Hilary Clinton snubs Mamata Banerjee after retail FDI tantrum

Hilary Clinton has just had first-hand experience of  the problems that the Indian government regularly faces with its unpredictably irascible – and it now appears maybe untruthful – coalition partner, Mamata Banerjee.

The story, which concerns whether or not Clinton raised the subject of foreign investment (FDI) in supermarkets when she met Banerjee yesterday, should evoke some sympathy for prime minister Manmohan Singh and his colleagues, whose policies are constantly upset by Banerjee, leader of the regional Trinamool Congress party and chief minister of West Bengal.

The Clinton experience did not however upset a two-day visit by the US secretary of state to India, nor did it overshadow a well-timed partial climb-down in parliament yesterday by finance minister Pranab Mukherjee over retrospective international tax plans that he announced in his Budget a few weeks ago.

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Clinton has been on her way back from a difficult time in Beijing (dealing with China over the blind dissident Chen Guangcheng) and stopped off on Sunday in Bangladesh.

From there it was logical to have another stop-over yesterday in Kolkata (Calcutta), state capital of West Bengal, on her way to Delhi for what might be her last India visit as secretary of state.

She presumably wanted to meet Banerjee because of the way that the chief minister has used her clout as a key partner in India’s coalition government to block policies ranging from supermarkets’ FDI to national security policy and a river water sharing agreement with Bangladesh.

Before the two women met, Clinton said in a tv interview that she would “certainly raise the United States’ desire to try to open the market to multi-brand retail” with Banerjee.  (Wal-Mart and other US companies are seeking this FDI access). They seemed to get on well for photos (above) before their talks, and they discussed West Bengal’s cultural brand ambassadors, Rabindranath Tagore, the Nobel prize winning poet and artist, and Bollywood star Shah Rukh Khan. The talks lasted nearly an hour and covered development issues such as a deep sea port, the entertainment industry, and twinning arrangements with American cities and states.

After the meeting however, Banerjee stated categorically on television that the FDI issue was not raised. This prompted the US consul general’s office in Kolkata to put out a statement a few hours later equally categorically saying it was one of the subjects covered during “a warm, vibrant and energetic  discussion”. Banerjee reacted by instructing her finance minister, Amit Mitra, to issue a statement asking the US to retract the claim – which it has not done.

Clinton snubs Banerjee

This morning, when Clinton spoke at a  press conference in Delhi, it was significant that she made no mention of meeting Banerjee. Normally she would have thanked the chief minister for the meeting and for her visit to the state, but she snubbed her by not naming her or West Bengal.

So who is telling the truth, and can the two sides obfuscate themselves out of the differing accounts? This is of course a relatively minor issue compared with other subjects discussed in Delhi, where the two countries bridged their differences over Iran’s oil exports to India, which the US opposes, and over India’s demands for the US to be tougher over Pakistan-based terrorist activities. But it is an embarrassing clash, as well as being illustrative of Banerjee’s behaviour

It is of course inconceivable that Clinton would have authorised such an explicit official US statement last night if retail FDI had not been mentioned, so it can only be assumed that Banerjee has some sort of wriggle-room to explain why she says it was not. Basically however, she seems to have been throwing the sort of tantrum that is usually aimed at India’s government.

I imagine that there is now a risk that the disagreement will harden Banerjee’s resolve to block the FDI. Indeed, was she maybe preparing to withdraw her objections but did not want that to appear to be in response to a request from the US? And, if that is so, was last night’s US statement an over-reaction?