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The Bolivian Cochabamba Water Revolt

Bolivia is a very poor country in South America with a net wealth per adult of about $700 and 70% of its people live in poverty.  Its population has grown from about 8 million in 2000 to over 11 million in 2017.  Cochabamba (‘lake plain’) is one of the largest cities in Bolivia, which has a current population of approximately 900,000 (2017).  In 2000, the population of this city in the Andes Mountains was about 500,000 (Instituto Nacional de Estadística de Bolivia).

In 1971 after several coups Hugo Banzer became the 62nd president of Bolivia and held the office as a dictator until 1978.  During that time thousands of Bolivians fled the country and hundreds were tortured and killed by government forces.  In 1978 due to international pressure, Bolivia held elections and Banzer lost; then in 1997, he became the 75th president at the age of 71.

In 1997, the World Bank told Bolivia that additional UN aid for water development would be conditioned upon the government privatizing the PUBLIC WATER systems in El Alto, La Paz and Cochabamba.

In September 1998, the International Monetary Fund (IMF) approved a $138 million loan to the government of Bolivia to help their economy (at a future cost).  In order to receive the money Bolivia had to agree to some ‘structural reforms,’ as well as agree to sell of ‘all remaining public enterprises,’ including their national oil refineries and the Cochabamba water agency known as SEMAPA (Servicio Municipal de Agua Potable y Alcantarillado).   SEMAPA provides water and basic sanitation services to Cercado province in Cochabamba.

In August 1999, a ‘Consortium’ led by International Water Ltd, wholly owned by Bechtel at the time was the sole bidder for a 40-year Concession Agreement over the water systems.  That same month, the Consortium formed Aguas del Tunari (AdT), a Bolivian corporation established to meet Bolivian laws and control the SEMAPA and other water systems.

September 3, 1999, in closed meeting negotiations, the Bolivian government signed a $2.5 billion contract with Aguas del Tunari (Tunari Waters), and it should be understood that they were the sole/ONLY bidder to buy and operate the water systems.

November 1, 1999: Tunari Waters raised rates on water bills by “35 to 200%.”  Tunari entered the 40-year contract (wow – talk about control) with the Bolivian government and assured it’s investors a 15-17% return of investment (ROI) per year and that water rates would increase with the US Consumer Price Index.

November 4, 1999: the Coordinadora organization (or Committee for the Defense of Water and Life) called for strikes and blockades at AdT.

November 17, 1999: the Cochabamba newspaper Opinión, published an article stating, ‘within 45 days of rate increases, calls are made for the annulment of the contract.’

November 28, 1999: AdT put out a rebuttal advertisement in the Opinión.   According to Transnational Dispute Management, AdT stated that its ‘subscribed capital’ of ‘$25 million’ was subject “to what is established in the Political Constitution of the Bolivian State and to all the laws that regulate its activity.”

January 2000: Residents of Cochabamba received their first water bills, what had significant rate increases for many.  AdT rolled back rates for most customers due to protests.

February and March 2000: Thousands took to the streets in anger and some with violent protests.  That March the Coordinadora called for AdT’s contract to be terminated with a 96% backing.

First week of April 2000: Protesters in Cochabamba’s Central Plaza barricaded the streets and blocked highways to the city.  Protests also took place in La Paz and other cities.

April 8, 2000: The government had sent in Army troops which fired tear gas into the crowds.  After which gunfire was exchanged and at least one civilian was killed in Cochabamba.  At that time President Hugo Banzer declared it a ‘state of siege.’

April 10-11, 2000: The Bolivian Waters Superintendent wrote AdT executives saying that the government had to rescind the Concession.  And it issued an Administrative Resolution rescinding the Agreement.

During a 4-day protest and city strikes, 200 were arrested, 70 injured along with 51 policemen; and during another protest rocks were being throw at officers and soldiers; several opened fire killing 2 people including a teenage boy (in a previous clash 5 died), after which the community stormed a local hospital and dragged the injured army captain into the streets where they dismembered his body.  Soon after the government informed Bechtel the contract was canceled and their losses were due to foreseeable risks.

