August 19, 2002
Cochabamba, Bolivia
Dear Friends and Readers:
As most of you well know, The Democracy Center has devoted a good deal of
our recent work to blocking the Bechtel Corporation in its ongoing efforts
against the people of Bolivia. Today we are asking you to do something
simple (and free) that can help.
It was Bechtel that, in early 2000, took over the public water system here
in Cochabamba, raising rates far beyond what poor families could afford and
setting off a citywide revolt. Only after one 17 year old boy was left
dead and hundreds of other people left injured, did Bechtel finally leave,
returning the water system to public hands. Last November Bechtel
initiated legal action against Bolivia in a secret trade court controlled
by the World Bank. The $14 billion a year company now wants $25 million
more from Bolivia, a portion of the profits the corporation hoped to gain
here but wasn't allowed to.
To be clear, this fight is not just about Bolivia. The World Bank's secret
court is the model for how all trade disputes would be settled under the
proposed Free Trade Act of the Americas (FTAA). What Bechtel is doing to
Bolivia is what all corporations would be able to do to local, state and
national governments across an entire hemisphere - challenging , behind
closed doors, the laws that protect us as consumers and workers and which
defend our environment. Fighting this case helps put the spotlight on
these plans and helps wage the larger battle as well.
The Democracy Center, along with a wide coalition of groups across Bolivia,
the U.S., and the rest of the world, is organizing a campaign to stop
Bechtel in its tracks. Step one is filing a formal demand with the World
Bank that it open up its secret trade court to public scrutiny and
participation. Below is the letter we will be sending to the World Bank
late next week. It speaks for itself and I hope you will read it. What we
need from you at this point is nothing more than support - your name to add
to the letter.
Please note, that the letter is ONLY FROM ORGANIZATIONS, not individuals.
So, if you represent an organization (an environmental group, a union, a
nonprofit organization, etc.) please consider endorsing this letter by
replying to this note with the following information (NO LATER THAN NEXT
MONDAY, AUGUST 26TH):
Name
Title
Organization
Country
If you are interested in more background on this issue and on our efforts,
please visit The Democracy Center Web site (http://www.democracyctr.org)
and click on the Bechtel vs. Bolivia link.
Thank you for your support and we'll keep you posted on what happens next!
Jim Shultz
The Democracy Center
-----------------------------------------------------
THE LETTER TO THE WORLD BANK
James D. Wolfensohn, President, World Bank
Ko-Yung Tung, Secretary-General, ICSID
David D. Caron, tribunal president
Henri C. Alvarez, tribunal member
José Luis Alberro-Semerena, tribunal member
ICSID Dispute Resolution Panel
c/o International Centre for the Resolution of Investment Disputes
World Bank
1818 H Street, NW
Washington, DC 20433
RE: Demand for public participation
Aguas del Tunari S.A. (Bechtel) v. Republic of Bolivia (Case No. ARB/02/3)
Dear Sirs:
The signers of this letter represent more than [# to be added] civil
society organizations and public leaders across five continents. We are
writing to you out of our shared commitment to the right of people to
participate in the public matters that affect their communities and
nations. With this letter we respectfully request that you guarantee
public participation in the arbitration between Aguas del Tunari/Bechtel
Enterprises and the Republic of Bolivia, a case that directly implicates
one of the most fundamental human needs - access to water. This case is
the most visible and important cases that has come before a World
Bank/ICSID tribunal - Aguas del Tunari/Bechtel Enterprises vs. Bolivia.
BACKGROUND
The history of this case is well-known worldwide. Under direct pressure
from the World Bank, the Bolivian government put up for private lease the
water system of its third largest city, Cochabamba. In 1999, following a
process with just one bidder, a 40 year concession was granted to Aguas del
Tunari, a majority-owned subsidiary of Bechtel Enterprises of California
set up for that sole purpose. Within weeks of taking over control of the
water system, the company raised water rates by an average of more than 50%
and in some cases far higher. Families living on a minimum wage of $60 per
month (and often less) were ordered by the company to pay as much as 25% of
their income just to maintain their water service.
