Direct encounters with Modi will also enable us to deliver a clear message regarding USG concerns for the state of human rights and religious freedom in Gujarat.

84043 11/2/2006 12:42 06 MUMBAI 1986 Consulate Mumbai CONFIDENTIAL "VZCZCXRO7463PP RUEHBI RUEHCIDE RUEHBI #1986/01 3061242ZNY CCCCC ZZHP R 021242Z NOV 06FM AMCONSUL MUMBAITO RUEHC/SECSTATE WASHDC PRIORITY 4876INFO RUEHNE/AMEMBASSY NEW DELHI 6035RUEHBI/AMCONSUL MUMBAI 9711RUEHCI/AMCONSUL CALCUTTA 1145RUEHCG/AMCONSUL CHENNAI 1258RUEHKA/AMEMBASSY DHAKA 0660RUEHLM/AMEMBASSY COLOMBO 0667RUEHIL/AMEMBASSY ISLAMABAD 0664RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DCRHHMUNA/HQ USPACOM HONOLULU HIRHMFISS/HQ USCENTCOM MACDILL AFB FLRUEAIIA/CIA WASHINGTON DCRUEKJCS/SECDEF WASHDC" "C O N F I D E N T I A L SECTION 01 OF 05 MUMBAI 001986

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/2/2016 TAGS: PGOV, PREL, CVIS, PHUM, KIRF, KISL, ECON, IN

SUBJECT: GUJARAT CHIEF MINISTER MODI SETS HIS SIGHTS ON NATIONAL POLITICS

REF: A: MUMBAI 1719; B: MUMBAI 818; C: 05 MUMBAI 1727

CLASSIFIED BY: Michael S. Owen, Consul General, Consulate General Mumbai, State. REASON: 1.4 (b), (d)

Summary and Comment

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1. (C) Gujarat Chief Minister Narendra Modi has his sights on national politics. Everyone we spoke to during a recent trip to Ahmedabad told us that Modi will use an expected state election victory next year to make a bid for the national presidency of the BJP. RSS and BJP leaders in Delhi echo these sentiments. Many in the party leadership believe that Modi is the only person of the BJP's many aspiring leaders who can reinvigorate the party and stop its further slide into oblivion. No one doubts that Modi will be reelected as Chief Minister of Gujarat in elections scheduled for late 2007, since he remains immensely popular among Gujarat's largely Hindu voters. Modi has successfully branded himself as a non-corrupt, effective administrator, as a facilitator of business in a state with a deep commercial culture, and as a no-nonsense, law-and-order politician who looks after the interests of the Hindu majority. Modi's backers in the BJP now hope to convince the party leadership that he can use these positive traits to attract voters throughout India. Some BJP leaders believe, or hope, that voters will forget or forgive Modi's role in the 2002 bloodshed, once they learn to appreciate his other qualities. Views differ in Gujarat on whether Modi can overcome his negative baggage to assume a national role. Some think that the memory of 2002 will turn off voters. Others say his arrogant and blunt leadership style will alienate the BJP hierarchy in New Delhi as it has in Ahmedabad, or that Modi's lower caste origins could become an obstacle at the national level.

2. (C) Against this backdrop of opinions, we believe that Modi's rise in the BJP seems likely. In coordination with Embassy New Delhi, we intend to continue our policy of interaction with the Chief Minister, whose B1/B2 visa we revoked in 2005, at the level of the Consul General. Since 2002, Mumbai Consul Generals have routinely sought meetings with Modi whenever they visited Ahmedabad. Such interaction allows us to deliver a clear message on human rights and religious freedom directly to the source. It will also shield us from accusations of opportunism from the BJP that would invariably arise if we ignored Modi now but sought a dialogue with him in the likely event that he makes it to the national stage. End summary and comment.

Modi Sets Sights on National Politics

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3. (SBU) Gujarat Chief Minister Narendra Modi remains immensely popular among the state's non-Muslim voters. Everyone we spoke to during an Oct. 7-8 trip to Ahmedabad predicted that Modi would easily win the next state elections, scheduled for late 2007. Views differ only on how large his victory will be.

4. (C) Our interlocutors were also unanimous in their belief that Modi has already set his sights on national politics. Modi hopes to use an electoral success as a springboard into the national BJP leadership, we heard repeatedly. The BJP national leadership, and particularly former deputy prime minister L.K. Advani, were convinced that only Modi could rejuvenate the party, Gujarat MP and BJP politician Harin Pathak told us. According to our interlocutors, Advani and former law minister Aroon Jaitley are the biggest Modi votaries in the central leadership, as no other clear successor to the party's aging leadership is in sight, and Modi's relative youth and obvious leadership talents are attracting more attention at the party center. The RSS's Ram Madhav told Embassy New Delhi the same thing, going so far as to say that Modi's ascendancy is not a question of if but when, and the USG must start considering now how it will deal with Modi when he becomes head of the BJP and leads the party's electoral campaign in the national elections scheduled for 2009.

