THE UPA SCORES BETTER THAN AVERAGE AFTER ONE YEAR

C O N F I D E N T I A L SECTION 01 OF 06 NEW DELHI 003933

SIPDIS

E.O. 12958: DECL: 05/19/2015
TAGS: ECON PARM PGOV PHUM PINR PREL IN
SUBJECT: THE UPA SCORES BETTER THAN AVERAGE AFTER ONE YEAR
IN OFFICE

REF: NEW DELHI 3797

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


1. (C) Summary: The UPA government completed one year in
office on May 22. Although the Left parties and the BJP
predictably criticized its performance, commentary has been
generally positive, reflecting widespread respect for
Manmohan Singh's performance. Despite some initial
weaknesses (such as antagonizing regional allies and failing
to respond to challenges in Nepal and Bangladesh),the UPA
registered significant progress on the economy, foreign
affairs, its relations with major powers (US, China, Japan,
Russia),and the domestic agenda. The UPA has clearly been
learning to consult with the disparate parties in its
alliance, and demonstrated that it can compromise with the
ideologically driven demands of the Communists without making
undue sacrifices on the reform agenda. Most observers agree
that Manmohan Singh and Congress President Sonia Gandhi have
worked well together to provide stability and produce
results. With the opposition BJP in complete disarray and
incapable of providing an attractive alternative, Congress
and its allies face little serious challenge, although the
Left continues to act as a drag on the PM's economic reform
ambitions. Analysis of the UPA's economic performance was
provided in reftel. There was little progress on global
issues (trafficking in persons, drug treatment programs,
HIV/AIDS) under the previous NDA government, as it was
reluctant to face controversial social issues. We have seen
a complete turnaround under the UPA. End Summary.

Congress Celebrates, Promises Further Reform
--------------


2. (U) As the UPA marked one year in office on May 22, the
Congress leadership was guardedly optimistic about its
performance. PM Singh modestly gave himself and the UPA a
6/10 score, and Party President Sonia Gandhi a perfect (and
exaggerated in our view) 10/10. Stressing that Congress had
"made the coalition experiment work," Manmohan Singh listed
the party's greatest contribution as returning the country to
"the politics of moderation, and the economics of equity and
development." The "single greatest achievement" was
providing "the weaker sections a new sense of belonging and
ownership in the destiny of the nation." The PM told the
Congress Working Committee on May 16 that the party would
"accelerate development" in seven key areas: agriculture and
rural development, infrastructure, education, health, urban
renewal, water, and the knowledge economy, by addressing both
equity and efficiency. Singh noted that Congress would have
to undertake "a bold initiative" to pursue serious economic
reform, improve public finances, and institute a "code of
conduct" to control the excesses of India's politicians.


3. (U) Mrs. Gandhi was more enthusiastic than the Prime
Minister, saying "I don't think we could have done more,
considering how a coalition works." She expressed
satisfaction with the Congress performance regarding
"coalition management," noting that "it is our first
experience and we have not done badly." Mrs. Gandhi accepted
responsibility for "mistakes" in the 2005 state legislative
assembly polls (in Jharkhand and Bihar),and the dissolution
of the Goa assembly, admitting that "the list of mistakes is
long," and "we could have formed the government in
Jharkhand." While noting that there was infighting within
her party, she was satisfied that it was "much less than
others."

The Left Criticizes
--------------


4. (U) The Communist parties, which support the UPA
government from outside, were naturally unhappy with the UPA,
criticizing it for "pursuing the same policies of
liberalization and privatization" as the previous NDA
government, while not doing enough "to promote multipolarity
in international relations." The Left Front (LF) urged the
UPA "not to get too close to the US," but to cultivate "close
ties with Russia, China, Europe and Japan," and "develop
trilateral cooperation between India, China and Russia." To
express their unhappiness, the LF parties did not attend the
UPA's anniversary celebration on May 22, with leader Jyoti
Basu noting that "all they have done is to implement the
decisions taken by the NDA government." The CPI(M) would
"keep an independent profile and keep its right to criticize
government policies," he stated.


5. (U) CPI General Secretary AB Bardhan commented that
"there are a few positive achievements, but a lot of failures
too." Noting that 70 percent of the population depends upon
agriculture for its livelihood, he praised the UPA for paying
more attention to India's rural sector, although the
budgetary increases were "somewhat reluctant and niggardly."
Bardhan criticized the UPA for what he viewed as "excess zeal
in raising FDI in the telecoms and the banking sector,
failing to commit resources to revive "sick" public sector
units, raising the possibility of FDI in retail trade and
pursuing disinvestment, and "making a mess" of the public
power sector with tariff hikes and privatization.


