UPA CABINET SHUFFLE GOOD FOR AMERICA

C O N F I D E N T I A L SECTION 01 OF 09 NEW DELHI 000657

SIPDIS

SIPDIS

USDOE FOR U/S DAVID GARMAN, DAS DPUMPHREY, RAJ LUHAR,
THOMAS CUTLER, STATE FOR EB/ESC

E.O. 12958: DECL: 01/30/2016
TAGS: PGOV, PINR, PREL, ECON, ENRG, EPET, EMIN, EAID, MASS,
IN, IR
SUBJECT: UPA CABINET SHUFFLE GOOD FOR AMERICA

REF: A. NEW DELHI 166
B. NEW DELHI 165
C. 05 NEW DELHI 9343
D. 05 NEW DELHI 8809
E. 05 NEW DELHI 8507
F. STATE 1151

NEW DELHI 00000657 001.2 OF 009


Classified By: Ambassador David C. Mulford, for reasons 1.4 (B,D)

1. (C) Summary: The UPA's January 28 cabinet shuffle
signifies a determination to ensure that US/India relations
continue to move ahead rapidly, and strengthens the cadre of
modernizing reformers at the top of the GOI. Removing
contentious and outspoken Iran pipeline advocate Mani Shankar
Aiyar from the Petroleum portfolio, the UPA replaced him with
the pro-US Murli Deora, who was one of several figures
inducted with long-standing ties to the Indo/US Parliamentary
Forum (IUPF) and the Embassy. The UPA also inducted a large
number of serving MPs, including seven from the IUPF who have
publicly associated themselves with our strategic
partnership. To ensure that there are no foreign policy
ripples before the President's visit, PM Singh retained the
critical MEA portfolio and is likely to hold on to it until
after the next session of Parliament concludes and Congress
has weathered crucial Assembly elections in Kerala and West
Bengal in May. Viewing the shuffle as a shift towards the
US, the left has become more alienated from Congress and more
determined to obstruct UPA economic liberalization and
foreign policy initiatives, all but ensuring political
fireworks in the months ahead. The net effect of the
reshuffle, however, is a Cabinet that is likely to be
excellent for US goals in India (and Iran). End Summary.

2. (U) After our analytical paragraphs, this cable includes
a full Cabinet list plus bios of new entrants. See paras
number 17 and 18.

An Eventful Weekend
--------------

3. (U) Prime Minister Manmohan Singh announced a major
cabinet shuffle and President Kalam swore in the new members
on January 29. Eighteen new personalities were inducted,
including 10 Ministers, one Minister of State with
Independent Charge, and 11 new Ministers of State. All the
new faces were from Congress, including three senior Congress
leaders from Maharashtra - Sushil Kumar Shinde (Power),AR
Antulay (Minority Affairs) and Murli Deora (Petroleum).
Although PM Singh retained the Foreign Affairs portfolio, he
announced that he would try to shuffle the Cabinet again
after the Budget Session of Parliament (the third week in
May.) Most expect him to name a new Foreign Minister at that
time. The two top names making the rounds are Finance
Minister P Chidambaram and Rajya Sabha MP and former Maharaja
of Kashmir Karan Singh. Longtime Embassy contact Anand
Sharma was named Minister of State for Foreign Affairs. In
the most significant development, the GOI replaced Petroleum
Minister Mani Shankar Aiyar with Murli Deora (Aiyar was
retained and was given Panchayati Raj, Youth Affairs & Sports
as a consolation prize.) The PM maintained on January 29
that regional considerations took priority, as Congress
wanted to provide opportunities to deserving individuals from
Maharashtra, Tamil Nadu and Andhra Pradesh. He also noted

NEW DELHI 00000657 002.2 OF 009


that there was a need to "accommodate MPs with a lot of
talent.

The Aiyar Controversy
--------------

4. (C) Our Foreign Ministry contacts welcomed Aiyar's
departure, commenting that his energy diplomacy had
encroached on MEA turf too many times, leading to MEA appeals
to the Prime Minister's Office to intercede. Despite the PMO
warning to back off, Aiyar's Ministry of Petroleum and
Natural Gas (MPNG) continued to interfere with MEA attempts
to craft policy, our contacts said, citing Pakistan, China,
Burma, Bangladesh, Iran and Sudan as areas of
intergovernmental conflict. Aiyar's unwillingness to step
back reportedly led to the PM's decision to remove him from
this high-profile portfolio, and cements MEA's position as
the lead bureaucracy on strategic policy making.

