C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 005692

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/17/2016
TAGS: PGOV ECON PREL PTER PINR IN PK
SUBJECT: PM'S I-DAY SPEECH WARNS PAKISTAN, LAUNCHES 2007
ELECTION SEASON


Classified By: A/POLCOUNS Atul Keshap for reasons 1.4 (B,D)


1. (C) SUMMARY: Amidst suffocating security due to the very
severe terror threat, PM Singh's annual Independence-day
speech delivered from the ramparts of the Red Fort in Old
Delhi largely ignored foreign relations and needed structural
economic reforms to focus on populist domestic issues,
primarily rural development, mass education, health care, and
poverty alleviation. The rural focus was an opening salvo in
his Congress Party's political showdown with its primary
rival in Uttar Pradesh, the Samajwadi Party (SP,) prior to
election in that crucial state in early 2007. The PM hoped
that a heavily populist message would steal the political
thunder from the SP in the state's heavily populated rural
areas. PM Singh also issued a stern warning to Pakistan to
halt cross-border terrorism, reflecting the shift in mood in
India since the Mumbai terror attacks. END SUMMARY

Domestic Terrorism Denounced, Yet No Mention of GWOT
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2. (U) Prime Minister Singh warned Pakistan that unless it
takes concrete measures to stop cross-border terrorism,
"(Indian) public opinion for the peace process will be
undermined." Making no mention of the latest reports linking
both the foiled airline-bombing plot in London and the Mumbai
bombings to Pakistan-based terrorist organizations (and maybe
Indian Muslim supporters), Singh made no effort to link
Indian developments to the Global War on Terror, placing his
remarks in a local, regional context.


3. (U) Singh denounced the July bombing attacks in Mumbai
without ascribing blame. He also reminded the Naxalites that
"power will never flow from the barrel of a gun - real power
flows from the ballot," and that Indian security forces "will
respond appropriately" to any new Naxalite violence.

4. (U) Singh notably made no mention of the constant and
steady violent attacks by J&K insurgents, instead choosing to
trumpet "improvements," and conflict resolution, including
the new transport connectivity between India and
Pakistan-occupied Kashmir.

Singh Cribbing notes from both FDR and LBJ
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5. (U) Ducking any real talk of much needed economic reform,
rural relief and development dominated the PM's speech, in
whic he trumpeted no less than six separate rural programs.
Echoing FDR, Singh called for a "New Deal for Rural India,"
and mimicked LBJ by announcing a "War on Poverty." Lamenting
the trend of debt-ridden rural farmers committing suicide,
the PM assured the nation that the UPA's aid programs would
correct the problem, including the National Rural Employment
Guarantee Act, short-term loans, waivers of interest on
overdue loans, and the establishment of a cooperative banking
system to provide more credit for farmers.


6. (U) Singh also emphasized that GOI programs would improve
rural health and education, extend vocational education to
the countryside and establish new medical and scientific
institutes in rural areas.

Pre-Emptive Damage Control for Rising Energy Prices
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7. (U) Singh cautioned that the rising cost of crude oil in

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the international markets would impact Indians, but took
credit for keeping costs relatively low. However, he hinted
that the GOI would not be able to subsidize LNG and kerosene
much longer at current high levels.

Playing to the UP Voters
--------------


8. (C) COMMENT: Singh was every inch the populist paternal
figure in his Independence day speech, promising solutions to
the problems bedeviling the common man in the countryside,
while avoiding hot-button foreign-policy issues. This
confirmed once again that it is domestic issues that make or
break Indian politics. Ignoring talk of needed (and painful)
economic reforms, the PM pledged to implement a dizzying
array of government programs to combat rural poverty in an
effort to use the power of incumbency in New Delhi to
influence upcoming political campaigns in the teeming
political heartland of India. The first and biggest
challenge will be in Uttar Pradesh (UP), where Singh and his
Congress Party face a tough fight in the February 2007
elections against the well-entrenched and deeply-corrupt
Samajwadi Party (SP). Knowing that it must do well in UP to
extend its influence in other Hindi belt states, the Congress
leadership has apparently determined that it must rely on a
broad populist agenda to beat the SP at its own game.

Whacking Pakistan
--------------


9. (C) In addition, newspapers headlined Singh's tough crack
at Pakistan, a rhetorical step the peace-seeking PM took in
large part due to the enormous change in public sentiment
following the Mumbai terror attacks. Singh clearly needed to
be seen as being tough in public even as his government
continues low-level engagement with Islamabad. END COMMENT.
PYATT