WEST BENGAL COMMUNISTS ACCEPT GLOBALIZATION

UNCLAS SECTION 01 OF 02 CALCUTTA 000069

SIPDIS

SENSITIVE

STATE FOR SA/INS AND INR

E.O. 12958: N/A
TAGS: PGOV ECON SOCI IN
SUBJECT: WEST BENGAL COMMUNISTS ACCEPT GLOBALIZATION



1. (U) SUMMARY: The 21st triennial State Conference of the
Communist Party of India-Marxist (CPM) concluded on February 12
after some lively debate on the Party's future road map -
political and economic. The CPM expressed concern about the
radical Left (Septel) and advised its cadre to begin preparing
for the West Bengal Assembly elections in 2006. On the economic
front, the Party's resolution welcoming foreign direct
investment (FDI) and multilateral institutional loans in the
state was carried, despite resistance from radical elements and
the labor lobby. This should mute - but not entirely silence -
CPM opposition to FDI at the Center. The Conference also
revealed the metamorphosis of the CPM from a strident,
revolutionary party to an organization of the middle class. END
SUMMARY.


2. (U) The State Conference of the CPM is held every three
years to elect the policy-making body (State Committee in CPM
parlance) that manages the Party in West Bengal. It is the
culmination of lower level conferences involving local
committees, zonal committees and district committees that
ultimately elect the State Committee. This year, 599 delegates
elected the 85-member State Committee that will frame the CPM's
policies at the state level and will manage the 2006 Assembly
elections. The new State Committee will meet shortly to form
the State Secretariat, the Party's executive body, although key
positions (State Secretary Anil Biswas, Treasurer Nirupam Sen)
have already been named.


3. (SBU) At the Conference, the issue of CPM support to the
Congress-led UPA government in New Delhi (while opposing the
Congress in West Bengal) was dealt with tactfully. CPM
General-Secretary-in-waiting Prakash Karat pointed out that the
responsibility of ensuring the continuance of the Congress-led
regime in New Delhi did not lie with the CPM alone. Congen
contacts interpret this as a strategy of unwavering support from
the CPM coupled with an ongoing review of the UPA's performance,
to be followed by agitation and criticism of the Center whenever
the need arises. While the Conference noted the "absence of
evidence" that the UPA is implementing the pro-poor measures in
the Common Minimum Program, veteran leader Jyoti Basu made it
clear that stability at the Center would not be disturbed.
However, in West Bengal, despite the rising Maoist challenge,
the Congress will continue to be regarded as the main opposition
party.


4. (U) The Conference dismissed overtures from India's
second-largest mainstream Left party -- the Communist Party of
India (CPI) -- for unification with the CPM. The growth of
Maoist and other divisive forces in the region was noted with
concern (Septel). The Party leadership acknowledged the
socio-economic dimension of the problem, noting that government
projects designed to benefit the "poorest of the poor" often did
not reach them. Karat even pointed out that the number of poor
far exceeded numbers mentioned in official records. The Party
also expressed suspicion regarding the role of Christian
churches and the quasi-Hindu religious organization ISKCON and
directed Party workers to keep a watch on their activities.


5. (U) The CPM's resolution on FDI is seen as a major departure
from the Party's so far ambiguous stand. In recent months,
ministers of the Government of West Bengal -- many of them
prominent CPM leaders - were vocally seeking to attract FDI,
even though their action did not have the Party's formal
endorsement. The Conference has now made the CPM's position
clear, at least in West Bengal. The argument, spearheaded by
Chief Minister Buddhadeb Bhattacharjee, and echoed by Industries
Minister Nirupam Sen and Party boss Anil Biswas, is as follows:
for better or worse, globalization is the order of the day;
economic success in a globalized market requires infusions of
foreign capital, FDI, and grants and loans from institutions
like the World Bank and the ADB; and furthermore, other
nominally Communist countries like China and Vietnam are
accepting FDI and their economies are growing strongly.
Unspoken in this debate is the fact that West Bengal could not
maintain a statist economic philosophy even if it wanted to, as
its coffers are empty. Despite the clarification on FDI at the
state-level, some opposition to FDI at the Center is likely to
linger. In recent meetings with CPM leaders, ConGen officers
have been told that the CPM only opposes FDI in core and
strategic sectors. For example, FDI is not welcome where India
has its own technology or in sectors involving the country's
security. According to this argument, since there is very
little core or strategic sector investment in West Bengal, the
CPM is going all out to welcome FDI in the state, whereas at the
center, despite being a UPA ally, it is opposing FDI in several
sectors.


6. (U) Having rejected the rigidity of Communist ideology, the
CPM leaders have apparently tried to salvage what they consider
the motivation behind that ideology - a desire to champion the
cause of the poor and the exploited classes. As such, the CPM
Conference stressed that it will not accept funds from the World
Bank and ADB with strings attached; that farmers should be
compensated when urbanization shrinks agricultural land; and
that worker rights should be protected. The West Bengal CPM's
reorientation of economic policy has come after a bitter debate.
The opposition came mainly from labor leaders and from those
advocating the traditional socialist hard line. Arrayed against
them, the pro-reform lobby argued that investment - foreign and
domestic - was needed to set up industries for the state's more
than six million unemployed people. Moreover, the party could
take up labor rights issues only when there were industries
employing labor. It was argued that strident labor movements
that led to a flight of capital from West Bengal were
detrimental to labor in the long run.


7. (U) The CPM's policy shift also reflects the change in the
Party's class character. Of the 599 delegates who came to the
Conference, 72 represented workers, 76 belonged to traders'
organizations, 26 represented landless peasants, and 399 were
representatives of the middle class. Among the delegates, 76
declared their monthly income to be more than USD 225 and an
equal number did not declare their income at all. With the
State Committee of the CPM packed with representatives of middle
and higher income groups, the party's strident and revolutionary
character, built on the image of struggling masses of peasants
and factory workers, is undergoing an inevitable - and quite
probably irreversible -- change.


8. (SBU) COMMENT: Having decided that the Party will welcome
foreign capital in West Bengal, the CPM must try to positively
correlate foreign/private investment with the welfare of the
poor. It will also need to provide a safety net for the people
displaced from land under the new industrial initiative. In the
meantime, the distinction between FDI at the state level versus
the Center smacks of sophistry and we have pointed out - in
public and in private - that the positive arguments supporting
foreign investment in the state apply equally well for the
nation as a whole. West Bengal's government must also
understand that investors will be confused by inconsistent
messages from the Party at the state and at the Center, and any
confusion is bound to command a risk premium. Nonetheless, the
CPM needs to keep some political space between itself and the
Congress Party in the run-up to West Bengal State Assembly
elections in 2006, and FDI makes a convenient issue on which to
differentiate itself. A cynic might say that these contrary
positions will allow the CPM to have it both ways in the 2006
campaign depending upon which group of voters they are wooing at
a particular time. In any case, with no credible political
opposition in West Bengal able to seize these issues in the
short term, the CPM is sitting pretty for now. END COMMENT.

SIBLEY