US embassy cable - 05NEWDELHI3933

C O N F I D E N T I A L SECTION 01 OF 06 NEW DELHI 003933 
 
SIPDIS 
 
E.O. 12958: DECL: 05/19/2015 
TAGS: ECON, PARM, PGOV, PHUM, PINR, PREL, IN, Indian Domestic Politics 
SUBJECT: THE UPA SCORES BETTER THAN AVERAGE AFTER ONE YEAR 
IN OFFICE 
 
REF: NEW DELHI 3797 
 
Classified By: Charge Robert O. Blake, Jr. for Reasons 1.4 (B, D) 
 
1.  (C) Summary: The UPA government completed one year in 
office on May 22.  Although the Left parties and the BJP 
predictably criticized its performance, commentary has been 
generally positive, reflecting widespread respect for 
Manmohan Singh's performance.  Despite some initial 
weaknesses (such as antagonizing regional allies and failing 
to respond to challenges in Nepal and Bangladesh), the UPA 
registered significant progress on the economy, foreign 
affairs, its relations with major powers (US, China, Japan, 
Russia), and the domestic agenda.  The UPA has clearly been 
learning to consult with the disparate parties in its 
alliance, and demonstrated that it can compromise with the 
ideologically driven demands of the Communists without making 
undue sacrifices on the reform agenda.  Most observers agree 
that Manmohan Singh and Congress President Sonia Gandhi have 
worked well together to provide stability and produce 
results.  With the opposition BJP in complete disarray and 
incapable of providing an attractive alternative, Congress 
and its allies face little serious challenge, although the 
Left continues to act as a drag on the PM's economic reform 
ambitions.  Analysis of the UPA's economic performance was 
provided in reftel.  There was little progress on global 
issues (trafficking in persons, drug treatment programs, 
HIV/AIDS) under the previous NDA government, as it was 
reluctant to face controversial social issues.  We have seen 
a complete turnaround under the UPA.  End Summary. 
 
Congress Celebrates, Promises Further Reform 
-------------------------------------------- 
 
2.  (U) As the UPA marked one year in office on May 22, the 
Congress leadership was guardedly optimistic about its 
performance.  PM Singh modestly gave himself and the UPA a 
6/10 score, and Party President Sonia Gandhi a perfect (and 
exaggerated in our view) 10/10.  Stressing that Congress had 
"made the coalition experiment work," Manmohan Singh listed 
the party's greatest contribution as returning the country to 
"the politics of moderation, and the economics of equity and 
development."  The "single greatest achievement" was 
providing "the weaker sections a new sense of belonging and 
ownership in the destiny of the nation."  The PM told the 
Congress Working Committee on May 16 that the party would 
"accelerate development" in seven key areas: agriculture and 
rural development, infrastructure, education, health, urban 
renewal, water, and the knowledge economy, by addressing both 
equity and efficiency.  Singh noted that Congress would have 
to undertake "a bold initiative" to pursue serious economic 
reform, improve public finances, and institute a "code of 
conduct" to control the excesses of India's politicians. 
 
3.  (U) Mrs. Gandhi was more enthusiastic than the Prime 
Minister, saying "I don't think we could have done more, 
considering how a coalition works."  She expressed 
satisfaction with the Congress performance regarding 
"coalition management," noting that "it is our first 
experience and we have not done badly."  Mrs. Gandhi accepted 
responsibility for "mistakes" in the 2005 state legislative 
assembly polls (in Jharkhand and Bihar), and the dissolution 
of the Goa assembly, admitting that "the list of mistakes is 
long," and "we could have formed the government in 
Jharkhand."  While noting that there was infighting within 
her party, she was satisfied that it was "much less than 
others." 
 
The Left Criticizes 
------------------- 
 
4.  (U) The Communist parties, which support the UPA 
government from outside, were naturally unhappy with the UPA, 
criticizing it for "pursuing the same policies of 
liberalization and privatization" as the previous NDA 
government, while not doing enough "to promote multipolarity 
in international relations."  The Left Front (LF) urged the 
UPA "not to get too close to the US," but to cultivate "close 
ties with Russia, China, Europe and Japan," and "develop 
trilateral cooperation between India, China and Russia."  To 
express their unhappiness, the LF parties did not attend the 
UPA's anniversary celebration on May 22, with leader Jyoti 
Basu noting that "all they have done is to implement the 
decisions taken by the NDA government."  The CPI(M) would 
"keep an independent profile and keep its right to criticize 
government policies," he stated. 
 
