Bechtel, one of the world’s largest corporations, reached agreement with the government of Bolivia today, dropping its controversial legal demand over the public water revolt that forced it out of Bolivia in April 2000.
Bechtel and its chief co-investor, Abengoa of Spain, had been seeking $50 million ($25 million in damages and $25 million in lost profits) in a case filed before a World Bank trade court, the International Centre for Settlement of Investment Disputes (ICSID). Following four years of international public protest aimed at the companies, Bechtel and Abengoa agreed to abandon their case for a token payment equal to thirty cents.
“Multinational corporations want to turn everything into a market,” said Oscar Olivera, a key leader in the Bolivian water revolt. “For indigenous people water is not a commodity, it is a common good. For Bolivia this retreat by Bechtel means that the rights of the people are undeniable.”
A Revolt Over Water
In 1997, the World Bank made privatization of the public water system of Bolivia’s third largest city, Cochabamba, a condition of the country receiving further aid for water development. That led, in September 1999, to a 40-year concession granted to a company led by Bechtel. Within weeks of taking over the city’s water, Bechtel’s Bolivian company, Aguas del Tunari, raised rates by more than 50 percent and in many cases much higher.
Bechtel’s price hikes were met with fierce public protest. Cochabamba, a city with a population of more than half a million, was shut down by general strikes three times. In an effort to protect the Bechtel contract, the Bolivian government declared a state of martial law and began arresting protest leaders at their homes in the middle of the night. An unarmed 17 year-old boy was shot and killed by an army sharpshooter. Hundreds of others were injured. In April 2000, Bechtel was forced to leave the country and the water company was returned to public ownership.
In November 2001, Bechtel and its associates filed their case with ICSID at the World Bank. The ICSID process bars the public and media from being present at its proceedings or even disclosing who testifies. For four years citizen groups on five continents waged a global campaign to pressure Bechtel to drop the case. Protesters closed down Bechtel’s San Francisco’s headquarters twice. Company officials were bombarded by e-mails. Citizen groups from 43 nations endorsed a legal petition to the World Bank demanding that the case be opened to public participation. The case also earned substantial notoriety in the international media.
“This is the first time that a major corporation like Bechtel has had to back down from a major trade case as the result of global citizen pressure,” said Jim Shultz, executive director of The Democracy Center in Cochabamba, and a leader of the global effort. “It should signal to corporations contemplating similar legal actions that they should be prepared to defend those actions in the court of global public opinion, not just behind closed doors at the World Bank.”
“This settlement demonstrates the power of public participation,” said Martin Wagner of Earthjustice. “Unfortunately, hundreds of foreign investor challenges against developing countries remain pending and more will be filed as the United States and others continue to force governments to give foreign corporations special privileges. We must continue to tear down the walls of secrecy and exclusivity in international commercial arbitrations like this one.” Wagner drafted the 2002 legal petition on behalf of Bolivian civil society leaders demanding public participation in the Bechtel case.
According to Sarah Anderson, of the Washington, DC-based Institute for Policy Studies, said, “The challenge now is to build on this momentum to press for new trade and investment rules that promote democracy and sustainable development rather than the narrow interests of large corporations.” Anderson helped coordinate U.S. civil society pressure on Bechtel to settle the lawsuit.
Earthjustice is the premier nonprofit environmental law organization. We wield the power of law and the strength of partnership to protect people’s health, to preserve magnificent places and wildlife, to advance clean energy, and to combat climate change. We are here because the earth needs a good lawyer.