US embassy cable - 05NEWDELHI7759

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 007759 
 
SIPDIS 
 
E.O. 12958: DECL: 10/03/2015 
TAGS: PGOV, ECON, ELAB, KISL, PREL, PINR, EINV, IR, IN, Indian Domestic Politics 
SUBJECT: CONGRESS MOVES TO CALM COALITION JITTERS 
 
REF: A. NEW DELHI 7661 
     B. NEW DELHI 7598 
 
Classified By: DCM Robert Blake, Jr. for Reasons 1.4 (B, D) 
 
1.  (C) Summary:  The virulent criticism by the Left Front 
(LF) and the opposition BJP of India's anti-Iran vote in the 
IAEA and their efforts to politicize the debate on economic 
reform has caught many Congress leaders by surprise, and fed 
rumors that the United Progressive Alliance (UPA) government 
may be shaky.  Congress is contesting elections in Kerala, 
West Bengal, and Bihar and could well be defeated in all 
three states.  This has motivated Congress Party stalwarts in 
Sonia Gandhi's office to publicly back away from 
controversial economic reform programs to allow the dust to 
settle after the Prime Minister's visit to the US and his 
vigorous efforts to push forward fiscal economic 
restructuring programs.  These uncertain political prospects 
and the left's onslaught (Ref A) have led some within 
Congress to speculate that the party was too quick to endorse 
a pro-US, pro-reform agenda, providing ready targets to UPA 
opponents.  Congress moved quickly to shore up its ranks, 
calling meetings of its "core group," its Chief Ministers, 
and convening the coordination committee to discuss matters 
with the LF.  Congress insiders self-servingly tell us that 
while there is some nervousness regarding upcoming elections, 
the Prime Minister faces no real opposition capable of 
undermining the UPA agenda.  The general consensus among 
economic pundits is that the Congress Party leadership has 
chosen to soft-pedal economic reform and privatization 
efforts in the lead up to the commencement of budget 
negotiations in November, when fiscal conditions will insert 
a new element of reality (and a new imperative for reform) 
into the debate, as the UPA and the opposition figure out how 
to finance their pet programs.  Rumors could revive should 
the party perform poorly.  End Summary. 
 
Foreign Policy Becomes a Political Issue 
---------------------------------------- 
 
2.  (C) Congress insiders have been rattled by the harsh 
criticism of India's IAEA vote against Iran.  Foreign policy 
issues rarely spill over into Indian domestic politics, and 
the party leadership had kept it under the purview of PM 
Singh, who manages the day to day agenda of the UPA and 
avoids political issues.  The IAEA vote has been taken up so 
aggressively by the LF and the BJP, however, that it has 
slipped over into the political sphere, which is the 
responsibility of Party President Sonia Gandhi.  This is 
causing some within Congress to question whether the UPA has 
been too far in front of the voter regarding economic 
liberalization and the Iran vote, providing the opposition 
with a political opening that could threaten the stability of 
the UPA and lead to a mid-term election. 
 
3.  (U) Under the energetic direction of Prakash Karat, a 
revived Left Front (LF) was the first to capitalize on the 
IAEA vote, but the BJP and regional parties have now joined 
the bandwagon.  On October 3, the LF leadership announced 
that it would work with regional parties around the country 
to "create awareness on the need for an independent foreign 
policy."  LF leaders will be traveling to Lucknow to meet the 
ruling Samajwadi Party and "to launch a nationwide campaign 
to mobilize opinion against India's IAEA vote," and will then 
hold public meetings in New Delhi, Kolkata, Hyderabad and 
Chennai, in which a variety of regional parties will likely 
participate. 
 
4.  (C)  The BJP has also tried to gain political advantage 
from the vote.  In an October 3 conversation with the CG, 
Tamil Nadu Chief Minister Jayalalitha opined that the UPA now 
"lacks stability," and that a mid-term poll is likely in 
2006.  Tamil Nadu is facing an election next year, and the 
BJP leadership has already announced that it will not contest 
alone.  Jayalalitha is the most  likely candidate to sign on 
with the BJP. 
 
Muslims Are Not Happy 
--------------------- 
 
5.  (C) While many Indian Muslims were not happy with the 
Iran vote, Shia leaders in Lucknow told us they were content 
to let the Prime Minister have his way and will not force the 
issue.  Sunnis were more outspoken.  The Muslim newspaper 
"Milli Gazette" accused PM Singh of "blackening his country's 
face" by "succumbing to the US pressure of open and blatant 
blackmail," and called on the Prime Minister to resign. 
Congress MP Maulana Obaid Azmi told Poloff on October 3 that 
the PM made a "mistake" when he allowed India to vote against 
Iran in the IAEA.  Azmi maintained that US foreign policy 
opposes Muslim countries everywhere and India has now 
signed-on to that agenda, which will cause more Muslims to 
oppose the party. 
 
Congress in an Uproar? 
---------------------- 
 
6.  (U) Congress has called a series of high-level meetings 
to shore up the leadership and restore confidence.  On 
September 30, the "core group" of Congress, consisting of 
Congress President Sonia Gandhi, PM Singh and senior 
ministers Pranab Mukherjee, Arjun Singh, Shivraj Patil, 
Ghulam Nabi Azad, and Mrs. Gandhi's Political Secretary Ahmed 
Patel met at the Prime Minister's residence.  "Hindu" Editor 
Harish Khare, quoting senior sources within Congress, claimed 
that the PM apologized for not consulting the leadership, and 
blamed the US for giving India only 12 hours to make a 
decision, rather than 48.  After protracted discussion, the 
group purportedly agreed that the Iran decision was the only 
"realistic" choice, as Iran "had not been a helpful 
neighbor."  Defense Minister Mukherjee argued that while the 
Iran decision would alienate Muslims, they would not abandon 
Congress "on the basis of a vote in some distant forum." 
 
