Gandhi bows out, taps reformer

Sonia Gandhi turned down India's top slot Tuesday, while her party signaled an agenda of moderate reforms.

Even though Sonia Gandhi has shocked everyone by refusing to become India's next prime minister, her victorious Congress party has studiously sent calming signals to investors and the public that it will not be setting a radical agenda.

After Mrs. Gandhi told senior party leaders Tuesday that she would not accept the top slot, party activists publicly pleaded in front of her home for a change of heart. One distraught Congress worker put a pistol to his head and threatened to commit suicide unless Gandhi reconsidered.

But Gandhi confirmed her refusal in a televised speech Tuesday night, saying: "I ask you to respect my decision and to understand the force of my conviction ... and to recognize that I will not reverse it."

Gandhi has endured fierce personal attacks by leaders of the former ruling party, the Bharatiya Janata Party or BJP, who say that a foreign-born person should not become India's leader. One BJP minister resigned at the prospect of a Gandhi-led government; another threatened to cut off her own hair.

But aside from all the drama and vitriol swirling around Gandhi's decision, the incoming leadership has quietly signaled that it will probably follow its predecessors on most of the major foreign and domestic issues of the day. On everything from economic reforms to relations with Pakistan, China, and the US, Congress leaders say they will choose policies that reflect and strengthen India's national interests, rather than any one party's ideology.

"We believe in the market, and I was a member of the Congress government that started the market reforms in 1989 under Rajiv Gandhi," says Eduardo Faleiro, a senior Congress party member and former minister of state for foreign affairs.

Stock market yo-yos

So far, Congress reassurances have already had an effect on Indian stock markets which rebounded Tuesday in the largest ever intra-day increase, just one day after the largest stock market drop.

Wild market fluctuations at election time are about as common in India as promises to clean up government corruption, and many market analysts and investment houses here have been urging investors to be patient until the new government announces its list of objectives. Congress leaders announced Wednesday that they had reached agreement with coalition partners and would soon be releasing their document, the Common Minimum Program.

With most of Congress's coalition partners and outside supporters coming from left-wing parties, investors are concerned that Congress might reverse some of the key economic reforms of the past decade. Some of these initiatives include lower import tariffs; tax breaks for foreign investors and Indian business houses; sell-offs of state-owned industries, hotels, and utilities; and cutbacks in bureaucratic regulations.

Small curbs on privatization

But, while Congress leaders say they might slow down the sell-off of profitable state industries, such as state oil companies, the overall direction of liberalization would continue.

"The market cannot solve all the world's problems," says Mr. Faleiro, the senior Congress member. "You need some state structure for purposes of education, for health, for alleviating unemployment. A safety net has to be there."

C. Raja Mohan, a senior political analyst in New Delhi, says that Congress still has a lot of baggage to give up from its heyday of the 1970s, when Congress promoted socialist policies of state ownership of industry and heavy state regulation. Congress largely turned the corner in 1989, by launching the reform era, but Congress won this latest election by promising to shift the burden of economic reforms from the shoulder of poor and middle class Indians.

"I think the trick here is to signal left but turn right," says Mr. Raja Mohan. "The Congress has to choose. Is Hindutva [the BJP's policy of promoting Hindu-ness] the bigger evil, or is the World Bank?"

In a sign that Congress does not intend to end the reform era, Gandhi let it be known that her own preference for the prime minister slot was Manmohan Singh. Most parties say they would support Mr. Singh, who was Rajiv Gandhi's former finance minister and the man most associated with Congress's economic reform policies of 1989.

Similarly, Congress party leaders are indicating that the direction of foreign policy would remain on track, particularly in relations with Pakistan, China, and the US.

"There will be adjustments at the margins more than at the center," says Mani Shankar Iyer, a senior Congress parliament member. "I think the [peace] process [with Pakistan] will move rather more smoothly than it did under the BJP, because the communal forces of the BJP have not been able to get beyond grandstanding."

While former Prime Minister Atal Bihari Vajpayee made a number of grand peace moves, including a trip to Lahore in 1999 and an Indo-Pakistani summit in Agra in 2001, Mr. Iyer notes that most of these moves were later undermined by his party's own "unachievable" conditions on Pakistan. Chief among these, Iyer says, were demands that all terrorist attacks stop before any dialogue. "It is only a party committed to national interests that can seal national foreign policy decisions and that can build fruitful peace with Pakistan."

Congress party workers say that they understand Gandhi's decision to refuse the prime minister job, particularly given the heavy toll her family has paid since the country gained independence in 1947. Former Prime Minister Indira Gandhi was killed in 1984 by her own bodyguards. Former Prime Minister Rajiv Gandhi, Sonia's husband, was killed in 1991 by a Tamil Tiger terrorist.

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