India's government and its communist allies appear headed for an imminent showdown over a nuclear energy deal with the United States, a clash that threatens to trigger early elections. But with inflation rising and with key members of the ruling coalition uneasy about facing the electorate, the Congress-party led government may yet pull back from the brink, analysts said. Congress now faces the toughest decision of its four years at the head of the governing bloc: whether to take on the left, prepare for polls and add some steel to perceived weak leadership -- or give way and see out its term in office. “I don't think the deal itself is a huge election issue, but there is a feeling that this is a government which has been unable to make a stand on pretty much anything,” said Pratap Bhanu Mehta of New Delhi's Centre for Policy Research. “For them to go into an election with the BJP and everybody else saying all their allies, including the left, completely walked all over them is a huge minus,” he said, referring to the main opposition Bharatiya Janata Party (BJP). “I don't think Congress has a choice but to go through with this.” The nuclear pact with the United States, negotiated in 2005 by Prime Minister Manmohan Singh and U.S. President George Bush, was supposed to be the centrepiece of a new strategic relationship between New Delhi and Washington. But it quickly evolved into a crisis for the government as left parties, which provide it with a parliamentary majority, went into open revolt, claiming the deal would damage India's independent foreign policy and security. They threatened to withdraw support, while Congress has insisted the government was determined to see out its term, due to end next May. Time running out Now after a year of prevarication and efforts to defuse the row, Congress and its non-communist allies may have just a week or so to make up their minds if the pact is to have any chance of final approval before Bush leaves office. The communists said again on Thursday they continue to oppose taking steps to operationalize the agreement, forcing the government to postpone a meeting with the left the day before. The civilian nuclear cooperation deal would lift a three-decade ban on sales of U.S. nuclear fuel and reactors to India, imposed after it conducted a nuclear test in 1974, while staying out of non-proliferation agreements. It has two key hurdles to clamber over -- a safeguards agreement with the International Atomic Energy Agency, and a green light from the 45-nation Nuclear Suppliers' Group -- before finally going to the U.S. Congress for approval. Newspapers reflected the dilemma facing the government on their front pages. The Hindu daily said the two sides “seemed to be preparing for a parting of ways”, without naming sources, and said an election in November or December was “virtually guaranteed.” But for a dozen or so smaller parties who make up the coalition, the risks attached to dumping the left are weighing heavily, the Mail Today said, adding allies were exhibiting a “complete lack of enthusiasm for early polls.” What to do? The government-communist meeting has been rearranged for June 25, and the paper said the run-up would be spent convincing allies of the need to stand firm and united. “There is a debate right now. The Congress seems inclined towards bringing about a showdown, forcing the issue and preparing for early polls,” agreed political commentator Mahesh Rangarajan. “But with this kind of government, allies do count for quite a lot,” he said. “The fact they have pushed the meeting to June 25 shows they are having some fairly serious problems with their allies.” India's main stock market has reflected the uncertainty, shedding one percent after it emerged the government and left would not meet on Wednesday, and falling 2 percent by mid-afternoon on Thursday, in part rattled by political worries. Since coming to power in 2004 the government's uneasy cohabitation with the left has stymied economic reforms, analysts say, while a complex leadership structure has often left it looking directionless. Singh, an economist and reformer-turned politician, has invested heavily in the deal, and his image has taken a beating after his party appeared to cave in to left pressure. Congress bosses have been stressing the need to be sensitive to the needs of junior coalition partners, and at the top of their agendas are galloping prices, with inflation expected to reach a 13-year high of nearly 10 percent this month. “For the first time in five or six years, there is beginning to be some nervousness about the economy, and inflation has always historically been quite significant in Indian elections,” said Mehta. But he adds: “It's not clear the government can do a whole lot (on prices). So October-November doesn't look much worse than March-April. It might actually be better as its post-harvest and farmers will have money in their pockets.” – Reuters __
