The Role of the World Bank

In January 2000, just months after it took over control of the water system of Bolivia’s third largest city, Cochabamba, a Bechtel Corporation subsidiary hit water users with enormous price increases.

In the aftermath of the disaster of the Bolivian water takeover, the World Bank worked very hard to erase its fingerprints on that chain of errors. However, the role of the World Bank, as the driving force behind the water privatization is indisputable and well documented.

Bank water officials believe in privatization the way other people believe in Jesus, Mohammed, Moses, and Buddha. They argue that it is essential as a means of securing capital for water development and to bring aboard skilled management. In public the Bank softens its tone, calling privatization just one option and “not a magic pill.” Behind closed doors, however, Bank officials are not so subtle.

In February 1996, Bank officials told Cochabamba’s Mayor that it was making a $14 million loan to expand water service conditioned on the city privatizing its water. In June 1997, Bank officials told Bolivia’s President that $600 million in international debt relief was also dependent on Cochabamba putting its water into corporate hands. Bank officials would later claim that they didn’t like the details of the way Bolivia negotiated the privatization, but the Bank’s role as the force behind it is indisputable. The Bolivian government followed the Bank’s orders. In September 1999, in a closed-door process with just one bidder, Bolivian officials leased off Cochabamba’s water until the year 2039, to a mysterious new company named Aguas del Tunari – which would later turn out to be a subsidiary of the California engineering giant, Bechtel.

Today, ironically, the World Bank has yet another role in the saga of Bolivia’s failed water privatization, sitting as the judge in Bechtel’s $25 million legal demand for compensation from Bolivia. Bechtel has filed that case through the International Centre for the Settlement of Investment Disputes (ICSID), an arm of the World Bank. The lead judge on the panel hearing the case was appointed directly by World Bank officials.

EXCHANGES OF CORRESPONDENCE BETWEEN THE WORLD BANK AND THE DEMOCRACY CENTER After the Democracy Center began publicizing the World Bank’s role in the Bolivian water takeover, Bank officials complained in writing. Read the exchange between the Democracy Center’s executive director, Jim Shultz and Bank officials.

THE INTERNATIONAL CITIZENS’ PETITION TO THE WORLD BANK’S CLOSED-DOOR TRADE COURT
In August 2002 more than 300 citizen groups from 41 different countries filed this petition, demanding that the Bechtel vs. Bolivia case be opened to public participation and scrutiny. Read the petition and see who endorsed it. (Version en Español)

BECHTEL’S LEGAL ACTION AGAINST BOLIVIA
A brief summary and explanation of Bechtel’s legal demand filed with the arbitration arm of the World Bank (ICSID)

“BOLIVIA’S WAR OVER WATER”Jim Shultz’s complete history of the Bolivian water revolt, a chapter from the book on globalization, We are Everywhere.

REPORTS FROM THE SCENE -2000
The Democracy Center’s complete dispatches from the Cochabamba water revolt, winner of the 2000 Project Censored award for top story.