6. (U) The Communists gave the UPA credit for "taking steps"
to remove Hindu nationalism from the education system,
textbooks and research institutions, abolishing the
Prevention of Terrorism Act, adopting a Right to information
Act, increasing in social spending, and attempting to pass a
Rural Employment Guarantee Bill. They blamed the bill's
failure not on the UPA, but on the NDA boycott of Parliament.


The BJP Pontificates
--------------


7. (U) On May 24, the NDA released a "report card" charging
the UPA with "a year of non-performance and misgovernance."
The report accused the UPA of "devaluing constitutional
institutions such as the Election Commission and the
opposition, and "misusing" governors to perpetuate "single
family rule" in the country. BJP Party President LK Advani
claimed that the UPA's "biggest failure" was in internal
security, as it had failed to contain Maoist insurgents or
prevent the infiltration of illegal migrants from Bangladesh.



8. (U) Attempting to denigrate and undermine the UPA by
emphasizing the relationship between PM Singh and Mrs.
Gandhi, and Congress and the LF, the BJP insisted that the
UPA is inherently flawed and not fit to rule. According to
the BJP, Mrs. Gandhi occupies an "extra-constitutional
position of power" that has "devalued" the position of the
Prime Minister. BJP spokesmen and pro-BJP journalists
pointed to what they alleged was a conflict between the
mild-mannered Prime Minister and the "crafty and
manipulating" Party President. The BJP further alleged that
Mrs. Gandhi and her retinue have a soft spot for the
Communists and have repeatedly sabotaged the PM's economic
agenda.


9. (U) The BJP has also criticized Sonia Gandhi as a
favorite of the LF, which is bent on sabotaging economic
reforms advocated by the Prime Minister. A blatantly pro-BJP
summary of the year's performance in a recent issue of "India
Today" cites Mrs. Gandhi for placating the Left by
intervening to prevent Finance Minister Chidambaram and
Planning Commission Deputy Chairman Montek Singh Ahluwalia
from privatizing 13 public sector companies. Mrs. Gandhi
also earned BJP ire by allegedly calling the Prime Minister
to task for his defense of the "communal" Gujarat Chief
Minister Narendra Modi after the US revoked his visa.

Domestic Politics
--------------


10. (C) The BJP ended its first year in the opposition
wracked by factionalism and disunity, and has been unable to
present a credible challenge to the UPA. The BJP's lack of
direction was epitomized by its failure to play a
constructive role in Parliament. Repeated disruptions,
walkouts and boycotts helped to discredit the party and
provided the UPA with an opening to pass legislation at will.
The BJP's failure to present a credible alternative allowed
the inexperienced Congress a long interval to learn the
intricacies of "coalition management," and to recover from
numerous early mistakes. Although Congress still had not
established close working relationships with the colorful and
disparate regional and caste-based parties that make up the
UPA, it was more successful in establishing a modus vivendi
with the Communists.


11. (C) Polling data indicated that voters were largely
content with the status quo and not eager to change
governments. The Congress leadership misinterpreted this as
a pro-party trend and tried to dislodge its regional allies
and "capture" the state governments of Goa, Jharkhand, and
Bihar. The party paid a heavy price for its hubris, its
attempt to win the Bihar State Assembly Election in February
without local satrap Laloo Prasad Yadav, split the UPA ticket
into warring elements, plunged the state into uncertainty,
and reduced Congress to only 10 seats. Yadav's RJD Party
lost control, and the state has been under President's rule
ever since. Congress tried the same strategy in neighboring
Jharkhand where it was expected to win an easy victory, and
turned near-certain victory into defeat. Having failed at
the polls, Congress used a sympathetic government to install
Shibu Soren as Chief Minister, only to see his government
fall two weeks later. In Goa, Congress failed to manipulate
state legislators to enact a constitutional coup and unseat
an NDA government, plunging that state into President's rule
as well. Only in Haryana was Congress able to dislodge a
regional party and come to power with a wide majority.


12. (C) Congress also had to contend with a newly empowered
LF. Without the Communist's outside support, the UPA could
not remain in power. In order to provide stability and keep
the government in power, Congress and the Left leadership
scheduled regular "coordination meetings" to deal with policy
differences and maintained informal communication channels.
The predictions of UPA critics that the Communists would hold
the government hostage, stop economic liberalization, and
destabilize the government proved false. Instead, both sides
learned to compromise.

Foreign Policy
--------------


13. (SBU) Indian commentators generally gave the UPA
government good reviews for strengthening relations with the
US and China, and have praised the recent thaw with Pakistan.
High-level visits over the past year have been platforms for
announcing "strategic partnerships" with China, Mauritius,
Japan, the US and Russia, while the MEA boasted that the EU
was also seeking a strategic partnership with India. Despite
the high profile bonhomie with many counterparts, however,
pundits questioned the government's management of relations
with India's closest neighbors: including Nepal, Sri Lanka,
and Bangladesh.


