FINANCE: Groups Want in on World Bank Hearing on Bolivian Water

By Marty Logan Reprint | | Print |

Marty Logan

WASHINGTON, Aug 29 2002 (IPS) - Activists demanded access Thursday to closed hearings between a U.S.-owned company and the government of Bolivia, where the firm’s water privatisation scheme died after residents protested massive price hikes.

Representatives from 300 civil society groups on five continents filed a petition with the International Centre for Settlement of Investment Disputes (ICSID), an arm of the World Bank, here at noon.

They say the case represents the sort of corporate interference in national affairs that will increase as governments sign more international trade agreements.

The move comes more than two years after the company, Aguas del Tunari, closed its operations in the Bolivian city of Cochabamba in the wake of protests against rising water fees that led to a state of emergency and the death of one person.

Aguas is a subsidiary of California’s Bechtel Enterprises, which owns 27.5 percent of the company.

In February, Aguas filed a claim with ICSID, saying that it lost millions of dollars when it was unable to continue operating in Cochabamba.

In July, a three-person tribunal was named to arbitrate the dispute. ICSID rules say that it must hold its first hearing by Sep 5, but the Centre will not confirm that a meeting has been scheduled.

Activists say the tribunal is a secret court. Their petition calls on ICSID to open the hearings to the public and for the three tribunal members — a Canadian, a Mexican and a U.S. national — to travel to Bolivia to hear the testimony of groups representing Cochabamba residents.

“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,” says the document.

“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.”

An ICSID spokesman said that Bechtel and Bolivia alone would decide what happens to the petition.

“If the parties agree, the sky’s the limit in terms of what can be arranged,” said Antonio Parras, ICSID’s deputy secretary general, who was the recipient of the petition.

In a previous case, hearings were opened to the public and documents were posted on the Centre’s website, he added.

A Bechtel spokesman would not comment on the petition. Bolivia elected a new president earlier this month, and an activist says the administration may cooperate with petitioners.

“It’s hard to know how cooperative the Bolivian government will be,” says Soren Ambrose of 50 Years Is Enough, a network of groups working to reform the World Bank and International Monetary Fund.

“We’ve heard some signals that they would be willing to work with civil society,” adds the activist.

ICSID was set up by the World Bank to help arbitrate disputes between states and citizens, namely investors, of other states.

Bechtel established Aguas and moved into Bolivia in 1999 after the country privatised operations of the water system in Cochabamba, Bolivia’s third largest city.

Activists say the government was pressured to make the move by the World Bank.

Weeks later, water rates jumped by an average of more than 50 percent, says the petition.

“Families living on a minimum wage of 60 dollars per month (and often less) were ordered by the company to pay as much as 25 percent of their income just to maintain their water service.”

Residents protested for months, the government declared a state of emergency and security forces violently suppressed demonstrations, injuring 100 people and killing a 17-year-old boy.

But in a “fact sheet”, Bechtel says the new water prices were set by government regulators and increased 10 to 106 percent.

“Even at the higher rates — which were rolled back early in 2000 — customers would have paid 20 percent less for water than the South American average,” states the fact sheet.

The petition notes that Aguas’ 25-million-dollar claim is far more than the company invested in Cochabamba. It also casts doubt on the independence of the tribunal’s president, who was nominated by World Bank president James Wolfensohn.

Bolivia and Bechtel named the other two members.

“It may not necessarily mean that (the president) is biased, but the process causes great concern given that the World Bank is so closely involved,” says Martin Wagner, director of international programmes at the non-governmental organisation Earthjustice.

He said it is hard to guess how the tribunal will react to the petition, but that recent decisions by other international trade tribunals have recognised that third parties should have a chance to be heard when cases touch on the public interest.

“These are intelligent people,” commented Wagner. “They realise that the system must have for the public a perception of legitimacy, and also that fundamental fairness requires them to hear the concerns of the public who will be affected.”

But activists are also protesting a system where people affected by investments must ask permission of the disputants before they can be heard.

“There should in fact be a way of making it happen above and beyond requiring the consent of the two parties,” says Ambrose.