5. (C) Separately, Piyush Goyal, General Secretary for the BJP

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in Maharashtra, said the BJP leadership is convinced that Modi can appeal to wide segments of Indian voters outside of Gujarat, and that his role in the 2002 bloodshed will not necessarily damage his popularity. Goyal said many within the BJP believe that Modi has the potential to become Prime Minister, and that voters may forget 2002 once the Chief Minister's other qualities become widely known. The attributes that have made Modi so popular in Gujarat are the qualities that the BJP would use at the national level as well, Goyal said.

Modi the Administrator

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6. (C) Most BJP insiders tell us that Gujarat's voters like Modi because he has successfully branded himself as an effective administrator and a pro-business, no-nonsense, law-and-order politician. Supporters and critics alike acknowledge that Modi is an effective administrator. He has successfully cultivated the image of a clean politician who has reduced corruption in public life in Gujarat. Views differ on how clean and non-corrupt Modi actually is, however. All our interlocutors acknowledge that Modi is a modest man who, unlike many elected officials in India, has not used his position to enrich himself or his family. Most contacts also say that he has purged the state administration of petty corruption at the mid- and lower levels of the bureaucracy. However, several people tell us that big ticket corruption is still common. Journalist Javed Rahmatullah claimed that Reliance Industries Ltd. (RIL) paid a large bribe for permission to expand its refinery in Jamnagar. The money went into the BJP's party coffers, Rahmatullah claimed, and not to Modi or any other individual. Other contacts have told us that business money flows to the BJP in Gujarat, but nobody had been this specific. We have been unable to verify Rahmatullah's claim.

Modi and Business

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7. (SBU) Modi's supporters claim that the state's economy has flourished under his leadership. They cite the state's annual growth rate of around nine percent, 15 percent growth in industrial production, sizable public investment in infrastructure and Gujarat's top ranking among Indian states as a destination for domestic investment. Among the five state governments in our Consular district, the GOG is the most visibly active in its attempts to attract investment, both domestic and foreign. One state agency recently supported a road show to the U.S. aimed at attracting foreign investment. The GOG is aggressively promoting special economic zones (SEZs) as a means to create new jobs and modernize infrastructure in the state.

8. (SBU) Modi's pro-business stance has won over the state's large business and trader community. Most businessmen say Modi has created a positive business climate in the state. Under Modi's leadership, red tape has been reduced, and most government officials support business rather than act as an obstacle to it, we hear repeatedly.

9. (SBU) The economic reality of Gujarat, however, may be far more complex than the ebullient statements of Modi's supporters suggest. Although Gujarat tops all Indian states in terms of investment intentions, actual investment is far less, and certainly less than the neighboring state of Maharashtra. Despite the presence of a few well-known international companies, FDI flows into the state are relatively small. Gujarat received less than four percent of the FDI coming into India in the past five years (Note: Delhi and Maharashtra, the top two FDI destinations, got 28 percent and 22 percent respectively. End Note) Ahmedabad does not have the visible construction activity, and increasingly noticeable foreign presence, of Pune in neighboring Maharashtra, for example. Many Gujaratis will say that the state is still not sufficiently known abroad. Some contacts are confident that investment will increase in tandem with growing awareness of Gujarat's business climate spawned by the GOG's aggressive marketing. Other sources were far less sanguine, and argue that the stain of the 2002 riots and the poor human rights record of its leadership continue to deter foreign companies fearful of further communal

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violence. Arvind Agarwal, GOG Industries Commissioner, conceded to us that the riots continue to negatively influence images of the state abroad.

Modi, Law-and-Order and Hindutva

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10. (C) Modi has successfully cultivated the image of a no-nonsense, law-and order politician among Gujarat voters. This image of Modi as a strong, decisive leader is what his BJP supporters hope will help him establish a foothold at the national level.

11. (C) Modi's role in the 2002 bloodshed continues to divide Gujaratis and Indians in general. While he remains repugnant to large numbers of people, particularly Muslims, human rights activists and educated urbanites with liberal or leftist leanings, many in the Hindu majority view his actions in 2002 favorably. Negative attitudes towards Muslims remain firmly anchored among Gujarati Hindus. Many feel that they, and not the Muslim minority, are the true second class citizens of India. Muslims often ""stepped out of line,"" prior to 2002, we often hear, demanding and receiving exceptional treatment by politicians who felt the need to placate them on the basis of perceived injustices carried out by the Hindu majority. That changed when Modi came into power in 2002, they say. While no one will openly condone the bloodshed of 2002, many Gujarati Hindus feel that Modi ""put Muslims into their place."" The BJP continues to echo these themes in its national political stance, especially over issues such as Hajj subsidies, the Muslim civil code, the singing of Vande Mataram, or other such religiously sensitive concerns.

12. (C) Modi continues to support a Hindutva agenda in the state, with the recent passage of amendments to the state's anti-conversion law (ref A) being seen as a concession to his supporters on the Hindu right. Both supporters and critics of Modi confirm that the state government continues to use administrative tools to marginalize and ghettoize the Muslim minority.