14. (C) With growing aspirations for great power status,
India is focused most intently on the "major players," the US
and China. While the previous NDA government pursued
initiatives aimed at resolving outstanding India-China
issues, the UPA government helped bring these closer to
fruition. During PRC PM Wen Jiabao's April visit to Delhi,
both countries moved closer to resolving their long-standing
border dispute, increasing trade ties and working
cooperatively on international issues. The two countries
also agreed to seek a "package settlement" of outstanding
border disputes (although the countries have not agreed on
any boundaries, a process that could drag on indefinitely),
and China recognized Sikkim's accession into the Indian
Union. The UPA took the initiative to renew New Delhi's
stagnant relationship with Japan, increasing economic ties
and cooperation in the UN.


15. (C) After a shaky start, Foreign Minister Natwar Singh
and the UPA have been more than receptive to US efforts to
broaden our bilateral relationship, welcoming increased trade
and economic ties, US investment, cultural and
people-to-people ties, and greater cooperation in military
affairs. Supporters of the Prime Minister trumpet
breakthroughs in areas such as nuclear nonproliferation and
US assistance with India's energy needs as major foreign
policy achievements. The Left parties and the left wing of
Congress remain wary, however, and many within the UPA are
reluctant to get "too close" to the US. Indians of all
political hues support a UN security Council Seat for India,
and would react angrily if the US was perceived as blocking
this aspiration. Opposition to Indian involvement on the
ground in Iraq remains widespread.


16. (C) The UPA has skillfully managed the growing dialogue
with Pakistan, and most Indian commentators praised its
management of India/Pakistan issues. The Composite Dialog
continued on a wide range of outstanding issues, while the
PM's launching of the Srinagar-Muzaffarabad bas service, and
strong and growing support for a "soft border" between the
two countries, set the stage for more trade, tourism, travel,
and cultural exchanges across the LOC, testifying to Manmohan
Singh's efforts to change the Kashmir paradigm.


17. (C) Indian observers have faulted the UPA's handling of
relations with Nepal and Bangladesh, with many commentators
lamenting that the GOI has not forcefully moved to counter
Bangladeshi support for Indian separatists. The government
has walked a fine line on Nepal seeking to please both its
Communist allies (bitterly opposed to the King) and the
Indian military (supporting full cooperation with the Royal
Nepalese Army to combat the Maoists). Both groups have
criticized the UPA's compromise policy that first ended arms
supplies to Nepal while pressing for concrete progress
towards democratization, only to relent and resume the supply
of non-lethal military assistance in the pipeline.


18. (C) Although the UPA government and Natwar Singh entered
office promising to revitalize the NAM and reinforce Third
World solidarity, in reality MEA policy did not depart from
that of the previous government. India continues to support
NAM and G-20 positions in multilateral fora, but instead of
promoting the NAM as a monolithic opponent of Western
"colonial" interests, the GOI is using its historic
partnerships to garner support for its UNSC bid. As domestic
public interest in a Security Council seat grows,
commentators have split in their advice to the government on
whether or not to demand a veto, but all have recognized and
applauded the government's efforts to rally developing world
backing.


19. (SBU) The UPA also added energy to its priority foreign
policy areas, aggressively seeking potential suppliers for
its growing petroleum needs, using assistance programs like
technical training that date back decades, and two
newly-announced credit facilities for development aid to win
influence in oil-rich nations against the larger amounts of
cash that China can promise. Foreign policy watchers
welcomed the UPA's new focus, reflected in Sonia Gandhi's
November statement that "energy security will be paramount"
in India's relations with the world.

Global Issues
--------------


20. (C) The GOI's cooperation on trafficking in persons
(TIP) issues underwent a complete turnaround in the past
year. Under the NDA, it was impossible for Embassy officials
(including the Charge or the USAID Mission Director) to get
appointments with GOI officials in the TIP nodal office of
the Department of Women and Child Development (DWCD). MEA
and DWCD jointly stalled implementation of almost $1 million
in G/TIP-funded anti-trafficking NGO projects originally due
to be implemented by UNIFEM, citing dissatisfaction with
UNIFEM's lack of liaison with the GOI. Neither MEA nor DWCD
responded to letters requesting information, appointments or
contributions to the TIP Report. Anti-TIP NGOs complained
frequently and strongly that the DWCD would not release funds
for anti-trafficking projects. While privately seething at
"USG internal interference in GOI affairs" on the TIP issue,
the NDA publicly refused to comment on the TIP Report or USG
statements regarding India's TIP problem, claiming that they
were for USG "internal consumption." A sympathetic Joint
Secretary (J/S) from the Social Justice/Empowerment Ministry

SIPDIS
confirmed that the NDA was "not inclined" to cooperate with
the USG on providing rehabilitation to TIP victims, the
Juvenile Justice Act, the Central Adoption Resource Agency
and India's drug abuse rehabilitation programs.


