Enron Prize: Russian, Central Asian power

HOUSTON, Texas – When former Enron CEO Kenneth Lay and former Secretary of State James Baker welcomed Mikhail Gorbachev to Houston in 1997 to receive the Enron Prize for Distinguished Public Service, more was at stake than toasting corporate America’s victory in the Cold War.

Russia and the Central Asian Republics of the former USSR have the world’s second largest proven reserves of oil and gas. Russia also has the world’s largest electric power grid.

All of it was socialized, owned and developed by the skill and toil of Soviet oil and gas workers, miners, hydroelectric and power station workers. Grabbing those energy resources would be theft on a scale that exceeds all Enron’s global privatization scams rolled together.

On hand at Rice University’s James A. Baker III Institute for Public Policy for the three-day celebration were Henry Kissinger, Warren Christopher, Cyrus Vance and Baker – all former secretaries of state. Baker told the crowd that Gorbachev had “demonstrated incredible personal and political courage” in his role in the downfall of the Soviet Union.

Lay was equally fulsome. Gorbachev is “one of a handful of people alive today who literally changed the world.” He handed Gorbachev a check for $250,000, as if to say, “cheap at the price.”

Four months later, Feb. 2, 1998, Lay flew to Davos, Switzerland, to attend the World Economic Forum. He met there with Boris Brevnov, chairman of Russia’s Unified Electricity Systems (UES).

They signed a “10-year strategic alliance” and agreed on terms of a $55 million joint financing project “as the first transaction under the alliance.” Said Brevnov,

“This alliance with Enron will enable UES to combine our experience in power generation, transmission, marketing and distribution to identify joint projects in Russia, Europe and Central Asia.”

Lay called the agreement “an important step in Enron’s relationship with UES.” UES is the world’s largest electric power utility, generating nearly 20 percent of Russia’s electricity. It owns majority equity in 52 of Russia’s regional electrical companies.

On April 15, 1999, Lay and Baker conferred the Enron Prize on Eduard Shevardnadze, president of the Republic of Georgia. Again, the cliches poured out. The former Soviet foreign minister was a “leader of the democratic reform movements” in the Soviet Union.

“He directed the policies that led to the withdrawal of Soviet troops from Afghanistan” and the “reunification of Germany,” said Baker. Now he has “launched democratic and economic reforms that restored political stability, economic growth and increased cooperation throughout the region.”

Georgia is one possible route for an oil and gas pipeline from the Caspian Sea and the Central Asian Republics to western Europe. This is a project dear to the hearts of oil and gas corporations, the real motive for the flattery that rained down on Shevardnadze.

George W. Bush was governor of Texas while these celebrations gushed forth. Some of the Lay-Bush correspondence during those years has just been released in Austin. In one April 1997 letter, Lay reminds Bush of a scheduled reception at the governor’s mansion for a dignitary from Uzbekistan.

Lay noted that Enron has just signed a $2 billion deal to develop and transport natural gas in Uzbekistan. “I know you and Ambassador Safaev will have a productive meeting which will result in a friendship between Texas and Uzbekistan,” said Lay’s note.

Two years later, Lay wrote asking Gov. Bush to meet with the prime minister of Romania during his visit to Houston. Lay noted that Enron had recently finalized a joint venture to market natural gas in Romania with its rich Ploesti oil fields.

Founded in 1985, Enron was a “new kid on the block” compared with behind-the-scenes partners, such as Citicorp, J.P. Morgan Chase, Chevron, General Electric Capital Services and the Bechtel Group, that provided the main capital backing for Enron’s global ventures.

Enron also required the full political, financial, diplomatic and military muscle of the Pentagon, the State Department and Department of Justice to carry out their global dealmaking. Thus Secretary of State Colin Powell, the first winner of the Enron Prize, twisted the arm of Russian President Vladimir Putin to endorse the building of permanent U.S. military bases in Uzbekistan, Kazakhstan and other Central Asian countries.

Hiding the “oil-gas-electricity” connection in these diplomatic and military maneuvers in Central Asia is one of the reasons Bush and Vice President Dick Cheney are claiming “executive privilege” and refusing to turn over to the General Accounting Office records of Cheney’s Energy Policy Task Force.

It is also one reason Lay has “taken the Fifth” in refusing to testify on the Enron debacle. Neither Lay nor Bush and Cheney want the people to see oil and gas profits in Bush’s foray into Afghanistan and his “war on terrorism.”