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                     Shall We Leave It to the Experts?
                       Enron's Power Project in India
                Demonstrates Who Benefits from Globalization

                              by Arundhati Roy
                              18 February 2002
                                 The Nation


     India lives in several centuries at the same time. Somehow we
     manage to progress and regress simultaneously.

     As a nation we age by pushing outward from the middle -- adding a
     few centuries on either end of the extraordinary CV. We greaten
     like the maturing head of a hammerhead shark with eyes looking in
     diametrically opposite directions.

     I don't mean to put a simplistic value judgment on this peculiar
     form of "progress" by suggesting that Modern is Good and
     Traditional is Bad -- or vice versa. What's hard to reconcile
     oneself to, both personally and politically, is the schizophrenic
     nature of it. That applies not just to the ancient/modern
     conundrum but to the utter illogic of what appears to be the
     current national enterprise. In the lane behind my house, every
     night I walk past road gangs of emaciated laborers digging a
     trench to lay fiber-optic cables to speed up our digital
     revolution. In the bitter winter cold, they work by the light of a
     few candles.

     It's as though the people of India have been rounded up and loaded
     onto two convoys of trucks (a huge big one and a tiny little one)
     that have set off resolutely in opposite directions. The tiny
     convoy is on its way to a glittering destination somewhere near
     the top of the world. The other convoy just melts into the
     darkness and disappears. A cursory survey that tallies the caste,
     class and religion of who gets to be on which convoy would make a
     good Lazy Person's concise Guide to the History of India. For some
     of us, life in India is like being suspended between two of the
     trucks, one leg in each convoy, and being neatly dismembered as
     they move apart, not bodily, but emotionally and intellectually.

     Fifty years after independence, India is still struggling with the
     legacy of colonialism, still flinching from the "cultural insult."
     As citizens we're still caught up in the business of "disproving"
     the white world's definition of us. Intellectually and
     emotionally, we have just begun to grapple with communal and caste
     politics that threaten to tear our society apart. But meanwhile,
     something new looms on our horizon. On the face of it, it's just
     ordinary, day-to-day business. It lacks the drama, the
     large-format, epic magnificence of war or genocide or famine. It's
     dull in comparison. It makes bad TV. It has to do with boring
     things like jobs, money, water supply, electricity, irrigation.
     But it also has to do with a process of barbaric dispossession on
     a scale that has few parallels in history. You may have guessed by
     now that I'm talking about the modern version of globalization.

     What is globalization? Who is it for? What is it going to do to a
     country like India, in which social inequality has been
     institutionalized in the caste system for centuries? A country in
     which 700 million people live in rural areas. In which 80 percent
     of the landholdings are small farms. In which 300 million people
     are illiterate. Is the corporatization and globalization of
     agriculture, water supply, electricity and essential commodities
     going to pull India out of the stagnant morass of poverty,
     illiteracy and religious bigotry? Is the dismantling and
     auctioning off of elaborate public sector infrastructure,
     developed with public money over the past fifty years, really the
     way forward? Is globalization going to close the gap between the
     privileged and the underprivileged, between the upper castes and
     the lower castes, between the educated and the illiterate? Or is
     it going to give those who already have a centuries-old head start
     a friendly helping hand?

     Is globalization about "eradication of world poverty," or is it a
     mutant variety of colonialism, remote-controlled and digitally
     operated? These are huge, contentious questions. The answers vary
     depending on whether they come from the villages and fields of
     rural India, from the slums and shantytowns of urban India, from
     the living rooms of the burgeoning middle class or from the
     boardrooms of the big business houses. Today India produces more
     milk, more sugar and more food grain than ever before. And yet, in
     March 2000, just before President Clinton's visit to India, the
     Indian government lifted import restrictions on 1,400 commodities,
     including milk, grain, sugar, cotton, tea, coffee and palm oil.
     This despite the fact that there was a glut of these products on
     the market.

     As of April 1 -- April Fool's Day -- 2001, according to the terms
     of its agreement with the World Trade Organization, the Indian
     government had to drop its quantitative import restrictions. The
     Indian market is already flooded with cheap imports. Though India
     is technically free to export its agricultural produce, in
     practice most of it cannot be exported because it doesn't meet the
     First World's "environmental standards." (You don't eat bruised
     mangoes or bananas with mosquito bites or rice with a few weevils
     in it, whereas we don't mind the odd mosquito and the occasional
     weevil.)

     Developed countries like the United States, whose hugely
     subsidized farm industry engages only 2 to 3 percent of its total
     population, are using the WTO to pressure countries like India to
     drop agricultural subsidies in order to make the market
     "competitive." Huge, mechanized corporate enterprises working
     thousands of acres of farmland want to compete with impoverished
     subsistence farmers who own a couple of acres.

     In effect, India's rural economy, which supports 700 million
     people, is being garroted. Farmers who produce too much are in
     distress, farmers who produce too little are in distress and
     landless agricultural laborers are out of work as big estates and
     farms lay off their workers. They're all flocking to the cities in
     search of employment.

