Re: The Enron-Cheney-Taliban Connection? AlterNet

[Eugene Coyle <eugenecoyle@xxxxxxx>]

Michael Perelman wrote:

> In case some of you have not seen this yet.  I would be
> interested in Gene Coyle's take on this.

Sorry to be so slow.  I've been traveling and just catching up.

I didn't find this story credible.  It conflates the Enron
headline-grabber with the already familiar oil grab explanation for the
Afghanistan.  It seems a real stretch to tie Enron to the oil pipelines
to be built someday from the Caspian to somewhere.

I find the oil pipeline connection to the counter-attack after 9/11 to
be credible.  And it is clear that Enron, with the strong support of the
US State Department and financing from OPIC, was ripping off, or
intending to rip off Indian electric customers.  But I don't link the
two stories.

    There are a number of errors in the piece, e. g. calling the gas
coming out of the future pipeline LNG.  And saying "Unocal wasn't the
only company laying pile."  Didn't we have to fight a war first?  No
point in detailing this stuff here.

    There are also some questionable arguments or insights.  The
economics of an OIL pipeline of great length make more sense than the
economics of a gas pipeline.  To be brief, consider the North Slope oil
pipeline with a terminal feeding the ships like the Exxon Valdez.  A
North Slope gas pipeline was never built and the associated gas has been
pumped back into the field rather than brought to market.  It is true
that there have been proposals to build a gas pipeline from the North
Slope to Valdez, plus an plant to liquify the gas, plus special tankers
to transport the gas to a terminal where it would be returned to a
gaseous state and then fed into a pipeline again.  Proposed destinations
were Japan and California.  The California economics didn't make sense,
and whether the Japan did I don't know, because there was a ban on
exports of Alaska oil/gas back at the time.  In any event, that gas
hasn't found a market.  And that would be a much shorter pipeline than
the one discussed in the piece.

    There is apparently an enormous gas reserve in the MacKenzie delta
in Canada.  A pipeline has been studied by competing interets for
decades, with the old studies resurrected last year when gas prices
spiked.  It isn't feasible at today's forecasted prices.

    This wouldn't rule out an Enron role in the Oil pipeline, but there
were already enough giant companies fighting each other that letting a
new boy in doesn't make much sense.

    Everybody seems to be jumping on the Enron rip off in India, but
that has been well known for years to those following this stuff.
Pratap Chatterjee and Project Underground reported on it in (I think)
'98, and there were reports before that.  For some reason someone in
India signed a sweetheart contract with Enron.  Why?  I suppose for the
usual reason.  And Enron went to arbitration in London some years back
to enforce it when the State tried to get out of it.  Now there is
another legal battle.

    To cut this off, basically I don't find credible the effort to tie
the stories together.

