On balance, however, it appears that Modi has solidified his power in Gujarat and that the rebellion of his fellow BJP politicians could likely flicker out.

38300 8/10/2005 11:16 05 MUMBAI 1708 Consulate Mumbai CONFIDENTIAL "This record is a partial extract of the original cable. The full text of the original cable is not available." "C O N F I D E N T I A L SECTION 01 OF 03 MUMBAI 001708

SIPDIS

TAGS: PREL, PGOV, PHUM, KIRF, PINR, CVIS, IN, Indian Domestic Politics

SUBJECT: GUJARAT: WILY MODI WEAKENS HIS OPPONENTS AND POSITIONS HIMSELF FOR BIGGER THINGS

REF: A) Mumbai 876; B) Mumbai 1303

Summary and Comment

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1. (C) On August 1, controversial Gujarat BJP Chief Minister Narendra Modi (whose visa we revoked for his role in the 2002 Gujarat Hindu-Muslim riots) expanded his cabinet by inducting 11 new ministers. In doing so, Modi met a long-standing demand of the rebels within his own party who had openly criticized him for not sharing power more broadly. A closer look at the timing of the expansion and the allocation of the portfolios, however, leads most of our contacts to argue that Modi actually ingeniously weakened his critics by only appearing to devolve some power to them, and by securing pledges of loyalty. Following the cabinet expansion, many rebels all but conceded defeat in their long drawn-out battle for power with Modi, whose star is rising in national BJP politics. Modi's move also demonstrates that caste-based politics remain alive in Gujarat. The chief minister, himself from a small, economically weak caste group, used the expansion to weaken the position of the long dominant Patel caste to the advantage of what are categorized by the government as Other Backward Castes (OBCs). Modi's latest actions may alienate both the better-off, urban middle classes that have supported him until now as well as the hard-line Hindu VHP, which used the swearing-in ceremony to rebuke Modi publicly. On balance, however, it appears that Modi has solidified his power in Gujarat and that the rebellion of his fellow BJP politicians could likely flicker out. Modi is using his strong base in Gujarat to position himself for the BJP power struggle and to crow about Gujarat's investment-friendly (but certainly not minority-friendly) record. End summary and comment.

Modi Shares Power With His Critics...

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2. (C) In late March, Bharatiya Janata Party (BJP) national president Lal Krishan Advani directed Modi to expand his cabinet after BJP parliamentarians openly criticized the chief minister's autocratic leadership style (ref A). Modi consented under the condition that the BJP appoint a state party president loyal to him. In early June, Advani kept his part of the bargain when the BJP appointed Vajubhai Vala as Gujarat BJP president (ref B). Vala is widely seen as pro-Modi.

3. (C) On August 1, Modi finally expanded his cabinet by swearing in 11 new ministers. The cabinet, which had far fewer ministers than allowed under Indian law, expanded to 26 as a result. Opinions differ among our Gujarat contacts as to whether or not the cabinet expansion is truly a sign that Modi is finally prepared to share power with the rebels, whose opposition to the chief minister was founded primarily on questions of power and personality and less on any political or ideological differences. The new ministers were drawn in nearly equal numbers from the rebel faction, from Modi's supporters, and from so-called fence sitters that are neither Modi's supporters nor opponents.

...And Weakens Them in the Process

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4. (C) Many contacts, including journalists Anosh Malekar and Uday Mahurkar as well as BJP official Pankaj Mudholkar, told us that none of the new ministers will have any significant policy-making clout or sizable budgets that can be diverted for political patronage. The newcomers received departments such as woman and child welfare, employment guarantee and fisheries. The CM and his core supporters still control the most important portfolios, such as Home, Finance, Industry, Irrigation and Rural Development.

5. (C) Mudholkar and Mahurkar said that Modi has ingeniously strengthened his position while weakening that of his opponents by superficially devolving some power to them. Modi timed the expansion of the cabinet to take advantage of the absence of the leader of the rebels, former Gujarat chief minister Keshubhai Patel. Patel is currently in the U.S., where his wife is undergoing medical treatment. Modi reportedly focused on two influential Patel supporters and enticed them to join his cabinet under conditions that Patel himself would probably never have supported. Modi also offered selective cabinet postings to rebels and fence sitters who he knew could be easily co-opted. ""The rebels are weakening,"" journalist Malekar told us. ""The so-called opponents inducted in the cabinet have also actually assured Modi of their loyalty."" Bimal Shah, an outspoken rebel parliamentarian who had hoped to get a cabinet posting, concurred. He said the rebels realized that the central BJP leadership is firmly with Modi, while rebel leader Patel is old and weakening. Shah conceded to us that he and several other key rebels had decided it is in their own best interests to make peace with Modi.