5.  (U) CPI General Secretary AB Bardhan commented that 
"there are a few positive achievements, but a lot of failures 
too." Noting that 70 percent of the population depends upon 
agriculture for its livelihood, he praised the UPA for paying 
more attention to India's rural sector, although the 
budgetary increases were "somewhat reluctant and niggardly." 
Bardhan criticized the UPA for what he viewed as "excess zeal 
in raising FDI in the telecoms and the banking sector, 
failing to commit resources to revive "sick" public sector 
units, raising the possibility of FDI in retail trade and 
pursuing disinvestment, and "making a mess" of the public 
power sector with tariff hikes and privatization. 
 
6.  (U) The Communists gave the UPA credit for "taking steps" 
to remove Hindu nationalism from the education system, 
textbooks and research institutions, abolishing the 
Prevention of Terrorism Act, adopting a Right to information 
Act, increasing in social spending, and attempting to pass a 
Rural Employment Guarantee Bill.  They blamed the bill's 
failure not on the UPA, but on the NDA boycott of Parliament. 
 
 
The BJP Pontificates 
-------------------- 
 
7.  (U) On May 24, the NDA released a "report card" charging 
the UPA with "a year of non-performance and misgovernance." 
The report accused the UPA of "devaluing constitutional 
institutions such as the Election Commission and the 
opposition, and "misusing" governors to perpetuate "single 
family rule" in the country.  BJP Party President LK Advani 
claimed that the UPA's "biggest failure" was in internal 
security, as it had failed to contain Maoist insurgents or 
prevent the infiltration of illegal migrants from Bangladesh. 
 
 
8.  (U) Attempting to denigrate and undermine the UPA by 
emphasizing the relationship between PM Singh and Mrs. 
Gandhi, and Congress and the LF, the BJP insisted that the 
UPA is inherently flawed and not fit to rule.  According to 
the BJP, Mrs. Gandhi occupies an "extra-constitutional 
position of power" that has "devalued" the position of the 
Prime Minister.  BJP spokesmen and pro-BJP journalists 
pointed to what they alleged was a conflict between the 
mild-mannered Prime Minister and the "crafty and 
manipulating" Party President.  The BJP further alleged that 
Mrs. Gandhi and her retinue have a soft spot for the 
Communists and have repeatedly sabotaged the PM's economic 
agenda. 
 
9.  (U) The BJP has also criticized Sonia Gandhi as a 
favorite of the LF, which is bent on sabotaging economic 
reforms advocated by the Prime Minister.  A blatantly pro-BJP 
summary of the year's performance in a recent issue of "India 
Today" cites Mrs. Gandhi for placating the Left by 
intervening to prevent Finance Minister Chidambaram and 
Planning Commission Deputy Chairman Montek Singh Ahluwalia 
from privatizing 13 public sector companies.  Mrs. Gandhi 
also earned BJP ire by allegedly calling the Prime Minister 
to task for his defense of the "communal" Gujarat Chief 
Minister Narendra Modi after the US revoked his visa. 
 
Domestic Politics 
----------------- 
 
10.  (C) The BJP ended its first year in the opposition 
wracked by factionalism and disunity, and has been unable to 
present a credible challenge to the UPA.  The BJP's lack of 
direction was epitomized by its failure to play a 
constructive role in Parliament.  Repeated disruptions, 
walkouts and boycotts helped to discredit the party and 
provided the UPA with an opening to pass legislation at will. 
 The BJP's failure to present a credible alternative allowed 
the inexperienced Congress a long interval to learn the 
intricacies of "coalition management," and to recover from 
numerous early mistakes.  Although Congress still had not 
established close working relationships with the colorful and 
disparate regional and caste-based parties that make up the 
UPA, it was more successful in establishing a modus vivendi 
with the Communists. 
 
