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ISSUE: #. 19. Feb. 2, 2002 By Bill Weinberg


"Not since the rise of the railroads more than a century ago has a single industry [energy] placed so many foot soldiers at the top of a new administration." (Newsweek, May 14, 2001)

1. Secret US Casualties in Kandahar?
2. Casualties and Ecological Toll of Bombardment Debated
3. Warlords Still Calling in US Air-strikes Against Rivals?
4. Pashtun Monarchists Stage Armed Protest
5. Northern Alliance Building Parallel Government?
6. Nostalgia for the Taliban--Already!
7. The Real Agenda at Tokyo: Debt Collection?
8. Technocrats Plan Dollarization of Afghanistan

1. Israeli Generals Plot Re-occupation of West Bank & Gaza
2. ...While IDF Troops Pledge Non-Cooperation
3. Al-Qaeda Re-grouping in Lebanon?
4. US-Saudi Rift Widens

1. Improbable "Axis of Evil"

1. Studies: Fewer Facts in Media Coverage, Public Pleased
2. Closure Through Commercialism

1. Ground Zero Toxic Threat Update
2. WTC Survivors Protest Evidence Destruction
3. Giuliani's Girlfriend Appointed to Twin Towers Fund

1. Enron & the Bush-Cheney Energy Plan
2. Enron & the California Energy Crisis
3. Enron & the Caspian Pipeline
4. Enron in India
5. Enron in Argentina
6. Enron in Croatia
7. Ex-Enron Veeps in the News


Pakistan's Frontier Post cited "eye witness accounts" that at least 4 US commandos were killed in an ambush in Kandahar province Jan. 28. US warplanes reportedly retaliated with heavily bombing of Kandahar's Lewa region. The attackers were identified only as "mujahedeen." (Frontier Post, Jan. 29 [top]

With US military operations still under way, international organizations have yet to investigate reports of noncombatants--including women and children--being killed in the aerial bombardment. Afghanistan presents staggering obstacles to establishing a total number of civilian deaths, Cox news service reported Jan. 27. "I've worked in more than a dozen war zones around the world and have found it more difficult to obtain accurate information about civilian casualties in Afghanistan than anywhere else," said Peter Bouckaert, a researcher at Human Rights Watch in New York. He added that the group will send a team to Afghanistan in March to conduct a nationwide investigation. Problems include the remote areas of Afghanistan that were targeted, and the lack of international humanitarian workers and journalists in the country to serve as witnesses. University of New Hampshire professor Marc Herold released a report last month claiming nearly 4,000 Afghan civilians have died since the bombing started Oct. 7 (see WW# REPORT #12). His tally was based on a survey of international media reports. But the International Committee for the Red Cross and the UN mission for Afghanistan have declined to estimate casualties. Amnesty International has called for "an immediate and full investigation into what may have been violations of international and humanitarian law" in the aerial attacks. In Khost, 100 miles southeast of Kabul, witnesses said US planes bombed a mosque during a Ramadan evening prayer service. The intended target was unknown, but "[t]he wreckage of brick and broken plaster, electric wiring and metal support rods support witnesses' testimony that none inside survived when bombs rained down."

New Scientist reports that the UN is dispatching a team of investigators to Afghanistan to evaluate the environmental damage caused by the bombing and two decades of war. Much of southeast Afghanistan was once lush forest watered by monsoon rains, but forests now cover less than 2% of the country. "The worst deforestation occurred during Taliban rule, when its timber mafia denuded forests to sell to Pakistani markets," said Usman Qazi, an environmental consultant based in Quetta, Pakistan. But the US bombardment destroyed much of what remained, and the refugee crisis is destroying what little is left, as land is cleared for much-needed farming. "Eventually the land will be unfit for even the most basic form of agriculture," warned Hammad Naqi of the World Wide Fund for Nature in Pakistan. Refugees--around 4 million at last count--are also cutting into forests for firewood. The bombing will also leave its mark beyond the obvious craters. Defense analysts say that while depleted uranium has been used less in Afghanistan than in the Kosovo conflict, conventional explosives will litter the country with toxic compounds such as cyclonite, a carcinogen, and rocket propellants contain perchlorates, which damage thyroid glands [top]

US forces in Afghanistan attacked and killed an anti-Taliban commander and 17 of his fighters after being deliberately misled by tribal factions, Reuters reported Jan. 30. The Pentagon said its planes had reacted to ground fire from a guerrilla compound, and claimed the retaliatory attack killed up to 15 and destroyed an arms cache. But Reuters claims it was an error which "has dealt a major setback to efforts to pacify a remote haven of Taliban and possibly al-Qaeda guerrillas." One source told Reuters: "The commander, Abdul Qadoos, was killed along with 17 other people when US troops attacked the district of Kharz in Uruzgan province last week." The sources blamed rival warlords for feeding the US forces bad information. Reporters who later visited the region said they were told by residents that villagers were among those killed, and that one building hit in the assault belonged to the provincial government. The sources said Abdul Qadoos was on his way from the Uruzgan provincial capital, Tarin Kot, to Kharz to collect weapons. Said Reuters: "Most residents in Kharz were from the Pashtun tribe of Achekzais, and the sources said they believed the Americans were misled in order for one side or another to gain the upper hand in one of the feuds that plague Pashtun society." [top]

