INDIA: Ms Sonia Gandhi, India's Italian-born prime minister designate, began negotiations yesterday with communist and socialist allies to build a new administration around her family's Congress party. It would replace the Hindu nationalist-led alliance, routed by a rural backlash in the general elections.
But the consultations came amid a "financial bloodbath" that engulfed India's markets, which plummeted by 6 per cent to their lowest level in four years. Financial institutions heavily divested stock, worried that market reforms would be derailed following demands by leftists to scrap the disinvestment policy.
Under this procedure, state-owned industries, many of them profitable, had been steadily sold off by prime minister Mr Atal Behari Vajpayee's outgoing government to bolster government spending and to reduce large budget deficits.
The communists, crucial to Ms Gandhi forging together a coalition, have long opposed privatisation of the public sector, calling it "anti-people". Analysts said a conflict over economic issues could become contentious, as the Congress party had diverted India from its socialist and inward-looking economic policies towards market reform in the early 1990s, and was committed to privatisation.
The communists had already extracted assurances from the Congress party that India's lucrative government-owned oil conglomerates would not be sold as planned by the previous administration.
On its own, the Congress party won 145 of the 539 seats declared, rendering it unable to form the government. But with the support of pre-poll allies and the leftists - who won 63 parliamentary seats, their largest ever haul since independence 57 years ago - the Congress-led coalition was confident of securing the support of 278 MPs, six more than the number required for a parliamentary majority.
"Forming the government with the present numbers is not the problem," said Ms Gandhi's close aide, retired Maj Dalbir Singh. But, he said, their aim was to get as many secular parties on board as possible to consolidate the secular front.
The Congress party and its allies had campaigned against the Vajpayee-led coalition's Hindu fundamentalist outlook and policies.
The prevailing political and financial uncertainty, meanwhile, is compounded by Ms Gandhi's refusal to declare outright whether she will assume the prime ministership, becoming India's first foreign-born leader.
Congress party MPs are meeting today to choose their parliamentary leader, almost certain to be Ms Gandhi, theoretically positioning her to become prime minister.
"All the \ workers want it, party officials want it. Now she will have to decide whether she wants to be the prime minister," said senior Congress leader Mr Ahmed Patel. But Ms Gandhi's prospective communist and other allies remain uneasy about her foreign origins as well as her political and administrative inexperience in dealing with the innumerable and complex economic, social and security-related problems besetting India.
Ms Gandhi became an Indian citizen in 1986, some 18 years after she married Rajiv Gandhi, and came to live in Delhi a few months after he became prime minister.
Mr Vajpayee's ousted party declared that while it had nothing against Ms Gandhi, the country's top jobs should be held by people of Indian origin. "We are not opposed to Sonia Gandhi but we feel that the offices of the president, vice-president and the prime minister should be held by people of Indian origin," party president Mr Venkaiah Naidu said.
Ms Gandhi formally replaced her husband as Congress party head, seven years after his assassination in 1991. The 57-year old widow's victory marked the revival not just of Congress, out of power since 1996, but of the country's first family, the Nehru-Gandhi dynasty that led India to independence in 1947 and ruled unchallenged for over four decades, albeit with short gaps. Her husband, her mother-in-law, Indira Gandhi, and her father, Jawaharlal Nehru, were Indian prime ministers.
Ms Gandhi's son, Rahul, also stood for parliament for the first time, easily winning in the family pocket borough of Amethi in north-eastern India, one of India's poorest regions.
Neighbouring Pakistan was among the first to react to India's election results, saying it looked forward to working with the new government and to continuing talks later this month on the disputed province of Kashmir. Washington too congratulated the Congress party.