TATA THREAT INTENSIFIES SINGUR TALKS

UNCLAS KOLKATA 000253 SENSITIVE SIPDIS DEPT PASS TO USTR E.O. 12958: N/A TAGS: ECON EINV EIND ELTN IN SUBJECT: TATA THREAT INTENSIFIES SINGUR TALKS REF: A. 08 KOLKATA 231 ¶B. 07 KOLKATA 380 ¶C. O6 CALCUTTA 453 ¶1. (U) SUMMARY: On September 3, Tata Motors announced that it has begun analyzing options to pull its Nano car project out of West Bengal. The opposition Trinamul Congress (TMC) appears to have been shaken by the threat, which came after several days of negative publicity and a growing public perception that closure of the Tata plant would harm not just the Communist Party of India (Marxist) (CPM),which runs the Government of West Bengal (GOWB),but also the common man and the Singur community. West Bengal Governor Gopalkrishna Gandhi is mediating talks between the GOWB and TMC, with talks starting on September 5. There is speculation in the business community that Tata's announcement was issued in order to put pressure on TMC to agree to a compromise. END SUMMARY. ¶2. (SBU) On September 3, Ratan Tata announced suspension of the construction and commissioning work at Tata's Nano plant in Singur. On August 24, TMC started an indefinite siege of the plant, demanding the return of 400 acres of land the GOWB acquired from farmers to provide to Tata for the plant (see reftels). Tata explained that protesters, in their second week of a siege of the plant, had intimidated workers and he was suspending operations because he could not ensure the safety of its workers. Tata added that the company is evaluating options for manufacturing the Nano at other company facilities and is preparing a detailed plan to relocate the plant and machinery to an alternate site. A senior Tata Steel employee, who claims personal knowledge of Tata's plans, told ConGen that Tata is already producing the Nano at an alternative site and would not miss its October launch deadline even if the Singur plant does not reopen. ¶3. (U) Tata's announcement came at the end of several days of negative media coverage of the TMC's siege. While no violence has been reported since TMC's blockade started on August 24, the media has reported that workers were harassed and intimidated by members of the blockade. The media widely reported the story of a 65-year-old farmer from Singur, who committed suicide after hearing Tata might pull-out from Singur. A rare alliance of small business owners, suppliers of raw materials and information technology workers also formed to confront TMC loyalists, using Internet blogs and media stunts to draw attention. ¶4. (SBU) TMC's weakened position appears to have raised hopes for a settlement. West Bengal Governor Gopalkrishna Gandhi agreed to mediate talks between CPM (GOWB) and TMC, with talks starting on September 5. Former Member of Parliament and TMC ally Jayanta Bhattacharya (protect) told EconFSN on September 4 that Mamata Banerjee has softened her position and is ready to find a solution. However, West Bengal Industrial Development Corporation Advisor Sudip Sinha (protect) told EconFSN that some of Mamata's ultra-Left allies within the Krishijami Jiban Jeebika Raksha Committee (farmland, life and livelihood protection committee) are looking to block a negotiated settlement. Sinha believes that these ultra-Left groups are ideologically opposed to industrialization at the cost of agriculture and are immune to public opinion as most of them have no ambition to hold public office. ¶5. (SBU) COMMENT: The Singur political theatre continues, with each party - CPM, TMC and Tata - jockeying for an advantage. The CPM and TMC do not appear to have a strategy for resolving the conflict, but are responding tactically to each other's moves. Both CPM and TMC are trying to preserve a public image that they support development in West Bengal, but both are constrained by internal conflicts and political realities. It is unclear whether Ratan Tata has a long-term strategy, but by suspending operations at the Singur plant right before the talks, he has inserted himself into the political fray. END COMMENT. PAYNE