About October 2001: Bethel and Abengoa filed a $50 million legal demand against Bolivia (for present and future losses) with a ‘closed-door’ trade court of the WORLD BANK (UN), and the ICSID.

In 2001, several lawsuits followed and a Tribunal was constituted on July 5, 2002.  However, the hearing on jurisdiction did not take place until February 9, 2004 in Washington D.C., United States.  Jurisdiction arguments and suits continued until the parties involved agreed upon waivers or the decision of the Tribunal at the International Center for Settlement of Investment Disputes (ICSID).  The ICSID was created in 1966 as a mechanism of the World Bank to handle arbitrations between countries and investors of World Bank members.

August 2003: More than 300 organizations from 43 countries petitioned the ICSID to open the case to the public; they rejected the petition.

March 16, 2005: Bethel issued their ‘Bechtel Perspective on the Aguas del Tunari Water Concession in Cochabamba, Bolivia.’  They stated without full discloser that they only owned 27.5% and that ‘the Bolivian government turned to the private sector in the late 1990s to operate the city’s water and wastewater system’ because the ‘local utility’ could not sustain losses.  They added that “half the rate increase was necessitated (like that word) by such government requirements as paying down more than $30 million in debt accumulated by the public utility that had previously operated the system so poorly.”  Perhaps the brilliant lawyers that wrote this never understood the expression, ‘you can squeeze blood out of a turnip.’

Moreover, Bethel failed to say that the deal was impossible with the IMF loan and that it would be at an increased cost (in part for updating facilities) plus 17% to shareholders – you know not the poor citizens of the very land from which the water resource came, but RICH individuals and corporations that knowingly and unknowingly desire to profit off of another’s natural resource – no differently than if it was African diamonds or oil.

http://www.bechtel.com/newsroom/releases/2005/03/aguas-del-tunari-water-concession-cochabamba/

October 21, 2005 the ICSID announced that Bechtel settled its case with the government on a ‘no-pay’ basis, and ended the 1,439 days of arbitration.  The Tribunal concluded that AdT was ‘controlled’ by the entities that owned it – imagine that, owners control and have responsibility for what they own.

January 19, 2006: Bechtel and Abengoa representatives signed agreements in Bolivia to abandon their ICSID case for a token payment of 2 bolivianos (or 15 cents to each of them).  This way these corporations settled the disputes and could not be held liable in the future for any wrongs, such as excessive water bills or sewage mismanagement.

In May 1988: The New York Times article, ‘Government by Bechtel’ reported concerning Bechtel, “the Most Secret Corporation… (that) no other private corporation in modern history has had closer ties to the Federal Government than Bechtel.   In the Reagan Administration alone, the engineering services company has supplied a secretary of state (George P. Shultz), a defense secretary (Caspar W. Weinberger) and a deputy secretary of energy (W. Kenneth Davis). The company’s own ranks have included the former head of the United States Export-Import Bank (John L. Moore), a former director of the Central Intelligence Agency (Richard Helms) and a diplomat (Philip Habib). By all accounts, the roster of ”consultants” to Bechtel and alumni from the company now in Washington could not have been better placed…”

Some Conclusions from the Bolivia Case

The Bolivian Water War resulted in a nightmare scenario for the foreign investors, their shareholders, and the nation of Bolivia and many of its people.  But this was no surprise to many upon seeing the sole bid, bribes and corruption and ‘legal’ but unjust manner of corporate control over a God-given inelastic natural resource – water.

The case revealed how multinational corporations can evade domestic laws and government procedures.  It revealed that closed-door agreements and forums, such as had at Bilderberg, favor the global elites and their corporations, the Central Banks and their private owners and really care little to aid the poor and innocent citizens who live in the region in which these global entities come in, manipulate and or bribes politicians and literally take control of the public’s natural resources.

So who is Aguas del Tunari and Bechtel?