    Gene Coyle

>
>
> http://www.alternet.org/print.html?StoryID=12525
>
> AlterNet                                              February
> 28, 2002
>
> The Enron-Cheney-Taliban Connection?
>
>      By Ron Callari, Albion Monitor
>
> Enron is a scandal so enormous that it's hard to wrap your mind
> around it.
> Not just a single financial disaster, it's actually a jigsaw of
> interlocking
> scandals, each outrageous in its own right.
>
> There's Enron the Wall St. con game, where company bookkeepers
> used slight
> of hand to turn four years of steady losses into stunning
> profits. There's
> Enron the reverse Robin Hood, which stole from its own employees
> even as its
> executives were hauling millions of dollars out the backdoor.
> There's
> Enron's Ken Lay the Kingmaker, who used the corporation's
> fraudulent wealth
> to broker elections and skew public policy to his liking. And
> then there are
> the Enron coverups, as documents are shredded and the White House
> seeks to
> conceal details about meetings between Enron and Vice President
> Cheney.
>
> The coverups are still very much a mystery. What were the
> documents that
> were fed into the shredder -- even after the corporation declared
>
> bankruptcy? What is the White House fighting to keep secret, even
> going to
> the length of redefining executive privilege and inviting the
> first
> Congressional lawsuit ever filed against a president? Were the
> consequences
> of releasing these documents more damaging than the consequences
> of
> destroying them?
>
> Could the Big Secret be that the highest levels of the Bush
> Administration
> knew during the summer of 2001 that the largest bankruptcy in
> history was
> imminent? Or was it that Enron and the White House were working
> closely with
> the Taliban - including Osama bin Laden - up to weeks before the
> Sept. 11
> attack? Was a deal in Afghanistan part of a desperate last-ditch
> "end run"
> to bail out Enron? Here's a tip for Congressional investigators
> and federal
> prosecutors: Start by looking at the India deal. Closely.
>
> Enron had a $3 billion investment in the Dabhol power plant, near
> Bombay on
> India's west coast. The project began in 1992, and the liquefied
> natural
> gas- powered plant was supposed to supply energy-hungry India
> with about
> one-fifth of its energy needs by 1997. It was one of Enron's
> largest
> development projects ever (and the single largest direct foreign
> investment
> in India's history). The company owned 65 percent of Dabhol; the
> other
> partners were Bechtel, General Electric and State Electricity
> Board.
>
> The fly in the ointment, however was that the Indian consumers
> could not
> afford the cost of the electricity that was to be produced. The
> World Bank
> had warned at the beginning that the energy produced by the plant
> would be
> too costly, and Enron proved them right. Power from the plant was
> 700
> percent higher than electricity from other sources.
>
> Enron had promised India that the Dabhol power would be
> affordable once the
> next phase of the project was completed. But to cut expenses,
> Enron had to
> find cheap gas to fuel it. They started burning naphtha, with
> plans that
> they would retrofit the plant to gas once it was available.
>
> Originally, Enron was planning to get the liquefied natural gas
> (LNG) from
> Qatar, where Enron had a joint venture with the state-owned Qatar
> Gas and
> Pipeline Company. In fact, the Qatar project was one of the
> reasons why
> Enron selected India to set up Dabhol: it had to ensure that its
> Qatar gas
> did not remain unsold. In April 1999, however, the project was
> cancelled
> because of the global oil and gas glut. With Qatar gone, Enron
> was back to
> square one in trying to locate an inexpensive LNG supply source.
>
> Enter the Afghanistan connection.
>
> Where the "Great Game" in Afghanistan was once about czars and
> commissars
> seeking access to the warm water ports of the Persian Gulf, today
> it is
> about laying oil and gas pipelines via the untapped petroleum
> reserves of
> Central Asia, a region previously dominated by the former Soviet
> Union, with
> strong influence from Iran and Pakistan. Studies have placed the
> total worth
> of oil and gas reserves in the Central Asian republics at between
> $3 and $6
> trillion.
>
> Who has access to that vast sea of oil? Right now the only
> existing export
> routes from the Caspian Basin lead through Russia. U.S. oil
> companies have
> longed dreamed of their own pipeline routes that will give them
> control of