Thousands of Pashtun tribesmen swept down from the mountains into Khost this week to protest what they call a conspiracy to abort Afghanistan's royal revival. Carrying old carbine rifles, ivory-handled daggers, and modern Chinese machine guns, they arrived by bicycle, tractor and car to protest installment of a governor who opposes the return of King Mohammad Zahir Shah. Several hundred marched on the US Special Forces base, demanding that the US remain neutral in the local power struggle. Mohamad Shah Zadran, chief of the "Greater Paktia" tribal union, spoke with US officers there. "We've chosen the royalist party of King Zahir Shah to lead us," he said. "We don't want other armed opposition parties who are making our people live in fear." Shah Zadran claimed the Northern Alliance was the hidden hand behind the decision to impose the anti-monarchist governor. The US officers asked the tribal leader to remain calm pending a final decision from Kabul on the matter. After the demonstration, tribesmen met in the city center to beat drums and perform traditional Pashtun war dances.

The Northern Alliance has reportedly made an alliance with ex-Taliban military officials in Khost, whose fighters have seized the city's two forts. A shoot-out was barely averted last weekend when supporters of warlord Zakim Khan secretly entered the police station and pulled down the king's flag, replacing it with their own. The royalists are reportedly holding 25 of Zakim Khan's fighters. Pashtun warlord Zakim Khan, hand-picked by Kabul's intelligence and security chiefs to oversee the region, was allied with the Northern Alliance in the war against the Taliban. He has formed an alliance with Commander Malim Jan, a former Taliban commander, who was given authority in Khost by local warlord Jalaluddin Haqqani before he became a fugitive from US forces, accused of ties to Osama bin Laden. (Christian Science Monitor, Jan. 29) [top]

Paksitan's News International reported Jan. 31 that "six containers full" of Moscow-printed Afghan currency was shipped to Afghanistan and "grabbed" by the Northern Alliance before it reached Kabul. Meanwhile, the interim regime is appealing to the UN for emergency funds to pay government salaries. The paper writes that Northern Alliance "overt and covert activities in the past 3 months, in collaboration with Russia, India and Iran, are intensifying, to gain complete control over Afghanistan/Kabul and serve the vested interests of their own as well as foreign masters... Militarily, NA has remained intensely engaged in receiving arms, military supplies and even manpower from its foreign friends. Their covert moves are indicative of their intentions to consolidate hold over important cities/towns of Afghanistan. Recently, in the last week of November, Russia dispatched 12 IL-76 aircraft to Bagram, carrying two groups of Russian specialists, including 200 uniformed officials and 12 intelligence officials. Similarly, on 15 and 17 Dec. 2001, Russia provided a heavy consignment of arms/ammunition and military equipment to commander [Mohammed] Daud at Kunduz." [top]

Just 10 weeks after the Taliban fled Kabul, Afghans are already starting to say they felt safer under the now-defeated ultra-fundamentalist militia than under the new power-sharing interim regime. Murders, robberies and car-jackings in the capital, as well as factional clashes and banditry throughout the country "are beginning to erode the optimism that greeted the inauguration of the interim administration on Dec. 22," AFP reported Jan. 25. "There are hundreds of thousands of people with weapon," said Francesc Vendrell, deputy to the UN special envoy to Afghanistan, Lakhdar Brahimi. He said it could take up to 30,000 international troops to secure the main cities and the rutted tracks that pass as highways in the war-battered country. The International Security Assistance Force (ISAF) is limited to 4,500 troops and restricted to the Kabul area to protect the new interim government during its six-month lifespan. In Kabul, where a night-time curfew is still in place, shots and explosions are often heard after dark. Residents report daily murders. Some parts of the capital have become no-go zones. But Kabul police chief Abdul Basir Khan Salangi denied there was insecurity in the city, saying those claiming the opposite were "enemies and those who want to defame the government." [top]

The Tokyo International Conference on Reconstruction Assistance to Afghanistan on Jan. 21 fell short of UN Secretary-General Kofi Annan's goal of raising $10 billion over the next 5 years (a total five-year commitment of $4.5 billion was made). But the conference did succeed in securing the following promise from interim prime minister Hamid Karzai: "Afghanistan will assume responsibility for the foreign debt incurred by all previous governments." Afghanistan's foreign debt last stood at $5.5 billion in 1990, the year that major international lenders suspended further loans. That is nearly four times the GDP of $1.55 billion in 1999, the first year of a drought that has since devastated the economy. If the debt is divided on a per capita basis, every man, woman and child carries an annual burden of $230, while the average individual GDP in 1999 was $70. Writes Yoichi Shimatsu on "Karzai pledged to ban the cultivation of opium poppies, the income of last resort for Afghanistan. Afghanistan will not be able to simply print money. On the contrary, the country is being put under an international trusteeship that aims to shrink the money supply--mainly by taking it out of the hands of the poor." [top]

