STATE ELECTIONS SET OFF POLITICAL TURMOIL IN INDIA

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 001710

SIPDIS

E.O. 12958: DECL: 03/04/2015
TAGS: ECON PGOV PINR IN
SUBJECT: STATE ELECTIONS SET OFF POLITICAL TURMOIL IN INDIA

REF: A. NEW DELHI 1519


B. MUMBAI 370

C. CALCUTTA 91

Classified By: DCM Robert O. Blake, Jr. for Reasons 1.4 (B, D)


1. (C) Summary: Attempts by Congress to grab power in Goa
and Jharkhand has thrown the Indian domestic political scene
into turmoil. Observers in Delhi see these moves as part of
a larger strategy by Congress operatives to gain control over
a majority of Indian states. Should Congress succeed in
Jharkhand, Bihar is likely to be next. Congress has bet that
it can win control of the North Indian Hindi Belt, and
position itself to govern India for decades to come. The BJP
is outraged, and has launched a vigorous counterattack,
foreshadowing a period of protracted political infighting
that will poison the political climate in the weeks and
months ahead. These events have paralyzed the budget session
of parliament, leading to doubts that it will be able to
conduct business. The Jharkhand episode in particular has
damaged the reputations of Sonia Gandhi and the technocratic
Congress leadership, and emboldened the BJP. The Left, while
not happy with these steps, appears willing to cooperate,
because it fears a resurgent BJP. President Kalam is
conferring with the Jharkhand governor on March 4, and he
could convene the Jharkhand Assembly for a floor vote as
early as March 7. With the GOI embroiled in domestic
politics, some important initiatives in which the US is
interested could be put on hold until the Congress/BJP battle
is resolved. End Summary.

The Power Grab at the State Level
--------------


2. (C) The Congress Party crossed something of a Rubicon
recently when it launched a power grab in Goa (Ref B) and
Jharkhand (Ref C). Despite its poor performance in the
Jharkhand elections (Ref A) and the lack of a clear majority
in Goa, Congress determined that it would manipulate the
levers of power in New Delhi and compliant governors to
consolidate its control of two more states. This outraged
the opposition NDA, making political consensus next to
impossible and setting off a protracted period of
Congress/BJP infighting. The Congress move was a deliberate
gamble for high stakes. If successful, it could solidify the
Congress position and set the stage for a long period of
Congress rule across the country. If not, a revived NDA
could score serious blows against Congress.

The Master Plan
--------------


3. (C) In our estimation, the Congress leadership decided
that gaining control of state governments, resources and
patronage would be so valuable to its bid to cement itself as
the preeminent player in Indian politics that it paid little
attention to appearances or consequences. The logic is that
the Indian electorate has become so cynical that it will over
time put aside its initial revulsion and accept these tawdry
tactics, especially once Congress begins dispensing
patronage. Most of the Indian public have long assumed that
politicians are for sale to the highest bidder, and are not
that shocked to see "independent" MLAs lining up to support
Congress governments in exchange for ministerial berths and
cash considerations.


4. (C) There is much speculation in the Indian political
class that Congress does not intend to stop with Jharkhand
and Goa. Should it succeed there, commentators expect the
party to use similar tactics to re-install Laloo Prasad Yadav
and his wife Rabri Devi in Bihar, and then to go after the
big prize - Uttar Pradesh (UP). Mohan Singh, a prominent MP
from Mulayam Singh Yadav's Samajwadi Party (SP),predicted to
Poloff recently that this was only the opening salvo in a
concerted Congress assault aimed at recapturing the entire
North Indian Hindi belt. According to Singh, the
installation of a compliant governor in Lucknow willing to do
its bidding is part of a Congress plan to undermine and bring
down the SP government. BSP MP Ilyas Azmi, who is close to
BSP leader Mayawati, confirmed to Poloff on March 3 that
Congress is negotiating a Congress/BSP alliance aimed at
rebuilding a coalition of Dalits, Muslims and upper castes
capable of recapturing the state.


