US embassy cable - 05NEWDELHI8844

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 008844 
 
SIPDIS 
 
E.O. 12958: DECL: 11/22/2015 
TAGS: PGOV, PREL, PINR, EPET, ETTC, KCRM, IN, IR, Indian Domestic Politics 
SUBJECT: CONGRESS FACING A DOMESTIC "PERFECT STORM" 
 
REF: NEW DELHI 08571 
 
Classified By: Political Counselor Geoff Pyatt, for Reasons 1.4 (B, D) 
 
1.  (C) Summary:  With Parliament set to convene on November 
23, the Congress-led United Progressive Alliance (UPA) 
government is reeling from assaults from its left and right 
and faces a series of political events that could undermine 
its stability, including the UPA defeat in the important 
Bihar election, and an impending Supreme Court Ruling on the 
constitutionality of the President's dismissal of the Bihar 
government (septel).  With the BJP-led National Democratic 
Alliance set to demand former Foreign Minister Natwar Singh 
and Congress Party President Sonia Gandhi's resignations over 
the oil-for-food scandal (reftel), few of our contacts 
believe that Natwar is innocent of wrongdoing or are willing 
to come to his defense, and suspicion of possible Congress 
malfeasance runs deep.  Most interlocutors believe that Sonia 
Gandhi will eventually have to drop Natwar from the Cabinet. 
Congress miscues have contributed to a growing perception 
that Prime Minister Manmohan Singh is too weak to manage 
alone the oil-for-food scandal, or the controversies 
surrounding the now-deferred IAEA vote on Iran and the UPA's 
dissolution of the Bihar Assembly.  BJP and Left critics view 
the Natwar affair as the an opportunity to attack a UPA 
already weakened politically by its IAEA vote.  The Left, 
chastened by the NDA's Bihar victory, has agreed to tone down 
its attacks in Parliament and is unlikely to withdraw its 
support for fear of consigning itself again to irrelevance 
and the country to right-wing Hindu rule.  However, the Left 
Front (LF) has joined with regional parties in a "Left and 
Secular Alliance," is increasingly combative and could grow 
more powerful if Congress fails to manage the political 
maelstrom.  End Summary. 
 
The Anti-Congress Matrix 
------------------------ 
 
2.  (SBU) This is not a good time for the Congress Party.  A 
set of issues has combined to erode its political integrity 
and place it on the defensive.  With Parliament set to 
convene on November 23, the LF on November 22 agreed to tone 
down its attacks on the UPA in Parliament, as it was 
satisfied that Congress was responding to its concerns 
regarding Iran in the IAEA.  This will not assure a smooth 
Parliamentary session, however, as the NDA Parliamentary 
delegation plans to raise questions on the UPA's dissolution 
of the Bihar Assembly, the alleged Congress role in the 
oil-for-food scandal, the GOI's September 24 vote against 
Iran at the IAEA, and alleged KGB payoffs to Congress leaders 
during the Cold War.  The NDA will focus on perceived 
Congress malfeasance and corruption, demanding Natwar's 
resignation from the cabinet and Sonia Gandhi's resignation 
as party President, as the proper response to the 
oil-for-food scandal and the dissolution of the Bihar 
Assembly. 
 
Congress Vulnerable 
------------------- 
 
3.  (SBU) Poloffs queried contacts from across the political 
spectrum to determine their views on Congress prospects. 
Those from Congress confirmed that their party faces a time 
of increased political vulnerability but, in typical fashion, 
claimed full faith in Party President Sonia Gandhi's ability 
to handle the crisis.  They also characterized the UPA 
decision to keep Natwar in the Cabinet as a Minister without 
Portfolio as a face-saving gesture rather than a genuine 
expression of support.  Most believed that Natwar would be 
expelled from the Cabinet after a decent interval. 
 
