Cablegate: Indian Observers (Mostly) Think Nuclear Deal Will

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TAGS: PREL PARM TSPL KNNP ETTC ENRG TRGY IN IR AF
SUBJECT: INDIAN OBSERVERS (MOSTLY) THINK NUCLEAR DEAL WILL
GO THROUGH DESPITE GUJARAT LOSS

1. (SBU) Summary: Gathered at a December 26 roundtable,
politicians and journalists largely agreed that the UPA
government will still complete the nuclear deal despite the
Congress Party's overwhelming loss in the Gujarat state
elections, but differed on the process and reasoning. Member
of Parliament (MP) Dinesh Trivedi expected a decisive moment
in January 2008, but Raashid Alvi, an MP from the Congress
Party, expected the government to continue stalling if
nothing happened in January. Harish Khare of the Hindu
outlined a timetable in which the Congress Party would
challenge the Left in March 2008 to take the deal or leave
it, prompting the Left to withdraw and early elections in
October 2008. While some observers, such as Pankaj Vohra of
the Hindustan Times, thought the Gujarat election had little
implications for national politics, others like Saba Bhaumik
of Outlook Magazine warned that the Congress Party may not
have such an easy time in upcoming state elections in
Rajasthan and Madhya Pradesh. End Summary.

Nuclear Deal Will (Probably) Still Go Through
- - -

2. (SBU) Politicians and journalists gathered for a December
26 roundtable largely agreed that the UPA government will
conclude the nuclear deal in 2008. "The government needs a
big idea before the next election so that it could show that
it will stand up to the Left," offered Pioneer correspondent
Ashok Malik. Saba Naqvi Bhaumik, Outlook Magazine Bureau
Chief, agreed, noting that without the nuclear deal "the
Congress Party is not clear on anything." "The deal will go
through by addressing the Left concerns to some degree,"
stated Hindustan Times Political Editor Pankaj Vohra. Harish
Khare, Senior Associate Editor of The Hindu, outlined a
scenario in which the Congress Party introduced a populist
budget in Parliament at the end of February, and then told
the Left to "take it or shove it," at which point the Left
would withdraw support, prompting elections in October.
"It's shocking we're in agreement," Malik quipped. Most of
the analysts agreed generally with this scenario -- a budget
with something in it for everyone, a confrontation with the
Left, and elections in Fall 2008.

3. (SBU) Member of Parliament (MP) Dinesh Trivedi opined that
the government will make some sort of statement in the next
three weeks which would force early elections to take
advantage of a Left still debilitated by the Nandigram
incident. Trivedi predicted that the Left could lose around
25 seats in West Bengal, where his Trinamool Congress Party
competes with the Communist Party of India (Marxist) (CPM).
Congress Party MP Raashid Alvi, however, warned that if
nothing happened by the end of January, the nuclear deal
could languish. Alvi reiterated the Congress Party's
commitment to complete the nuclear initiative through a
"midway" process with the Left, but he also warned that
building consensus between the UPA and Left could take longer
than the U.S. would like. Of all ten participants, only Alvi
believed that the UPA would last the full term.

Gujarat Result Does Not Reflect the Deal
- - -

4. (SBU) Most of the commentators recognized that voters in
Gujarat made their choice based on the development priorities
of Chief Minister Narendra Modi, and as a result, the BJP
victory does not reflect how Indians feel about the nuclear
issue. In fact, noted Trivedi, "if anyone wanted a nuclear
deal, it would have been the Gujaratis who have strong
connections with the U.S." Swapan Dasgupta, who followed the
Gujarat elections for the BJP-oriented The Pioneer, related
that Modi never discussed the nuclear deal. "He would not be
adverse to it," Dasgupta guessed, but cautioned that the 2005
rejection of a U.S. visa for Modi made any mention about the
nuclear deal by Modi fraught with politics.