11.  (C) Polling data indicated that voters were largely 
content with the status quo and not eager to change 
governments.  The Congress leadership misinterpreted this as 
a pro-party trend and tried to dislodge its regional allies 
and "capture" the state governments of Goa, Jharkhand, and 
Bihar.  The party paid a heavy price for its hubris, its 
attempt to win the Bihar State Assembly Election in February 
without local satrap Laloo Prasad Yadav, split the UPA ticket 
into warring elements, plunged the state into uncertainty, 
and reduced Congress to only 10 seats.  Yadav's RJD Party 
lost control, and the state has been under President's rule 
ever since.  Congress tried the same strategy in neighboring 
Jharkhand where it was expected to win an easy victory, and 
turned near-certain victory into defeat.  Having failed at 
the polls, Congress used a sympathetic government to install 
Shibu Soren as Chief Minister, only to see his government 
fall two weeks later.  In Goa, Congress failed to manipulate 
state legislators to enact a constitutional coup and unseat 
an NDA government, plunging that state into President's rule 
as well.  Only in Haryana was Congress able to dislodge a 
regional party and come to power with a wide majority. 
 
12.  (C) Congress also had to contend with a newly empowered 
LF.  Without the Communist's outside support, the UPA could 
not remain in power.  In order to provide stability and keep 
the government in power, Congress and the Left leadership 
scheduled regular "coordination meetings" to deal with policy 
differences and maintained informal communication channels. 
The predictions of UPA critics that the Communists would hold 
the government hostage, stop economic liberalization, and 
destabilize the government proved false.  Instead, both sides 
learned to compromise. 
 
Foreign Policy 
-------------- 
 
13.  (SBU) Indian commentators generally gave the UPA 
government good reviews for strengthening relations with the 
US and China, and have praised the recent thaw with Pakistan. 
 High-level visits over the past year have been platforms for 
announcing "strategic partnerships" with China, Mauritius, 
Japan, the US and Russia, while the MEA boasted that the EU 
was also seeking a strategic partnership with India.  Despite 
the high profile bonhomie with many counterparts, however, 
pundits questioned the government's management of relations 
with India's closest neighbors: including Nepal, Sri Lanka, 
and Bangladesh. 
 
14.  (C) With growing aspirations for great power status, 
India is focused most intently on the "major players," the US 
and China.  While the previous NDA government pursued 
initiatives aimed at resolving outstanding India-China 
issues, the UPA government helped bring these closer to 
fruition.  During PRC PM Wen Jiabao's April visit to Delhi, 
both countries moved closer to resolving their long-standing 
border dispute, increasing trade ties and working 
cooperatively on international issues.  The two countries 
also agreed to seek a "package settlement" of outstanding 
border disputes (although the countries have not agreed on 
any boundaries, a process that could drag on indefinitely), 
and China recognized Sikkim's accession into the Indian 
Union.  The UPA took the initiative to renew New Delhi's 
stagnant relationship with Japan, increasing economic ties 
and cooperation in the UN. 
 
15.  (C) After a shaky start, Foreign Minister Natwar Singh 
and the UPA have been more than receptive to US efforts to 
broaden our bilateral relationship, welcoming increased trade 
and economic ties, US investment, cultural and 
people-to-people ties, and greater cooperation in military 
affairs.  Supporters of the Prime Minister trumpet 
breakthroughs in areas such as nuclear nonproliferation and 
US assistance with India's energy needs as major foreign 
policy achievements.  The Left parties and the left wing of 
Congress remain wary, however, and many within the UPA are 
reluctant to get "too close" to the US.  Indians of all 
political hues support a UN security Council Seat for India, 
and would react angrily if the US was perceived as blocking 
this aspiration.  Opposition to Indian involvement on the 
ground in Iraq remains widespread. 
 