5. (C) On March 1, well-connected journalist Saeed Naqvi
told Poloff that his interaction with the Congress leadership
has convinced him that they have not abandoned their "old
think" and are determined to use any tactics to recapture
their old base in the Hindi belt, win an absolute majority in
Parliament, and send a clear message to UPA allies that they
must be compliant and accept Congress "leadership," or face
marginalization. Naqvi insisted that this plan was out of
step with present Indian realities, and the Congress must
learn to deal honestly with regional parties. This was
echoed by Azmi, who said that after capturing UP, Congress
hopes to install UPA/Congress governments in Gujarat, Madhya
Pradesh, Chhattisgarh and Rajasthan. He maintained that
Rajasthan is being saved for last, as Chief Minister
Vasundhara Raje is not as vulnerable as other BJP leaders.

Congress Viewpoints
--------------


6. (C) Congress politicians have downplayed the power grab,
trying to depict it as a natural result of hung assemblies.
Congress MP Maulana Obaidullah Azmi claimed that his party
was only using tactics perfected by the BJP during the NDA
government, while Nationalist Congress Party (NCP) MP Tariq
Anwar said everything is going according to plan, except that
by backing Shibu Soren for Chief Minister of Jharkhand,
Congress provided an opening for the BJP to cry foul. He
conceded that Soren "does not have a good image," but would
nevertheless produce a clear majority on March 21, the
current deadline for the UPA to prove its majority in the
Jharkhand State Assembly. Congress ally D. Raja of the CPI
rather disingenuously claimed that the BJP should not be
upset about events in Jharkhand, as it could "prove its
point," at that time.


7. (C) In a March 3 meeting with PolCouns Sonia loyalist and
Congress spinmeister Rajiv Desai (strictly protect) was
confident that when the dust settles, Congress would emerge
the winner in Jharkhand and Bihar. Desai was also confident
that Mrs. Gandhi would successfully disassociate herself from
the more tawdry aspects of recent events, while insisting
that Jharkhand Governor Razi was incapable of taking such a
dramatic step on his own. Now that the Congress leadership
has focused on Jharkhand and Bihar, he maintained, it will
end the situation quickly. He named Defense Minister Pranab
Mukherjee and Sonia loyalist Ahmed Patel as the key players
in the damage control effort. Desai was optimistic that the
controversy surrounding the elections would make it harder
for the Left parties to attack the GOI's handling of economic
issues, on the grounds that it fear a resurgent BJP more than
reform.

BJP Viewpoints
--------------


8. (C) The power grab has the BJP up in arms and more united
and engaged than at any time since its fall from power in May

2004. BJP MP Ram Nath Kovind denounced the Congress moves as
a "danger to democracy," and claimed that "the myth of Sonia
Gandhi as a great politician, known for her renunciation, has
exploded." BJP MP Kalraj Mishra was even more scathing,
stating "this exposes the real designs of the Congress, that
the party cannot tolerate opposition and would like to
monopolize all political activity. I am hopeful that the day
is not too far off when these undemocratic acts will hugely
benefit us."

What Will Be the Impact?
--------------


9. (C) The situation is extremely fluid and could change
quickly. As of March 4, Congress has experienced dramatic
setbacks, with a reactivated BJP dramatically flying in 41
MLAs at the President's residence in New Delhi, a fairly
convincing display that it has the real majority in
Jharkhand. BJP President LK Advani was quick to assert that
since the BJP was the first to present a majority in the
state assembly, Jharkhand Governor Syed Sibtey Razi should
ask the party to form the government. Labeling Razi "a
contract killer of democracy" being "micromanaged" by Sonia
Gandhi, Advani demanded dissolution of the Soren government,
its replacement by a BJP government, and Razi's recall. In
view of this, President Kalam may request that Razi convene
the Jharkhand State Assembly within 72 hours for a floor
vote, according to the media.


10. (C) As the aggrieved party, the NDA now has an issue
around which to rally the faithful and attract support.
Before the budget session the BJP/NDA was clearly on a
downward trend. The assembly elections were make or break
contests for them, and they did well enough to revive their
spirits and keep their hat in the ring. Almost everyone
agreed that they should have formed the government in
Jharkhand, as they were very close to winning a majority.
Likewise, few are convinced that Congress/UPA has a clear
majority in Goa and should form the government there. The
Congress-led government confirmed its majority in a March 4
vote of the Goa State Assembly. Yet its majority remains
razor-thin and vulnerable to the types of machinations that
led to its gaining power in the first place (Ref B). In
addition, the BJP is challenging its recent dismissal from
power in Goa before the Indian Supreme Court, which could
rule as early as March 4.
.