     "Trade Not Aid" is the rallying cry of the head men of the new
     Global Village, headquartered in the shining offices of the WTO.
     Our British colonizers stepped onto our shores a few centuries ago
     disguised as traders. We all remember the East India Company. This
     time around, the colonizer doesn't even need a token white
     presence in the colonies. The CEOs and their men don't need to go
     to the trouble of tramping through the tropics, risking malaria,
     diarrhea, sunstroke and an early death. They don't have to
     maintain an army or a police force, or worry about insurrections
     and mutinies. They can have their colonies and an easy conscience.
     "Creating a good investment climate" is the new euphemism for
     Third World repression. Besides, the responsibility for
     implementation rests with the local administration.

     Enron in India

     The fishbowl of the drive to privatize power, its truly star turn,
     is the story of Enron, the Houston-based natural gas company. The
     Enron project was the first private power project in India. The
     Power Purchase Agreement between Enron and the Congress
     Party-ruled state government of Maharashtra for a 740-megawatt
     power plant was signed in 1993. The opposition parties, the Hindu
     nationalist Bharatiya Janata Party (BJP) and the Shiv Sena, set up
     a howl of swadeshi (nationalist) protest and filed legal
     proceedings against Enron and the state government. They alleged
     malfeasance and corruption at the highest level. A year later,
     when state elections were announced, it was the only campaign
     issue of the BJP-Shiv Sena alliance.

     In February 1995 this combine won the elections. True to their
     word, they "scrapped" the project. In a savage, fiery statement,
     the opposition leader L.K. Advani attacked the phenomenon he
     called "loot through liberalization." He more or less directly
     accused the Congress Party government of having taken a $13
     million bribe from Enron. Enron had made no secret of the fact
     that in order to secure the deal, it paid out millions of dollars
     to "educate" the politicians and bureaucrats involved in the deal.

     Following annulment of the contract, the US government began to
     pressure the Maharashtra government. US Ambassador Frank Wisner
     made several statements deploring the cancellation. (Soon after he
     completed his term as ambassador, he joined Enron as a director.)
     In November 1995 the BJP-Shiv Sena government in Maharashtra
     announced a "renegotiation" committee. In May 1996 a minority
     federal government headed by the BJP was sworn in at New Delhi. It
     lasted for exactly thirteen days and then resigned before facing a
     no-confidence vote in Parliament. On its last day in office, even
     as the motion of no confidence was in progress, the Cabinet met
     for a hurried "lunch" and reratified the national government's
     counterguarantee (which had become void because of the earlier
     "canceled" contract with Enron). In August 1996 the government of
     Maharashtra signed a fresh contract with Enron on terms that would
     astound the most hard-boiled cynic.

     The impugned contract had involved annual payments to Enron of
     $430 million for Phase I of the project (740 megawatts), with
     Phase II (1,624 megawatts) being optional. The "renegotiated"
     power purchase agreement makes Phase II of the project mandatory
     and legally binds the Maharashtra State Electricity Board (MSEB)
     to pay Enron the sum of $30 billion! It constitutes the largest
     contract ever signed in the history of India.

     Indian experts who have studied the project have called it the
     most massive fraud in the country's history. The project's gross
     profits work out to between $12 billion and $14 billion. The
     official return on equity is more than 30 percent. That's almost
     double what Indian law and statutes permit in power projects. In
     effect, for an 18 percent increase in installed capacity, the MSEB
     has to set aside 70 percent of its revenue to pay Enron. There is,
     of course, no record of what mathematical formula was used to
     "re-educate" the new government. Nor any trace of how much
     trickled up or down or sideways or to whom.

     But there's more: In one of the most extraordinary decisions in
     its not entirely pristine history, in May 1997 the Supreme Court
     of India refused to entertain an appeal against Enron.

     Today, everything that critics of the project predicted has come
     true with an eerie vengeance. The power that the Enron plant
     produces is twice as expensive as its nearest competitor and seven
     times as expensive as the cheapest electricity available in
     Maharashtra. In May 2000 the Maharashtra Electricity Regulatory
     Committee (MERC) ruled that temporarily, until as long as was
     absolutely necessary, no power should be bought from Enron. This
     was based on a calculation that it would be cheaper to just pay
     Enron the mandatory fixed charges for the maintenance and
     administration of the plant that it is contractually obliged to
     pay than to actually buy any of its exorbitant power. The fixed
     charges alone work out to around $220 million a year for Phase I
     of the project. Phase II will be nearly twice the amount.

     Two hundred and twenty million dollars a year for the next twenty
     years. Meanwhile, industrialists in Maharashtra have begun to
     generate their own power at a much cheaper rate, with private
     generators. The demand for power from the industrial sector has
     begun to decline rapidly. The MSEB, strapped for cash, with Enron
     hanging like an albatross around its neck, will now have no choice
     but to make private generators illegal. That's the only way that
     industrialists can be coerced into buying Enron's exorbitantly
     priced electricity.

     In January 2001 the Maharashtra government (the Congress Party is
     back in power with a new chief minister) announced that it did not
     have the money to pay Enron's bills. On January 31, only five days
     after an earthquake in the neighboring state of Gujarat, at a time
     when the country was still reeling from the disaster, the
     newspapers announced that Enron had decided to invoke the
     counterguarantee and that if the government did not come up with
     the cash, it would have to auction the government properties named
     as collateral security in the contract.