16.  (C) The UPA has skillfully managed the growing dialogue 
with Pakistan, and most Indian commentators praised its 
management of India/Pakistan issues.  The Composite Dialog 
continued on a wide range of outstanding issues, while the 
PM's launching of the Srinagar-Muzaffarabad bas service, and 
strong and growing support for a "soft border" between the 
two countries, set the stage for more trade, tourism, travel, 
and cultural exchanges across the LOC, testifying to Manmohan 
Singh's efforts to change the Kashmir paradigm. 
 
17.  (C) Indian observers have faulted the UPA's handling of 
relations with Nepal and Bangladesh, with many commentators 
lamenting that the GOI has not forcefully moved to counter 
Bangladeshi support for Indian separatists.  The government 
has walked a fine line on Nepal seeking to please both its 
Communist allies (bitterly opposed to the King) and the 
Indian military (supporting full cooperation with the Royal 
Nepalese Army to combat the Maoists).  Both groups have 
criticized the UPA's compromise policy that first ended arms 
supplies to Nepal while pressing for concrete progress 
towards democratization, only to relent and resume the supply 
of non-lethal military assistance in the pipeline. 
 
18.  (C) Although the UPA government and Natwar Singh entered 
office promising to revitalize the NAM and reinforce Third 
World solidarity, in reality MEA policy did not depart from 
that of the previous government.  India continues to support 
NAM and G-20 positions in multilateral fora, but instead of 
promoting the NAM as a monolithic opponent of Western 
"colonial" interests, the GOI is using its historic 
partnerships to garner support for its UNSC bid.  As domestic 
public interest in a Security Council seat grows, 
commentators have split in their advice to the government on 
whether or not to demand a veto, but all have recognized and 
applauded the government's efforts to rally developing world 
backing. 
 
19.  (SBU) The UPA also added energy to its priority foreign 
policy areas, aggressively seeking potential suppliers for 
its growing petroleum needs, using assistance programs like 
technical training that date back decades, and two 
newly-announced credit facilities for development aid to win 
influence in oil-rich nations against the larger amounts of 
cash that China can promise.  Foreign policy watchers 
welcomed the UPA's new focus, reflected in Sonia Gandhi's 
November statement that "energy security will be paramount" 
in India's relations with the world. 
 
Global Issues 
------------- 
 
20.  (C) The GOI's cooperation on trafficking in persons 
(TIP) issues underwent a complete turnaround in the past 
year.  Under the NDA, it was impossible for Embassy officials 
(including the Charge or the USAID Mission Director) to get 
appointments with GOI officials in the TIP nodal office of 
the Department of Women and Child Development (DWCD).  MEA 
and DWCD jointly stalled implementation of almost $1 million 
in G/TIP-funded anti-trafficking NGO projects originally due 
to be implemented by UNIFEM, citing dissatisfaction with 
UNIFEM's lack of liaison with the GOI.  Neither MEA nor DWCD 
responded to letters requesting information, appointments or 
contributions to the TIP Report.  Anti-TIP NGOs complained 
frequently and strongly that the DWCD would not release funds 
for anti-trafficking projects.  While privately seething at 
"USG internal interference in GOI affairs" on the TIP issue, 
the NDA publicly refused to comment on the TIP Report or USG 
statements regarding India's TIP problem, claiming that they 
were for USG "internal consumption."  A sympathetic Joint 
Secretary (J/S) from the Social Justice/Empowerment Ministry 
 
SIPDIS 
confirmed that the NDA was "not inclined" to cooperate with 
the USG on providing rehabilitation to TIP victims, the 
Juvenile Justice Act, the Central Adoption Resource Agency 
and India's drug abuse rehabilitation programs. 
 
21.  (C) We faced similar problems on drug 
regulation/rehabilitation policy issues.  DEA and Customs was 
able to increase cooperation with the GOI's LE agencies only 
because they kept a low profile vis-a-vis the GOI 
bureaucracy.  The NDA government put a hold on publishing the 
results of what is likely the world's largest drug abuse 
study, although the Ministry of Social Justice/Empowerment 
and UNODC had analyzed the data and approved its release. 
According to the UNODC, the GOI shied away from the study's 
publication for fear that the opposition would compel it to 
commit funds and implement programs to combat drug abuse, 
once they realized the extent of India's huge drug abuse 
problem.  Several Indian contacts opined that "a massive 
survey that shows such high levels of drug abuse does not 
enhance the image of an 'India shining,'" (an NDA 2004 
election campaign slogan)  The NDA government's refusal to 
release the results publicly and to discuss drug regulation 
policies set the dialogue back by almost two years. 
 