A delegation from the International Monetary Fund (IMF) and the World Bank now in Afghanistan said told Pakistan's Frontier Post Feb. 2 that it would make sense for the country to switch to the US dollar. "I personally see more benefits than negative effects," IMF fiscal policy expert Warren Coates told a press conference in Kabul. The governor of the Afghan Central Bank, Abdul Qadeer Fitrat, told the news conference that a final decision on the Afghan currency would be made by the interim administration "in the near future." [top]


Haaretz reported Jan. 31 that a group of senior Israeli reserve officers, led by Brig. Gen. (res.) Effi Eitam are working on a "security-political plan" that includes re-occupying the West Bank and Gaza and invading Palestinian towns and cities to destroy the Palestinian Authority. After "cleaning" the territories of terrorists, Israel would re-impose direct rule. The former generals argue that the military incursions into cities like Jenin and Tul Karm proved in recent weeks that the Israeli Defense Forces would have no problem re-taking the territories. The plan's authors believe Israel should unilaterally declare that no sovereignty other than Israel will ever be allowed into the area west of the Jordan River. They claim the move would lead to the withering of the Palestinian uprising, "because the suicide bombers are not blowing themselves up out of despair, but out of hope they can drive us out of the territories. As soon as they find out that won't happen, the level of violence will also drop." The political power of Israeli Arabs would also be curtailed, with new electoral districts intentionally gerrymandered to prevent Arab representation in the Knesset. The plan also calls for an aggressive Israeli military response to the "nuclear threat" from Iran (if the US doesn't do it). The plan has already been presented to Prime Minister Ariel Sharon, who has refrained from expressing support, and will be presented to the public in the coming weeks. The former generals say they have support in the top command of the IDF. Hardliner Eitam, who left the army a year ago, has been conducting intensive activity in recent months, and plans to directly enter the political arena. Boasted Eitam: "This is a first attempt by the right to present a political-security plan that doesn't make do only with blocking Palestinian intentions but proposes solutions to the situation." [top]

Since last week's declaration by 53 IDF soldiers and officers in Haaretz newspaper that they would refuse to serve in the Occupied Territories (see WW3 REPORT #18), their number has swelled over 100--sparking national debate and harsh warnings from the government. Prime Minister Ariel Sharon said, "It will be the beginning of the end of democracy if soldiers don't carry out the decisions of the elected government." IDF Chief of Staff Lt. Gen. Shaul Mofaz suggested there was an "ideological" basis to the declaration, saying "in my eyes this is more than refusal to serve. This is incitement to rebellion. There is no more serious act than that." The statement with the new signatories was reprinted in Haaretz Feb. 2, reiterating, "We will no longer fight beyond the Green Line," the pre-1967 boundary between Israel and the West Bank/Gaza. "The price of occupation is the loss of the Israeli Defense Forces' semblance of humanity and the corruption of all Israeli society." One of the signatories, reservist Ariel Shatil, 32, protested that he had been ordered to fire on civilian dwellings in the Gaza Strip last Sept. "We all have limits," he told the New York Times. "You can be the best officer [but] suddenly you're required to so things that you can't be asked to do: to shoot at people, stop ambulances, destroy houses when no one knows who lives in them." (NYT, Feb. 2) [top]

The al-Qaeda terrorist network is trying to transfer its base of operations from Afghanistan to Lebanon, according to "intelligence" uncovered by the London Times. A senior al-Qaeda operative, a Yemeni who goes by the alias of Salah Hajir, is said to have arrived in Lebanon and held meetings with leaders of Hezbollah. Although UK diplomatic sources said Hezbollah, a Shia Muslim organization, and al-Qaeda, which is Sunni, were "unlikely bedfellows," the Times claims "substantial evidence of a working alliance between the two dating back to the early 1990s." Hezbollah is believed to be funded by Iran--whose government is in the spotlight after President Bush's State of the Union address on Jan. 29 denounced an "evil axis" of Iran, Iraq and North Korea. On Jan. 30, US Defense Secretary Donald Rumsfeld said: "We know Iran is actively sending terrorists down through Damascus into the Bekaa Valley where they train terrorists, then engage in acts against countries in the region and elsewhere." The last time Hezbollah attacked Americans was in 1983 when 241 US troops were killed in a Beirut suicide bombing. The operative is also said to have met with a radical Sunni organization called Usbat al-Ansar based in the Ain al-Hilweh refugee camp in Sidon. A number of Usbat al-Ansar operatives are believed to have returned to Lebanon last month after fighting alongside al-Qaeda in Afghanistan. (London Times, Feb. 1) [top]