The people of Cochabamba, unable to pay the bills presented them by the
company and unable to get any satisfactory relief from the Bolivian
government, were forced into massive and widespread public protests. To
protect the company's contract the Bolivian government took extraordinary
measures against its people, including a declaration of a state of
emergency, the suspension of constitutional rights, and the violent
repression of the protests, resulting in more than 100 injuries and the
death of one 17 year old boy, Victor Hugo Daza. In April 2000, with the
government unable to stop the protests, the company abandoned its
management of the water system and left the country.
THE BASIS OF OUR DEMAND FOR PARTICIPATION
To be clear, in our view the World Bank/ICSID should not be handling this
case to begin with. The World Bank/ICSID system is one of what the New
York Times recently called "secret trade courts" ("A Fairer Trade Bill" New
York Times editorial, July 25, 2002), in which urgent public matters are
decided behind a shroud of secrecy, without full information and without
any of the opportunities for public vigilance and participation that are
the basis for public legitimacy. Such public involvement is essential to
the legitimate resolution of disputes, like this one, that directly affect
issues of fundamental public concern.
Moreover, the World Bank/ICSID handling of this case is even more
unjustified for two specific reasons unique to this case:
First, the World Bank is by no means a neutral party in this matter. It is
well-documented that it was the World Bank itself which directly forced the
government of Bolivia to privatize the water system of Cochabamba, making
that privatization a condition for both debt relief and funds for water
system expansion and thereby setting the events of this case in motion.
Additionally, during the water revolt in Bolivia in April 2000, World Bank
president James Wolfensohn personally made public comments about the case,
justifying water price increases. Further, despite the Bank's role in the
history of this case, Mr. Wolfensohn violated one of the most important
principles of objectivity when he directly appointed the President of the
arbitration tribunal that will decide the case. These facts have created
strong and well-justified public doubt that ICSID can resolve this dispute
fairly.
Second, Bechtel/Aguas del Tunari's claim of ICSID jurisdiction rests
entirely on a bogus claim of being a Dutch corporation (and therefore
benefiting from Holland's bilateral investment treaty with Bolivia which
invokes ICSID as arbitrator of any trade disputes between the two
countries). Bechtel/Aguas del Tunari moved its registration to Holland only
after it signed its water contract with Bolivia, in a forum-shopping
exercise already repudiated by the Dutch government.
Given, however, that the World Bank/ICSID has acceded to Bechtel/Aguas del
Tunari's request to take this case, this makes it all the more imperative
that the process be opened to public participation and scrutiny, as laid
out in this letter.
We would also note that Bechtel/Aguas del Tunari has already made plain
their willingness to advance fraudulent information about the case. In
response to widespread public and press attention to the company's rate
hikes, a Bechtel Enterprises spokeswoman, Ms. Gail Apps, widely distributed
the following statement to members of the public and the media inquiring
abut the rate increases it imposed, "For the poorest people in Cochabamba
rates went up little, barely 10 percent." Data drawn directly from the
water company's computers make clear that the rate increase in question
averaged more than 50%.
If Bechtel/Aguas del Tunari is willing to assert clearly fraudulent
information such as this on the public record, one can only imagine what
misinformation the company will be willing to provide to the tribunal
behind closed doors and away from public scrutiny. For this reason as
well, civil society groups directly knowledgeable about the facts at hand
must be able to participate actively in the case, to assure that the
tribunal receives a complete and accurate rendering of those facts.
