C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 002086

SIPDIS

E.O. 12958: DECL: 03/17/2015
TAGS: ECON PGOV PINR IN
SUBJECT: A CHASTENED CONGRESS FACES HARSH REALITIES

REF: NEW DELHI 1519

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


1. (C) Summary: As India's leading newsmagazine splashed
across the cover of its March 21 issue, "the halo has
slipped," from Sonia Gandhi after Congress' electoral
setbacks and questionable decisions in Bihar, Goa, and
Jharkhand. The long term impact for Congress and the BJP is
unlikely to be serious. Congress has closed ranks behind
Mrs. Gandhi and PM Manmohan Singh, and media attention could
quickly turn elsewhere. Congress' failed gambles in remote
state elections, are likely to have little or no impact in
New Delhi, where the UPA remains firmly in control. Congress
heavyhandedness has angered allies in the United Progressive
Alliance (UPA), but they are content with the status quo and
will do nothing to risk a government downfall. As long as
the UPA alliance remains firm, the BJP cannot use this
episode to score substantive gains, although Congress faces
increased pressure from the BJP as a result of the USG
decision to revoke Gujarat CM Modi's visa (Septel). End
Summary.

Electoral Missteps
--------------


2. (C) A series of Congress miscalculations and missteps has
damaged Sonia Gandhi's image as the "renunciate" who gave up
her chance to become Prime Minister, and tarnished her
party's reputation. Regional parties dominated in the three
states that recently-concluded assembly elections (Jharkhand,
Bihar, and Haryana). Congress unwillingness to acknowledge
their predominance has spoiled ties with several regional
allies, and opened the party to charges that it was
undermining democracy.


3. (C) According to press reports, two coteries, one local
and one in New Delhi, devised the Congress electoral strategy
in these elections and convinced Mrs. Gandhi to approve it.
In Delhi, the principal campaign leaders included HRD
Minister Arjun Singh, senior Congress leader M.I. Fotedar,
and Water Resources Minister Priyaranjan Das Munshi. The
Congress leaders in the states included: All India Congress
Committee (AICC) functionary Subodh Kant Sahai, former Chief
Minister of Chhattisgarh Ajit Jogi, Jharkhand Governor Syed
Sibtey Razi,

and former MP R.K Anand. These leaders
recommended that the party not nurse the UPA coalition, in
favor of building a base for a Congress revival in North
India. Mrs. Gandhi purportedly agreed to cast aside Laloo
Prasad Yadav, and to ally with Bihar Dalit leader Ram Vilas
Paswan and Jharkhand tribal leader Shibu Soren.


4. (C) The strategy fared miserably in both Jharkhand and
Bihar. In Bihar, Congress declined from 12 assembly seats to
10, and in Jharkhand from 11 to nine, while Laloo's Rashtriya
Janata Dal (RJD) won 75 seats in Bihar to remain the state's
largest party. Soren and Paswan failed to win enough seats
to secure a majority in either state. If Congress had not
burned its bridges with the RJD, and divided the anti-BJP
vote, the UPA could have easily formed the government in
Jharkhand and Bihar.

Anti-Democratic Heavyhandedness
--------------


5. (C) Having failed at the ballot box and managed its
coalition poorly, Congress then compounded its errors by
trying to use compliant governors to install UPA governments
in Goa and Jharkhand, even when they did not have a majority.
The strategy compelled the Supreme Court to intervene in the
Jharkhand case, while the ruling party ended-up dismissing
its own government in Goa. The NDA was quick to respond in
the media, accusing Congress of "murdering democracy," and
"attempting to return to the bad old days of the Emergency."


Is Sonia Responsible
--------------


6. (C) Although the BJP has attacked the PM for being
"invisible," party President L.K. Advani acknowledged that
the PM had little, if any, role in the recent political
machinations, declaring Sonia Gandhi as the principal
culprit. The pro-BJP weekly "India Today" argued in its
March 21 cover story that despite Congress attempts to
distance her from the fiasco, the governors in Jharkhand and
Goa could not have acted without her assent, and without
keeping her fully informed throughout. "India Today"
described Mrs. Gandhi's renunciation of the Prime
Ministership as a "show" meant to provide her "maximum
empowerment by other means," arguing that she personally
makes all major political decisions, has masterminded the
Congress political strategy since the UPA came to power in
2004, and should therefore be held responsible.

Dissension in the Ranks
--------------


7. (C) These state level developments have caused dissension
within the UPA, with the regional satraps resentful of
Congress meddling and heavy-handedness. Nationalist Congress
Party (NCP) Chief Sharad Pawar continues to resent Mrs.
Gandhi for selecting the Chief Minister in Maharashtra, even
though the NCP won more seats than Congress in the Fall 2004
elections there. Although Laloo Yadav remains dependent on a
sympathetic UPA government in New Delhi to return to power in
Bihar, he has publicly expressed bitterness and anger for the
way he has been treated.


8. (C) The next round of state level elections is scheduled
for February 2006, when Tamil Nadu, West Bengal and Kerala go
to the polls. Congress does not have a sufficient power base
to come to power on its own in any of the three states, and
will again have to rely on regional allies to form UPA
governments. In Tamil Nadu, UPA ally DMK Chief M.
Karunanidhi, has already stated that he will not share power
with his Congress allies should he win. In West Bengal and
Kerala, Congress will contest against the Communists.

