Enron's Global Crusade
Enron was big on writing the rules. Before its collapse, it held a place on the board of the National Foreign Trade Council, which worked with the WTO to forge trade policy. It sponsored the 1999 World Services Congress in Atlanta, where, Polaris Institute researchers say, the services industry set its agenda for a new round of WTO negotiations. Along with its accounting firm, Arthur Andersen, Enron was at the center of the shadowy US Coalition of Service Industries' campaign to negotiate General Agreement on Trade in Services (GATS) schemes that remove restrictions on international commerce involving services. The GATS negotiations, which have been going on for two years under the aegis of the WTO, were described at the World Economic Forum by former Clinton Administration Treasury Department official Stuart Eizenstat as a move to "allow [Arthur] Andersen to export its accounting services to the world."
Eizenstat's attempt at humor was actually a blunt statement of reality. The first rules for a profession developed by the WTO as part of the GATS negotiations were for the accounting sector--and the rules were indeed shaped with a big assist from Arthur Andersen. So what might appropriately be dubbed "Enron accounting" is already in the process of going global.
The loosening of rules governing sectors of the global economy in which Enron was involved was a long-term corporate priority. During the go-go years of business expansion in the 1990s, the company scoured the planet in search of opportunities in countries that were embracing--sometimes willingly, often under pressure from the World Bank and the International Monetary Fund--"market-oriented reforms." These public-policy shifts allowed multinational corporations to buy formerly public utilities and capitalize on the lifting of traditional regulations--moves that opened the door to aggressive global corporations like Enron. Forged in the last years of Ronald Reagan's presidency by an ambitious former Pentagon economist named Ken Lay, Enron was a corporation designed to shape and then master the new economy of the post-cold war era. Lay preached what Britain's Independent newspaper described as a "deregulation-happy philosophy" with such passion that The Economist would eventually describe Enron as "an evangelical cult" in which Lay was the messiah.
Enron's crusading globalism extended the corporation's operations into virtually every sector of every economy worth owning a piece of, using all the tricks in the corporate globalizer's handbook. "The thing that you have to understand about Enron is this: They have taken advantage of every opportunity globalization has presented them. They have been in the forefront of pushing deregulation and privatization, pushing for access to markets around the world, using pressure from the US government to open trade," says the Polaris Institute's Puscas.
Once borders opened, once privatized industries were put up for sale and once sectors of economies were deregulated, Enron moved aggressively to gain advantage. Business Week explained that for companies like Enron, "the approach to globalization then was brutally simple: get in fast, strike megadeals with top officials, and watch the profits roll in." Initially, it seemed, the model was working. Enron was often credited with putting new technologies to work in the service of its rapid expansion. But as much as the corporation benefited from the rise of the Internet, a case can be made that its bottom line gained at least as much from the opening of markets around the planet to swashbuckling corporate adventurers, who brought Texas-style business practice to Australia, Brazil and Croatia. Between 1998 and 2001 Enron's foreign revenues increased from 7 percent to 23 percent of the company's total revenues--adding $22.9 billion in 2001 to the coffers of a company that, it turns out, needed every cent it could get its hands on. Enron executives embraced the gospel of globalization with a fervor that portrayed free trade, deregulation, privatization and other planks in the neoliberal platform as the necessary and inevitable face of progress. "We are on the side of the angels," declared former Enron CEO Jeffrey Skilling. "People want to have open, competitive markets."
That is a debatable point. When officials in the Indian state of Maharashtra took advantage of a recent relaxation of India's restrictions on foreign investment to invite a joint venture led by Enron to build a power plant south of Bombay, nearby villagers were certainly not clamoring for the "open, competitive markets" Enron was offering. They worried that the Dabhol power-plant project would destroy their livelihoods and their environment. When they launched a movement to stop it, leading activists were dragged from their homes and beaten by Enron-paid "police" in what Human Rights Watch describes as "serious, sometimes brutal human rights violations carried out on behalf of the state's and the company's interests." "Enron is now being widely accused of arrogance and lack of transparency, but the people of Dabhol have known that all along," says Arvind Ganesan, who directs the group's business and human rights program. "Enron was complicit in human rights abuse in India for several years."
Enron's tough line with the locals caused complaints from Brazil to Mozambique. And despite the near-euphoric reporting on Enron in the US press during the 1990s, its projects drew skeptical responses from an institution not famous for saying no to multinational corporations: the World Bank. Enron came to the bank for financing of its Indian project, only to be told it was "not economically viable." That would have stopped the unpopular initiative were it not for Enron's connections with two deep-pockets lenders: the US Overseas Private Investment Corporation and the Export-Import Bank. The taxpayer-funded OPIC granted a $100 million loan guarantee for the Dabhol project early on; and at a critical stage in the plant's troubled construction, the taxpayer-funded Ex-Im Bank provided Enron with almost $300 million in loan guarantees for the project.
In all, according to research compiled by Friends of the Earth, OPIC and the Ex-Im Bank loaned Enron $2.4 billion for its international projects. Even after twenty-five members of Congress signed a letter asking OPIC not to finance an Enron pipeline that cut through tropical forests in Brazil, the corporation still got the loan guarantees. Now that Enron is bankrupt, US taxpayers could find themselves swallowing the debt. With its joint-venture partners, General Electric and Bechtel, Enron has filed claims for $200 million in compensation for losses in India. OPIC officials say the energy giant's bankruptcy could leave US taxpayers liable for as much as $1 billion.
"The Enron scandal exposes the reality that both the Ex-Im Bank and OPIC are financing precisely the wrong sort of corporate behavior at home and abroad," says Representative Bernie Sanders. "They are providing corporate welfare to companies that harm workers in the United States and harm communities and the environment overseas--as the Indian power-plant case illustrates. This really is one of the most distressing examples of how our government promotes the sort of globalization that does no one any good."