How Washington Inc. Makes a Sale - Clinton Adminstration, Enron ~

BODY: IT is 24 hours before a trade mission of two dozen top corporate executives and government officials departs for India, and inside the Commerce Department's sleek new "Advocacy Center," teams of trade specialists are wrestling with the biggest of the last-minute crises: Are India's top leaders ready to make the final concessions needed to close a billion-dollar deal that will allow a consortium of American firms, including Enron, General Electric and Bechtel, to build a giant new power plant just south of Bombay?

For 18 months, the Indian power-plant deal has floated near the top of the list of 100 or so big infrastructure projects around the world that the United States Government desperately wants American firms to win. It is the first of eight big power generation projects in India, and if the American consortium could close this one, it would create a precedent likely to give other American companies an advantage in billions of dollars of follow-on deals. In years past, American officials would have offered some modest help, but only as a sideshow to bigger foreign policy concerns, from containing Communist influence in South Asia to keeping India and Pakistan from accelerating their nuclear arms race. But that was another era in American foreign policy, before the Commerce Department built what Jeffrey E. Garten, the undersecretary of commerce for international trade, calls "our economic war room."

From that Washington war room, the negotiators for the Enron Corporation, the lead bidder in the American consortium, have been shadowed and assisted by a startling array of Government agencies. In a carefully-planned assault, the State and Energy Departments pressed the firms' case. The American ambassador to India, Frank G. Wisner, constantly cajoled Indian officials. The Secretary of Energy, Hazel O'Leary, brought in delegations of other executives -- including some last week -- to make the point that more American investment is in the wings if the conditions are right.

To sweeten the pot, the Export-Import Bank of the United States and the Overseas Private Investment Corporation put together $400 million in financing. And working just behind the scenes, as it often does these days, was the Central Intelligence Agency, assessing the risks of the project and scoping out the the competitive strategies of Britain and other countries that want a big chunk of the Indian market.

The big push by Washington Inc. paid off last month when the Indian government awarded the power plant project to the American consortium.

After years of false starts, Washington is finally taking a solid crack at a sport long familiar to the Japanese and the Europeans: Commercial diplomacy. Not since the days when the American Navy was sent to open up trading ports in Japan and China -- a less subtle form of government advocacy for business -- has the United States made such a concerted effort to win deals for American companies.

"I for one was tired of seeing President Mitterand and Chancellor Kohl travel the world representing their country's industry while we stood back and did nothing," Commerce Secretary Ronald H. Brown said recently. "Our attitude was "Good luck, let us know how it turned out."

Yet Washington's new approach has also generated new questions and policy conflicts for the Government. Should the United States be helping cigarette makers and nuclear power firms conquer foreign markets? Should it be sending trade missions to sell power equipment to China -- one such delegation arrived there yesterday -- while simultaneously threatening $1 billion in sanctions if China fails to adhere to copyright and patent conventions? And what are the limits to employing America's huge intelligence apparatus to bolster American business interests abroad?

Still, it is clear that economic imperatives have changed the dynamics of American foreign policy for good. The State Department, for example, now trains every American ambassador how to promote American businesses abroad. "There is a recognition now that promoting private investment and trade abroad is a primary interest of our policy," said Joan Spero, the former American Express executive who now serves as undersecretary of State for economic affairs. "That is a big conceptual change."

In Washington, of course, there is no instinct stronger than bureaucratic self-preservation, and that explains the movement as well. Arguing that you help create jobs is a favorite maneuver to avoid the budget knife. Senator Jesse Helms, the volatile Republican chairman of the Senate Foreign Relations Committee, hates foreign aid -- but he loves the profit-making O.P.I.C., which, along with the Export-Import Bank, has become a hot new instrument for exercising American influence in developing economies.

For the White House, aggressive advocacy of business interests is also a way to answer critics who argue that free trade is nice on paper, but a disaster in the global marketplace, where relationships, power politics and influence-peddling often determine who gets the deal. "The world's free trade rules don't work yet," said Mr. Garten, architect of the Administration's plan to focus on major "emerging markets" like China, Brazil and Indonesia. "Countries still award contracts for highly political reasons. And we are saying we can't wait for trade rules to unfold."

IT is Mr. Garten, perhaps the Administration's most articulate champion of the new age of foreign economic policy, who transformed a cramped room of a few bureaucrats charged with export promotion into the situation room for trade wars. But the headlines usually go to his boss, Mr. Brown, who never seems to travel anywhere without issuing a press release about the billions in contracts he is bringing home.

The Commerce Secretary's detractors say that many of the deals are cooked long before he lands. His boosters -- and there are many in business community -- argue that his Cabinet-level influence has helped sway foreign governments.

"The Commerce Department today is the most effective and proactive it has been in my business career," said Robert Eaton, the chairman of the Chrysler Corporation, which has worked with American officials for two years in a so-far unsuccessful effort gain China's approval for a joint venture to build minivans there. "And one reason is that Ron Brown is not bashful in asking for the order."