Saudi officials warned they would not allow US servicewomen to go around without a head-to-toe robe, and criticized Washington for lifting the requirement that its female troops wear the garment (see WW3 REPORT #18). A member of the Saudi regime's Committee for the Preservation of Virtue and the Prevention of Vice said all women must wear the robe, or "abaya," regardless of religion, nationality or profession. US Central Command head Gen. Tommy Franks issued an order last week saying the abaya is no longer required for US servicewomen in Saudi Arabia "but is strongly encouraged." The requirement dates from the 1990-91 Persian Gulf crisis when US forces were first stationed in Saudi Arabia. A Saudi military official criticized Franks' move, saying the US should have consulted the kingdom beforehand. The conflict is the latest in a string of disputes between the two allies since the Sept. 11 terrorist attacks. Although the Bush administration publicly says it is pleased with Saudi cooperation, the US media have criticized the Saudi regime for not arresting people accused of connections to the terror attacks--despite the fact that more than half the 19 hijackers involved were believed to be Saudi citizens. Saudi newspapers, in turn, have published numerous reports of mistreatment of Saudi nationals in the US who were arrested following Sept. 11. (AP, Jan. 24) [top]


President Bush's bellicose Jan. 29 State of the Union address was made with Afghan interim leader Hamid Karzai sitting in the front row next to First Lady Laura. Bush warned that al-Qaeda terror cells "are now spread throughout the world like ticking time bombs--set to go off without warning." He claimed detailed plans to attack US nuclear plants had been found in former al-Qaeda hideouts in Afghanistan--an allegation that shows Bush's policy of reviving nuclear power plant development in a stark light. He also singled out Iran, Iraq and North Korea, saying, "States like these, and their terrorist allies, constitute an axis of evil." These nations hardly constitute an "axis": Iran and Iraq are mutually hostile, and North Korea is isolated from both. But by selecting states he could plausibly accuse of "seeking weapons of mass destruction," Bush implicitly legitimized his plans to develop space-based missiles (not openly addressed in the speech). (Quotes from NYT, Jan. 30) University of Virginia presidential scholar Larry Sabato hedged at stating the obvious: "I'm not cynical enough to believe that's his motivation, but there are political consequences in what he says. If he had declared victory in the war on terrorism, all the focus would have moved to the economy and Enron, where the democrats are stronger. By keeping the focus on the war on terrorism, it keeps it on ground much more favorable to him and his party." (Newsday, Feb. 3) [top]


News coverage immediately after the 9-11 attacks was based on solid sources and "just the facts," but media standards have since slipped, according to a study of 2,496 television, magazine and newspaper stories by the Project for Excellence in Journalism. Every assertion in the stories was categorized as either fact, analysis attributed to reporting, or unattributed opinion/speculation. The study analyzed four newspapers--the New York Times, Washington Post, Cleveland Plain Dealer and the Fresno Bee--as well as Time, Newsweek and various national TV programs. "The news media reacted to the terrorist attacks of Sept. 11 with great care about not getting ahead of the facts," the report said. Three-fourths of the coverage was strictly factual and just 25% involved some level of interpretation. By Dec., however, the share of factual coverage overall had fallen to 63%--a level "lower than those seen in the middle of the Clinton-Lewinsky scandal." Analysis, speculation and outright opinion picked up the slack. The researchers also found a stark difference between newspaper or magazine stories and TV reports: 82% of print accounts were factual, compared to 57% of TV accounts. The study said government restrictions imposed on journalists could be a cause for the decline in factual reporting. Not surprisingly, the study concluded that coverage heavily favors official US positions. About half of the relevant stories contained only viewpoints in line with White House policy. TV news was measurably less likely than print stories to include criticism of the administration. (AP, Jan. 28)

In a related story, a Nov. survey by the Pew Research Center indicated the public's traditionally jaundiced view of the media had warmed significantly. Compared with just a few months earlier, the proportion of people who felt journalists "stand up for America" grew from 43% to 69% while those inclined to believe the press "protects democracy" rose from 46% to 60%. (The Globe Online, Jan. 28) [top]

For John Ridley, writing on, the signal that the US was returning to normalcy after the 9-11 attacks came with a TV commercial that read: "The American dream. We refuse to let anyone take it away. So GM announces interest-free financing on every new car and every new truck." Observes Ridley: "In lesser hands, the ad might have come off as the work of a morally bankrupt big corporation trying to reduce the greatest single day of tragedy in the history of this country to a cheap sales pitch. But the genius is in the ad's subtle psychology. By trivializing the terror attacks, General Motors actually helps us realize how insignificant they were compared to the business of selling cars. By marrying the tragedies with low interest financing, they remind us that if we all don't go out and buy a new Pontiac Aztec we're just letting them win." Following the GM ad, Miller Brewing ran a spot featuring actual hand-written signs from across the US expressing sympathy for the 9-11 victims. "This deeply moving tribute ended with a big fat Miller logo as if to say: there's no better way to salute these heroes than by poppin' a cold one." Anheuser-Busch, Southwest Airlines and other companies made donations to various relief organizations--"then promptly ran ads to make sure we all know what a bunch of Samaritans they are. Doing good might be it's own reward... but why take the chance?" But Ridley finds the beleaguered travel industry the worst offenders. "The US Travel Industry Association is running ads interweaving speeches by President Bush with cruise ship employees and amusement park personnel telling us to quit crying, get off our collective duffs, get out there and have some fun. It might be demeaning for some to have the most powerful man shilling between ads for burger joints and adult diapers. But the same as it's the duty of reluctant generals to wage war regardless of the human toll, it's the unpleasant chore of corporate suits and Madison Ave. flaks to have to persuade us that...beyond every tragedy, there's a reeeally good deal to be had." [top]


