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Bolivia is one of Latin America’s poorest countries, where a third of the population has no access to clean water and 70 percent of people live below the poverty line. Yet the people are determined to reclaim their rights and their dignity. The movements to defend water, and all natural resources and public services, have grown stronger and bolder in recent years. Reversing the devasting effects of privatization the Bolivian government laid out a new vision for water in 2006.

Bechtel v. Bolivia

U.S. Corporation Demanded $50 million After Provoking Social Unrest

In the late 1990s, the World Bank forced Bolivia to privatize the public water system of its third-largest city, Cochabamba, by threatening to withhold debt relief and other development assistance. In a process with just one bidder, U.S.-based Bechtel was granted a 40-year lease to take over Cochabamba’s water through a subsidiary called Aguas del Tunari.

Within weeks of taking over the water system, Aguas del Tunari imposed rate hikes on local water users of more than 50 percent on average, according to the Cochabamba-based Democracy Center. Families living on the local minimum wage of $60 per month were billed up to 25 percent of their monthly income. The rate hikes sparked massive citywide protests that the Bolivian government sought to end by declaring a state of martial law and deploying thousands of soldiers and police. More than a hundred people were injured and one 17-year-old boy was killed. In April 2000, as anti-Bechtel protests continued to grow, the company’s managers abandoned the project after the government warned that it could not guarantee their safety.

Water "service" provided by Suez in El Alto, Bolivia

Aguas del Tunari retaliated by filing an ICSID claim for compensation and lost profits under a Dutch-Bolivia bilateral investment treaty. At the time there was no such pact between the United States and Bolivia, and so although Bechtel is a U.S. corporation, it established a post office box presence in the Netherlands. Even the Dutch government was ambivalent about whether the corporate shell created by Bechtel should be entitled to take advantage of the treaty, but the ICSID tribunal accepted jurisdiction anyway.

Bolivian “Water Warriors” joined forces with supporters in the United States and elsewhere to pressure Bechtel to drop the lawsuit. In San Francisco, activists occupied the lobby of the corporate headquarters, while the City Council passed a resolution criticizing the company’s legal action. Earth Justice, along with a Center for International Environmental Law and Friends of the Earth, drafted a legal petition on behalf of Bolivian civil society leaders demanding that they be allowed to participate in the lawsuit proceedings. The Democracy Center helped organize a sophisticated international media strategy and, along with the Institute for Policy Studies, helped coordinate a citizen sign-on letter in support of the legal petition that was endorsed by people in more than 40 countries.

Battered by several years of bad publicity, Bechtel settled the $50 million lawsuit for a symbolic amount of about 30 cents on January 19, 2006.

Read more about the water struggles in Bolivia:

• La Paz/ El Alto – Residents demand water rights!
• Cochabamba – Victory over Bechtel
• Read the letter sent to World Bank officials and the government of Bolivia in support of Bolivia’s withdrawal from the International Centre for the Settlement of Investment Disputes (ICSID).