5. (C) Aiyar's dismissal as Petroleum Minister will leave
MEA officials breathing easier, and put MEA back in charge of
policy toward these energy suppliers, including the "problem
children" of Sudan, Burma and Iran. Unlike Aiyar, who
cultivated a reputation for anti-Americanism, Murli Deora has
been associated with the US/India relationship for years.
Lacking Aiyar's ambitions (or entrepreneurial zeal),he will
be a more cautious Minister. Clearing these lines of
authority should make the PM's job of coordinating India's
often-conflicting interests in energy security, trade,
investment, anti-terrorism and stronger ties with the West a
bit less muddled. His departure also weakens the holdouts
fighting a rear-guard action against stronger engagement with
the US, who would prefer that India hold true to its
non-aligned traditions. Local journalists speculate that
Aiyar's parting shot was the leak on January 28 of the USG
demarche (ref A) protesting Indian investment in Syrian oil
projects, spun by opponents of US-India engagement as another
attempt by the US to dictate policy to India.

6. (C) Our contacts (protect) in the Government-owned Gas
Authority of India Ltd. (GAIL) confirmed that Aiyar had vexed
the PMO and MEA by positioning the MPNG to usurp the lead on
India,s strategic posture for energy security issues,
inducting Additional Secretary Talmiz Ahmad, a senior career
diplomat, to lead on oil and gas diplomacy, and taking a
pro-active stance on the proposed Iran-Pakistan-India (IPI)
natural gas pipeline (Reftels B and C). Before Aiyar,s
ouster, a Planning Commission energy expert (protect) told us
that Aiyar,s international forays in search of oil and gas
equity had been taken as "fishing expeditions" at Aiyar,s
initiative, and that any significant deals would be subject
to Cabinet scrutiny before approval. The GAIL contact said
the MPNG,s civil bureaucracy had run a whispering campaign
against Aiyar calling him autocratic and disrespectful of IAS
officers, including a public criticism of MPNG Joint
Secretary (for International Cooperation) Prabh Dass in front

SIPDIS
of government-run entities.

7. (C) Aiyar's replacement as Petroleum Minister, Murli
Deora, is a stalwart supporter of stronger US-India ties, and
one of the few high-profile Congress leaders who embraces the
PM's vision of the bilateral relationship. He is currently
the Chairman of the India-US Forum of Parliamentarians, a

NEW DELHI 00000657 003.2 OF 009


non-partisan, industry-sponsored counterpart to the US
Congress's India Caucus that advocates closer political and
economic ties to the United States. Deora is a Gandhi family
loyalist and a wealthy Mumbai-based industrialist, and is
currently serving his fourth term as a member of the Lok
Sabha. Deora's only vulnerability, as a Mumbai politician,
is his long-standing connection to the Reliance industrial
group, which includes significant energy equities.

8. (C) One analyst at Petrowatch, an industry publication in
Mumbai, noted that Aiyar,s dismissal removes a powerful
supporter of the Iran Pipeline project and speculated that it
could signal a shift in the GOI's energy-related foreign
policy. Our GAIL contact said the private conglomerate
Reliance probably lobbied heavily for Deora, particularly in
view of Aiyar,s clashes with Reliance during the five year
rule of the National Democratic Alliance. Deora said his
priority is to strengthen the chronically loss-making public
sector oil firms and tackle the fuel subsidy issue, drawing
on his experience as chairman of the standing committee on
finance. While we expect Deora to more faithfully uphold the
PM's foreign policy vision, the MPNG Petroleum Ministry is
likely to be less pro-active and energetic in its drive to
acquire foreign oil and gas assets than it was under Aiyar's
globe-trotting leadership. New Delhi energy analysts have
questioned the wisdom of removing Aiyar, predicting that his
departure puts several nascent energy partnerships and deals
in doubt (including a much-trumpeted pact to cooperate with
China on energy purchasing signed during Aiyar's January
visit to Beijing). In the end, however, the high-profile
deals have all been of highly tentative nature, and Aiyar's
self-promoting maverick diplomacy was too much for PM Singh
to accommodate.