13. (C) At the same time, most interlocutors tell us that Modi cannot gain anything more by openly pursuing an aggressive Hindutva agenda. He already has the backing of those who applaud his firm stand against Muslims, and he risks alienating swing voters in Gujarat by being too openly communal. Modi understands that, outside of Gujarat, his role in the 2002 riots has damaged both his reputation and that of the state. He also realizes that outbreaks of communal violence in Gujarat will harm both his chances in the state and nationally, and hence he has given law enforcement agencies clear instructions to act swiftly if violence breaks out, we have been told. Several interlocutors cited Modi's rapid reaction to the communal rioting in Vadodara in May (ref B) as proof of his new strategy. Modi allowed federal army troops to establish order, and he even visited hospitalized Muslim victims of the riots in an attempt to portray himself as a leader of all Gujaratis.

Modi's Leadership Style

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14. (C) Views remain divided on whether Modi's leadership style will help or harm him if he enters national politics. In public appearances, Modi can be charming and likeable. By all accounts, however, he is an insular, distrustful person who rules with a small group of advisors. This inner circle acts as a buffer between the Chief Minister and his cabinet and party. He reigns more by fear and intimidation than by inclusiveness and consensus, and is rude, condescending and often derogatory to even high level party officials. He hoards power and often leaves his ministers in the cold when making decisions that affect their portfolios. His abrasive leadership style alienated much of the state BJP leadership in 2005. He was able to quell their subsequent rebellion by branding them as corrupt opportunists who were angry because he denied them the tools of political patronage and corruption (ref C). Modi maintains the support of most MLAs in the state because they understand his popularity with voters. His leadership style has created many enemies within the state party, however. This opposition could

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come back to haunt him at the national level, some critics hope. In any case there is consensus that Modi has failed to attract a sustainable, loyal cadre of followers within the state party, and that his few confidants will likely be pushed out of power and influence if and when Modi leaves the state for New Delhi. At the national stage, he will have to depend on opportunists who want to latch onto his bandwagon, some believe.

Modi and Caste

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15. (C) Caste resentments exacerbate the bad feelings between Modi and much of the state party's leadership. Modi heralds from a so-called Other Backward Caste (OBC), while many of his opponents are from higher castes, and in particular from the Patel caste that dominates public life in the state. The Chief Minister is openly distrustful of the higher-caste party officials around him, yet is careful not to make caste an issue since he seeks the support of the Gujarati commercial class, most of whom are Patels or other higher castes. Gujarat Congress spokesman Himanshu Vyas told us his party hopes to play the caste card in the 2007 elections to divide Modi's support among Hindus, yet none of our other interlocutors believed that caste issues could endanger a Modi victory at the polls. Some believe, however, that Modi's lower caste status could create problems for him in national politics.

Econoff's Unscheduled Meeting with the Chief Minister

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16. (C) The USG has not met Modi since his B1/B2 visa was revoked in 2005, yet Embassy Econoff had an unscheduled courtesy call with the Chief Minister on the margins of our recent visit to Gujarat. While paying a personal visit to a family friend who works in Modi's office, she was quickly whisked through the several perimeters of security surrounding the Chief Minister and introduced to Modi himself. Modi was pleasant and, conversing only in Gujarati, asked her the purpose of the USG visit to the state (Note: The local edition of the Times of India speculated earlier that day why USG officials were in Gujarat and indicated they might be on a ""secret"" mission. End note) After Econoff clarified the purpose of the visit to meet with contacts to assess Gujarat's political, economic, and social environment, Modi seemed surprised that U.S. officials would travel to Gujarat, saying the USG had warned the state is ""unsafe."" Econoff responded by stressing that while the USG has serious concerns about human rights and religious freedom, we do not restrict visitors or opportunities for U.S. companies to invest in Gujarat. Modi also asked what our contacts said about the current state of human rights and religious freedom in Gujarat. Econoff replied that the opinions were mixed.

Comment

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17. (C) Modi's dominance of Gujarat politics is likely to continue for now, and by all accounts he should get reelected easily next year. Among our contacts, there is not yet a consensus on Modi's chances for success at the national level, but some feel strongly in Delhi and Gujarat that his rise is inevitable. If Modi does eventually get a national leadership role in the BJP in the foreseeable future, the USG will be obliged to decide how it wants to deal with a figure of national prominence whose B1/B2 we revoked. We believe it would dilute our influence to avoid Modi completely. If we waited to engage Modi after he attains national stature within India's largest and most important opposition party, many in the BJP would likely view this as an opportunistic move and only deepen the suspicions cultivated by some BJP leaders in western India since the visa revocation. Since the riots of 2002, we have declined to engage Modi at the Ambassadorial level, but Mumbai Consul Generals have routinely sought meetings with Modi whenever they visited Ahmedabad. We will continue to seek such meetings at the level of the CG to emphasize that the USG does not have a formal no-contact policy (Note: The CG requested a meeting during his initial visit to Gujarat in 2005, but Modi was traveling that day), and to demonstrate to the BJP that we are interested in cultivating relationships with the party while it

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is in the opposition. Direct encounters with Modi will also enable us to deliver a clear message regarding USG concerns for the state of human rights and religious freedom in Gujarat. End comment.

18. (U) Embassy New Delhi cleared this cable.

OWEN

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