US embassy cable - 05NEWDELHI9128

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 009128 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 12/01/2015 
TAGS: PGOV, PINR, PREL, PHUM, PTER, EPET, ETTC, IN 
SUBJECT: NEW ALLEGATIONS BREATHE LIFE INTO NATWAR OIL 
SCANDAL, THREATENING GOI AGENDA 
 
NEW DELHI 00009128  001.2 OF 002 
 
 
Classified By: DCM Robert Blake, Jr. for Reasons 1.4 (B, D) 
 
1.  (C) Summary:  The NDA's anti-UPA, anti-Natwar Singh 
campaign got a new lease on life December 2 when longtime 
Natwar Singh confidant (and serving Indian Ambassador to 
Croatia)  Aneil Mathrani claimed in a television interview 
that the former Foreign Minister was deeply and personally 
involved in the oil-for food scandal.  The uproar was 
instantaneous.  The NDA took immediate advantage of this 
opening to demand Natwar's arrest, and force adjournment, 
while the GOI recalled Mathrani from Zagreb.  After a quiet 
initial week, the remainder of Parliament's Winter Session 
could now be more stormy, with the LF and UPA digging in to 
defend against a renewed opposition onslaught.  End Summary. 
 
New Allegations Put Wind in the NDA's Sails 
------------------------------------------- 
 
2.  (U)  Just when it appeared that the UPA had successfully 
deflected the NDA attack, the national news channel "Aaj Tak" 
featured a lengthy interview with Natwar Singh confidant and 
current Ambassador to Croatia Aneil Mathrani.  He alleged 
that the former Foreign Minister has been deeply involved in 
the oil-for-food scandal as noted in the Volcker Report, and 
implied that Natwar's denials were duplicitous.  On December 
2, the NDA delegation immediately demanded a statement from 
the PM on the Mathrani allegations, with BJP leaders 
demanding Natwar's immediate arrest.  The revelations have 
encouraged new rumors that Natwar will soon leave the 
cabinet.  The GOI has recalled Mathrani from Croatia. 
 
At First the NDA Adjournment Motion Flops 
----------------------------------------- 
 
3.  (U) The NDA had signaled in advance their intention to 
disrupt Parliament and put the UPA on the defensive over 
Congress corruption, epitomized by stories of Soviet pay-offs 
to Congress officials during the cold war and Congress 
involvement in the oil for food scandal.  However on November 
28, under the able leadership of Finance Minister P. 
Chidambaram, the UPA and its Left allies easily defeated an 
NDA attempt to adjourn the house over the Volker Report and 
compel the GOI to share all Volcker related documents with 
Parliament.  Dismissing the motion as "unjustifiable," 
Chidambaram noted that no other country named in the Report 
has responded as swiftly as India and the UPA-appointed 
Pathak Committee would present a full report to Parliament. 
Opposition leader LK Advani conceded that if the UPA had 
initially spoken with such clarity, there would have been no 
need for an adjournment motion.  NDA Spokesman Arun Jaitley 
was more combative, claiming that the Volcker Report could 
"tarnish the Congress image," and that "Congress had entered 
the Volcker era."  In the end, the MP's defeated the BJP 
adjournment motion on a voice vote in the Lok Sabha on 
November 27 and in the Rajya Sabha on November 28. 
 
The Boomerang Effect 
-------------------- 
 
4.  (C) Our contacts among Congress MPs argued before the 
Mathrani interview that the BJP was reluctant to go to the 
carpet on the Volcker scandal, knowing that some in the NDA 
might be vulnerable to similar charges of seeking "non 
contractual advantage" from other transactions.  Now, the NDA 
 
NEW DELHI 00009128  002.2 OF 002 
 
 
leadership is on the offensive, which inevitably will detract 
from Manmohan Singh's reformist agenda.  One opposition MP 
told Poloff that Natwar is no longer the target, and the NDA 
will go after Sonia as well and demand her resignation.  He, 
and other contacts, agreed that Natwar's fate is sealed and 
his departure will not end the matter. 
 
Comment - Is UPA Up to the Challenge? 
------------------------------------- 
 
5.  (C) By December 1, the UPA was beginning to rest easy, 
convinced that the oil for food scandal, like most others in 
Indian politics, was drifting from public consciousness.  The 
NDA had been able to score few points on the issue and the 
had LF rallied to the defense of Congress, while UPA floor 
managers such as Finance Minister Chidambaram and Defense 
Minister Mukherjee proved capable of meeting the verbal 
onslaught of the BJP's big guns such as Jaitley and Shourie. 
The UPA was also relieved that the contentious IAEA issue did 
not come to a vote, robbing the NDA and LF of a potential 
issue. On December 2, all was upset, as the Mathrani 
revelations pumped new life into the NDA, which is now 
attacking Congress with renewed vigor.  The UPA may now find 
itself on the ropes again, with key Congress leaders fighting 
for their political lives. 
MULFORD