India’s terrorist attacks have created a political minefield.
The co-ordinated shootings that started the evening of 26 November have killed at least 130 people and injured nearly 300 others. Attackers targeted the city’s main railway station and the high-end Trident and Taj Mahal hotels in the business district, also popular with tourists.
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The Deccan Mujahedeen, a previously unknown group which is thought to have links with Al Qaeda, has claimed responsibility for the attacks. The claim has not been verified so far.
As the Mumbai massacre is brought to an end, the next priority is to mitigate the fallout. India is no stranger to such tasks, but the targeting of tourists and iconic landmarks in the financial district make this recovery effort a particularly delicate matter.
Incidentally, the Bombay Stock Exchange, which was closed on Thursday in view of the attacks, resumed trading on Friday with its benchmark index, the Sensex, closing with a gain of 66 points or 0.73%.
Meanwhile, Prime Minister Manmohan Singh is being pulled in two directions. At home, national elections must be held by May 2009. The Congress party, which leads the desperately weak ruling coalition government, doesn’t have a strong economy to run on. The country’s banks don’t seem to be in trouble, but local equity markets are still down by over half since January. Rampant inflation continues to be a problem, which is especially tough on the poor.
The horrific attack gives Singh a political opportunity. The government is already accused of being soft on Islamic militants. Hindus make up 80% of the population, so blaming the Muslim neighbour is an easy vote winner.
Singh has already effectively pointed the finger of blame towards Pakistan. In a televised address to the nation, he said: “We will take up strongly with our neighbours that the use of their territory for launching attacks on us will not be tolerated, and that there would be a cost if suitable measures are not taken by them.”
But the international community would prefer India used a softer rhetoric. Pakistan’s new President Asif Zardari is a weak leader who needs all the help he can get to depoliticize the powerful—and nuclear-armed—military. Relations between the two countries have been historically tense and bloody. Even a potential escalation in cross-border violence would further damage India’s reputation amongst politicians, tourists and business.
Singh needs to maintain India’s business standing if he wants to maintain economic growth at 7.5% next year. India is still a partially closed market, but it attracted almost $20 billion (Rs99,600 crore) in foreign direct investment in the first half of the year, up 166% on the previous year. And while tourism constitutes just a fraction of the $1 trillion economy, the perception of India as a safe destination is critical.
It will be hard for Singh to stay in power, protect economic growth, and retain geopolitical calm.