7.  (U) On October 3 Congress scheduled a coordination 
meeting with the LF, and on October 7 and 8 Mrs. Gandhi and 
PM Singh will address Congress Chief Ministers, in what will 
be the first such meeting since the UPA took power in 2004. 
In its press releases, Congress emphasized that the party 
leadership will discuss how best to implement the party 
manifesto and "thrust areas identified by Mrs. Gandhi." 
 
State Elections Hold the Key 
---------------------------- 
 
8.  (C)  Although the opposition BJP is currently in disarray 
and ineffectual, Congress holds a slim parliamentary majority 
and depends on UPA allies and the LF to remain in power.  Any 
indication that the political winds have shifted and are no 
longer blowing in the Congress direction, would lead India's 
political class to speculate about growing instability and a 
possible mid-term poll.  Likewise, ambitious politicians 
among the LF and the UPA's regional allies would view any 
sign of Congress weakness as an opportunity.  Congress 
defeats in all three upcoming electoral contests in Bihar, 
West Bengal and Kerala, would spur growing worries within 
Congress that the UPA has become shaky and vulnerable, and 
energize Indian politicians to start plotting against it. 
 
The Left is Also Playing for High Stakes 
---------------------------------------- 
 
9.  (C) While the Communists are pleased with their present 
position, they are also closely watching the outcome of 
upcoming state elections.  Karat is determined to expand LF 
influence beyond the "red forts" of West Bengal, Kerala and 
Tripura.  To do so, the Communists must do well in state 
elections and weaken Congress.  Indian journalist AB 
Mahapatra told Poloff on October 5 that Karat had earlier 
hoped to build on a good electoral performance by expanding 
into new states, recruiting new allies and preparing to part 
company with Congress, but has become more pessimistic about 
dropping support for the UPA over the short-term.  If 
Congress appears to be weakening, he could speed up his 
timetable. 
 
The Views of the Insiders - Not Yet a Big Deal 
--------------------------------------------- - 
 
10.  (C) Harish Khare told Poloff on September 26 that there 
was no Congress  "left wing" siding with the LF, and 
predicted that party leaders will continue to support PM 
Singh and Sonia Gandhi.  He suggested that Congress may be 
deliberately feeding false rumors of a left wing to give the 
party "breathing room" to act against Washington's wishes if 
necessary.  Khare claimed that this was reflected in PM 
Singh's statement to him in a private conversation that 
"India must distribute its energy dependence between the 
ayatollahs in Teheran and the ayatollahs in Washington." 
Congress MP and party insider Rashid Alvi also insisted that 
there is no "left wing" within Congress that is sympathetic 
to the Communists, and that the party leadership universally 
dislikes Karat.  Alvi was also worried about the election 
outcome, pointing out that Congress is weak politically and 
does not want a mid-term poll.  He predicted that the NDA 
would win the Bihar election, forcing the LF to support the 
UPA to prevent an NDA resurgence. 
 
11.  (C) In a September 28 conversation with Poloff, 
Revolutionary Socialist Party (RSP) Secretary Abani Roy gave 
no indication that the LF was contemplating dramatic 
political moves, and seemed resigned to the political status 
quo.  Roy also predicted an NDA win in Bihar, pointing out 
that this would be a major victory for the BJP and its 
allies. 
 
Nervousness Probably Does Not Portend a Fall 
-------------------------------------------- 
 
12.  (C) Comment: The Iran vote and the UPA's proposed 
economic reform measures have made many within Congress 
nervous, and this has been compounded by the unexpected 
virulence of the LF under Karat's energetic leadership, and 
intimations of an impending cabinet shuffle.  However, the 
Congress culture does not encourage quick and radical 
political moves, and there is little to indicate that this 
nervousness implies anything near as significant as a change 
of government.  With political forces so evenly divided, 
neither the LF nor the BJP could come up with the necessary 
numbers to form a new government, and no major bloc is 
prepared or eager now to contest another national election. 
While the rumor mill is churning in New Delhi, the Congress 
leadership has already moved to reassert party discipline and 
this should suffice for the time being.  With crucial state 
elections imminent, no one is willing to engage in more than 
gossip until the election outcome is known.  Karat is 
ambitious, and should the LF do well, will embark on a 
long-term plan to increase the Communist base, expand into 
new areas, and fill the opposition vacuum that the BJP 
collapse has engendered.  This would take time, and in the 
interim, there is little to suggest that he, or anyone within 
Congress, BJP or the UPA is prepared to bring the government 
down.  Nonetheless, revived chatter about a cabinet reshuffle 
and repeated speculation to us by senior Congress players 
about the pressure that Manmohan Singh is feeling are 
evidence of the Autumn jitters that this government is 
enduring.  And that in turn should limit the government's 
room for maneuver in the weeks ahead on issues of concern to 
the US. While Congress "has taken a breather" when it comes 
to economic reform, we expect it to be short-lived and 
efforts to resume after the political climate has cooled. 
13.  (U) Visit New Delhi's Classified Website: 
(http://www.state.sgov.gov/p/sa/newdelhi/) 
Mulford