11. (C) Congress is banking on the fact that the Left
parties will join with "all secular parties" to stave off a
BJP/NDA resurgence. In a March 2 meeting with Poloff,
Communist Party of India Secretary D. Raja confirmed that the
Left was relatively happy with the budget and felt that
Congress was responding to its calls for increased social
spending and more taxation of the wealthy. He also confirmed
that the Communists have committed their MLAs to the UPA
effort in both Bihar and Jharkhand. Raja said that he fully
expected a resurgent BJP/NDA to mount a counterattack, and
the Left parties to stand with the UPA against it.


12. (C) In playing dirty, Congress has tarnished its image,
and demonstrated that is has no long-term friends, only
temporary allies. In Bihar, it allied first with the
discredited Laloo, then with Paswan against Laloo, and is now
back with Laloo against Paswan. There is a lingering
distrust of Congress among Indian politicians and these
developments will only encourage suspicion. Most will assess
that regional parties that ally with Congress are
self-serving and mercenary.

Long-term Implications
--------------


13. (C) Congress can expect its popularity to fall as a
result of these moves. With the party strategy going poorly
in Jharkhand, Sonia Gandhi and PM Manmohan Singh are
distancing themselves from the effort. Congress spokeswoman
Ambika Soni and others continue to insist that Mrs. Gandhi
and the PM were not involved in the Jharkhand events, and
that Governor Razi acted on his own. Despite these attempts
at damage control, it will be difficult for Mrs. Gandhi and
Manmohan Singh to keep their reputations untarnished, as most
Indians assume they had a hand in events in Jharkhand and
Goa. Should Congress gain control in both states, it is not
likely to take long for most political players to decide that
the balance of power has shifted and that it is best to go
along with the new dispensation, take advantage of new
opportunities, and cooperate with the newly-installed
governments.


14. (C) The budget session of parliament is likely to be the
first casualty. Few now expect it to conduct serious
business during the remainder of the session, which ends on
May 13. This means that the budget could pass without
debate, which would make the Left happy, as its social
initiatives would remain in place, unchallenged by the
opposition. In return, the Left could decide to stress
"secular unity" and tone down its public opposition to the
UPA, resulting in a measure of "stealth economic reform," as
Congress enacts economic measures without parliamentary
debate or contentious squabbling with the Left. The
Communists and Congress will need each other more than ever
now, and we suspect that they will continue to coordinate,
with the Left receiving some economic concessions in exchange
for its political support.

Who is Responsible
--------------


15. (C) The UPA "core group" consisting of the PM, Mrs.
Gandhi, and the "senior ministers" (Pranab Mukherjee, Arjun
Singh, Shivraj Patil and Ghulam Nabi Azad) is coordinating
the Congress handling of the state elections. The aggressive
Congress strategy carries the trademark of hard-bitten
professional politicians in the Congress leadership. The
role of the PM and Mrs. Gandhi is not yet clear. It is
conceivable that veteran ministers drafted the plan and
presented it to Mrs. Gandhi for her approval. PM Singh has
remained aloof from domestic political machinations and may
not have been involved at all. Based on his reputation and
priorities, we doubt he would have acquiesced in an approach
that has clearly distracted energies from his priority of
economic reform.

The Gamble
--------------


16. (C) Congress has decided to play a high-stakes gamble in
hopes of restoring its position as India's pre-eminent
political party, which controls a clear majority of state
governments. Over the long term, Congress hopes that this
will translate into a clear parliamentary majority for the
UPA and ultimately for Congress. As recent events have
demonstrated, such a plan can easily backfire. Should the
BJP rally its supporters, present a majority in Jharkhand,
and force Shibu Soren to step down, it would force Congress
to go into a defensive mode and postpone its plans for other
states. Bihar could then face a protracted period of
uncertainly. With Congress and the BJP locked in bitter
combat, it could take several months for a clear winner to
emerge, with major policy decisions taking a back seat to
domestic politics.
MULFORD