> the oil and gas resources of the Caspian Sea. Likewise, the U.S.
> government
> also wants to dominate Central Asian oil in order to reduce
> dependency on
> resources from the Persian/Arabian Gulf, which it cannot control.
> Thus the
> U.S. is poised to challenge Russian hegemony in a new version of
> the "Great
> Game."
>
> Construction of oil and natural gas export pipelines through
> Afghanistan was
> under serious consideration during the Clinton years. In 1996,
> Unocal -- one
> of the world's leading energy resource and project development
> companies --
> won a contract to build a 1,005-mile oil pipeline in order to
> exploit the
> vast Turkmenistan natural gas fields in Duletabad. The pipeline
> would extend
> through Afghanistan and Pakistan, terminating in Multan, near the
> India
> border.
>
> Multan was also the end point for another proposed pipeline, this
> one from
> Iran. This project never left the drawing boards, however; the
> pipeline
> would be much longer (over 1,600 miles) and more expensive.
> Still, this
> route was being seriously considered as of early 2001, and it
> increased the
> odds that gas would be flowing into Multan from somewhere.
>
> Unocal wasn't the only energy company laying pipe. In 1997, Enron
> announced
> that it was going to spend over $1 billion building and improving
> the lines
> between the Dabhol plant and India's network of gas pipelines.
>
> Follow the map: Once a proposed 400-mile extension from Multan,
> Pakistan to
> New Delhi, India was built, Caspian Sea gas could flow into
> India's network
> to New Delhi, follow the route to Bombay -- and bingo! A
> plentiful source of
> ultra-cheap LNG that could supply Enron's plant in India for
> three decades
> or more.
>
> Besides the route to Multan, another proposed spur of the
> pipeline would
> have ended on the Pakistan coast, where an estimated one million
> barrels of
> LNG per day could be shipped to Japan and Korea, the largest
> consumers of
> LNG in the world. For Enron, there was an upside here as well.
> Entering the
> South Eastern Asian markets, which offered vast growth potential,
> could
> position Enron well in the global marketplace and offset some of
> their
> losses in other markets.
>
> There was one gotcha: It looked like the trans-Afghan section of
> the
> pipeline might never be built. Afghanistan was controlled by
> religious
> extremists who didn't want to cooperate.
>
> Enter the Taliban.
>
> >From 1997 to as late as August 2001, the U.S. government
> continued to
> negotiate with the Taliban, trying to find a stabilizing factor
> that would
> allow American oil ventures to proceed with this project without
> interference. To this end, in December 1997, Unocal invited the
> Taliban
> contingency to Texas to negotiate protection while the pipeline
> was under
> construction. At the end of their stay, the Afghan visitors were
> invited to
> Washington to meet with the government officials of the Clinton
> Administration.
>
> But in August, 1998, terrorists linked to Osama bin Laden bombed
> two U.S.
> embassies in East Africa. After a few cruise missiles were fired
> into
> Afghanistan and the Pentagon boasted that we had disabled bin
> Laden's
> "terrorist network," Unocal said they were abandoning plans for a
> route
> through the country. But was such a potentially lucrative deal
> really dead?
>
> Not hardly. Although Unocal had the largest share, the "Central
> Asian Gas
> Pipeline" (CentGas) consortium had six other partners, including
> companies
> in Saudi Arabia's Delta Oil Company -- the next largest
> shareholder with 15
> percent -- and groups in Japan, Korea, Indonesia, Pakistan, and
> Turkmenistan. They vowed to continue the project, and had strong
> national
> interests in seeing the Afghanistan pipeline built.
>
> The U.S. looked for other options, and the Trade and Development
> Agency
> commissioned a feasibility study for an improbable east-to-west
> route that
> would cross the Caspian Mountains and end at a Mediterranean
> seaport in
> Turkey. The company hired for that study was Enron. If that
> pipeline were to
> be constructed, Turkmenistan signed an agreement that it would be
> built by
> Bechtel and GE Capital Services -- the same American companies
> that were
> Enron's business partners in the Dabhol power plant.
>
> No matter which direction the Central Asia natural gas would
> eventually
> flow, Enron would profit. Should it go south towards ships
> waiting on the
> Pakistan coast, it would be still only a few hundred miles at sea
> to Dabhol.
