Bechtel Puts Squeeze on Bolivia's Poor
Pacific News Service, Jim Shultz, Posted: Dec 18, 2001
Two years ago, Bolivians rioted when a subsidiary of corporate giant Bechtel tripled water rates in the country's third-largest city. Protests eventually ousted the local water utility. Now, Bechtel is suing the Bolivian government for $25 million in damages and lost future profits.
COCHABAMBA, BOLIVIA--Here in Bolivia's third-largest city, bad news greets the New Year: Bechtel is back.
Two years ago, a subsidiary of Bechtel Enterprises took control of the Cochabamba's water system. Within weeks, the company doubled and tripled water rates for the poor. Mothers living on a minimum wage of $60 per month were ordered to pay $15 or more just to keep water running out of the tap.
Faced -- literally -- with a choice between water and food, people took to the streets to demand that rates be lowered. Bechtel's representatives refused, and the Bolivian government called out soldiers to protect the contract. One unarmed demonstrator, 17-year-old Victor Hugo Daza, was shot in the face and killed. More than 100 others were seriously wounded.
I was there. I saw it happen.
Eventually, in April 2000, the company left. It had no choice -- the protests and the government's violent response wouldn't end until Bechtel's company was gone. Fleeing corporate officials grabbed hard drives from the computers, cash left in the company's accounts and sensitive personnel files. They also left behind an unpaid electric bill for $90,000.
Now the company says it wants more. Last month, it filed a demand of $25 million against the Bolivian government, claiming as an "expropriated investment" the millions of dollars in potential profits it had hoped to make.
Bechtel's water takeover in Bolivia -- the poorest country in South America -- and the popular revolt against it has become an international poster child for the excesses of economic globalization. Now Bechtel's legal action against Bolivia is becoming a touchstone for how corporations are manipulating global trade laws to take further advantage of the world's poor.
Bechtel's legal move last month came in the form of a "request for arbitration" to the little-known International Center for Settlement of Investment Disputes (ICSID), an arm of the World Bank -- the same institution that pressured the Bolivian government into privatizing its water system in the first place.
Like the negotiations that produced the Bechtel contract, the arbitration will be held in complete secrecy, with no opportunity for Bolivians to review a case that could potentially force them to fork over millions of dollars to the same company that threw them into violent crisis last year.
Even Bechtel's access to this arbitration was the result of legal manipulation. As Bechtel admits, the only reason it can force Bolivia into such arbitration is under terms of a treaty between Bolivia and Holland. How did a company based in California get itself covered by such a treaty? As the company was setting up shop in Bolivia two years ago, it quietly filed papers to shift its subsidiary's corporate registration to Holland, apparently in anticipation of exactly the sort of fiasco it ended up creating.
Bolivia's president, desperate to look friendly to foreign investment, may well be eager to write the company a check just to bring the conflict to an end.
For Bechtel, with revenues of more than $14 billion annually, $25 million is about what the company takes in before lunch on any given workday. For Bolivian families, $25 million equals the annual cost to hire 3,000 rural doctors or 12,000 public school teachers, or hook up 125,000 families that don't have access to the public water system.
Which of these does Bechtel suggest be cut in order to pay them off?
Bechtel's public relations department denies the company's responsibility in the matter, claiming that Bechtel is only a minority shareholder in the subsidiary that did business in Bolivia. This, too, is a convenient manipulation. The fact is that the Bolivia subsidiary has only minority shareholders, and Bechtel is clearly the largest among them.
The corporate giant has a choice. It can direct its public relations staff to make glib statements about fairness while its lawyers take aim at Bolivia's poor, or it can do something extraordinary. It could decide that Bechtel has already done enough damage and rescind its legal action. It could even do so on condition that the Bolivian government agrees to dedicate that $25 million directly to serving the country's poor.
Bechtel's corporate mission statement declares the company's commitment to work with communities "to help improve the standard of living and the quality of life." In Bolivia, by any definition imaginable, Bechtel has failed that standard. The time has come for the corporation to decide if it wants to repeat that failure.
PNS contributor Jim Shultz (JShultz@democracyctr.org) is executive director of The Democracy Center (www.democracyctr.org), lives in Cochabamba, Bolivia, and is author of the forthcoming "The Democracy Owners' Manual" (Rutgers University Press).
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