But it is Secretary Brown's same penchant for aggressive dealmaking that prompted the Justice Department last week, after months of allegations, to announce that it was beginning a deeper investigation of Mr. Brown's murky transactions with a number of business partners before and just after he became Commerce Secretary, including why he was paid $400,000 for his stake in a nearly worthless company in which he invested no money. Mr. Brown is always enthusiastic about talking about his export successes, but he declined an interview last week unless the reporter agreed not to make on-the-record inquiries about the business dealings now under investigation.

ETHICS questions aside, there is no doubt that under Mr. Brown the Commerce Department has radically changed the way it operates. For decades the department has represented American business interests abroad with the foreign commercial service and endless export programs, but it was always an effort short on staff, funds and political savvy.

It was during the Bush Administration that Washington slowly awakened to the reality that foreign governments were devoting far more resources to commercial competition abroad than Washington. Some of the numbers are stark: In Indonesia, one of the biggest of the emerging markets, Japan provides $2 billion a year in foreign aid, 20 times the American figure.

Searching for a way to respond, Congress created the Trade Promotion Coordinating Committee in 1992 to fashion a unified command among 19 or so agencies that often fly in different directions.

"It was a terrific idea and piece of legislation," said Kenneth Brody, a former investment banker at Goldman Sachs & Company, who is now chairman of the Export-Import Bank. "But when I asked what was going on to implement it, I was told pretty much nothing."

Now that committee and its spin-offs meet almost weekly, constantly revising a list of major projects around the world that have caught the attention of corporate executives, ambassadors, the C.I.A., or other agencies, and assessing American chances to win the business.

Often, as in the case of the Enron-led consortium's 695-megawatt project 120 miles south of Bombay, that means arm-twisting in foreign capitals to change the way nations do business. India will need a huge amount of power-generation in the next decade, and its officials realized that this would require a massive opening of the country's strictly-controlled market to allowing private capital to flow in.

Eventually, after a series of trips by American officials, India's leaders overcame objections from domestic industry and protectionists in its own Government, agreeing to issue guarantees that would protect the American investment. "This is the ball game these days -- complicated deals, endless details, lots of frustration, and big money," Mr. Garten said. "That's the future of foreign policy."

From the time it took office, the Clinton Administration made clear that the future of the C.I.A. -- to say nothing of the justification for much of its budget today -- lay in turning its resources to detailed, focused gathering of economic intelligence. Today, that is happening every day, with mixed success.

For years the agency has helped America's trade negotiators, providing day-to-day assessments -- sometimes right, sometimes wildly off-base -- about the strategies of countries sitting across the table. But in the last 18 months Mr. Garten and others have worked closely with the agency to focus its attentions on the Big Emerging Markets -- "BEMs" in Commerce-speak -- and the race to win contracts for the power plants and hospitals, the airplanes and the airports that will keep those countries booming.

"The agency has transformed itself tremendously," said Mr. Brody, "It is now able to provide very wide-ranging information, from the broad to the very specific."

STILL reeling from the Aldrich Ames scandal and trying to justify its role in the post-Cold War world, the intelligence community wants to redeem itself by showing economic sophistication. In his last report to the Senate before resigning last month as the C.I.A.'s director, R. James Woolsey described its economic mission in unusually specific terms, saying it is now assessing "whether nations are skirting the rules of international trade by using their intelligence services for industrial espionage, or exerting pressure to win contracts for their firms at the expense of American business and American jobs."

"This does not mean we are conducting economic espionage -- we are not in the business of spying for private firms," he said. "But it does mean that we bring these corrupt foreign practices to the attention of the White House and the State and Commerce Department, who then seek redress -- often successfully."

The most stark example, Government officials say, came last Spring, as Raytheon Corporation battled with Thomson CSF, a giant French electronics firm, for the right to lead a $1.4 billion project in the Amazon. It was a high-tech exporter's dream: The winner would set up a complex surveillance system, using radar, satellite imagery and computers to measure the health of the rainforest, catch illegal mining operations and detect drug trafficking. The lobbying was so intense that when Mr. Brown went to Brazil with a delegation of business executives he kept tripping over a French minister, making the opposing pitch.

As the competition reached a fever pitch, the C.I.A. came in with reports that the French were offering large bribes to Brazilian officials with influence over the decision. "This was really brazen under-the-table stuff, and we had to counter it," one senior government official familiar with the deal said. American officials made it clear to Brazil's leadership that they knew what was going on, and -- based partly on data the agency gathered -- matched France's financing terms.

President Clinton wrote a letter backing the American bid. The pressure worked. "This blew away the French," said one American official who was eager to cite the case as an example of the C.I.A.'s utility in the economic sphere.

That is not always the outcome, especially in places like China, where bribery is the norm, and American firms are caught between losing the business and violating the Foreign Corrupt Practices Act. One senior Administration official says he favors changing policy so that the United States would routinely leak evidence of bribery to the press, hoping to embarrass the offending Government. But that would also tip off American competitors, and drive the effort to influence contracts further underground.