> The trip from the Mediterranean would be farther (and thus more
> expensive
> for Enron to buy gas), but it was also the least likely route to
> be
> constructed. Estimated costs were almost $1 billion more than the
> route
> through Afghanistan, and engineering plans had not even started.
> No, the
> only practical route for the Caspian Sea gas was through
> Afghanistan and
> Pakistan to the border of India. All that was lacking was the
> political will
> to make it happen.
>
> Enter George W. Bush.
>
> Bush's long and personal relationship with Enron's former CEO
> Kenneth Lay is
> now well known, as is his generous contribution of over $600,000
> to advance
> the political career of the man who now holds the White House.
> Not so well
> known is how Bush has helped Enron.
>
> In 1988, Bush allegedly called Argentina's Minister of Public
> Works to
> pressure him into awarding Enron a $300 million contract shortly
> after his
> father won the presidency. Rodolfo Terragno recalled that the
> younger George
> Bush said that giving Enron the project "would be very favorable
> for
> Argentina and its relations with the United States." Terragno
> didn't know
> whether this message was from the White House or whether Bush was
> working a
> business deal on his own.
>
> (Although unlikely, it is possible that Terragno was called by
> brother Neil
> Bush, who would later seek an oil drilling deal in Argentina. The
> Bush Sr.
> campaign denied that George W. made the call. This was, however,
> the time
> period when Lay began to cultivate his friendship with George W.
> and there
> is no known association between Neil Bush and Lay. That two Bush
> brothers
> are suspects, however, speaks to the levels of power that this
> family
> wields.)
>
> By the time George W. became president, the India project was in
> serious
> trouble. Enron's reputation as a bully in India was legion. The
> Human Rights
> Watch released a report that indicated human rights violations
> had occurred
> as a result of opposition to the Dabhol Power project. Beginning
> in late
> 1996 and continuing throughout 1997, leading Indian environmental
> activists
> and employee organizations organized to oppose the project and,
> as a direct
> result of their opposition were not paid and subjected to
> repeated
> short-term detention. One ghastly report actually states that
> police stormed
> the homes of several women in western India who had led a massive
> protest
> against Enron's new natural-gas plant near their fishing village.
> According
> to Amnesty International, the women were dragged from their homes
> and beaten
> by officers paid by Enron.
>
> The crisis came just a few months after the Bush inauguration.
> Contractors
> walked off the job, saying they hadn't been paid for over a
> month. The
> [India state of] Maharashtra Electricity Board stopped paying for
> Dabhol's
> power in May 2001, saying it was too expensive. Enron
> counter-charged that
> the Board owed them $64 million. The plant was closed, although
> it is said
> to be 97 percent complete. All that was missing was a source for
> cheap,
> cheap, natural gas.
>
> Enter Dick Cheney.
>
> Scarcely a month after Bush moves into the White House, Vice
> President
> Cheney has his first secret meeting with Ken Lay and other Enron
> executives
> on February 22, 2001. Other meetings follow on March 7 and April
> 17. It is
> the details of these meetings that the Bush Administration is
> seeking to
> keep private.
>
> It's clear the Cheney had his own conflicts of interest with
> Enron. A chief
> benefactor in the trans-Caspian pipeline deal would have been
> Halliburton,
> the huge oil pipeline construction firm which was previously
> headed by
> Cheney. After Cheney's selection as Bush's Vice Presidential
> candidate,
> Halliburton also contributed a huge amount of cash into the
> Bush-Cheney
> campaign coffers.
>
> So the obvious question: Did Enron lobby Cheney for help in
> India? It has
> already been documented that the Vice President's energy task
> force changed
> a draft energy proposal to include a provision to boost oil and
> natural gas
> production in India in February of last year. The amendment was
> so narrow
> that it apparently was targeted only to help Enron's Dabhol plant
> in India.
> Later, Cheney stepped in to try to help Enron collect its $64
> million debt
> during a June 27 meeting with India's opposition leader Sonia
> Gandhi. But
> behind the scenes, much more was cooking.
>
> A series of e-mail memos obtained by the Washington Post and NY
