US embassy cable - 05NEWDELHI6635

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 006635 
 
SIPDIS 
 
E.O. 12958: DECL: 08/26/2015 
TAGS: PREL, PGOV, ECON, ELAB, IN, KDEM, MNUC, Indian Domestic Politics 
SUBJECT: LEFT SHAKES DOWN CONGRESS USING ITS COALITION 
LEVERAGE 
 
 
Classified By: A/DCM-Geoff Pyatt for reasons 1.4 (B, D) 
 
1.  (C)  SUMMARY: The Indian Left, led by the CPI(M), has 
been on a political roll.  It has pressured the UPA 
government to forestall disinvestiture plans, to sack a 
Cabinet minister and to support economically-unsound programs 
such as the "National Rural Employment Guarantee Bill" 
(septel).  Pundits have begun to wonder if the UPA's, and 
more specifically, Prime Minister Singh's globalization and 
economic reform efforts have become a victim of the Left's 
growing influence.  In a recent interview, however, the PM 
firmly reaffirmed his commitment to globalization and his 
reform agenda and struck back at the Left.  The PM has 
criticized the doctrinal dichotomy between the 
business-friendly "communists" ruling West Bengal and the 
die-hard ideologues in Delhi.  While this inconsistency may 
merely be a reflection of the old adage that "all politics is 
local", it also reflects the Left's general political 
strategy of setting itself up to beat Congress in local 
elections in West Bengal and Kerala in 2006.  Congress' 
continued reliance upon the Left's support from the outside 
is exemplified by the PM's statement that "a politician 
before he can become a statesman has to remain in office long 
enough--so we have to make those compromises."  We will 
undoubtedly see both Congress and the Left clamoring to claim 
credit for passage of the "National Rural Employment 
Guarantee Bill" as they seek to ingratiate themselves to the 
vote-rich rural poor.  At the same time the government seeks 
to implement economic reforms, they will have to adjust to 
the fits and starts leveraged against them by to their 
uncooperative Left coalition partner. 
End summary. 
 
Red Storm Rising 
----------------- 
2. (U)  As the summer of 2005 waned, the Indian Left, led by 
the new generation CPI(M) appeared to be on an influential 
political roll.  In early August, the Left first pressured 
the UPA government to forestall the disinvestiture of Bharat 
Heavy Electricals Ltd (BHEL) and Maruti Udyog Ltd (MUL). 
This was followed by the sacking, at the Left's insistence, 
of Cabinet Minister Tytler following the release of the 
Nanavanti Commission report on the anti-Sikh riots.  And, 
most recently, the passage of the "National Rural Employment 
Guarantee Bill" was viewed by some as yet another political 
victory for the Left, despite being the brainchild of 
Congress Party stalwarts.  Pundits were left wondering if the 
UPA had become vulnerable to the Left's growing influence. 
 
PM Strikes Back 
---------------- 
3.  (U)  In a key interview with "McKinsey Quarterly Journal" 
(MQJ) on 25 August, however, the PM abandoned his normal 
non-confrontational style and fired broadsides at the Left as 
he reaffirmed his commitment to globalization and his reform 
agenda.  The PM praised Buddhadeb Bhattacharjee's communist 
government in West Bengal, highlighting the doctrinal 
dichotomy between the pragmatic, business-minded communists 
in Kolkata and the party dinosaurs in Delhi.  The PM made a 
strong argument for labor reform, but added "we don't have 
the broad-based consensus in our coalition for me to assert 
that I can move forward in a big way."  While the Left in 
Delhi has opposed every UPA attempt at labor market reform, 
public sector divestment and foreign investment, the Left in 
West Bengal has embraced these measures--much to West 
Bengal's economic benefit. 
 
Coalition Realpolitik 
--------------------- 
4.  (U)  Political observers note that this doctrinal 
dichotomy between the Left's political center (Delhi) and its 
regional power base in West Bengal merely reflects the old 
adage that "all politics is local".  The Left's prize over 
the horizon is the Kerala and West Bengal state elections 
slated for February 2006, where the communists will be in 
direct competition with Congress.  In order to avoid becoming 
a subset of the Congress-led UPA government at the national 
level, the center must maintain its "opposition" mantle. 
Yet, to stimulate its base at the state level, the Left must 
obtain economic results.  In essence, the center has the 
luxury of ideological purity over the practical problems of 
governance faced by the local governments.  For its part, and 
in realization of the realpolitik involved with coalition 
partnerships, Congress not only must indulge the Left's 
support from the outside but must also watch for the threat 
of a "Third Front", i.e., a Left-BJP or Left-regional parties 
grouping, which for now remains highly unlikely.  With an eye 
to his legacy, the PM has apparently recognized this 
realpolitik as he was quoted in the McKinsey article as 
noting that "a politician before he can become a statesman 
has to remain in office long enough--so we have to make those 
compromises." 
 
Playing to the Masses 
---------------------- 
5.  (C)  With the recent passage of the "National Rural 
Employment Guarantee Bill" (septel), we will undoubtedly see 
both Congress and the Left clamoring to claim credit for its 
passage as the parties seek to ingratiate themselves with the 
rural poor.  Moreover, while the Congress-led UPA government 
and the PM will continue to seek to implement their 
globalization and economic reforms, they will continually 
have to adjust to the fits and starts leveraged against them 
by the Left.  As the PM observed, "one must understand that 
economic policy and decision-making do not function in a 
political vacuum."  The cost of this coalition management in 
the short-term is as usual borne by the Indian tax-payer, who 
must pay for costly and economically unjustifiable 
expediencies like the jobs bill. 
MULFORD