The press, business and government have treated the collapse of Enron as if it had been completely unforeseeable, like the iceberg that sank the Titanic. This may have been the case for those who chose to believe the endless sycophantic Enron features in the US business press, even, it appears, for a number of auditors and Wall Street analysts. But for those lacking such `privileged' insight into the company's Byzantine financial structures, there were plenty of clear signs of instability, gross dishonesty and corruption to be seen in Enron's global operations. This was particularly true in the Middle East.
Enron's interests in the Middle East served its main aim in the region, the development of the emerging Indian energy and power market. In 1992 Enron started a $2.2 billion project to build the world's largest gas fired power station at Dabhol, south of Bombay. It was the first foreign direct investment in the Indian power sector, and was concluded without a tender. The power purchase agreement (PPA), the contract between Enron and Maharashtra State Electricity Board (MSEB), was extremely favourable to Enron and almost completely non-transparent, but observers such as Abhay Metha, author of Powerplay, an investigation of the Enron affair, predicted that when Dabhol came online it would almost immediately go bankrupt. This duly happened in 2001, when the full capacity came online. Facing non-payment, Enron simply pulled out of Dabhol. Further indictment of Enron's conduct in India came from the Human Rights Watch report, `The Enron Corporation: Corporate Complicity in Human Rights Violations'.
Enron's India policy was probably to use Dabhol as a bridgehead to help it conquer the rapidly expanding Indian energy market. A central part of this was the supply of LNG. In this, Qatar, situated on India's doorstep and with the world's second-largest reserves of natural gas, was crucial to Enron's scheme. Enron would buy into rigid LNG sale-and-purchase agreements with Qatar, and sell the gas into India through its own import terminals, the first of which was in Dabhol. The Texans assumed that if they turned up in Doha with sufficient dollars, the Qataris would come running to sell them 3-5 million tonnes a year of LNG -- that, in American eyes, is how capitalism works. But to their astonishment, Enron found the Qataris at first unwilling to sell them as much gas as they demanded, and finally refused to sell them any.
The emir and his ministers...