New York 1 reported Jan. 20 that dangerous substances were stored in 7 World Trade Center before it collapsed Sept. 11. Con Edison reports show the building contained 109,000 gallons of oil and hundreds of pounds of hazardous chemicals in two electrical substations. The substances were probably released when the building fell. Trace amounts of PCBs and large quantities of sulfuric acid are among the hazardous materials, the reports say. PCBs are suspected carcinogens, and sulfuric acid is a respiratory irritant and a possible carcinogen. [top]

The World Trade Center disaster was US history's first total collapse of high-rise buildings in a fire, and the largest structural collapse in world history. Sally Regenhard, whose firefighter son was killed in the collapse, launched a battle for an independent investigation with the Campaign for Skyscraper Safety, a project of parents and relatives of firefighters and WTC victims. The federal government has finally agreed to such an investigation. But Regenhard wrote in the Daily News Jan. 24: "Now we must urge Congress to provide emergency funds as soon as possible. Just as important, we must convince our public officials to stop recycling the WTC structural steel immediately. Recycling amounts to destroying physical evidence that holds clues to why the towers fell... When a plane crashes, we do not throw it away. All parts are meticulously recovered and reconstructed. In the case of TWA Flight 800, the government spent $50 million to find out why it crashed. So far, only $600,000 has been spent for a crime involving nearly 3,000 homicides at the WTC. And the city almost immediately began to dispose of the steel and other debris, which is material evidence in a heinous crime. Why was it so quick to enter into a $50 million scrap-metal contract, shred the steel and sell it to foreign markets? The question of who was responsible for signing off on this remains unanswered. We have lost precious time. The relatives of the doomed 3,000, supported by fire science experts, agree on the importance of examining the steel evidence. Why is it still being thrown away?" [top]

The New York Post reported Jan. 28 that Judith Nathan, ex-mayor Rudolph Giuliani's paramour, has been appointed to a seat on the board of the Twin Towers Fund. The Post said Nathan is one of 14 friends, supporters or former employees of Giuliani on the charity's volunteer board. A former aide told the Post that Nathan has been helping the fund since its inception. Giuliani established the Twin Towers Fund shortly after Sept. 11 to raise money for the families of rescue workers who died in the terrorist attacks. The board's roster reportedly includes Giuliani's former police commissioner Bernard Kerik, his former Fire Commissioner Thomas Von Essen and actor Arnold Schwarzenegger. Giuliani himself will chair the board. [top]


The General Accounting Office, Congress' investigative arm, announced it will sue the White House to force Vice President Dick Cheney--author of the Bush administration energy policy--to release documents detailing contacts between Enron executives and the Bush administration energy task force (NYT, Jan. 31). The scandal, now front-page news from coast to coast, may reveal the hidden corporate interests lying behind not only White House energy policy, but also the so-called War on Terrorism in Afghanistan and Central Asia.

The Houston-based energy giant began to collapse in Oct. last year, brought down by huge debts and accusations of accounting irregularities. It filed for bankruptcy in Dec., after admitting it had hidden huge losses from its books. Investors--including employees of Enron and West Coast utilities it had taken over, whose 401(k) retirement plans were wiped out--are suing the company (Financial Times, Jan. 11). The SEC, FBI and Congress have all launched investigations into the financial sleaze which led to the biggest corporate bankruptcy in US history--but Attorney General John Ashcroft had to recuse himself from the probe due to Enron's massive donations to his Senatorial bids (NYT, Jan. 11). Federal prosecutors are threatening to bring obstruction-of-justice charges related to document-shredding against Enron figures and accountants at its auditor, Arthur Andersen (NYT, Jan. 28).

Enron has been President Bush's top financial backer throughout his career. Enron and affiliates gave over $110,000 to the Bush/Cheney election campaign, and $300,000 to the inaugural fund. Enron and its executives spent over $2.4 million supporting candidates and parties in the 1999-2000 elections--the vast majority for Republican candidates and the GOP. ( For all this, Bush actually had the chutzpah to shed some strategic crocodile tears over his mother-in-law losing $8,096 in the Enron collapse (Washington Post, Jan. 23).

