February 2006

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Bechtel vs. Bolivia: The People Win!

Jim Shultz is the Executive Director of The Democracy Center in Cochabamba, Bolivia.

The Cochabamba water revolt -- which began exactly six years ago this month -- ended this morning when Bechtel, one of the world's most powerful corporations, formally abandoned its legal effort to take $50 million from the Bolivian people. Bechtel made that demand before a secretive trade court operated by the World Bank, the same institution that coerced Bolivia to privatize the water to begin with. Faced with protests, barrages of
e-mails, visits to their homes, and years of damaging press, Bechtel executives finally decided to surrender, walking away with a token payment equal to thirty cents. That retreat sets a huge global precedent.

The Water Revolt

In January 2000 the people of Cochabamba, Bolivia woke up one morning to discover that their public water system had been taken over by a mysterious new private company, Aguas del Tunari. The World Bank had coerced Bolivia to privatize its water, as a condition of further aid. The new company, controlled by Bechtel, the California engineering giant, announced its arrival with a huge overnight increase in local water bills. Water rates leapt by an average of more than fifty percent, and in some cases much more. Bechtel and its Spanish co-investor, Abengoa, priced water beyond what many families here could afford.

The people demanded that the rate hikes be permanently reversed. The Bolivian government refused. Then the people demanded that the company's contract be canceled. The government sent out police and soldiers to take control of the city and declared statewide martial law.

In the face of beatings, of leaders being taken from their houses in the middle of the night, of a seventeen-year-old boy being shot and killed by the army -- in the face of it all, the people did not back down. In April of 2000 Bechtel's company was forced to leave and the people won back control of their water. 

Bechtel Fights Back

Eighteen months later Bechtel and Abengoa sought revenge, filing a $50 million legal action against Bolivia in the World Bank's trade court -- the International Centre for Settlement of Investment Disputes. It was a legal forum tailor-made for Bechtel. The people of Cochabamba would be tried in Washington, in English, and in a process so secret that no member of the public or press would be allowed to know when the tribunal met, who testified before it, or what they said.

Bechtel claimed it was suing for both its losses and the profits it wasn't allowed to make. Records later showed that Bechtel and its associates had spent less than $1 million in Bolivia.

What Bechtel did not count on was the firestorm of public protest that it would face. Cochabamba water revolt leaders, the Democracy Center, and a host of allies all over the world launched a global campaign to force Bechtel to drop the case.

Thousands sent e-mails to corporate executives. Protesters in San Francisco blocked the entrance to Bechtel's headquarters, occupied its lobby, and draped a banner across its front. Dutch activists mounted a ladder and posted a sign renaming Bechtel's Amsterdam office after Victor Hugo Daza, the 17-year-old killed in Cochabamba. The San Francisco Board of Supervisors approved a resolution calling on Bechtel to drop its case.

More than 300 organizations from 43 countries joined in a citizens' petition to the World Bank demanding that the case be opened to public scrutiny and participation. Activists in Washington DC protested at the home of the head of Bechtel's water company. Hundreds of articles and dozens of documentaries were produced worldwide, making Bechtel and its Bolivian water takeover a well-known exemplar of corporate greed and abuse.

Bechtel -- a corporation so powerful that it won a billion-dollar, no-bid Bush administration contract to rebuild Iraq -- found it all too much to take. Last June, Bechtel and its associates raised the white flag and began negotiating a deal to drop their case -- for a token payment of two bolivianos (thirty cents). Bechtel officials flew to Bolivia this week to sign the surrender and collect their two coins.

Bechtel's Surrender

Bechtel's surrender settlement is historic. The World Bank's system of closed-door trade courts has received more than 200 cases like Bechtel's. The WTO and NAFTA trade courts have their own piles of corporate cases. In no other, however, has a major corporation backed down as a result of public pressure.

International financial institutions coerce poor countries into privatization arrangements as a condition of aid. Corrupt and incompetent governments sit down behind closed doors with multinational corporations and cut bad deals. A year later, or a decade later, the people finally realize what has happened. They demand a reversal and the companies warn, "Mess with the deal and we will take you to court -- and we will win."

The global campaign against Bechtel sends an important message to other corporations who are thinking of following in their legal footsteps, in Bolivia and beyond: "No, we will not let you wage this fight behind closed doors where only a handful of lawyers has a voice. We will wage this fight on your doorstep. We will make you defend your actions in the court of world public opinion."

Once again, it is clear that the economic rules of the game can be changed. Six years ago the people of Cochabamba won their water revolt with courage and commitment. Today we have all won that revolt's second and final round, with a persistence that was truly global and that could not be stopped. Another world is indeed possible.

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