The New Minister of Power
--------------

9. (C) The new Minister of Power, Sushil Kumar Shinde, a
close political ally of Sonia Gandhi, fills the ministerial
slot vacated by the death last December of Minister PM
Sayeed, who was viewed more as a figurehead political
appointee. The power ministry is pivotal, in that the power
sector must attract huge investment, while being
politically-sensitive to needed price increases; and rapid
long-term growth in power generation capacity and production
is crucial to achieving the GOI goal of sustained 8% annual
GDP growth. The power sector,s reliance for growth on most
forms of generation - nuclear, hydroelectric, coal-thermal,
gas-thermal, wind, and solar - underscores the political
sensitivity of related issues outside the Power Ministry's
purview, such as seeking natural gas from Iran or alternative
foreign sources, civil nuclear energy cooperation with the
US, or social and environmental aspects of increasing coal
production.

10. (C) The UPA Government appointed Shinde as Governor of
Andhra Pradesh State after he led the Congress party to
victory in the 2004 State Assembly elections in neighboring
Maharashtra, where he had been elected Chief Minister in
2003. Shinde was Sonia Gandhi's election campaign manager
when she first contested for the Amethi Parliamentary
constituency in Lok Sabha. Shinde, age 65, was born into a
poor cobbler's family of the disadvantaged (scheduled) Dalit

NEW DELHI 00000657 004.2 OF 009


Caste in Solapur district. In 1971, he quit his job as a
sub-inspector in the state police intelligence wing to run
for and win a seat in Maharashtra,s legislative council. By
1981, he became Finance Minister in Maharashtra,s
Government, serving for nine years.

The New Minister of Coal and Mines
--------------

11. (C) A vindicated Shibu Soren, was re-inducted into the
Union Council of Ministers as Minister of Coal. The
thickly-bearded tribal leader had been forced to resign in
July 2005, both as Minister of Coal and as Chief Minister of
Jharkand State, after getting embroiled in a number of
criminal cases, including being arrested for inciting arson
and violence during a deadly rally in 1975. Earlier he was
acquitted of accepting bribes to support the minority
government of the late Prime Minister Rao. Soren was elected
to parliament in 1980 and to the Bihar State Assembly in
1981. He founded in 1972 the Jharkhand Liberation Front,
which successfully achieved Statehood for the coal-rich
tribal region of Jharkhand. He has been President of the JLF
since 1990.

12. (C) Coal now accounts for over 50% of India,s power
generation and is projected to remain at 52-55% for at least
20 years thereby requiring sustained production growth to
underpin rapid growth in India,s power sector, potentially
with close US. cooperation in clean coal technology. Greater
exploitation of India,s huge coal reserves faces issues of
environmental protection and social disruption in areas with
coal seams below tribal areas.

And Good News on Kashmir
--------------

13. (C) Another welcome addition to the cabinet is Kashmiri
Congress Party Rajya Sabha member Saifuddin Soz, a
long-standing contact of the Embassy's Political section.
Soz, a Sonia Gandhi confidant, worked discreetly and
diligently behind-the-scenes to help launch the PM's dialogue
with Kashmiri separatists such as the Mirwaiz, Yasin Malik,
and Sajjad Lone. For his loyal service and his successes on
Kashmir diplomacy, Sonia has elevated him to the Cabinet. In
doing so, she also ensured that a prominent and
well-respected Kashmiri Muslim would occupy the important
Water Resources portfolio. Kashmir has tremendous water
resources, including massive untapped hydroelectric
potential. Given the on-going dispute between India and
Pakistan over the construction of the Baglihar dam on the
Chenab river near Jammu, and Soz's new job's supervision of
the India-Pakistan Indus Waters Treaty, it is clear that Soz
will play a key role in Delhi's efforts in Kashmir and its
dialogue with Pakistan. Soz -- a professor -- is a moderate,
earnest gentleman who has been a good friend of the US. He
could potentially be Chief Minister of Kashmir one day, or
rise even higher in the Cabinet, if he does a good job as
minister.

