Case Study: Bolivia 1998 The Water Wars!
Bolivia received a $138 million loan from the IMF in 1998, which was intended to assist the nation to reduce inflation and stabilise its domestic economy. Bolivia had to agree to several “structural reforms,” including the privatisation of “all remaining public enterprises,” including water utilities. Bolivia was under intense pressure from the World Bank after these loans were approved to ensure that no public water subsidies existed and that all water projects were run on a “cost recovery” basis, which means that citizens must pay the full cost of construction, financing, operation, and maintenance of a water project. Even in the industrialised, developed world, cost recovery pricing is unique since water is a basic human need and crucial for agriculture. In this context, Cochabamba, the third-largest city in Bolivia, put its water works up for sale in late 1999. Only one company, managed by Bechtel subsidiary Aguas del Tunari, submitted a proposal, and it was given a 40-year water concession. The specifics of the negotiations were kept under wraps, and
Bechtel claimed that the contract’s statistics were “intellectual property.” However, it was subsequently discovered that the pricing involved inhabitants of Cochabamba subsidising a portion of a massive dam-building project being done by Bechtel, despite the fact that water from the Misicuni Dam Project would be 600% more costly than other water sources.
Cochabambans were also compelled to pay Bechtel a legally guaranteed 15% profit, implying that the public was expected to pay for investments while the private sector profited. The corporation increased water bills by as much as 400% in certain cases after acquiring the concession. These raises occurred in a region where the monthly minimum wage is less than $100. Self-employed men and women were predicted to spend one-quarter of their monthly salary on water after the price increase. The citizens of the city were furious. In January 2000, a large coalition headed by Oscar Olivera, a local worker, called for peaceful rallies under the banner of the Coordination for the Defence of Water and Life, or simply La Coordinadora. A general strike and transportation strike shut down Cochabamba for four days, but the protests ended when the government vowed to intercede to cut water costs. However, when no results were forthcoming in February, the protests resumed. Demonstrators were
greeted with tear gas and police resistance this time, leaving 175 people hurt and two adolescents blinded. Residents of the city took to the streets on April 4, shutting down the city. They were met with police resistance once again, and the government proclaimed martial law on April 8. The Bolivian soldiers killed a 17-year-old demonstrator by shooting him in the face. However, the demonstrations persisted, and on April 10, the administration caved in, signing an agreement that agreed to the demonstrators’ demand that the water concession be reversed. Cochabamba residents reclaimed their water.
Unfortunately, the triumph for the people of Cochabamba did not conclude this remarkable narrative. Bechtel filed a grievance with the World Bank on February 25, 2002, claiming investor rights under a Bolivia-Netherlands Bilateral Investment Agreement and demanded a $25 million payment as compensation for lost earnings.
Note: Bechtel Engineering is one of the largest civil engineering companies in the world. It is privately owned by the Bechtel family. For many years, the general counsel (and vice-president) for Bechtel was none other than original Trilateral Commission member Caspar Weinberger. So, in this case from Bolivia this is the run-down of what transpired:
- An IMF loan is made to Bolivia, with conditionalities
- The World Bank steps in to enforce the conditionalities and impose structural adjustments
- The World Bank loans “development” funds to Bolivia, and simultaneously bring in private bank consortiums to fund the various projects that Bechtel had in mind.
- Bechtel makes a sole-source bid, and it is accepted.
- The water project ends in total failure and Bechtel gets kicked out after extreme political pressure from consumers.
- Bechtel files a “lost profit” claim according to a pre-negotiated “insurance guarantee” with the World Bank Group (MIGA, see above.)
- If Bechtel wins its claim, it will be paid off with taxpayer money contributed by member countries.
- Undoubtedly, any loans from private-sector banks that later turn sour, will be bailed out with taxpayer funds as well.
For many years, the World Bank has been accused of corruption. Given that the Bank is a United Nations specialised agency and given the old saying that “the apple doesn’t fall far from the tree,” this may not come as a surprise to most. The United Nations has a long and well-documented history of corruption of many kinds. It would be much too simple to stop there.
In May 2004, Sen. Richard Lugar (Republican-Indiana), as Chairman of the Foreign Relations Committee, headed an inquiry into corruption related to the activities of the multilateral development banks, of which the World Bank is foremost.
Witnesses before the Committee testified that as much as $100 billion may have been lost to corruption in World Bank lending projects.
One has to question why World Bank executives were so irresponsible with public funds. Furthermore, one must consider whether the Bank’s fundamental goals, namely, the creation of fake and unwanted projects in order to “stimulate” commerce, necessitated the corruption.
Although it is unclear which Bank employees may have accepted bribes in return for influence, any transaction that begins with corruption can only go one way. In the end, defenceless folks are the ones who are left
carrying the bag. Debts accrued and failing ventures exacerbate the poverty of already impoverished individuals.
The World Bank is likely to continue to operate despite any amount of political flack or public protest. Such is the pattern of elitist-dominated institutions. Such is the history of the International Monetary Fund and the Bank for International Settlements.
It is sufficient to conclude that…
- Of the two architects of the World Bank, one was a top Soviet communist agent (Harry Dexter White) and the other was a British idealogue (John Maynard Keynes) totally dedicated to globalism (See Global Banking: The International Monetary Fund: for more details on White and Keynes)
- From the beginning, the Bank has been dominated by international banking interests and members of the Council on Foreign Relations and later by the Trilateral Commission
- The cry of “poverty reduction” is a sham to conceal the recycling of billions of taxpayer dollars, if not trillions, into private hands
- The cry of “poverty reduction” defuses critics of the Bank as being anti-poor and pro-poverty
- Corruption at the World Bank goes back decades, if not all the way to the very beginning
online sources: geo-politics.com, wef.com, worldbank.org, imf.com All opinions and views expressed or suggested by the Digital Zeitgeist are not necessarily the same opinions and views held by or suggested by GPM-Invest plus any and all partners, affiliates, parties, or third parties of GPM-Invest. Any type of media distributed by GPM-Invest IS NOT financial advice. Please seek advice from a professional financial advisor.