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Wednesday, Feb 06, 2002

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Breach of contract will hit US investments: Blackwill

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IF American investors come to believe that India does not protect the sanctity of contracts, it will be a deathblow for further American investments in India, according to the US Ambassador to India, Mr Robert Blackwill.

Answering questions at a press conference here today, Mr Blackwill was of the view that the problems faced by Enron in the US and the concern of American companies about the sanctity of contracts in India were unrelated issues.

He said that there were some in India who believed that Enron's extraordinary problems in the US somehow wiped away the concerns of the US business community about the sanctity of contracts.

This was not true. These concerns came long before Dabhol (the power project majority-owned by Enron). There were other US power companies that had problems with their contracts. And, these had nothing to do with Enron's collapse.

Mr Blackwill told a questioner that it was normal for US embassies to support US business interests wherever they might be. It was absolutely routine for American companies to approach the embassies to promote their business activity in the country. In that context, he and his predecessors had been concerned about the Dabhol power project to counsel a fair resolution to the dispute. That was what had been done.

He agreed with a questioner that India-US trade relationship had taken a backseat in the light of increased defence and political engagements between the two countries. He had expressed concern that the India-US economic relationship was falling behind major advances in other areas. The US trade to India was flat and so was the case with US FDI in India. This was a subject of concern and it was in the US' interest to increase trade and investment. It would be of benefit to the long-term relationship if economic relationship took off, he said.

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