Enron's Global Crusade
The mandarins of corporate capital continued to preach the gospel of free markets and economic globalization at the World Economic Forum in New York, but a more traditional preacher reminded them that the burgeoning Enron scandal ought to give the shapers of the new world economic order pause. "There's a big question mark over capitalism today," the Rev. George Carey, Archbishop of Canterbury, informed the assembled CEOs and political hangers-on. "It's one word and it's 'Enron.' And what is that challenge? Capitalism has to act within boundaries."
Much of the US media and all but a few members of Congress continue to fixate on the domestic debacles--from lost pensions to lax regulations--that the collapse of Enron has exposed. But the Archbishop's invocation served as a reminder that the Enron scandal is not merely an American affair. The rise and fall of Enron is very much the story of a model global corporation gone awry. It is also an apt illustration of the consequences of the rush to embrace a corporate-sponsored template for economic liberalization: from multilateral free-trade pacts that supersede domestic regulations to privatization, deregulation, International Monetary Fund-ordered "structural adjustments" of national economies and the corrupting interplay of corporate campaign contributions and policy-making that is no longer just a US phenomenon.
Enron's business model, which until recently was taught in business schools around the world, did not respect boundaries. Its global reach, powered by as much as $2.4 billion in loans backed by US taxpayers and aided by barrier-breaking "reforms" pushed by the World Trade Organization, made the Houston-based corporation not merely the seventh-largest in the United States but the sixteenth-largest in the world. Before its empire began to unravel last fall, Enron was regularly featured on Global Finance magazine's annual list of the "world's best global companies." Enron was a globalizer on a grand scale, its grubby big hands stretching from Houston to London to Bombay to Maputo to La Paz. Forget about trying to chart the maze of Enron's 874 "offshore partnerships"; the corporation bragged quite openly about "business units" (Enron Americas, Enron Europe, Enron Australia, Enron South America, Enron Japan, to name but a few) that traded in the world's natural gas, crude oil, metals, plastics, fertilizers, forest products, lumber, steel and, ominously, the weather. The shorthand description of Enron in most US media reports continues to refer to the corporation as a "Texas energy giant." But that does not begin to describe the conglomerate that, in addition to being the planet's largest energy trader, had a hand in virtually every economic sector--in every country--that a corporate jet could reach. If, as Global Reach authors Richard Barnet and Ronald Muller predicted a quarter-century ago, "the men who run the global corporations are the first in history with the organization, technology, money and ideology to make a credible try at managing the world as an integrated unit," then Enron throughout the 1990s tried harder. However, the company was not always credible--let alone credit-worthy.
"Enron is the model for globalization, a model for how the whole neoliberal ideology forms a business model. Here is a company that is huge in America, huge in Canada, it's all over Europe, all over India, all over South America, all over the world," says Darren Puscas, a researcher with Canada's Polaris Institute, which began last year to study the company's campaign to promote privatization and deregulation of public services in developing countries. "Enron is a scandal in the United States now. But it has been a scandal in other countries for a long time."
Even for serious readers of the US financial press, it may come as a surprise that Fortune's "most innovative company in America" is one of the most controversial companies in the world. Only in reports on human rights and environmental abuses produced by groups like Human Rights Watch, Amnesty International, CorpWatch, Multinational Monitor and Friends of the Earth could Americans get a hint until recently that Global Finance's "best company" award winner did not achieve that honor for being a good corporate citizen.
In Geneva, where the WTO is headquartered, Enron is known as a sharp-elbowed advocate for liberalizing rules governing the trade in "services," a move that anticorporate campaigners say is designed to open the way for the privatization and deregulation of health, education, energy, water, welfare and postal services. In India Enron is known as a partner in the decade-long, still incomplete development of a $2.9 billion power plant project so controversial that it spawned a nationwide protest movement and upset the balance of political power in the region surrounding the facility [see Arundhati Roy, "Shall We Leave It to the Experts?" February 18]. In Britain Enron lobbied successfully for energy-policy shifts and, with approvals from Tony Blair's Labour government, recently took ownership of a huge privatized water utility, Wessex Water--moves that are now under intense scrutiny by that country's media and political opposition. In Germany Enron swept in with schemes to corner newly deregulated electricity markets. In Mozambique, with the aid of a friendly US ambassador, Enron grabbed control of an oil pipeline project from a government under pressure from the International Monetary Fund to forge public-private partnerships. In Argentina it brought high-level political pressure down on successive governments until, finally, Enron was granted approval to construct a natural gas pipeline from that country to Chile. The pressure included a 1988 call to a Cabinet minister from George W. Bush, the son of the then-Vice President of the United States [see David Corn, "Enron and the Bushes," February 4].
The lines of connection between the Bush family, the Bush campaign and Enron may explain why the White House's spin machine is struggling to wedge the Enron collapse story into a "business scandal" box that would conveniently exempt the political class from the stain. True, Enron is a business story: How could the biggest bankruptcy in US business history be otherwise? But it's also a political story: Enron gave $6 million in political contributions over a decade, and its CEO, the largest career contributor to George W. Bush's campaigns, has been exposed as having exploited his connections to name Bush Administration regulators, to shape its energy policies and to block moves to regulate the offshore tax havens Enron exploited.
And Enron's domestic activities are only a part of the story. To limit discussion of Enron to them is to miss the most dramatic lessons of this burgeoning scandal. "If you want to know where economic globalization along the lines cheered on by the WTO, the IMF, the World Bank, George W. Bush and Tony Blair is headed, look at Enron. Globalization has created an international no man's land where businesses survive by engaging in financial practices that no responsible nation-state would permit," says Tony Benn, Britain's former minister of industry. "When you allow corporations to write their own rules in the global marketplace, which is what has essentially been the case in recent years, you will see unimaginable abuses."