     But Enron had friends in high places. It was one of the biggest
     corporate contributors to President George W. Bush's election
     campaign. US government officials warned India about vitiating the
     "investment climate" and running the risk of frightening away
     future investors. In other words: Allow us to rob you blind, or
     else we'll go away.

     Last June the MSEB announced that it was ending its agreement with
     the Dabhol Power Corporation, a joint venture of Enron -- which
     has the largest stake -- General Electric and Bechtel. DPC ceased
     operations soon afterward, and is pressuring the government to
     cover its debts. Royal Dutch/Shell, the Anglo-Dutch petroleum
     group, TotalFinaElf and Gaz de France are currently bidding to
     take over Enron, Bechtel and GE's collective stake in the plant in
     a "distress sale."

     Globalizing Dissent

     Recently, globalization has come in for some criticism. The
     protests in Seattle and Prague will go down in history. Each time
     the WTO or the World Economic Forum wants to have a meeting,
     ministers have to barricade themselves with thousands of heavily
     armed police. Still, all its admirers, from Bill Clinton, Kofi
     Annan and A.B. Vajpayee (the Indian Prime Minister) to the
     cheering brokers in the stalls, continue to say the same lofty
     things: If we have the right institutions of governance in place
     -- effective courts, good laws, honest politicians, participatory
     democracy, a transparent administration that respects human rights
     and gives people a say in decisions that affect their lives --
     then the globalization project will work for the poor as well.
     They call this "globalization with a human face."

     The point is, if all this were in place, almost anything would
     succeed: socialism, capitalism, you name it. Everything works in
     Paradise, a Communist State as well as a Military Dictatorship.
     But in an imperfect world, is it globalization that's going to
     bring us all this bounty? Is that what's happening in India now
     that it's on the fast track to the free market? Does any one thing
     on that lofty list apply to life in India today? Are state
     institutions transparent? Have people had a say -- have they even
     been informed, let alone consulted -- about decisions that vitally
     affect their lives? And are Clinton (or now Bush) and Prime
     Minister Vajpayee doing everything in their power to see that the
     "right institutions of governance" are in place? Or are they
     involved in exactly the opposite enterprise? Do they mean
     something else altogether when they talk of the "right
     institutions of governance"?

     The fact is that what's happening in India today is not a
     "problem," and the issues that some of us are raising are not
     "causes." They are huge political and social upheavals that are
     convulsing the nation. One is not involved by virtue of being a
     writer or activist. One is involved because one is a human being.

     If you're one of the lucky people with a berth booked on the small
     convoy, then Leaving It to the Experts is, or can be, a mutually
     beneficial proposition for both the expert and yourself. It's a
     convenient way of shrugging off your own role in the circuitry.
     And it creates a huge professional market for all kinds of
     "expertise." There's a whole ugly universe waiting to be explored
     there. This is not at all to suggest that all consultants are
     racketeers or that expertise is unnecessary, but you've heard the
     saying: There's a lot of money in poverty. There are plenty of
     ethical questions to be asked of those who make a professional
     living off their expertise in poverty and despair.

     For instance, at what point does a scholar stop being a scholar
     and become a parasite who feeds off despair and dispossession?
     Does the source of your funding compromise your scholarship? We
     know, after all, that World Bank studies are among the most quoted
     studies in the world. Is the World Bank a dispassionate observer
     of the global situation? Are the studies it funds entirely devoid
     of self-interest?

     Take, for example, the international dam industry. It's worth
     $32-$46 billion a year. It's bursting with experts and
     consultants. Given the number of studies, reports, books, PhDs,
     grants, loans, consultancies, environmental impact assessments --
     it's odd, wouldn't you say, that there is no really reliable
     estimate of how many people have been displaced by big dams in
     India? That there is no estimate for exactly what the contribution
     of big dams has been to overall food production in India? That
     there hasn't been an official audit, a comprehensive, honest,
     thoughtful, post-project evaluation, of a single big dam to see
     whether or not it has achieved what it set out to achieve? Whether
     or not the costs were justified, or even what the costs actually
     were?

     Cynics say that real life is a choice between the failed
     revolution and the shabby deal. I don't know . . . maybe they're
     right. But even they should know that there's no limit to just how
     shabby that shabby deal can be. What we need to search for and
     find, what we need to hone and perfect into a magnificent, shining
     thing, is a new kind of politics. Not the politics of governance,
     but the politics of resistance. The politics of opposition. The
     politics of forcing accountability. The politics of slowing things
     down. The politics of joining hands across the world and
     preventing certain destruction. In the present circumstances, I'd
     say that the only thing worth globalizing is dissent. It's India's
     best export.



     Arundhati Roy, a novelist who lives in New Delhi, is the author of
     Power Politics (from which this article in the February 18, 2002
     issue was adapted). A second and expanded edition will be
     available (February 2002) from South End Press.

                      © 2002 The Nation Company, L.P.




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