22.  (C) Less than two weeks after taking office in May 2004, 
the UPA Human Resource Development Minister Arjun Singh 
(whose ministry oversees DWCD) and Social Justice/Empowerment 
Minister Meira Kumar assured the Ambassador and INL Office 
Director of their cooperation.  The new MEA J/S was equally 
cooperative on TIP issues, serving as a liaison with the MHA 
to move forward our mutual TIP agenda.  During the past year, 
Mission officers have had sustained, high-level contact 
virtually weekly with the GOI on TIP, pharmaceutical drug 
regulation, HIV/AIDS, and drug abuse.  This new openness was 
reflected in GOI approval of a month-long sex crimes 
investigation course for MHA officials, MHA agreement to 
negotiate a comprehensive anti-TIP training project with the 
USG and UNODC, and the GOI's active participation in and 
response to requests for TIP Report input.  The UPA was 
proactive in initiating efforts to prevent TIP and to bring 
together the various offices to implement an effective 
anti-TIP policy.  These were the fruits of a new openness, a 
willingness to acknowledge India's TIP problem, and a desire 
to take concrete actions to combat TIP.  Equally, the GOI has 
re-invigorated its drug abuse/rehabilitation policies, 
resulting in USG cooperation with the Ministries of Health, 
Finance and Home Affairs on pharmaceutical drug regulation 
issues and increased GOI focus on the link between 
pharmaceutical drug regulation policies, injecting drug use 
and India's HIV/AIDS epidemic. 
 
Comment 
------- 
 
23.  (C) Criticism from the BJP and the Left of the UPA's 
performance during its first year in office has largely 
fallen on deaf ears.  TV Commentator and Columnist Harish 
Gupta reflected the views of most political insiders when he 
told Poloff on May 18 that BJP criticism was "baseless" and 
"did not reflect reality."  UPA credibility depends on 
popular perception of the PM and Mrs. Gandhi and their close 
personal relationship.  Repeated BJP claims of "two power 
centers," and a Gandhi family that "dictates" to the Prime 
Minister have fallen flat.  Most of our contacts agree that 
the BJP poses no threat to continued UPA rule and that 
Congress will remain in power for a full five-year term. 
Unable to devise a clear alternative, the BJP has little or 
no chance of returning to power, and is reduced to hoping 
that the UPA will somehow break apart or the LF withdraw 
support.  Such a scenario is increasingly unlikely as 
Congress gets used to heading a disparate and contentious 
coalition and compromising with the ideological demands of 
the LF. 
 
24.  (C) Like any new government that has been out of power 
for some time, the UPA made some mistakes during its first 
year.  Congress initially was inept in managing its 
coalition, failing to recognize the power of regional leaders 
such as Bihar's maverick Laloo and attempting to manipulate 
government institutions to "capture" states.  It also made 
mistakes in dealing with the crisis in Nepal or the downturn 
in ties with Dhaka that reflect the absence of a powerful 
personality like Brajesh Mishra to coordinate foreign policy 
from the Prime Minister's office.  Overall, however, the UPA 
has credibly handled the most important issues it faced, 
including the economy, relationships with Pakistan and the 
major countries that matter (including the US), and working 
with the Left parties. 
 
25.  (C) Credit for the UPA's positive performance goes to 
the Prime Minister and Mrs. Gandhi.  They have devised a 
workable division of labor in which the PM pursues his 
economic and foreign relations agendas, while leaving the 
rough and tumble of domestic politics to Mrs. Gandhi. 
Despite lingering accusations that he is a "weak" Prime 
Minister, Singh emerged from his first year as head of 
government with his reputation enhanced.  With success under 
his belt, and unscathed by failure or major scandals, he has 
delivered a solid performance, and has the wind at his back 
as he prepares for a July visit to Washington. 
BLAKE