AT least publicly, the agency has yet to talk about the limits of its growing economic mission. But it is bound to become a bigger issue in coming years, as tension rises with allies who are also competitors for billions in contracts. That tension is already evidence in Tokyo, where Japanese officials regularly -- though never on-the-record -- grumble about the activities of the C.I.A. station inside the American embassy, all the while denying that the Ministry of International Trade and Industry and the country's biggest trading houses perform the same roles.

At times, all the pressure in the world will not always work, as Chrysler has learned. For several years now it has been looking to expand its presence in China, beyond the production of its famed "Beijing Jeep," a car so popular that illicit factories are now producing cheap knockoffs.

The next big project for Chrysler is a chance to build minivans in Guangdong Province, the heart of China's southern industrial area. For the Chinese, though, the minivan project is not only a deal, it is potent political weapon. When Washington declared earlier this month that it would slap a billion dollars in tariffs on Chinese goods unless Beijing reached an accord to end the piracy of American compact disks, movies and software, the Chinese response was quick: Try it, and kiss your car project goodbye. And they have a real alternative: Mercedes-Benz, which is eager to become a force in the world's largest untapped car market.

Chrysler's deal nearly came to fruition last August, when Mr. Brown visited China following President Clinton's decision to de-link human rights concerns from the annual renewal of China's "most favored nation" trade benefits. It was a good trip -- save for complaints that Mr. Brown was insufficiently tough on human rights issues -- and he emerged with a commitment to expand China's purchases of McDonnell Douglas aircraft.

Meeting with Prime Minister Li Peng and President Jiang Zemin, Mr. Brown raised the Chrysler deal explicitly. The Chinese seemed ready.

With Chrysler's Mr. Eaton along on the trip, Mr. Brown upped the ante, saying the deal should be closed before the Secretary's entourage left town. For a while that looked likely. But at the last minute the Chinese told Chrysler it would have to meet a series of new conditions: Better financing terms, and no language in the agreement that would limit China's right to export minivans to third countries, where it would compete with other Chrysler cars.

More disturbing to Chrysler, though, was China's demand that it must be free to copy the manufacturing technology broadly. Mr. Eaton, fearing his minivans would be copied and sold en masse, much like Microsoft's operating systems and Kenny G's compact disks, packed up and went home. Government help or not, it could be a long time before he's driving a Chinese minivan around Beijing.

Mission Energy and General Electric, Indonesia -- $2.6 billion The two companies won a major contract to build a power generation plant last November. Commerce orchestrated American Government's efforts, worked with Indonesian Government to eliminate red tape, met with senior government ministers, and pushed for $500 million in Export-Import Bank financing.

McDonnell Douglas, China -- $1.6 billion China chose McDonnell Douglas last November over rival aircraft makers to supply 20 commercial jets, seating about 110 passengers each. The company and China also enterred a joint venture to make 20 more planes. Commerce officials met with high-ranking Chinese ministers to push American bid.

Raytheon, Brazil -- $1.4 billion Brazil agreed last July to purchase surveillance system for the Amazon Basin from Raytheon, beating out France's Thomson. The satellites, aircraft electronics and computers will track environmental threats like fires in the rain forest and illegal mining. Commerce lobbied Brazilian Government, cleared red tape and enlisted help of CIA.

General Railway Signal, Taiwan -- $65 million Taipei bought railway signaling equipment from the Rochester, N.Y., company last May, which will be used in the Taiwanese city's new mass transit system. American officials pushed for the sale with Government ministers.

Teradyne, South Korea -- initial contract: $5.5 million Teradyne, a small Boston company, had trouble trying to sell its semiconductor test equipment to Hyundai, a major South Korean conglomerate. The problem: Hyundai bought nearly all its chip test equipment from an entrenched Japanese supplier. But after Commerce officials met with senior Korean executives, Hyundai purchased $5.5 million worth of test equipment from Teradyne last July.

GRAPHIC: Photos: Jeffrey E. Garten, undersecretary of commerce for international trade, in the Commerce Department's "Advocacy Center." (David Scull for The New York Times)(pg. 1); Commerce Secretary Ron Brown, left, confers with officials in the advocacy center. (David Scull for The New York Times)(pg. 6)

An article from almost 7 years ago about Clinton, Brown and Enron, as well as other firms.

It shows the SOP of the Clinton admin.

There are Democrats who would pass out on first sight if this story were ran again in the NY Crimes today...

"That ENRON scandal won't bruise me!"

Good one! I thought it was a new article at first until I came back to reality and realized the NYT wouldn't dare shift the focus now with the GOP on the defensive.

Photo caption: "Fighting demoNrats and evil-doers is a tough job, but I love a good fight!"

Good one! I thought it was a new article at first until I came back to reality and realized the NYT wouldn't dare shift the focus now with the GOP on the defensive.

Back in 1995 I think the NY Times saw it as a piece showing how great and progressive the Clinton administraion was.

What it shows, though, is just how entwined they were with Enron.

Yep you're right, they loved the Clinton's "progressive fascism"

Nice term. I think National Socialism is a similar term that fits.

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