Caste Politics Still Alive in Gujarat

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6. (C) Modi also appears to be using the cabinet expansion to change the power equation among castes in Gujarat. The Patel caste had long dominated Gujarat state politics, even before Modi became chief minister in 2001. The Patel caste has given Gujaratis the image of being a hardworking, businesslike and pragmatic people. Tensions between the sizeable, landowning and better-off Patel caste and economically weak castes with the statutory definition ""Other Backward Castes"" (OBC) have long simmered in Gujarat's politics. Modi belongs to a small and economically weak OBC group. The Patel hold on state politics began to weaken when the BJP central leadership replaced chief minister and current rebel leader Keshubhai Patel, a figurehead of the caste, with Modi in 2001. Our contacts tell us nine of the 11 new cabinet members are from the OBC grouping. They are also drawn evenly from all regions of Gujarat. Having effectively manipulated religious strife to strengthen his power base during and after the 2002 riots in Gujarat, Modi is now using caste/class resentments within Hinduism to tighten his grip, many of our contacts believe.

7. (C) Some of our contacts see Modi's move to change the caste equation as a masterful stroke. Others warn that he might be creating future troubles for himself, as his move might alienate many of the wealthier business interests that have supported him in the past.

Are Troubles Brewing with the VHP?

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8. (C) Modi may also be facing new troubles from the Vishwa Hindu Parishad (VHP). One parliamentarian close to the VHP, Ahmedabad-based Govardhran Zhadapia, used the cabinet-induction ceremony to openly refuse the cabinet posting that Modi had offered him. Zhadapia said he refused the cabinet seat to protest what he called Modi's non-democratic ways. Ironically, the VHP worked hard for Modi's election in the 2002 state elections. In particular, the VHP had been instrumental in reaching out to urban, higher-caste Hindus, many of whom were not predisposed to supporting a lower-caste figure like Modi. Zhadapia's open affront now to Modi is seen as the VHP's shot across his bow. The VHP is reportedly angry that Modi has not sufficiently acknowledged the group's role in his election, but caste/class tensions may also factor in their thinking. Most of our contacts do not expect an open break between Modi and the VHP, however, since they are so closely ideologically linked. At the very least, we have heard, the VHP may not work as whole-heartedly for the BJP in the civic elections scheduled for Ahmedabad and other cities in 2006. (Comment: We find this doubtful, however, as ideological birds of a feather should flock together. End comment.)

9. (C) Our sources, including journalist Mahurkar, tell us the chief minister further alienated urban middle class Hindu voters by granting a cabinet post to a shady and controversial OBC leader named Purushottam Solanki, who is wanted by the Mumbai police in various extortion cases. Several Modi supporters expressed their disappointment, arguing that the appointment of Solanki was undermining the clean, non-corrupt, no-nonsense image that made Modi attractive to many voters from castes far higher than his own. Journalist Mahurkar, an otherwise strong backer of Modi, told us that the parliamentary opposition to the chief minister may grow significantly in the coming weeks because of disappointment over Modi's choice of appointments like Solanki.

Eyes on The National Stage

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10. (C) Despite the shenanigans in Gujarat local politics, it is clear Modi has his eyes on bigger things. His governing style has its appeal among a nationwide set of conservative Hindus, and that could translate into growing power in the national BJP. Moreover, in a BJP beset by internal struggles, Modi's revival sets him up nicely to influence the king making when the time comes. Having recovered from the crisis invoked by our visa revocation and his tyrannical management style, Modi is positioning himself as a national leader by reminding people that Gujarat has done a fine job of economic governance, notwithstanding the black stain the riots left. When the Gurgaon riots broke out in Congress-ruled Haryana, Modi published full-page ads in the major national broadsheets to remind voters everywhere that Gujarat had model labor relations, sound macroeconomic policies, terrific infrastructure, and responsible local government. Modi's face and name were prominent in these costly pokes in the Congress' eye. Moreover, Modi can crow to the nation that the respected newsmagazine ""India Today"" just named Gujarat among the best-run states in the union, an accomplishment for which Modi can be justifiably proud. These developments mean that Modi can try to develop a national ""brand image"" that speaks of good government and sound economics instead of the riots and hatred for which he is still best known.

Comment: A Force to be Reckoned With

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11. (C) We agree that power sharing has weakened the rebels, who appear to have accepted the reality that they are not strong enough to topple Modi. Modi's caste-based machinations, and his run-in with the VHP, could pose new threats to him in the future, but his popularity within the BJP and in Gujarat should blunt short-term VHP ire. At present, Modi appears stronger than at any time since the rebels took their opposition to him public, and he is using that strength to position himself within the national BJP and, by extension, on the national stage. End comment.

CHEATHAM

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