Nuclear deal wrangle drives India towards early election

Financial Times

July 5, 2008

The entire spectrum of the Congress-led ruling coalition is taking risks over a civil pact with the US, says Amy Yee

Fleets of the white Ambassador saloons used by government officials frantically criss-cross New Delhi in a sign of the political storm that is brewing. Outside the headquarters of India’s main parties, television news teams crowd the streets, tracking the wrangling that has pushed the government to the brink of collapse.


Manmohan Singh, the prime minister, is near the end of a stand-off with leftwing allies that support his delicate United Progressive Alliance coalition government. The endgame of a 10-month stalemate could mean early elections, political realignment for the Congress party-led coalition or the anti-climactic end to an elaborate game of chicken. A decision on the future of the government could come before Monday’s summit of the Group of Eight leading industrialised nations.

The main issue is a pact with the US to boost nuclear energy in India. Congress’s leftist allies oppose the deal because they believe it compromises India’s foreign policy. Since last year they have threatened to pull support for the coalition if Mr Singh seeks necessary international approvals for the landmark agreement.

The left’s threat could trigger elections as early as this autumn, well before the required date of May next year. But the government has little political capital for early elections. Inflation reached a 13-year-high of 11.63 per cent in the week to June 21, according to data published yesterday. Congress has lost a string of recent state elections to the rival Bharatiya Janata party (BJP).

Time has almost run out to finalise the nuclear deal before George W. Bush, US president, leaves office in January, but Mr Singh looks ready to bite the bullet.

Convinced that nuclear energy is critical to security for fuel-strapped India and eager to cement ties with the US, he has remained firmly behind the deal.

“This deal is about a paradigm shift of India’s world view,” says Shekhar Gupta, editor of The Indian Express. “The prime minister has gone ahead and put his reputation at stake.”

This week the prime minister met Pratibha Patil, India’s president, to discuss “national and international developments”, including his visit to the G8. The meeting with Ms Patil, who has the power to call elections, signalled Mr Singh’s resolve to face the consequences of moving forward even in the face of significant opposition from nervous Congress MPs.

“The Congress party is trying to tame him, but he doesn’t seem to be relenting,” said Brahma Chellaney, professor of strategic studies at the Centre for Policy Research.

Even if the left withdraws, it may be possible to salvage the coalition by bringing in smaller parties and independents to retain a parliamentary majority.

The Congress party is wooing the Samajwadi party (SP), an old foe with a crucial foothold in the populous state of Uttar Pradesh and 39 seats in parliament.

Amar Singh, SP secretary-general, said yesterday that “the prime minister’s clarifications on the nuclear deal are quite satisfactory” after meeting Mr Singh and Sonia Gandhi, Congress president. But the SP has also been talking to the BJP, which wants to block the pact.

Even with SP backing, the coalition would need support from other small parties should the leftist parties withdraw their 59 MPs.”Every small player has become a big shot,” says a business leader.

Some analysts say Congress would compromise its hold on power if it entered a marriage of convenience with the SP, especially if it relinquished cabinet posts. “They [the SP] will take their pound of flesh,” says Mahesh Rangarajan, a political scientist at Delhi University. “It’s easier to deal with the left. Their objections are intellectual and ideological.”

Others say the SP would be a better bedfellow for Congress. Free of the left’s ideologies, stalled bills to reform insurance, pensions, microfinance and banking could be re-activated.

Another possibility is that the left does not withdraw support. Even the ideological left would not welcome being out of power, observers say. “It’s a terrible time to go to elections,” says the business leader. “Everyone is buying time.”


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