Comment - A Boost to US Energy Interests
--------------

14. (C) Our initial assessment is that appointment of the

NEW DELHI 00000657 005.2 OF 009


three new energy ministers will boost USG interests by
enhancing bilateral cooperation under the US/India Energy
Dialogue (Reftel F) prior to US. Department of Energy Under
Secretary David Garman,s visit to New Delhi (expected Feb

SIPDIS
8-9). Aiyar,s dismissal, following on USG demarches against
oil and gas cooperation with Iran and Syria, will probably
disrupt the recent momentum built by Aiyar and MPNG
Additional Secretary Talmiz Ahmad in favor of the
Iran-Pakistan-India natural gas pipeline, as well as
cooperation with Syria, as Deora conducts a thorough review
of these transactions.

And a pro-US Shift
--------------

15. (C) The Cabinet shuffle contained lots of good news for
the USG, confirming the UPA government's determination to
maintain rapid progress in the India/US relationship. The
demotion of Aiyar was the most significant indicator. The
new entrants with strong pro-US credentials include Saifuddin
Soz, Anand Sharma, Ashwani Kumar, Kapil Sibal and Aiyar's
replacement Murli Deora. Seven of the new faces are also
members of the pro-American Indo/US Parliamentary Forum,
while the induction of so many entrants from the Rajya Sabha
reflects the declining importance of a mass political base.
The timing of the shuffle and the PM's retention of the MEA
portfolio were dictated by the impending POTUS visit, and
reflects the PM's commitment to ensure that there is no
foreign policy surprises before the visit.

That Angers the Left
--------------

16. (C) The undeniable pro-American tilt of the Cabinet
shuffle has infuriated the Left, which will view it as a
throwing down of the gauntlet and an invitation to open
warfare. The editorial comment of the pro-Left "Hindu" was
typical "Mr. Aiyar paid with his job for...going against the
Government's strategic pro-US policy and its increasing
acceptance of unilateralism and unipolarity." Increasingly
infuriated by what they view as Congress subservience to the
US, the Left is likely to become even more uncooperative in
the aftermath of this move. Congress hoped to pacify the
Left by bringing in Jairam Ramesh, who has been close to the
Communists while in the National Advisory Council and Vayalar
Ravi (Overseas India Affairs),who has been a consistent
critic of the UPA's economic liberalization and pro-US tilt.
These moves are unlikely to mend the growing rift between the
Left and Congress, however, making increased confrontation
more likely.

The New Cabinet
--------------

17. (U) After the Cabinet shuffle the current shape of the
Cabinet is as follows:

Cabinet Ministers

Manmohan Singh--Prime Minister, External Affairs
Pranab Mukherjee--Defense
Arjun Singh--Human Resource Development
Sharad Pawar--Agriculture, Food & Civil Supplies

NEW DELHI 00000657 006.2 OF 009


Lalu Prasad Yadav--Railways
Shivraj Patil--Home
P Chidambaram--Finance
Kamal Nath--Commerce & Industry
Ram Vilas Paswan--Chemicals & Fertilizers, Steel
Jaipal Reddy--Urban Development
PR Dasmunshi--Information & Broadcasting, Parliamentary
Affairs
Mahavir Prasad--Small Scale, Agro & Rural Industries
PR Kyndiah--Tribal Affairs, Development of North East
TR Baalu-- Shipping, Road Transport & Highways
Shankarsinh Vaghela--Textiles
HR Bharadwaj--Law & Justice
Sushil Kumar Shinde--Power
Mani Shankar Aiyer--Panchayati Raj, Youth Affairs & Sports

Sis Ram Ola--Mines
Meira Kumar--Social Justice & Empowerment
K Chandra Shekar Rao--Labor & Employment
A Raja--Environment & Forests
Dayanidhi Maran--Information Technology & Communications
Anbumani Ramdoss--Health & Family Welfare
Shibu Soren--Coal (new)
AR Antulay--Minority Affairs (new)
Vyalar Ravi--Overseas Indian Affairs (new)
Murli Deora--Petroleum (new)-IUPF member
Ambika Soni--Tourism & Culture (new)
Saifuddin Soz--Water Resources (new)
Santosh Mohan Dev--Heavy Industries & Public Enterprises (new)
Prem Chanda Gupta--Company Affairs (new)
Kapil Sibal--Science & Technology (new)

