SOUTH INDIA'S FIRST BJP GOVERNMENT MUDDLES THROUGH A

UNCLAS SECTION 01 OF 02 CHENNAI 000327

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SUBJECT: SOUTH INDIA'S FIRST BJP GOVERNMENT MUDDLES THROUGH A
CRISIS

REFS: A) CHENNAI 213, B) 08 CHENNAI 350

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1. (SBU) Summary: South India's first state government led by the
Bharatiya Janata Party (BJP) teetered on the verge of collapse for
nearly two weeks as Karnataka's Chief Minister fought off attempts
by the Tourism Minister to unseat him. National-level BJP
authorities brokered a truce on November 9, but several observers
have told us that the peace is tenuous, and expect that it will be
difficult for the government to rule effectively. Members of
minority religious communities have said that they fear the lack of
stability may create an environment that encourages tension among
religious communities. End Summary.

Girlfriend brings the government to the brink
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2. (SBU) B.S. Yeddyurappa, the first BJP Chief Minister in South
India, appears poised to continue to head Karnataka's government,
despite Janaradhana Reddy's (the state's Tourism Minister) bitter
attempt to unseat him. National BJP officials enforced a truce on
November 9, ending the insurrection, at least for now. Publicly,
Reddy maintained that the main reason for his demand that
Yeddyurappa resign as Chief Minister was the favoritism shown to
Shobha Karandlaje, the Minister for Rural Development and the only
woman in the cabinet, who doubles as Yeddyurappa's girlfriend.
(Yeddyurappa is a widower.)

Mining's millions the real culprit
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3. (SBU) Others have told us, however that the real reason for the
insurrection was Reddy's desire to protect his core business,
iron-ore mining. Reddy and his brother, Karunakara Reddy,
Karnataka's Infrastructure Minister, have grown rich from allegedly
illegal mining operations in Karnataka and Andhra Pradesh. They
used their fortunes to fund the rise of the BJP in the state, and
have long been irritated because they feel that they were given
largely peripheral posts in the government when the BJP assumed
power in May 2008.


4. (SBU) The editor of a local-language newspaper told us
Yeddyurappa's office, increasingly embarrassed by the attention
attracted by the Reddys' shady mining interests, had decided clip
their political wings, a plot the brothers sniffed out and wanted to
avenge by seeking the Chief Minister's ouster. The editor said that
the immediate cause of the Reddys' rebellion was the state's
decision to impose a fee of INR 1000 (about USD 21) tax on all
trucks transporting iron ore in the state, levied to raise funds to
assist the victims of October's flooding in northern Karnataka. In
addition, the state's Department of Forestry began investigations
into the Reddys' mining activities, looking for possible legal
violations.

National leadership instills peace, for now
--------------


5. (U) While the BJP's national leadership ensured Yeddyurappa
retained his post, the Reddys got their pound of flesh, succeeding
in securing the removal of both the Chief Minister's
girlfriend/Minister for Rural Development and his aide reportedly
responsible for targeting the Reddys' interests. The BJP leadership
also created a "core committee" of faction leaders in the state
party to vet major political decisions in the state.

Observers skeptical about the future
--------------


6. (SBU) Our contacts are unsure whether this arrangement will last,
or even allow for the government to function properly. A
Bangalore-based political correspondent for one of India's major
English-language dailies told us that the core committee would sit
uneasily with Yeddyurappa's leadership style, which involves "a
minimum of consultation." He also added that the committee
consisted of people with "diametrically opposite views," making it
difficult for them to formulate a coherent administrative strategy.
A high-level state bureaucrat agreed, saying that he feared the
state's administration would be pulled in many different directions.
He also said he believed that the Reddys were the winner in the
brouhaha, and that the mining lobby in the state will now ensure
that the state's administration serves that lobby's interests.


7. (U) The "peace deal" however, is seen as a big loss for the Chief
Minister. Apart from his girlfriend and aide's removal, he has also
been forced to rescind the transfer of key officials who were suspected
to have helped build the Reddy brothers business empire. The "core
committee" established is headed by the Chief Minister's opponent
Ananth Kumar. Another of the Chief Minister's rivals, state assembly
speaker Jagdish Shettar, is likely to be inducted into the cabinet -
something that the Chief Minister desperately tried to avoid. The deal
also reflects the growing Nagpur-Delhi struggle between the RSS and the
Advani BJP camp. The Chief Minister's girlfriend is also a staunch RSS
loyalist. The Reddy brothers are close to senior BJP leader Sushma
Swaraj, an Advani loyalist, who together within another Advani man,
Venkaiah Naidu, brokered the peace deal and then forced the Chief
Minister to accept it when he balked.

Minority leaders fear attacks by Hindu extremists
-------------- --------------


8. (SBU) Meanwhile, leaders of minority religious communities,
already nervous about religiously-tinged, episodic violence in the
state, worry that the current scenario might create an environment
that encourages tension among religious communities. A Muslim
member of the state's legislative assembly told us that the economic

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slowdown has ensured that there are a number of angry young men in
all religious communities who could be easily incited to violence.
A prominent Christian leader told us the same, noting that he fears
attacks on churches similar to those in September 2008 at Mangalore.
He opined that those attacks occurred when the BJP government was
attempting to attract political support and reckoned that the
current situation may also encourage extremists. Thus far, however,
there is no evidence of an upswing in religious violence in
Karnataka.

Comment
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9. (SBU) Yeddyurappa's government can point to few accomplishments
in its 18 months in office other than its continued existence, and
the spectacle the state has witnessed over the past several weeks
does little to inspire confidence that his government will
accomplish anything major in the near future. This is unfortunate
in a state in desperate need of a firm hand at the wheel to direct
the many infrastructure projects in the works.
SIMKIN