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CAPITALIST DAVID VS. GOLIATH
By Jessica Tara
Smith
In the late 1990’s a small South American country became the poster child for the World Bank.The country was Bolivia, a small third world country situated on the south eastern part of the South American continent. This nation, like many others, was receiving aid from the World Bank whose idea of economic “reform” was to have these countries follow their dicta as Gregory Palast reported in the Washington Post.
For Bolivia, the sale of the nation’s public water systems to a subsidiary of the Bechtel Group of San Francisco was advised by the Bank.
Within weeks after taking control, Bechtel increased public water prices by as much as 35-150 percent in accordance to recommendations of the World Bank. This left much of the already impoverished people inhabiting cities like Cochabamba, the third largest city in Bolivia, with having to choose to either use their money to pay for food or to keep water running from their taps.
Jim Shultz covered much of the events happening in Cochabamba, Bolivia since he lived there and witnessed the increased water rates and reactions of the Bolivian people. He wrote in the Pacific News Service that Bechtel, “ordered mothers living on minimum wage of $60 per month to pay $15 or more just to keep water running out of the tap.”Gail Apps, spokeswoman for Riley Bechtel, CEO of Bechtel Enterprises, responded to this claim stating that “For the poorest people in Cochabamba rates went up little, barely 10 percent.”
The Democracy Center refuted her comment by providing bills from Bolivians living in Cochabamba on their website. Saturnino Marin experienced nearly a 50 percent increase in his water bill after Bechtel’s price hikes took effect. Bechtel blames increase water use had a part in the increase of the bills but it Marin’s case, his water use decreased by 18 percent in the one month after Bechtel’s price hikes.
The increase in water rates for the poor was just more than any of them could comfortably afford leading them to protest against the company and the unaffordable water rates.
A general strike shut down the city and as Bechtel continued to refuse to lower their rates, the government called out its soldiers to protect the contract between the country and the company. The government’s reaction was a bloody one.Shultz wrote in a letter to Bechtel’s CEO about the protests in the city.
“A 17 year old, Victor Hugo Daza, was shot in the face and killed,” said Shultz. “More than a hundred others were seriously wounded. I was there. I saw it happen.”
After nearly two weeks of demonstrations, and fearing stronger protests, Bolivia’s president cancelled the contract, regained control of the water systems and lowered the rates for public water.
At the time, most of the news was caught up by the Washington demonstrations against the World Bank in the year 2000’s International Monetary Fund and World Bank summit.Although the crisis in Bolivia did not receive much news coverage, the events were enough to disturb the president of the World Bank, James Wolfensohn. He denounced the Bolivian protesters as “rioters,” his statement meant to dissuade the press from writing about the Bolivians. He succeeded as there was and continues to be little attention given to the situation Bolivia finds itself in.
“I didn’t know about what was going on between American businesses and third world countries,” said Rahul Narayan from England. “This is something serious that I thing Americans should be looking at and there has not been enough news coverage about this.”
Not long after Bechtel left Bolivia the company filed a demand of $25 million against the Bolivian government claiming that it wanted to recoup the potential profits it had hopes to make before the Bolivian government drove them out. This was in November 2001. This case was made through a branch of the World Bank, known as the International Center for Settlement of Investment Disputes (ICSID), which will decide whether or not to consider the case.
This is one example of legal manipulation, since the World Bank is the institution that pressured Bolivia into privatizing its water system. Bechtel’s capability to even take legal action against the Bolivian government is a manipulation of the legal system in itself.
Bechtel admits that the reason they are able to force Bolivia into what they call “arbitration” is because of the terms of a treaty between Bolivia and Holland. As the company was settling in Bolivia, they quietly filed papers to shift its subsidiary’s corporate registration to Holland, perhaps in preparation for the crisis they ended up creating.
The Bechtel Company is also making the case that it was merely a minority shareholder in the subsidiary that did business in Bolivia. The truth is the Bolivia subsidiary has only minority shareholders, with Bechtel the largest among them.
The irony of the situation is that Bolivia should be suing Bechtel. When the company left Bolivia after the protests, they left behind an unpaid electric bill of $90,000.“I think that Bolivia should be taking the company to court because the company did more damage to the country,” said Justyna Michnowicz, a student in Poland. “It’s stupid that the company wants to take money from a poor country.”
For Bechtel, with revenues of more than $14 billion annually, they can make $25 million in half a day. For Bolivia, that amount of money can be used to provide funds for doctors, teachers, or running water.
Should the president decide to end the conflict by signing a check for Bechtel, in a desperate attempt to appear friendly towards foreign investment, funds for the country’s necessities, like running water, teachers, and doctors, will have to be cut.
According to Bechtel’s mission statement, the company is committed to work with communities and people to “help improve the standard of living and the quality of life.”Apparently their actions in Bolivia show that they have failed their mission.