Page last updated at 09:50 GMT, Tuesday, 8 July 2008 10:50 UK

India's fight over 'national interest'

By Soutik Biswas
BBC News, Delhi

George W Bush and Manmohan Singh
The leaders say the deal is historic

What constitutes the national interest in India, a country trying to reconcile economic growth and inequality at home and pining to claim its place in the world at the same time?

Is it a landmark nuclear deal with the United States under which India will get access to US civilian nuclear technology and fuel?

An agreement which the government says will help meet some of oil-scarce India's spiralling energy demands. One, which it insists, will deepen strategic relations with a country with whom India had a near-hostile relationship during the Cold War.

Or does the national interest lie in taming runaway double-digit inflation - the highest in over a decade - that is choking growth and showing no signs of abating?

Or does it lie in tackling a stubborn unemployment problem that persists despite a recent economic boom?

The failure to come to a bipartisan answer to this tricky question - why can't a government carry off a nuclear deal and tackle poverty at the same time? - has plunged India into a bout of fresh political uncertainty.

Undue influence

Communist allies of India's Congress party-led governing coalition have withdrawn support after it decided to move ahead with the nuclear deal.

India's dour communists hate anything to do with the US - they argue that the deal would give the Americans undue influence over India's foreign and nuclear policy.

Wrong, says the government.

In the words of the architect of the deal, Prime Minister Manmohan Singh, the agreement is historic and does India good. It is "an offer you cannot refuse".

Prakash Karat
Communist leader Prakash Karat has led the opposition to the deal

After nearly a year of sniping with the government over the fine print of the deal, the communist allies, who command 59 seats in India's 542-seat parliament, have decided that enough is enough.

Meanwhile, faced with the ignominy of becoming a lame duck government or possible early elections triggered by the nuclear row, India's Grand Old Party has been stitching up deals with a regional party and independents that would compensate for the loss of communist support in parliament.

Many analysts see this as a sorry tale.

They say the passage of a truly significant agreement which could change India's relations with the US and the world has had to rely finally on political horse trading, again exposing the murky underbelly of Indian politics.

"The Congress had dug itself into an impossible situation. If they didn't back the deal, everyone would have said, justifiably, that they let the communists walk all over them," says political commentator Pratap Bhanu Mehta.

"The puzzle is how did the party ever commit to this deal without doing the preparatory political work early on."

Down to the wire

The showdown over the deal between the communists and the Congress began nearly a year ago. The communists' historical anti-American ideology was well known to all.

So the way the battle over the deal went down the wire has baffled observers.

Most say Congress's tardy political management skills and a curious ruling diarchy - the technocrat Manmohan Singh as prime minister and party chief Sonia Gandhi as the political decision maker - are to blame for the crisis.

Sonia Gandhi
Critics have questioned Sonia Gandhi's political management

When the Congress, a dynastic party, won an unexpected victory at the general elections in 2004, the Italian-born Sonia Gandhi was the natural choice to become prime minister.

But after the defeated Hindu nationalist BJP party kicked up a storm over her nationality, she passed on the prime ministerial baton to the able, honest, unassuming and largely apolitical economist-bureaucrat Manmohan Singh.

Mr Singh, as federal finance minister, was responsible for opening up the Indian economy in 1991.

But he has never won a popular election and, as one analyst says, is a "prime minister who does not derive his power from the people".

So even as he agreed the deal with US President George W Bush, his party failed to sell it to its key communist allies.

"The problem is that a prime minister without political reflexes and a base cannot deliver even on foreign policy or economic issues," says analyst Mahesh Rangarajan.

Mr Singh has tried to make the nuclear deal the showpiece achievement of his tenure, and his legacy to the nation.

But critics say key economic, labour and farm reforms have remained stillborn because of resistance from within the party and its allies. And the jury is still out on the government's grandiose $2bn "back-to-work" scheme.

Rising woes

Mr Singh spoke eloquently of reforming public and educational institutions when he took office. Most of his efforts were stymied by obdurate allies, and a number of senior ministers.

Mulayam Singh Yadav
Congress is wooing Samajwadi leader Mulayam Singh Yadav

"A prime minister of India must have the ability to stand on his own political feet. I cannot think of any major issues except this nuclear deal when the PM has had his way," says Pratap Bhanu Mehta.

That also has come at a cost - making an ally out of a former political foe to take the nuclear deal forward.

To add to the government's woes, the allies' pullout comes at a time when inflation and high interest rates are hurting the poor and the middle classes respectively.

So even if the governing coalition manages to save the deal and staves off early elections, its political fortunes look dim.

Even the government admits that inflation, fuelled by steep oil prices, is here to stay for a while.

And a nuclear deal cannot win votes in a country where many people still worry about their roti, kapda and makan (bread, clothes and home).

At the end of the day, the Congress still runs the danger of losing it all in the "national interest".

"Imagine," says an analyst, "that the deal hits more bumps in the completion stage and gets stuck."

Only the future will tell whether the deal finally served the national interest or sundry "self interests" - the Congress and its new-found allies.

It is possibly the biggest gamble by India's Grand Old Party in its chequered history.

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