Congress Hits the Natwar Iceberg 
-------------------------------- 
 
4.  (C) Sonia is reportedly very displeased with the turn of 
events prompted by the Volcker report.  Hanspal, an 
Ex-President of the Punjab Congress Committee, noted that 
while the Volcker scandal could hurt Congress nation-wide, it 
could particularly effect Punjab, where Congress faces stiff 
competition from the Sikh regional party, the Akali Dal, and 
the Chief Minister is a Natwar relative.  Herkewaljit Singh, 
Editor of the Punjabi Daily Ajit, pointed out that the 
Volcker Report could open a Pandora's box of corruption, 
implicating Congress in further scandals.  Echoing those 
sentiments, Ilya Azmi, a BSP MP from Uttar Pradesh, 
speculated that the Natwar episode was just the tip of the 
iceberg and would reveal other skeletons in the Congress 
closet.  He pointed out that if Congress is implicated in a 
cascade of scandals, its strength will be sapped as it 
contests assembly polls in West Bengal, Assam, Kerala, and 
Tamil Nadu next year.  This has forced the party to move 
quickly to support what are likely to be painful 
investigations in hopes of clearing its name. 
 
Natwar Singed 
------------- 
 
5.  (SBU) Congress contacts expressed frustration at the 
damage caused to the Party image by Natwar's failure to 
manage the Volcker report.  They focused on Natwar's 
hysterical reaction to the scandal and avoided substantive 
discussion of the far more embarrassing corruption issues 
that it raised, although most were more than willing to point 
the finger at Natwar's son Jagat Singh.  Sonia Gandhi clearly 
demonstrated her displeasure by ordering Natwar not to attend 
further meetings of the Jawaharlal Nehru and Indira Gandhi 
Foundations.  He has heretofore played a leading role in 
both. 
 
6.  (C) Ammar Rizvi, an MLA and senior Congress leader in 
Lucknow, suggested that Natwar's refusal to step down before 
challenging the Volcker findings embarrassed his party and 
the UPA government.  Rizvi claimed that this has led many 
within Congress to write Natwar off and downplay his 
importance as part of their damage control strategy.  Rizvi 
pointed out that Natwar is an elitist politician without a 
mass base who failed to deliver his own caste (the Jats) in 
the last assembly elections.  Freelance journalist Zafar Agha 
maintained that the Congress rank and file are steering clear 
of the Natwar affair, content to let Sonia defend the Party 
against corruption charges.  Such superficial support, he 
pointed out, may not be enough to prevent this bundle of 
crises from spreading further. 
 
The BJP and Left Smell Blood 
---------------------------- 
 
7.  (SBU) BJP and Leftist contacts viewed the Natwar scandal 
as the beginning of a "perfect storm" that has presented them 
with an opportunity to score political gains against Congress 
after months of opposition drift.  While the Left has 
benefited from its consistent opposition to UPA policies, the 
BJP has been searching for its own issue.  BJP contacts 
confirmed that the Natwar affair has rejuvenated their party 
by providing them with the resonant issue they were hoping 
for.  They were particularly elated that the Volcker report, 
while flawed in their eyes, was issued by the United Nations, 
which is still viewed by most Indians as a credible world 
body.  This, they argued, makes it difficult for Congress to 
dismiss the Volcker findings. 
 
 
Comment: Buckle Your Safety Belts Congress 
------------------------------------------ 
 
8.  (C) Congress' ability to weather this perfect storm will 
depend on whether Sonia Gandhi and PM Singh can present 
cogent responses to multiple crises occurring at the same 
time.  The party's performance so far has been short of the 
mark.  Should Congress continue to present a weak face, it 
could begin to present a picture of a party in disarray and 
decline, emboldening its critics from the Left and the right, 
compelling regional parties to re-examine their commitment to 
the UPA, and fostering political realignments that could 
render this government more unstable.  While Sonia leads the 
Congress effort in Delhi, it seems adrift and without a 
focused strategy in the states, where it must fight crucial 
upcoming elections.  The drifting BJP has the most to gain 
politically and should get a much-needed shot in the arm from 
the NDA electoral victory in Bihar.  However, the BJP/RSS 
leadership struggle is still not resolved.  The Left appears 
bent on portraying itself as the defender of India against 
alleged US bullying, and is trying to convince more regional 
parties to sign up for a new Left coalition that might 
eventually challenge the UPA.  In India, even such farfetched 
political constructs should not entirely be ruled out. 
BLAKE