THE METHODS OF PARTICIPATION PROPOSED
For all these reasons, we propose that the Tribunal adopt the following
procedures:
1) Grant the Petition of Affected Individuals and Organizations to
Participate in the Case
We call on the Tribunal to grant the petition to participate made by key
Bolivian leaders, including Oscar Olivera of The Coalition for Water and
Life; Father Luis Sánchez, a member of Cochabamba's public water company
board of directors (SEMAPA); Omar Fernández of the Cochabamba Federation of
Irrigators; and Congressman Jorge Alvarado, President of the Cochabamba
delegation of the Bolivian Congress. These leaders, represented by able
and experienced Bolivian and U.S. counsel, represent tens of thousands of
people with a direct stake in the case. Their participation is essential
to legitimate resolution of this dispute.
2) Publicly Disclose all Documents Filed with the Tribunal
In order to provide for adequate public scrutiny of the claims made by the
two parties, especially given the record of misinformation, we call on the
Tribunal to place into the public record all documents filed with the
Tribunal.
3) That the Tribunal Members Travel to Bolivia to Receive Public Testimony
It is clearly within the purview of the tribunal to come directly to
Cochabamba, Bolivia and receive testimony from the people directly affected
by the case and who have important information to share with the tribunal:
"...the Tribunal may, if it deems it necessary at any stage of the
proceedings... visit the scene connected with the dispute, and conduct such
inquiries there as it may deem appropriate. [Convention On The Settlement
of Investment Disputes Between States and Nationals of Other States:
Powers And Functions Of The Tribunal, Section 3, Article 43].
We call on the panel to invoke that power in this case and to travel to
Cochabamba to receive appropriate public testimony relevant to the case.
4) That the tribunal hearings be made completely open to the public.
All tribunal hearings should be open to the public, including making all
transcripts of the testimony public, as well as all tribunal decisions and
awards.
CONCLUSION
No ICSID case has ever drawn the public attention that this case has and
will continue to, and for good reason. The actions of Aguas del
Tunari/Bechtel in Bolivia left a city of more than 600,000 people in
turmoil for four months. They left hundreds injured and one young boy
dead, and jeopardize thousands of peoples' access to the most fundamental
element of life. This case is about far more than the calm transfer of
assets from one economic institution to another. It is a matter of deep
importance to far more than the two parties who now have formal access to
the process. We hope the Tribunal will grant our requests and the petition
to participate, and will honor the legitimate right of civil society to
also have an active and constructive role in this case.
Sincerely,
[list of names under development]
Bolivia
Oscar Olivera, Fedration of Factory Workers and Coalition for the Defense
of Water and
Life (La Coordinadora)
Gabriel Herbas, Bolivian Forum on the Environment
Marcela Olivera, Coalition for the Defense of Water and Life (La
Coordinadora)
Omar Fernández, Cochabamba Federation of Irrigators
Father Luis Sánchez, member boiard of directors, SEMAPA (public water
company) Jorge Alvarado, President of the Cochabamba delegation of the
Bolivian Congress
Jim Shultz, executive director, The Democracy Center
Tom Kruse, Center for Agriculture and Labor Development Studies (CEDLA)
United States
Sarah Anderson, Institute for Policy Studies, Global Economy Project
Nancy C. Alexander, Citizens' Network on Essential Services
Marie Dennis, Director, Maryknoll Office for Global Concerns
Jerry Mander, President, International Forum on Globalization
Mark Ritchie, Institute for Agriculture and Trade Policy
Kevin Danaher, Co-Founder, Global Exchange
Cam Duncan, Inter-American Regional Secretary, Public Services International
Anthony Arnove, Editor, South End Press
Lori Wallach, Director, Global Trade Watch, Public Citizen
The Netherlands
Edith van Overveld, Latin America Centre, Netherlands
Berrie Jurg, Friends of the Earth, Netherlands
Canada
David Diamond, Headlines Theatre
Ghana
Rudolf Amenga-Etego, Integrated Social Development Centre, Ghana
Charles Abugre, Integrated Social Development Centre, Ghana
Patrick Apoya, Community Partnerships For Health and Development, Ghana
Denis Chirawurah, Peoples's Actions For community Transformation, Ghana
cc: Alejandro Escobar, ICSID general counsel
Claudia Frutos-Peterson, ICSID counsel
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