21. (C) We faced similar problems on drug
regulation/rehabilitation policy issues. DEA and Customs was
able to increase cooperation with the GOI's LE agencies only
because they kept a low profile vis-a-vis the GOI
bureaucracy. The NDA government put a hold on publishing the
results of what is likely the world's largest drug abuse
study, although the Ministry of Social Justice/Empowerment
and UNODC had analyzed the data and approved its release.
According to the UNODC, the GOI shied away from the study's
publication for fear that the opposition would compel it to
commit funds and implement programs to combat drug abuse,
once they realized the extent of India's huge drug abuse
problem. Several Indian contacts opined that "a massive
survey that shows such high levels of drug abuse does not
enhance the image of an 'India shining,'" (an NDA 2004
election campaign slogan) The NDA government's refusal to
release the results publicly and to discuss drug regulation
policies set the dialogue back by almost two years.


22. (C) Less than two weeks after taking office in May 2004,
the UPA Human Resource Development Minister Arjun Singh
(whose ministry oversees DWCD) and Social Justice/Empowerment
Minister Meira Kumar assured the Ambassador and INL Office
Director of their cooperation. The new MEA J/S was equally
cooperative on TIP issues, serving as a liaison with the MHA
to move forward our mutual TIP agenda. During the past year,
Mission officers have had sustained, high-level contact
virtually weekly with the GOI on TIP, pharmaceutical drug
regulation, HIV/AIDS, and drug abuse. This new openness was
reflected in GOI approval of a month-long sex crimes
investigation course for MHA officials, MHA agreement to
negotiate a comprehensive anti-TIP training project with the
USG and UNODC, and the GOI's active participation in and
response to requests for TIP Report input. The UPA was
proactive in initiating efforts to prevent TIP and to bring
together the various offices to implement an effective
anti-TIP policy. These were the fruits of a new openness, a
willingness to acknowledge India's TIP problem, and a desire
to take concrete actions to combat TIP. Equally, the GOI has
re-invigorated its drug abuse/rehabilitation policies,
resulting in USG cooperation with the Ministries of Health,
Finance and Home Affairs on pharmaceutical drug regulation
issues and increased GOI focus on the link between
pharmaceutical drug regulation policies, injecting drug use
and India's HIV/AIDS epidemic.

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


23. (C) Criticism from the BJP and the Left of the UPA's
performance during its first year in office has largely
fallen on deaf ears. TV Commentator and Columnist Harish
Gupta reflected the views of most political insiders when he
told Poloff on May 18 that BJP criticism was "baseless" and
"did not reflect reality." UPA credibility depends on
popular perception of the PM and Mrs. Gandhi and their close
personal relationship. Repeated BJP claims of "two power
centers," and a Gandhi family that "dictates" to the Prime
Minister have fallen flat. Most of our contacts agree that
the BJP poses no threat to continued UPA rule and that
Congress will remain in power for a full five-year term.
Unable to devise a clear alternative, the BJP has little or
no chance of returning to power, and is reduced to hoping
that the UPA will somehow break apart or the LF withdraw
support. Such a scenario is increasingly unlikely as
Congress gets used to heading a disparate and contentious
coalition and compromising with the ideological demands of
the LF.


24. (C) Like any new government that has been out of power
for some time, the UPA made some mistakes during its first
year. Congress initially was inept in managing its
coalition, failing to recognize the power of regional leaders
such as Bihar's maverick Laloo and attempting to manipulate
government institutions to "capture" states. It also made
mistakes in dealing with the crisis in Nepal or the downturn
in ties with Dhaka that reflect the absence of a powerful
personality like Brajesh Mishra to coordinate foreign policy
from the Prime Minister's office. Overall, however, the UPA
has credibly handled the most important issues it faced,
including the economy, relationships with Pakistan and the
major countries that matter (including the US),and working
with the Left parties.


25. (C) Credit for the UPA's positive performance goes to
the Prime Minister and Mrs. Gandhi. They have devised a
workable division of labor in which the PM pursues his
economic and foreign relations agendas, while leaving the
rough and tumble of domestic politics to Mrs. Gandhi.
Despite lingering accusations that he is a "weak" Prime
Minister, Singh emerged from his first year as head of
government with his reputation enhanced. With success under
his belt, and unscathed by failure or major scandals, he has
delivered a solid performance, and has the wind at his back
as he prepares for a July visit to Washington.
BLAKE