And then came the moan about the Dabhol power project. "The Dabhol dispute feeds a chronic perception...that India may not be ready yet for big-time international investment," he said. The usual bogeyman was hauled out, that India had violated the sanctity of a contract, the very basis of any business activity, and this gave the heebie-jeebies to anyone looking to invest in the country.
Later that day, Blackwill screened John Ford’s 1956 classic The Searchers for an elite Delhi audience of editors and past and current bureaucrats and diplomats. The choice of film was pleasantly puzzling initially (why not Ford’s best-known film, Stagecoach?), till a former diplomat called me up and said: "The subtext of the show was very interesting."
But I digress. First, Enron. There’s no clear evidence that the Maharashtra State Electricity Board’s refusal to pay Enron’s bills has affected foreign investment negatively. (We don’t need the Enron case to scare away investors. Our babus can do that well enough, thank you.) As for this "sanctity of contract" business: as far as my limited understanding goes, the Dabhol contract can be proved invalid on at least four perfectly legal grounds:
The contract is violative of the nation’s laws: The sort of guarantees and counter-guarantees that were given to Enron are not allowed under the Indian Constitution. Of course, the agreement explicitly mentions that the Indian Constitution is not binding on the deal but no state or central government is allowed under the Indian Constitution to sign a deal that does not recognise the Constitution.
That the contract is against public interest: The honouring of the contract will place a totally unbearable burden on the people of Maharashtra.
That the contract was signed based on wrong information given by one party: Enron lied outright on a number of issues while presenting its case, especially on matters like the cost of their other power station, the rate of interest and the costs of fuel, shipping, operation and maintenance (some of these by a couple of orders of magnitude).
That the contract was "conceived in fraud": This is difficult to prove since evidence on the outrageous bribery that was the real fuel for the project (and not LNG) is obviously hard to come by. But one needs to prove any one of the other three conditions (and all three can be easily proved) and the contract can be declared null and void. Sanctity of contract? Give me a break. Weren’t US companies forced by their government to renege on contracts with Indian firms relating to "sensitive" technologies after the US imposed post-Pokhran sanctions?
Now to he Searchers. A magnificent film, it stars John Wayne as a racist ex-soldier relentlessly pursuing—for five years—a band of Comanche Indians who killed his family and kidnapped his niece. When he finally locates his niece, she is more Comanche than Texan and is possibly sleeping with her captor, and Wayne decides to kill her, having a change of heart only when he is about to press the trigger. The film is far more complex than this bare storyline suggests, dealing as it does with Wayne’s gradual redemption, his relationship with his half-breed companion Martin and Martin’s journey from boy to man. Perfectly fine, except for the subtext, which are as follows:
- You can run from Americans but you never can hide, because Americans never give up on a mission, whether it’s a Comanche murderer or Osama bin Laden.
- This does not mean Americans are racists; Asian types wearing turbans in the US are safe. Even if some Americans are racist, they see the light in the end.
- People who betray American values only because they don’t know better will be forgiven and integrated into American society.
India wants to do business—much more business—with the US. But trade ties are different from blind dates.