Now for a lesson on global economic and political sorcery!  Tunari Waters (Aguas del Tunari) is a consortium of companies registered in the Cayman Islands.  It is a subsidiary (subordinate or minor wholly or partially owned corporation of the parent or holding Corporation) of International Water Limited, which is a UK (London based) subsidiary of the US-based Bechtel Corporation or Bechtel Enterprises Holding, Inc.

Now Bechtel stated that it only owned 27.5% of Aguas del Tunari (AdT).   AdT was also partial owned (a subsidiary) of Abengoa of Spain and four other companies from Bolivia.  One of which is majority owned by Bolivian politician Samuel Medina.  At the time Bethel stated it owned 50% of International Water Ltd. (IWL of the Cayman Islands); but Transnational Dispute Management said Bethel owned 100% of International Water Ltd.; which owned 55% of Tunari Waters.   ICE-Ingenierors of Bolivia owned four companies; each with 5% ownership in AdT (i.e. had 20%).   Abengoa of Spain owned the other 25% of AdT through Rivestar International of Uruguay.   November 24, 1999, after the protests Bechtel transferred 50% of their ownership in IWL to Edison S.p.A. of Italty for ‘tax reasons;’ and the 55% IWL stake was to transfer to the ‘New IWL Shareholder’ in the Netherlands; yet it ended up in Luxembourg where it changed its name to International Water Tunari SARL.

More on the settlement: https://www.crowell.com/documents/After-the-Water-War_The-Battle-for-Jurisdiction-in-Aguas-del-Tunari_v_Bolivia.pdf

According to Bechtel.com, the Company was founded in 1898 and incorporated in 1925; and is one of the oldest and largest family-led corporations in the United States.  One of their biggest breaks was in 1931, when through a Six Companies, Inc. consortium they received the Hoover Dam project from the US government; which was the largest ever government contact to that date.   Soon after through government and corporate international contacts and handshakes they receive several international contracts from foreign governments; particularly in the Middle East during and after WWII.  In 2016, Bechtel was the 9th largest privately owned American Company and had project in about 160 countries dealing with natural resources, construction, transportation, FEMA, nuclear and security.  Bechtel serviced about 80% of the nuclear plants in the US and has made tens of billions from Defense contracts.

Stephen Bechtel Jr. was worth $3.9 billion in 2015 at the age of 91.  Stephen and Riley Bechtel (his son) each were on the 2017 Forbes World’s Billionaires at $3.1 billion and ranked #630.  According to InformationClearinghouse.info: “With the help of Stephen Bechtel Sr.’s connections in the Atomic Energy Commission (AEC), Bechtel Corporation quickly grew to be the DOMINANT player in the business of nuclear power… in 1959.  …Stephen Bechtel Sr.’s close friendship with Steve McCone was arguably the real reason that Bechtel Corporation was successful in the business of nuclear power plant building.  The two men had made millions together as partners in the California Ship Building Company which built warships for the U.S. military during World War II.  After their stint as WAR PROFITEERS, the two parted ways… In 1948 McCone was appointed U.S. Deputy to the Sec. of Defense and then from 1950-51 served as Under Sec. of the Air Force… (then) as Chairman of the Atomic Energy Commission (AEC)…”

InformationClearinghouse.info also reported that “Robert Hollingsworth, after being the AEC general manager under (President) Nixon subsequently became the manager of manpower services as Bechtel.”  And they offered the following:

The company further penetrated the barrier between private industry and the federal government when Kenneth Davisa former Bechtel vice president of nuclear reactor development went on to become U.S. Deputy Secretary of Energy and head of the AEC under Reagan.  (MacCartney 1989; Montague 2000)

“According to one investigative journalist, the relationships between the AEC and Bechtel was “so incestuous it is impossible to tell where the public sector begins and the private one leaves off” (MacCartney 1989, pg. 115 cited in Montague 2000)

Bechtel’s CEO, Riley P. Bechtel, currently serves on the President’s Export Council (4/24/03)