Enron's apparent backstage role in White House energy policy is coming to light in the scandal. At least 4 Enron consultants and executives have done work for the administration. A champion of the deregulation favored by the White House, Enron Corp. Chairman Kenneth Lay (who has since stepped down) was a frequent informal adviser to the Cheney-led national energy panel. (UK Independent, Jan. 6)

A few months after Lay gave the White House got a list of recommended candidates, two of them were appointed to top federal energy positions. Lay gave the list of names to Clay Johnson, Bush's personnel director, admitted White House spokesperson Anne Womack. Among the 8 names were Pat Wood, now chairman of the Federal Energy Regulatory Commission (FERC), and FERC member Nora Brownell. Bush, as Texas governor, had also appointed deregulation-advocate Wood to head the state's Public Utilities Commission in 1995. Enron went on to exploit the loosened regulatory climate in ambitious deals to gain control of a large chunk of the West Coast energy market. The White House has also acknowledged that Lay met at least once privately last year with Cheney, whose task force drew up the national energy policy calling for opening the Arctic National Wildlife Refuge to oil exploitation, reviving nuclear power and bringing the Caspian Basin on line as a new global petroleum source ( Report of the National Energy Policy Development Group). (AP, Feb. 1) [top]

A new study of the 2000-1 West Coast energy crisis which caused blackouts nearly across California found that the entire affair was "just a hoax to make money." The Foundation for Taxpayer and Consumer Rights (FTCR) used government and industry data for the 58-page report, entitled "Hoax: How Deregulation Let the Power Industry Steal $71 Billion From California." The study claims the California electricity system did not fail according to the laws of supply and demand, as was widely portrayed. The California crisis was intentionally "orchestrated by a power industry freed from price regulation that will cost $2,200 for every Californian." Contrary to claims by the energy industry and President Bush that there was an "energy shortage" in California, the crisis ended late last spring after Gov. Gray Davis committed the state to spending $43 billion for energy over the next 20 years. The report accuses the industry of manufacturing blackouts so that it could gain the overpriced long-term contracts. "It wasn't a shortage, it was a shakedown," said FTCR's Harvey Rosenfield. "The utilities, energy companies and power traders backed deregulation because they knew it would be a license to steal. Once freed of state scrutiny--once the cop was off the beat--they held the state hostage... When they stole as much as they thought they could get away with, the 'crisis' mysteriously disappeared--leaving the people of California stuck with the tab." (

Enron was among the largest beneficiaries of California's energy crisis. Under the state deregulation plan, California utilities were required to divest half their fossil-fuel power plants and buy electricity from out-of-state energy companies like Enron. Barred from entering long-term contracts for cheap power, the utilities were required to buy at whatever the market would bear on a day-by-day basis. In a New York Times op-ed piece (May 31, 2001), Gov. Gray Davis complained how White House policy--particularly the deregulation dogma of the Federal Energy Regulatory Commission--allowed the out-of-state companies to manipulate the price of natural gas and hold California consumers hostage. Davis argued that FERC's inaction in the face of the crisis violated the Commission's own mandate: "The law requires FERC to ensure that rates are just and reasonable. California itself can do nothing about the unconscionable wholesale electricity prices that are often more than 700% higher than they were just a year ago. President Bush must direct the commission to exercise its authority under the law... The agency that runs California's power grid has identified $6 billion in overcharges by the generators. Prices are greatly inflated. The same electricity that cost Californians $7 billion in 1999 was $27 billion in 2000 and is projected to cost upwards of $50 billion in 2001. Much of this is fed by escalating wholesale natural gas prices that were 1,000% higher in Southern California is Dec. 2000 than in Dec. 1999."

In April 2001, California's biggest investor-owned utility, Pacific Gas & Electric Co., filed for bankruptcy, blaming politicians for failing to act in the crisis (NYT April 7, 2001). The parent Pacific Gas & Electric Corp. was not affected, protecting the top investors--a tactic challenged by California Attorney General Bill Lockyer, who has brought suit against the holding company, charging it with breaching legal agreements to protect ratepayers ( Lockyer press release, Jan. 10, 2002 ). Enron is owed $570 million by the bankrupt utility (Houston Chronicle, June 28, 2001). In the wake of PG&E's bankruptcy, Gov. Gary Davis accused Enron and its cohorts of being "pirates" (, Dec 24, 2001). Enron CEO Kenneth Lay took home more than $140 million last year and donated $100,000 to the Bush inauguration party (California Labor Federation, <>).

An April 2001 memo from Enron's Lay to VP Dick Cheney as the two met to discuss the energy crisis and the formation of a new national policy was recently leaked to the San Francisco Chronicle. Critics say the two-page memo shows how administration policy mirrored Enron's priorities. Sen. Barbara Boxer (D-CA), called the memo "a smoking gun." Sen. Dianne Feinstein (D-CA) has asked the Energy & Natural Resources Committee to schedule hearings on Enron's role in the negotiations that led California impose the deregulation policy in 1995. (Salon,com, Feb. 1)

According to a report in the on-line magazine Salon by Anthony York: "Vice President Cheney has already admitted that he and Enron CEO Ken Lay discussed the California situation in some of their six meetings last year, leading some critics to believe that Bush's hands-off policy toward California was done at Enron's bidding. Lay was also instrumental in replacing the chairman of the federal commission that regulates energy issues [FERC] with his own nominee, after the original chairman refused to kowtow to Enron's wishes on electricity deregulation. A California state Senate committee is currently calling for depositions of Enron and Arthur Andersen officials to find out if the former energy giant or its auditors willfully destroyed documents that were under subpoena from the committee. And an ongoing criminal investigation by California Attorney General Bill Lockyer is still looking into allegations that energy producers and traders, including Enron, artificially manipulated the price of energy to profit off of California's poorly constructed energy deregulation plan." (Salon,com, Jan. 16)