Ministers of State with Independent Charge


Oscar Fernandes--No Portfolio allotted yet (new)
GK Vasan-- Statistics & Program Implementation (new)
Renuka Choudhury--Women & Child Development (previously
Tourism & Culture)
Subodh Kant Sahai--Food Processing
Vilas Muttemwar--Non-conventional Energy Sources
Kumari Selja--Urban Employment & Poverty Alleviation
Praful Patel--Civil Aviation

Minister of State

E Ahamed-- External Affairs
Suresh Pachauri--Personnel, Parliamentary Affairs
BK Handique--Chemicals & Fertilizers (previously defense)
Mrs. P Lakshmi--Health & Family Welfare
D Narayan Rao--Coal & Mines
Shaqeel Ahmed--Information Technology & Communications
Rao Inderjit Singh--Defense (previously MEA)
Narainbhai Rathwa--Railways
KH Muniyappa--Road Transport & Highways
MV Rajashekharan--Planning
Kantilal Bhuria--Agriculture, Food and Civil Supplies
Manik Rao Gavit--Home Affairs
Sri Prakash Jaiswal--Home Affairs
Prithviraj Chavan--Prime Ministers Office
Taslimuddin--Agriculture, Food and Civil Supplies
Mrs. Suryakanta Patil--Rural Development, Parliamentary
Affairs

NEW DELHI 00000657 007.2 OF 009


A Narendra--Rural Development
Mohammed Ali Ashraf Fatimi--Human Resources Development
R Velu--Railways
SS Palanimanickam--Finance
S Regupathy--Home Affairs
K Venkatapathy--Law & Justice
Ms. S Jagadeesan--Social Justice & Empowerment
EVKS Elangovan--Commerce & Industry
Mrs. Kanti Singh--Heavy Industry
Namo Narayan Meena--Environment & Forests
Akhilesh Prasad Singh--Agriculture, Food & Civil Supplies
Pawan Kumar Bansal--Finance (new)
T Subbirami Reddy--No portfolio allotted yet (new)- IUPF
member
Anand Sharma--External Affairs (new)- IUPF member
Ajay Maken--Urban Development (new) - IUPF member
Pallam Raju--Defense (new) - IUPF member
CS Sahu--Labor (new)
Akhilesh Das--Steel (new)
Jairam Ramesh--No portfolio allotted yet (new)
Ashwani Kumar--Industry (new) - IUPF member
Ms. D Purandareswari--Human Resources Development (new) -
IUPF member
Dinsha Patel--No portfolio allotted yet (new)

Bios of New Entrants
--------------

18. (C)(All Bios):

Sushil Kumar Shinde - Minister for Power - A long time
Congress party activist and Gandhi family loyalist, Shinde
was the Governor of Andhra Pradesh until he took this
position. Prior to that, he was Chief Minister of
Maharashtra. He has held many positions in the Congress
party including General Secretary and Congress Working
Committee Member. He is a dalit and his inclusion in the
cabinet is seen as an attempt to reach out to the community.

Shibu Soren - Minister for Coal - Leader of the regional
party Jharkhand Mukti Morcha (JMM),Soren is considered to be
the father of the JMM movement that ultimately led to the
creation of Jharkhand state. He was a minister earlier in
the cabinet, quit after he was charged with arson and rioting
for acts he committed during the hey days of the JMM movement
in the 1980s. The charges have since been quashed and so
Soren comes back into the cabinet.

AR Antulay - Minister for Minority Affairs - Another Gandhi
family loyalist, Antulay is from Maharashtra and has been
Chief Minister of the state. He was infamous in the early
1980s for floating fictitious trusts and amassing money in
the name of Indira Gandhi that led to the fall of his
government in Maharashtra. Antulay has been in the political
wilderness since then, but as a Muslim was rehabilitated as a
concession to the Muslim community.

Vyalar Ravi - Minister for Overseas Indian Affairs - Another
old time party loyalist, Ravi is the first UPA Minister from
Kerala, and his induction was a concession to that state,
where the Congress government faces the voters this year.
Ravi also comes from a backward caste.


NEW DELHI 00000657 008.2 OF 009


Murli Deora - Minister for Power - Long considered as a key
fund raiser for Congress, Deora has been a parliamentarian
for many years, as well as President of the Mumbai District
Congress Committee. He is well-known as a friend to the
business community and pro-US. His son, Milind, is also a
member of the Lok Sabha.

