Asia Times: 'Sugargate' taints Vajpayee's election campaign



	September 02, 1999	atimes.com

India/Pakistan

'Sugargate' taints Vajpayee's election campaign
By Ranjit Dev Raj

NEW DELHI - It is called ''Sugargate'' and it is a scandal that, curiously enough, has the potential to derail the political careers of the prime ministers of both India and Pakistan.

In India, where polling to elect a new government begins next week, the deal to import sugar from Pakistan, which survived the bitter border conflict in Kashmir, is turning into a star campaign issue for the main opposition Congress party of Sonia Gandhi.

According to papers made available to the press this week by the Congress party, the main beneficiaries of the deal signed in February to import 80,000 metric tonnes of sugar from Pakistan were Prime Minister Nawaz Sharif and his sugar-mill owning family.

The deal sweetened the famous bus-ride across the border to Lahore undertaken by Indian Prime Minister Atal Bihari Vajpayee that month and claimed as a diplomatic breathrough by the ruling Bharatiya Janata Party (BJP) until the Kargil conflict erupted. Skeptics on both sides of the border had then pointed out that Pakistan's army brass was conspicuously missing from the reception party led by Sharif which greeted the Vajpayee entourage of diplomats, journalists and film stars at the border.

By May, heavily armed groups of militants, backed by the Pakistan army were entrenched on high mountains deep inside Indian territory and shelling an important highway connecting Kashmir's capital Srinagar with the town of Leh. It took the Indian army, assisted by heavy artillery and air power, three months to evict the intruders but during the conflict Indian Defense Minister George Fernandes sought to absolve Sharif of blame in initiating the conflict and instead held responsible the generals in Islamabad .

According to the Congress party, through the conflict which claimed 2,000 lives and saw the shooting down of expensive military aircraft on both sides, the sugar deal continued undisturbed. To top it all, the deal was made when there was a glut of locally produced sugar in the Indian market, ruining many farmers.

''In effect, Mr Sharif's family benefited the most, the poor Indian cane farmers lost the most and our jawans [soldiers] paid with their lives,'' said Kapil Sibal, spokesperson for the Congress party. ''One of the first steps that should have been taken (after the Kargil conflict broke out) was to stop this sugar import,'' Sibal said.

Sibal said the whole deal was backed by the powerful Prime Minister's Office and therefore the blame rested with the prime minister himself. But a prime ministerial spokesperson quickly denied as ''ridiculous'' the charges leveled by Sibal which now form a major part of the Congress party's campaign.

An official statement that followed did not deny the fact of the sugar imports but said they were carried out exclusively by private companies and that the government had no direct role. According to the statement, the Vajpayee government, since it came to power in March last year, has been steadily raising import duties on sugar from zero to the present 27.5 percent to protect the indigenous sugar industry.

India is both the world's biggest producer and consumer of sugar, a commodity which has long been regarded as politically sensitive because the industry is a major generator of wealth and employment in the rural areas. The import of low-duty sugar from Pakistan has naturally been a sore point with local sugar producers who have been lobbying for a minimum import duty of 50 percent which, they say, is required for their survival.

In contrast to India's low duties, the European Union imposes duties ranging between 200 and 240 percent and the US around 130 percent. Bangladesh imposes a 200 percent duty while it is 100 percent in Thailand.

Sugar industry sources say the government should have been promoting the export of Indian sugar, considering the surplus production which, last year, stood at 10 million tonnes. ''There is no rationale at all for India to spend valuable foreign exchange importing sugar when there is surplus in this country,'' said S L Jain, chief of the Indian Sugar Mills Association (ISMA).

Last year, out of 586,000 metric tonnes of sugar exported by Pakistan, 526,000 tonnes were bought up by Indian traders. Most of it originated from mills owned by the Sharif family. Ramzan Sugar Mills, owned jointly by Sharif and his brother Shehaz Sharif, are said to be the largest in Asia while other members of the family own at least 10 other big mills.

In spite of protests by the ISMA and the National Federation of Cooperative Sugar Factories, the government allowed the new deal in February which, according to Sibal, cost the country $225 million in foreign exchange.

The fact that the imports continued through the Kargil conflict, even if carried out by private parties, is clearly an embarrassment for the BJP for which the ''diplomatic and military victory'' over Pakistan is a major electoral plank. In contrast, the Congress party has taken the stand that the armed intrusion in Kargil was the result of a massive failure of intelligence by a government blinded by an obsession to make a success out of bus-diplomacy at any cost.

(Inter Press Service)

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