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US Deputy NSA warns about investment chill if Bhopal case goes on

Posted by Sara | Opinion | Wednesday 25 August 2010 12:49 am
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US Deputy NSA warns about investment chill if Bhopal case goes onThe Manmohan Singh government is under immense pressure from the United States after its request to provide relief to Dow Chemicals was answered by a warning. The US deputy National Security Advisor Michael Froman said that this could have “a chilling effect on the investment relationship” between the two countries.

Mr Ahluwalia briefed Mr Pulok Chatterjee, ED at World Bank, in a subsequent communication, about demand to go soft on Dow by Mr Froman.

From Economictimes.indiatimes.com:

In his e-mail to Mr Froman, Mr Ahluwalia had sought American help at the World Bank meeting. “I wonder if I can enlist your help on a matter relating to India’s borrowing from the World Bank. We are about to hit the arbitrary single borrower limit in IBRD which forces IBRD to cut new lending to India drastically unless the limit is relaxed. You may remember I had mentioned this as an issue when we discussed the IBRD capital increase in G-20. The matter is coming up in the IBRD board audit committee on Monday. The US is a member. The management wants a relaxation for India. The British prime minister was in Delhi yesterday. We raised it with him and he said that the UK ED would be instructed to support us. Could you speak to treasury to get the US ED on our side? At a time when countries are graduated out of soft assistance, it is normal to switch them to IBRD. But we are faced with a sharp reduction…Larry will fully understand. Hope you can help,” Mr Ahluwalia had said in his mail to Mr Froman.

In a subsequent communication, Mr Ahluwalia briefed Mr Pulok Chatterjee, ED at World Bank, about Mr Froman’s demand to go soft on Dow. While agreeing that quid pro quos are not unknown, he conceded that meeting the demand on Dow could be difficult. “There is always a quid pro quo though I fear on this we are helpless,” Mr Ahluwalia wrote to Mr Chatterjee on July 30. ET is possession of the copies of the e-mail.

Dow, in 1999, bought Union Carbide whose pesticide plant in Bhopal was responsible for leakage of poisonous gas killing more than 15,000 people.

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