Ambika Soni - Minister for Tourism & Culture - Having cut
her political teeth under the tutelage of Sanjay Gandhi, Soni
is a long term Gandhi family loyalist. Since Sonia Gandhi's
entry into active politics, Soni has been one of her close
confidants and supporters and was for many years the
Secretary in charge of the Congress President,s office.

SIPDIS
Always quick to defend the party and Sonia on any issue,
Soni,s induction into the cabinet is seen as a reward for
her loyalty.

Saifuddin Soz - Minister for Water Resources - A veteran
parliamentarian from the Kashmir valley, Soz was environment
minister in the Gujral government and his was the crucial
vote that brought down the Vajpayee government in March 1998.
Soz was expelled from the National Congress for defying the
party whip and voting against the BJP-led government. Soz,s
induction into the cabinet is a reward for his hard work to
promote the ongoing dialogue between the government and the
Kashmir separatist groups and allows Congress to claim credit
for appointing a Muslim and Kashmiri to the Cabinet.

GK Vasan - Minister of State for Statistics and Program
Implementation - Son of the veteran Congress leader GK
Moopanar, Vasan is from Tamil Nadu and is the President of
the state's Congress party. His induction is a concession
to Tamil Nadu, where Congress hopes to benefit in elections
later this year.

Pawan Kumar Bansal - Minister of State for Finance - A
Congress MP from Chandigarh, Bansal is a long time party
loyalist. He recently became the subject of controversy
after providing MP development funds to the Chandigarh Golf
Club in return for a privileged membership.

T Subbirami Reddy - No Portfolio - Another major fund raiser
for the Congress party, Reddy is an industrialist and film
producer. Known as the best party-giver in town, Reddy has
been in Parliament since 1989. He is from Andhra Pradesh.

Anand Sharma - External Affairs - A Congress spokesman,
Sharma is a former President of the Youth Congress and a
well-known Gandhi family loyalist. He is very friendly to
the US, where one of his two sons receives treatment for
autism. Sharma is a Rajya Sabha MP from Himachal Pradesh.

Ajay Maken - Urban Development - One of the younger MPs in
the Lok Sabha, Maken is serving his first term. He was
widely praised for his performance as Minister for Power and
Transport in the Delhi government and Speaker of the Delhi
Assembly. A tough task master, he is credited with
initiating power reforms in Delhi.

M Pallam Raju - Defense - Educated at Temple University,
Philadelphia, Raju is a Lok Sabha Member from Andhra Pradesh.
A member of the house from 1989-91 and an engineer by
profession, Raju worked in the US and Norway before coming

NEW DELHI 00000657 009.2 OF 009


back to India and joining politics.

CS Sahu - Labor - A first time member of the Lok Sabha, Sahu
has been in Congress politics for a long time, serving as
Mayor of Behrampur, Orissa. A lackluster politician, his
induction into the council is mainly to give representation
to Orissa.

Akhilesh Das - Steel - A member of the Rajya Sabha since
1996, Das is the publisher of a leading Hindi daily
"Jansatta, " and was Mayor of Lucknow. Das has a Ph.D. in
Management Studies from Agra University.

Jairam Ramesh - No portfolio - Along with Manmohan Singh,
considered one of the leading members of the Congress
Economics brain trust, Ramesh is a Rajya Sabha member. Close
to Sonia Gandhi, he is one of her key advisors on economic
issues.

Ashwani Kumar - Industry - A long standing Rajya Sabha
member, Kumar is another Gandhi family loyalist. He is a
very successful Supreme Court lawyer and strong proponent of
closer US/India ties.

D Purandareswari - Human Resources Development - A Daughter
of former Andhra Pradesh Chief Minister NT Rama Rao,
Purandareswari is serving her first term in the Lok Sabha.
She has been brought into the Cabinet as a reward for her
strong performance in the house.

Dinsha Patel - No portfolio - A member of the Lok Sabha from
Gujarat since 1996, Patel is a veteran Congressman. He was a
member of the state assembly from 1975 to 1996. He has been
brought in to give representation to the powerful Patel
community of Gujarat.

19. (U) Visit New Delhi's Classified Website:
(http://www.state.sgov.gov/p/sa/newdelhi/)
MULFORD