Bechtel drops suit against Bolivia

Just days before Evo Morales is inaugurated as President of Bolivia, the US multinational giant, Bechtel, has backed down after a major international campaign and dropped a legal suit for $50 million against Bolivia. Instead the Bolivian Government will sign a contract today (19 January 2006) in which they will pay only 2 Bolivianos (14 pence) to end the case. Courtesy of Nick Buxton.

Bechtel first made the claim after they were forced out of the city of Cochabamba by huge popular protests in April 2000. Their decision to settle followed years of being bombarded with thousands of emails and letters, facing scores of protests outside their headquarters along with receiving largely negative coverage in the international media. Sources directly involved in the settlement suggest that Bechtel’s decision to eventually back down was a result of international citizen pressure.

The decision by one of the most powerful corporations in the world to end the legal claim will send a strong warning note to the nine multinational companies who are currently lining up to sue Bolivia. Suez, the French water multinational, and eight oil and gas companies including British Gas, Repsol, Total and Exxon have initiated legal proceedings which could result in legal claims being filed in the World Bank hosted International Centre for Settlement of Investment Disputes (ICSID) in mid 2006.

The companies are filing legal claims stating that actions taken by the Bolivian Government in 2005 are “tantamount to expropriation” and are therefore illegal under the various Bilateral Investment Treaties signed by Bolivia. Suez is protesting against a decision to end their contract to supply water to the impoverished city of El Alto which took place following major public protests against their failure to expand and supply affordable drinking water. The oil and gas companies, including British Gas, are protesting against a new hydrocarbons law passed in May 2005 which increased taxes and State control over the hydrocarbons resources in the country.

Under Bilateral Investment Treaties, companies can file demands for both investments made as well as loss of anticipated future profits which could result in a legal claim of billions by the energy multinationals.

However the Bechtel case shows that the multinationals may find themselves not just fighting a legal case but a growing and strengthening global movement of solidarity.

Jim Shultz, one of the principal organisers of the international campaign against Bechtel said: “Bechtel’s surrender settlement is historic. This is the first time that a major corporation has ever dropped a major international trade case such as this one as a direct result of global public pressure.”

He warned the oil and gas companies, such as British Gas, that the case “signaled that [the Bolivian social movements and international citizen groups] are able to battle these cases, not just in the closed-door forums favored by corporations, but also in the larger forum of world public opinion.”