  • Jack Sheehan, a senior vice-president with Bechtel, serves on the Pentagon’s Defense Policy Board (4/16/03)
  • George Schultz. Shortly after assuming his new position in Bechtel, President Reagan invited him to Washington to be his secretary of state.
  • Reagan’s Secretary of Defense Caspar Weinburger was a former Bechtel general counsel.
  • W. Kenneth Davis was a Bechtel vice-president for nuclear development before he was appointed as Reagan’s deputy secretary of Energy and head of the Atomic Energy Commission.
  • William Casey a former Bechtel consultant served in a number of government positions including chairman of the SEC under Nixon, head of the Export-Import bank under Ford, and director of the CIA under Reagan.
  • Richard Helm, who later became a ‘consultant’ to Bechtel, had earlier been a CIA director under Nixon.
  • William Simon, Nixon’s Treasury secretary, was hired by Bechtel as a consultant.
  • Ross Connelly, former CEO of Bechtel Energy Resources Corporation, was appointed by George Bush in June of 2001 to the Overseas Private Investment Corporation
  • Stew Burkhammer, a current Bechtel executive, is presently a member of the Occupational Safety and Health Administration’s (OSHA) Advisory Committee on Construction Safety and Health.

“Bechtel’s first connections to U.S. intelligence were with the Office of Strategic Services (OSS) which used Bechtel (who at the time was building oil pipelines in Saudi Arabia) as a cover to monitor events in the Middle East.  (MacCartney 1989)

Stephen Bechtel Sr.’s financial advisor, John Simpson was very tight with CIA deputy director John Foster DullesCollaboration between the CIA and Bechtel was instrumental in the toppling of both Iran’s Mossadeq and Indonesia’s Sukharno. In both cases pro-Western, repressive regimes were the successors – Reza Shah Pahlavi in Iran, and Suharto in Indonesia.  (Montague 2000)

After Stephen Bechtel Sr.’s friend Steve McCone served on the chair of the AEC, John F. Kennedy made McCone director of the CIA (1961-1965)  McCone was no friend to democracy during those years as he oversaw the CIA during a very scandalous period of American history scarred by the Kennedy assassination and U.S. involvement in Vietnam, Laos, Congo, and Chile to name a few.”

Source: http://www.cooperativeresearch.org/corporation/profiles/bechtel.html

Many journalists have shown Bechtel ties to Egypt’s 1974 boycott; to Libya’s Muammar el-Qaddafi from 1963 to 1970 and revenues at least indirectly which financed his regime; to a CIA led Syrian coup in 1949 and the Iranian coup of 1953.  Many have shown evidence of the company has given bribes to foreign families and officials.

Bechtel executives gave a Saudi prince $200 million in the 1970s.   In March 1977 in what became Jubail, Saudi Arabia Bechtel began work on the largest project in construction history which took 41,000 laborers and slaves from 39 countries, plus 1,600 Bechtel project managers decades to accomplish and the project over 40 years yield as much as one-half to $1 trillion.  Hundreds of millions of dollars where paid off as ‘business commissions’ to Saudi royal families.  King Fahd’s son Mohammad ibn-Fahd al-Saud operated through the Al Bilad and received up to 10% interest in Saudi Arabian Bechtel Co. Ltd.

During the US-IRAQ War, the Bechtel Group joined Halliburton, Carlyle and others lobbing government officials for billion dollar contracts.  About that time Bechtel’s ties with the Bush administration were revealed, Bechtel’s Chairman and Chief Executive Riley Bechtel was appointed to President Bush’s export council.  Jack Sheehan, a senior Vice-President of Bechtel, became a member of the Defence Policy Board, the Pentagon advisory council that lobbied hard for war. George Shultz, a former US Secretary of State and another Bechtel board member, was chairman of the Committee to Liberate Iraq, a fiercely pro-war group with close ties to the White House.  And Bechtel was put in charge of repairing power and water systems in Iraq – the same company that is one of the top water privatization companies in the world; and who sought to hold the poor people of Bolivia hostages to their own natural resource – water.

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