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NSC Aided Enron's Efforts
Dana Milbank and Alan Sipress . Washington Post . 21 january 2002

The White House's National Security Council is the president's nerve center for international crises and strategy. For a moment last year, it also acted as a sort of concierge service for Enron Chairman Kenneth L. Lay and India's national security adviser, Brajesh Mishra.

A June e-mail sent from the NSC said Mishra would "be willing to meet with Mr. Lay and the bankers . . . but only at the residence. Pls. let me know your decision on this soonest." A second e-mail, also originating in the NSC, added, "We are not involved in arranging any meetings for Mr. Lay. . . . I will ask the Indians if he is invited to the dinner. Also, the Indians did not agree to see the lenders. I will go at them again, but if they come around it might be for a Friday meeting and not the dinner."

The efforts to get an audience with Indian officials for Lay and the bankers over the company's Dabhol power plant were detailed in documents released last week by the government-funded Overseas Private Investment Corp. under a Freedom of Information Act request. They provide a glimpse of a government function normally conducted in secret to avoid political embarrassment for foreign governments that face U.S. pressure on behalf of American corporations.

Susan Schwab, a Commerce Department official from the first Bush administration and now dean of the University of Maryland's School of Public Affairs, said she was surprised that the commercial advocacy has become "one where it's not the State Department or Commerce Department but the NSC leading the working group."

Daniel Tarullo, a Georgetown University law professor who oversaw international economics issues for President Bill Clinton's National Economic Council, concurred that "the norm would have been NSC participation in a discussion rather than NSC chairing it."

That change is symbolic of the heightened government priority on aiding commercial interests overseas. The effort, which expanded in the first Bush administration and in the Clinton administration, is evolving to a more explicit link to national security as the Bush administration elevates ties between the NSC and economic and commercial considerations.

"It's a new definition of national interest that embodies the national economic interest," Schwab said. "It's not as blatant as 'what's good for General Motors is good for America,' but it's the globalized version of that."

The trend grew after the end of the Cold War, when it appeared American companies were not competitive with the Japanese and others. "It was a sense that our strategic position was at stake," said Leon Fuerth, who was security adviser to Vice President Al Gore. U.S. multinationals came to be seen as "agents of American national power."

Under the Clinton administration, U.S. diplomats were evaluated on their performance in cooperating with American business, according to Stuart E. Eizenstat, who held a senior post in the State Department. "This was a major activity and something they were expected to engage in," he said.

Even back then, Enron received a disproportionate share of government help -- not necessarily because of the company's political connections but because of its bold expansion into emerging markets. "With the possibility of Boeing, there is no U.S. company I had more interaction with, involved in more projects abroad [and] had more of a call on our time than Enron," Eizenstat said.

The effort, which decelerated after Sept. 11, may have peaked last year with U.S. support for Enron in its dispute with India. At times it was difficult to separate Enron interests from national interests. In late August, Lay, frustrated with progress in India, told the Financial Times: "There are U.S. 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."

At the time, Enron was seeking $2.3 billion for itself and its lenders to sell its 65 percent interest in the Dabhol plant, which had been mired for years in a dispute with its main customer, an Indian state government. "If they try to squeeze us down to something less than cost, then it basically becomes an expropriation by the Indian government," Lay told the newspaper.

The chief minister of Maharashtra state in India decried "the strong-arm tactics of Enron" he interpreted in Lay's words. Just two weeks before, the United States had indicated that it might lift sanctions imposed on India for earlier nuclear tests.

Enron issued a statement the next day saying Lay "was merely referring to U.S. laws" and was not issuing a threat. Lay sent a letter to Indian Prime Minister Atal Bihari Vajpayee to say "I have not asked anyone in the U.S. government to consider sanctions. I did not say that the Dabhol power issue had been expropriated."

The administration correspondence released last week suggested various overlaps between Enron and U.S. efforts in India. A July 30 memo to the "Dabhol Working Group" in the administration listed among the actions taken in July that "Enron Chairman Ken Lay visited India" and met various government officials. The Dabhol working group's plans in August included an "Enron trip" to a location that was blacked out on the document before the government released the information.

September's actions by the Dabhol group were to include a visit by U.S. Trade Representative Robert B. Zoellick to India; Zoellick had been a paid consultant to Enron before joining the administration. Zoellick has since said he did not raise the issue. The group also planned to make use of a visit to the United Nations in September by Vajpayee.

The NSC working group coordinated a push at the highest levels of government. Vice President Cheney, as reported, brought up the matter with Sonia Gandhi, leader of India's Congress Party. The e-mail exchanges indicate Cheney planned to raise the matter again on Oct. 3 with India's foreign minister. A list of "Dabhol talking points" for Cheney's meeting with the minister were "passed to Veep's staff for inclusion" by the NSC. The minister, Jaswant Singh, heard again from the administration in October, when Undersecretary of State Alan P. Larson raised Dabhol.

Last weekend, the State Department disclosed that Secretary of State Colin L. Powell had discussed the Dabhol project on April 6 in a meeting with Singh. According to an account provided by State, Powell told his Indian counterpart that "failure to resolve the matter could have a serious deterrent effect on other investors."

Before the November meeting between Vajpayee and Bush, at which Bush was to raise the subject of Dabhol, an e-mail apparently from the NSC to the Overseas Private Investment Corp. suggested a resolution was close. It asked: "Do you still want to sign an MOU [memorandum of understanding] with the Indians or announce one during Vajpayee's visit?" Plans for Bush to raise the subject were scratched as Enron's problems became public.

The administration continues to talk about Dabhol, even after Enron's bankruptcy filing. Larson mentioned it with the Indians during a visit to New Delhi last week with Powell.