The India Cables

A struggle between 'reform cadre' and the 'old line' in the Congress

Electoral defeats in 2007 and their impact on impending Uttar Pradesh polls made some Congressmen seek 'a more saleable political face at the head of the government.' Photo: Kamal Narang  

After the Congress suffered electoral losses in Punjab and Uttarakhand in February 2007, some party members advocated that party president Sonia Gandhi “jettison” Prime Minister Manmohan Singh ahead of the Uttar Pradesh Assembly election in April-May 2007 and “put a more saleable political face at the head of the government,” according to a United States Embassy cable ( >100159: confidential ) sent on March 13, 2007.

“Following a string of recent local-level electoral defeats in Mumbai, Uttarakhand, and Punjab, Sonia Gandhi and her personal advisors are very concerned that the impending Uttar Pradesh (UP) elections will turn out horribly for Congress. As a result, some are advocating that she jettison Prime Minister Singh — whose message of rapprochement with Pakistan has been criticized by the BJP — and put a more saleable political face at the head of the government,” the cable sent under the name of Embassy Charge d'Affaires Geoffrey Pyatt reported to Washington.

The Embassy appeared worried about the “reform cadre” in the government being sidelined by the “old line” Congress with socialist sympathies. “What seems clear in the aftermath of recent polls is that the reform cadre of Manmohan Singh, [Deputy Chairman of the Planning Commission] Montek Singh Ahluwalia, and Finance Minister [P.] Chidambaram are politically diminished, Sonia Gandhi's inner coterie is deeply worried, and the old line Congress and their Communist fellow-travelers are empowered. Politics in India are a mess right now for Congress, and while the GOI [Government of India] is publicly optimistic about the nuclear deal, it is clearly caught in a domestic political eddy,” the cable added.

It also took note of the political compulsions of the Congress that might have a bearing on U.S. interests. “Others are urging that the Congress hunker down and play it safe on the budget, inflation, economic reform, and foreign policy — including the nuclear deal — to minimize the negative impact on UP voters, many of whom are Muslim and take a dim view of the United States.”

Energy sector concerns

The cable, accessed by The Hindu through WikiLeaks, was sent ahead of a visit to India by Secretary of Energy Samuel Bodman to further the U.S.-India relationship in the energy sector.

Mr. Pyatt, in the “scene-setter” for the visit, expressed the hope that Mr. Bodman could win over the Indian nuclear scientific establishment with the prospect of “future-oriented programs” like the Global Nuclear Energy Partnership. “Your scheduled meetings in Mumbai with Department of Atomic Energy Secretary Dr. Anil Kakodkar and in New Delhi with Special Envoy Shyam Saran offer an opportunity to highlight the many benefits of U.S.-India civil nuclear cooperation, which could be lost if India does not conclude the 123 Agreement quickly,” he wrote.

Briefing Mr. Bodman on what to expect during his meetings in India, the Charge said: “The Prime Minister will likely tell you that his number one priority is extending the benefits of India's rapid growth to the 700 million Indians — mostly in the rural sector — who continue to live at a near subsistence level. Rising food and fuel prices have particularly hurt the poor, creating a political backlash against the UPA government in recent state elections. Prime Minister Singh and your other interlocutors will be very interested in your ideas on how the United States can help with India's energy needs in the short and long term, particularly with respect to the rural sector.”

Looking ahead to Mr. Bodman's meeting with Union Minister of Petroleum and Natural Gas Murli Deora, Mr. Pyatt wrote that Mr. Deora had “close ties to Sonia Gandhi's inner circle and a political base in Mumbai, and he is central to India's international quest for growing petroleum and natural gas imports, and cooperation with the United States in domestic industry development and regulatory policy.” The Minister had told American diplomats that India did not expect a final agreement to be reached on the oil pipeline with Iran due to Iranian unreliability and Iran changing the terms of the June 2005 agreement to sell India LNG from its South Pars field for 25 years. “The MPNG increasingly sees LNG from Qatar and Australia as a more viable option than several proposed pipeline projects,” the cable noted.

While giving the Energy Secretary a backgrounder to the U.S.-India civil nuclear negotiations, Mr. Pyatt said Indian Foreign Secretary Shivshankar Menon had handed Under Secretary Nicholas Burns a “completely inadequate counter-draft to the 123 Agreement — authored by the skeptics in India's nuclear establishment who remain concerned about U.S. efforts to ‘entrap' India and constrain its strategic program.”

Mr. Burns, the cable added, had asked Mr. Menon to “provide a more workable basis on which the U.S. and India can continue talks, and invited an Indian team with negotiating authority to the U.S. for the next round of discussions.” (This was sent before the two countries released the full text of the 123 agreement, which allows for cooperation on peaceful uses of nuclear energy, in August 2007.)

Analysing the compulsions of the Congress-led government in this context, it said:

“The politics around India's energy policy reflects a struggle between needed economic reform and political impediments to change. Prime Minister Singh and Deputy Chairman Ahluwalia are well aware of what economic reforms are needed to enhance India's long term growth.

“They realize that reasonable regulation and market-based pricing of electricity, petroleum products, natural gas, and coal would be most conducive to encouraging investment, reliable revenue streams, energy efficiency, and rational choice among projects and energy sources. However, the political imperatives of middle-class and poor voters' resistance to price increases, particularly with consumer inflation recently exceeding 6%, have induced the GOI to maintain price controls and government subsidies. Similarly, although the GOI privately doubts Iran's reliability as a potential source of natural gas by pipeline or of liquefied natural gas, it continues negotiations with Iran to appease Muslim and left-wing voters and Members of Parliament.”

(This article is a part of the series "The India Cables" based on the US diplomatic cables accessed by The Hindu via WikiLeaks .)

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