National Elections Could Compel the Congress to Push the Deal
Through
- - -

5. (SBU) Once the Congress Party focuses on the next national
elections, Bhaumik predicted that it would want to retain
urban, middle-class voters it stole from the BJP in the 2004
elections by finishing the nuclear initiative. Dasgupta

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pointed out that the next election will be the first
conducted according to the 2000 census, which shifted the
balance of Parliament seats to urban areas, making the cities
even more important. Strong relations with the U.S. enjoy
overwhelming support in the urban middle-class which has
grown politically significant, Dasgupta continued. But
Bhaumik countered that the urban poor care little about
foreign policy.

The Allies Still Have the Power To Stall
- - -

6. (SBU) Asked how the Gujarat election impacts the UPA
allies, most agreed that they will do everything possible not
to let the government fall. "The Congress Party is isolated
in government," observed Malik. However, Alvi reminded that
all the UPA allies pronounced their support for the nuclear
deal during the winter session of Parliament. Vohra
countered that they had also supported the 123 Agreement as
members of the Cabinet Committee, but equivocated in October
when it looked like the government might collapse.

Congress: What Does it Stand For?
- - -

7. (SBU) Rajiv Desai, who is reportedly close to the
Congress Party's leadership, was scathing in his criticism of
the Congress Party's performance in Gujarat. He felt it was
a "comprehensive rejection" of the party's policies and
electoral agenda and strategy. According to him, voters in
Gujarat (and elsewhere in the country) are questioning
whether the Congress stands for anything. He felt that the
party needs to show some backbone in its dealing with the
Left, its UPA allies and its opponents like Narendra Modi if
it is to make a comeback. He contrasted the Congress
Party,s floundering on message and waffling on the US-India
civil nuclear agreement to the firm, consistent and
uncompromising stand Modi took on the election issues.

BJP: Boost in the Near Term
- - -

8. (SBU) Dasgupta believes that the Gujarat election results
would be a strong morale booster for the BJP in the short
term, but whether the momentum would continue into the
national elections depends on the timing of the elections and
whether other developments in the interim weaken the
resonance from the Gujarat elections. Most of the analysts
see a clear BJP victory in Himachal Pradesh, where election
results are due on December 28. They expect a strong BJP
performance in Karnataka, where the state assembly was
dissolved in November and are in the February-March
timeframe. After that, however, the going starts getting
tough for the BJP. It stands to lose ground in Madhya
Pradesh, Rajasthan and Chhattisgarh, where elections are due
in 2008. Poor BJP performance in these states may dull some
of the shine off the Gujarat victory. Bhaumik, however,
warned that the Congress Party may not have such an easy time
in upcoming state elections in Rajasthan and Madhya Pradesh.

Comment: Gujarat Means Everything and Nothing for the Deal
- - -

9. (SBU) The lively discussion, during which simultaneous
arguments and debates broke out at opposite ends of the table
at several times, hides the fact that the participants
surprisingly agreed that the government would finish the deal
sooner -- as in 2008 -- rather than later. More worrisome,
however, is that Congress MP Raashid Alvi expressed the
gravest doubts that the deal would get done, while Congress
insider Rajiv Desai expressed deep frustration with the
Congress Party's clumsy politics. Still, the journalists,
whether affiliated with the BJP or Congress Party, all
thought that the Congress Party would jettison the Left at
some point in the first quarter of 2008 and finish the
nuclear initiative.

10. (SBU) Despite the commentators' optimism, post remains
somewhat skeptical that the Congress Party has more guts now
than before the Gujarat election. With Left leaders
continuing to assert their anti-U.S., anti-nuclear stance in

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the press, we doubt that the Gujarat election has given the
government more confidence to confront the Left. If the
Congress Party had no spine before Gujarat, why would it have
any vertebrae left after losing Gujarat? The commentators'
general optimism could reflect that the Gujarat election
ultimately has little impact on a strategy that the Congress
Party concocted several months ago.
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