Enron reported an income of $777 million in the fourth quarter of 2000, while California citizens were facing rate hikes and rolling blackouts. When Enron CEO Jeffrey Skilling spoke at San Francisco's elite Common Wealth Club on "The Roles and Responsibilities of the Energy Industry" last June 21, Agent Chocolate Supreme of the Biotic Baking Brigade (BBB) wafted a blueberry tofu cream pie into his face, crying, "This is for the millions you've stolen from California's real working people!" Said the pie-throwing activist: "Mr. Skilling, who personally made $132 million this year, creamed us--so I, Agent Chocolate Supreme, felt obligated to cream him. Energy companies such as Enron are the ones who lobbied for deregulation. they bought off our politicians to make laws in their favor, and are now getting rich off us, everyday working people, as our rates are going up up up." (A-Infos news service, June 21 ) Skilling saw things differently. "We are on the side of angels," he told a reporter. "People want to have open, competitive markets. They want fair competition. It's the American way." (Pratap Chatterjee for, Dec. 17, 2001)

Although the California crisis had nothing to do with oil, Cheney's Report of the National Energy Policy Development Group (officially entitled "National Energy Policy: Reliable, Affordable and Environmentally Sound Energy for America's Future") explicitly invoked the "electricity shortages and disruptions in California" to push its agenda of oil development in Alaska's North Slope and Central Asia's Caspian Basin. The report was released in May 2001, in the midst of the crisis. ( Report of the National Energy Policy Development Group) [top]

In a July 1998, the US State Department announced it was "pleased" that the government of Turkmenistan had selected the US company Enron to carry out a feasibility study for the trans-Caspian gas pipeline. Under the deal, funded by the US Trade & Development Agency (TDA), Enron was contracted to provide an analysis of the technical, economic and environmental aspects of the project, which had the official backing of the White House, NATO allies and major Western oil companies. Read the State Department announcement: "The United States Government has made development of Caspian energy resources along an east-west transport corridor a top priority and welcomes Turkmenistan's decision." The TDA funding for the study was part of the US Caspian Sea Initiative, through which the three federal trade financing agencies (TDA, OPIC, and EXIM) are coordinating programs "and putting US Government support behind the drive to move Caspian oil and gas to world markets." ( Press statement by James P. Rubin, State Department spokesperson )

The pipeline is to cross the Caspian Sea and deliver Turkmenistan's natural gas to global markets via Turkey, and to be followed by an oil pipeline on the same route. This route was decided on after repeated efforts by the State Department and Texas oil giant Unocal (top investor in the Turkmenistan oil fields) to strike a deal for a route across Afghanistan with the Taliban regime. (See WW3 REPORT # 4, WW3 REPORT # 5) [top]

Human Rights Watch has re-issued a 1999 report charging Enron with complicity in human rights abuses that plagued the corporation's Dabhol power plant in India from 1992 to 1998. The 166-page report, "The Enron Corporation: Corporate Complicity in Human Rights Violations," documents how Enron subsidiaries paid local law enforcement to suppress opposition to its power plant south of Bombay.

"Enron is now being widely accused of arrogance and lack of transparency, but the people of Dabhol have known that all along," said HRW's Arvind Ganesan. "Enron was complicit in human rights abuse in India for several years." Local opposition to the project began in 1992 over concerns about corruption in the hasty negotiations over the terms. Farmers complained the power plant had unfairly acquired their land and had diverted scarce water.

The report documents how contractors for the Dabhol Power Corp. harassed and attacked local opponents of the project. Police refused to investigate complaints, and in several cases arrested the victims on trumped-up charges. Dabhol Power, under provisions of law, reimbursed the abusive state forces for the security they provided the company. The forces were stationed there largely to deal with protests.

In one instance in June 1997, Maharashtra state police raided a fishing village where many residents opposed the plant. They arbitrarily beat and arrested dozens of villagers, including Sadhana Bhalekar, wife of a well-known protester. They broke down the door and window of Bhalekar's bathroom and dragged her naked into the street, beating her with batons. Bhalekar was three months pregnant at the time. In May 1997, police beat and arrested nearly 180 protesters who were demonstrating peacefully outside the company gates. Both Enron and Maharashtra authorities ignored public complaints. "Dabhol Power Corporation would not tolerate any human rights abuses by its employees and sub-contractors," the company said in a 1997 statement. Tentative Enron steps to address future violations ended when the company collapsed.

Ganesan accuses the US of "aggressive lobbying" on behalf of the project--despite widespread Indian press reports of the human rights issues around the plant. The US failed to investigate the matter, but extended $300 million in loan guarantees to Enron for its Dabhol investment. The Export-Import Bank (EXIM) requires a human rights analysis of its loans, but the State Department's entire human rights assessment for one EXIM loan for the Dabhol project read: "The State Department has no objection to this case on political grounds or on the basis of human rights issues." A 2001 Congressional measure to strengthen EXIM's human rights oversight was "killed" by a House committee at Bush administration request.