Confessions and Confusion from Congress
--------------


9. (C) In a March 15 meeting with Poloff, AICC Secretary
Wasim Ahmed admitted that his party had made a series of
blunders over the past several months. Laying the principal
blame on such state level politicians as, Ranajan Das Munshi,
Subodh Kant Sahai, Ajit Jogi, and Syed Sibtey Razi. Ahmed
asserted that they told the Congress High Command that:

--Laloo Yadav was very vulnerable and could be removed from
power;
--Ram Vilas Paswan would deliver the Muslim and Dalit vote on
election day;
--Paswan and Congress would form the Bihar government without
Laloo Yadav;
--Shibu Soren's JMM would emerge as the largest party in
Jharkhand;
--Congress and the JMM would form the government in
Jharkhand; and
--Congress could use the Goa governor to grab power there.


10. (C) Ahmed argued that neither Mrs. Gandhi, the PM, nor
senior advisors Pranab Mukherjee, Arjun Singh, and Makhan Lal
Fotedar should bear any responsibility, as they had all
relied on state cadres for advice. He claimed that he and
other party insiders have told Mrs. Gandhi that the election
outcome signals the need for a change in strategy, and that
Congress must stop interfering with its regional allies, give
them free reign, or face disaster. In Ahmed's view, UPA
allies are now united in their suspicion of Congress, and if
not placated will stop cooperating, leading to potential UPA
losses in Bihar, Goa, Tamil Nadu and Uttar Pradesh (UP), with
the Communists poised to decimate Congress in Kerala and West
Bengal. Ahmed maintained that Congress must reassure the
regional parties by humbly supporting Laloo Yadav's efforts
to regain power in Bihar, ending support for Paswan, and
convincing the DMK in Tamil Nadu, and the Communists in West
Bengal and Kerala, that Congress would not seriously oppose
them in 2006.

11. (C) Ahmed also confirmed that the Congress strategy for
reviving its fortunes in UP has not been successful, and that
the party has decided that since it cannot return to power on
its own, it must play junior partner to a regional party.
Ahmed claimed that Congress is currently negotiating an
informal alliance with BSP leader and former Chief Minister
(CM) Mayawati, under which the two parties would not contest
against each other in key constituencies, and Congress would
support Mayawati for CM after the election. The negotiations
are not going smoothly, he maintained, as Mayawati is not yet
convinced that Congress can provide much help in her battle
against her rival and current CM Mulayam Singh Yadav. Until
an agreement can be worked-out, Congress has no choice but to
leave Mulayam Singh Yadav and his Samajwadi Party (SP) in
control.

Straight Talk from a Journalist
--------------


12. (C) Political journalist Zafar Agha stressed to Poloff
on March 15 that Congress and the BJP would both like to
reduce the influence of regional parties and create a two
party system in India. According to Agha, Congress hoped to
remove Laloo Yadav and replace him with pliant allies --
Paswan in Bihar, and Shibu Soren in Jharkhand -- but has
failed on both counts. Agha argued that both parties would
continue to displace regional parties whenever they had an
opportunity, but were not overly concerned about failure, as
political battles in remote areas like Bihar and Jharkhand
have little practical impact in New Delhi. Agha maintained
that it was ludicrous to believe that Mrs. Gandhi did not
approve the Congress strategy, asserting that "few believe
Congress efforts to lay the blame on a few rogue officials."


13. (C) Agha pointed out that the news was really not that
bad for Congress and the UPA. He predicted that the NDA
government in Jharkhand would be weak and may not last as
long as six months before the UPA brings it down. Likewise,
the UPA will exercise de-facto rule in Bihar, and likely form
the government there, with or without Laloo. In Agha's
estimation, the losses and gains from the recent election
were largely symbolic. The BJP is pleased because it can use
its friends in the media to create the impression of a
BJP/NDA revival, and that Congress has been humbled.
However, there will be few substantive benefits for the BJP,
in that it cannot change the balance of power in New Delhi.
While UPA allies in the states will continue to grumble, they
will remain solidly with Congress in New Delhi, as they want
political stability, and have nowhere else to go, he
maintained.

Comment
--------------


14. (C) While the BJP has used this episode to score points
against its Congress rivals, shore up its National Democratic
Alliance (NDA), and cast doubt upon the credibility of Sonia
Gandhi and PM Singh, the long-term gains could be minimal.
The NDA government in Jharkhand will be weak and vulnerable
and the BJP does not have the strength on the ground to come
to power in next year's elections. Although Congress has
lost some of its luster, the Indian economy continues to do
well, there are no pressing law and order or communal
problems, and most Indians are happy with improved
India/Pakistan relations.


15. (C) Another party would replace advisors who gave its
leaders poor advice and devised a flawed strategy. Such
moves are anathema in Congress, however, where personal
loyalty to Sonia Gandhi is prized above performance. Within
the Congress culture, loyal footsoldiers are seldom called to
task, and no prominent Congress leader is likely to lose his
or her job over this episode. Confident that it can maintain
the UPA alliance in New Delhi, Congress will wait for this
episode to blow over.


16. (C) Congress faces increased pressure from the BJP as a
result of the USG decision to revoke Gujarat CM Modi's visa.
For analysis see Septel.
MULFORD