers from a "Gandhian" 
mindset that leads to unreasonably low salaries.  On retail, 
he argued that foreign competition should not seriously hurt 
the mom and pop stores that form a  BJP constituency. 
However, he suggested that opening up to big retail chains 
like Wal-Mart should proceed slowly, since large Indian 
retailers are just now coming into their own. 
 
6. (C) Comment: Although visibly pained by the Modi visa 
revocation, Jaitley was gracious and open throughout.  He 
clearly values his personal and commercial connections to the 
US (several US corporates are legal clients).  As the 
competition for BJP leadership heats up, Jaitley will enjoy 
the advantages of a telegenic personality and strong ties to 
the New Delhi establishment.  However, as reflected in his 
remarks here about Hindutva, Jaitley's credentials with the 
Sangh Parivar are weak, and he may not have what it takes to 
mobilize the BJP base. 
BLAKE