Maharashtra state terminated its agreement with Dabhol Power in June 2001 following a dispute over plant's high rates. Dabhol Power ceased operations but insisted the state repay its debts. The dispute but was complicated when Enron declared bankruptcy on Dec. 2, 2001. On Jan. 17, Enron reportedly filed a $200 million claim with the US Overseas Private Investment Corporation (OPIC) to recoup losses from the project. ( [top]

In 1988, Rodolfo Terragno was Minister of Public Works & Services for Argentine's President Raul Alfonsin, whose government was considering building a pipeline to transport natural gas to Chile. Several US firms were interested--including Enron. But Terragno was upset with Enron's representatives in Argentina, who were pressing for a deal to buy from the state-owned gas company at an extremely low price. Terragno told the Enron agents he was not happy. Terragno says shortly later he received an unexpected telephone call from George W. Bush, who introduced himself as the son of the Vice President. (The elder Bush was then campaigning for the presidency.) Terragno claims George W. told him he was keen to have Argentina proceed with the pipeline, especially if it signed Enron on. "He tried to exert some influence to get that project for Enron," Terragno said. "He assumed that the fact he was the son of the [future] President would exert influence.... I felt pressured. It was not proper for him to make that kind of call."

Terragno didn't know that Bush is an old friend of Enron head Kenneth Lay. The Enron company and its top officers had donated at least $100,000 to George W. Bush's Texas gubernatorial campaigns. After the 1992 election left Secretary of State (and Bush pal) James Baker jobless, he signed as a consultant for Enron.

Shortly after Terragno's conversation with George W., Terragno says he was paid a visit by US Ambassador Theodore Gildred. who cited Bush's support for the Enron project as a reason Terragno should back it. Terragno didn't OK the project, and Alfonsin was voted out in 1989. The pipeline was approved by his successor President Carlos Menem--another friend of President Bush. George's brother Neil Bush played tennis with Menem in Buenos Aires the day after the inauguration. Argentine legislators complained that Menem approved the pipeline project before economic feasibility studies were prepared.

Replying to questions from The Nation on whether Bush spoke to Terragno about the pipeline, Bush's gubernatorial campaign issued a terse statement: "The answer to your questions are no and none. Your questions are apparently addressed to the wrong person." This blanket denial covered one question inquiring if Bush had ever discussed any oil or gas projects with any Argentine official. The denial is contradicted by a 1989 article in Argentina's La Nacion daily reporting he met that year with Terragno to discuss oil investments. An Enron spokesperson said, "Enron has not had any business dealings with George W. Bush, and we don't have any knowledge that he was involved in a pipeline project in Argentina." Ex-ambassador Gildred was unavailable for comment. (David Corn in The Nation, Feb. 4) [top]

Late Croatian president Franjo Tudjman negotiated a controversial memorandum of understanding with Enron before his death in Dec. 1999. It would give Enron rights to build a power station in Croatia and run it for 20 years, selling power to the state electric company at dramatically above-market rates. The final deal was less favorable, but still fixed prices above market rate. The contract expires this summer, and details are unclear due to confidentiality agreements. Enron's power deliveries to Croatia ended on Nov. 30 when other European operations ceased, and the power station was not built. Questions about the deal intensified after the election of a democratic government in Jan. 2000. Tapes of conversations show Tudjman hoped giving Enron the contract would secure political favors. In the weekly Globus, President Tudjman boasted that if he signed the deal he would be rewarded with a visit to Washington and Croatian entry into the World Trade Organization and NATO. He also linked the deal to avoiding his own arrest and that of other senior figures by the Hague-based International Criminal Tribunal. Tudjman led his country to independence from Yugoslavia but was accused of complicity with war crimes against Serbs and running an authoritarian regime. In one meeting, Tudjman reportedly asked Enron international operations chief Joseph Sutton how much influence his company had with the US State Department and whether it could arrange WTO entry. "Mr Sutton said he could not promise WTO membership, but guaranteed that Enron and the US would lobby for Croatia's entry into the WTO, Partnership for Peace and NATO." (Financial Times, Jan. 31) [top]

Ex-Enron vice chair Thomas E. White is now Bush's Secretary of the Army. Former employees accuse him of having overstated profits by hundreds of millions. His final salary at Enron was $5.5 million, and he made $12 million when he sold his shares upon being appointed Army Secretary (NYT, Feb. 1). Ex-Enron vice chair J. Clifford Baxter was found dead in his car in a Houston suburb Jan. 24, "an apparent suicide," police said. Baxter netted nearly $22 million on Enron stock options since 1998. He was killed by a gunshot to the head (CNN Jan. 26). According to a letter by former Enron chair Kenneth Lay, Baxter "complained mightily to Skilling and all who would listen about the inappropriateness of our transactions..." (NYT, Jan. 16) One "former business associate" told the New York Times he spoke with Baxter by phone two days before he was killed and he "was talking about perhaps needing a bodyguard." (NYT, Jan. 26) [top]


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