> Daily News
> in January revealed that the National Security Council led a
> "Dabhol Working
> Group" composed of officials from various Cabinet departments
> during the
> summer of 2001. The memos suggest that the Bush Administration
> was running
> exactly the sort of "war room" that was a favorite subject of
> ridicule by
> Republicans during the Clinton years.
>
> The Working Group prepared "talking points" for both Cheney and
> Bush and
> recommended that the need to "broaden the advocacy" of settling
> the Enron
> debt. Every development was closely monitored: "Good news" a NSC
> staff
> member wrote in a e-mail memo: "The Veep mentioned Enron in his
> meeting with
> Sonia Gandhi." The Post commented that the NSC went so far that
> it "acted as
> a sort of concierge service for Enron Chairman Kenneth L. Lay and
> India's
> national security adviser, Brajesh Mishra" in trying to arrange a
> dinner
> meeting between the Indian official and Lay.
>
> While lobbying India, it appears that the Bush Administration was
> also
> raising the heat on the Taliban to allow the pipeline.
>
> The book "Bin Laden: the Forbidden Truth" by Jean-Charles Brisard
> and
> Guillaume Dasique claims that the U.S. tried to negotiate the
> pipeline deal
> with the Taliban as late as August, 2001. According to the
> authors, the Bush
> Administration attempted to get the Taliban on board and believed
> they could
> depend upon the regime to stabilize the country while the
> pipeline
> construction was underway. Bush had already indirectly given the
> Taliban $43
> million for their supposed efforts to stamp out opium-poppy
> cultivation. Was
> this an award -- or a bribe? The circumstances make this a valid
> question.
>
> Enron was unraveling at the seams, yet in early August, Kenneth
> Lay seemed
> optimistic, even exuberant. Was he whistling past the graveyard,
> or did he
> have secret information? The last meeting between U.S. and
> Taliban
> representatives took place five weeks before the attacks on New
> York and
> Washington; on that occasion, Christina Rocca, in charge of
> Central Asian
> affairs for the U.S. government, met the Taliban ambassador to
> Pakistan in
> Islamabad on August 2, 2001. Rocca said the Taliban
> representative, Mr.
> Zaeef, was aware of the strong U.S. commitment to help the Afghan
> people and
> the fact that the United States had provided $132 million in
> relief
> assistance so far that year.
>
> Lay's last documented e-mail was sent on August 27th, about the
> same time
> the Taliban allowed the International Red Cross to visit jailed
> foreign aid
> workers in Afghanistan. In it, Lay waxes optimistic about the
> strength and
> stability of his company, and exhorts his employees to buy into
> the
> company's stock program. Was Kenneth Lay anticipating a new
> pipeline deal,
> and an Enron contract, courtesy of George W. Bush? If a deal was
> at hand, he
> had every reason to be optimistic about the future.
>
> Even though the trans-Caspian pipeline and the extension into
> India would be
> years from completion, Enron's conceit of working above the law
> was
> ultimately the guiding beacon in all of its transactions. They
> had played
> the game of subterfuge for so long, they were near experts at
> covering their
> tracks. Even if Lay knew at this point that bankruptcy was
> imminent, Enron
> had always survived major hurdles in the past, right? The
> possibility of a
> total meltdown was most likely not even a consideration -- there
> could
> always be an 11th hour federal bailout.
>
> However, from all records, relationships became strained. The
> Taliban had
> demanded that the U.S. should also reconstruct Afghanistan's
> infrastructure
> and that the pipeline be open for local consumption. Instead, the
> U.S.
> wanted a closed pipeline pumping gas for export only and was not
> interested
> in helping to rebuild the country.
>
> In turn, the U.S. threatened the Taliban during the negotiations.
> The
> directive of "we'll either carpet you in gold or carpet you in
> bombs" was
> bantered about in the press to underscore the emerging
> willfulness of the
> U.S.
>
> But sometime in late August, apparently the whole deal went sour.
>
> Enron had one last card to play, and that was selling the Dabhol
> plant for
> quick cash -- if it could. If Enron could get its asking price of
> $2.3
> billion, then maybe the company could pull out of its bankruptcy
> nose dive.
>
> In late August, Lay appeared to threaten India in an article in
> the London
> Financial Times. We expect full price for the plant, he warned;
> if they
> received anything less, there could be backlash: "There are laws
> that could
> prevent the U.S. government from providing any aid or assistance
> to India
> going forward if, in fact, they expropriate property of U.S.
> companies," he
> said. When Indian officials called these statements "strong arm
> tactics," an
> Enron statement claimed Lay "was merely referring to U.S. laws."
> Again Lay
> appeared to threaten India in a Sept. 14 letter to the Prime
> Minister,
> insisting that the $2.3 billion price was reasonable because they
> had a
> "legal claim" of up to $5 billion.
>
> But the house of cards collapsed dramatically on November 8, when
> Enron
> disclosed that it had overstated earnings dating back to 1997 by
> almost $600
> million. That same day, an e-mail ("Importance: High"), whose
> sender and
> recipient are blacked out, warned, "President Bush cannot talk
> about Dabhol
> as was already mentioned." The memo also said that Bush economic
> adviser
> Lawrence Lindsey could not discuss Enron either. Lindsey had been
> an Enron
> consultant.
>
> The end came in December 2001, as Enron fired the 300 remaining
> workers at
> the plant. Enron also filed a $200 million claim with the U.S.
> government's
> Overseas Private Investment Corporation, a U.S. taxpayer-funded
> insurance
> fund for American companies abroad, in an attempt to recoup
> losses from the
> Dabhol Power Corporation.
>
> On the last day of the year, President Bush appointed Zalmay
> Khalilzad as
> his special envoy to Afghanistan. Khalilzad is a former Unocal
> consultant,
> whose positions on Afghanistan changed in sync with Unocal's own.
> When it
> looked like the pipeline would be built in 1996, Khalilzad
> advocated that
> the U.S. should work with moderate elements in the Taliban. By
> 2000 Unocal
> was out of the project, and Khalilzad was writing that the U.S.
> must
> undermine the Taliban.
>
> It's clear that once again the Great Game is afoot, now that the
> Taliban are
> gone. Today, Khalilzad is the Special Assistant to the President
> and
> National Security Council member responsible for setting up the
> post-Taliban
> "Pro-Unocal" regime in Afghanistan. International oil men
> euphemistically
> call the project the new "Silk Road." On Feb. 8, Afghanistan's
> interim
> leader Hamid Karzai and Pakistan's president agreed to revive
> plans for a
> trans-Afghanistan route for Iranian gas. The next day,
> Turkmenistan chimed
> in that they hoped their trans-Afghanistan route would be soon
> built. It's
> all but certain that gas from somewhere will reach Multan -- and
> the Dabhol
> plant beyond.
>
> For investors, Dabhol should be a bitter lesson. Enron was a
> company known
> for its hubris that tried to accomplish too much, too quickly,
> playing too
> fast and loose with financial realities. In the end, Enron found
> that its
> far-reaching global clout could no longer circumvent the rules of
> basic
> economics -- nor could it count on the players they helped bring
> into power.
>
> Until there is a full investigation, questions will remain about
> how far the
> Bush team went to try to save their buddies at Enron. Vice
> President Dick
> Cheney's refusal to release details about his private April
> meeting with Lay
> is suspicious. It is already known that Cheney accepted seven out
> of eight
> national energy policy recommendations made by Lay; so what are
> they so
> damned determined to keep secret? What could be more
> incriminating than
> that?
>
> On Feb. 22, the GAO sued Cheney, who has stated that the White
> House will go
> to court to fight the release of the documents. (However, John W.
> Dean,
> former Nixon staffer and Watergate witness, is quick to point out
> that
> executive privilege is unique to the president, not the vice
> president.)
> With recent discovery that a highest-level "Dabhol Working Group"
> was set up
> in the Bush Administration, it appears that there is much more to
> be
> uncovered.
>
> Is the White House covering up that it was molding foreign policy
> as well as
> energy policy to suit Enron? Did the Bush Administration know
> that Enron's
> collapse was coming as early as August? If any of these are true,
> the
> largest bankruptcy in American history may well connect with the
> greatest
> political scandal in American history.
>
> Ron Callari is a freelancer writer. This article originally
> appeared in the
> Albion Monitor.
>
> --
>
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail michael@xxxxxxxxxxxxxxxxx