How Activists Exposed The World Bank’s Secret Courts

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Above: The Cochabamba Water Revolt. Photo by Tom Kruse.

The Case That Blew the Lid Off the World Bank’s Secret Courts

There’s an international awakening afoot about a radical expansion of corporate power — one that sits at the center of two historic global trade deals nearing completion.

One focuses the United States toward Europe — that’s the Transatlantic Trade and Investment Partnership (TTIP) — and the other toward Asia, in the Trans-Pacific Partnership (TPP). Both would establish broad new rights for foreign corporations to sue governments for vast sums whenever nations change their public policies in ways that could potentially impact corporate profits.

These cases would not be handled by domestic courts, with their relative transparency, but in special, secretive international tribunals.

It’s a stupendously powerful tool and a double win for the corporations: It’s a money machine that loots public treasuries and a potent tool to stifle unwelcome regulations, all wrapped in one. As Senator Elizabeth Warren recently wrote in the Washington Post, “Giving foreign corporations special rights to challenge our laws outside of our legal system would be a bad deal.” But it’s a deal U.S. lawmakers are rapidly preparing to make as they debate extending “fast-track” trade promotion authority to President Barack Obama.

The system of closed-door trade tribunals has been around for decades now, nestled like a ticking time bomb into hundreds of smaller bilateral trade agreements between nations. But not so long ago, the trade tribunal system wasn’t the stuff of high-profile op-eds by U.S. senators. It was virtually unknown except among a small cadre of international lawyers and trade specialists.

The case that brought the system into broad public view was born 15 years ago this month on the streets of a city high in the Andes. How that case was won holds powerful lessons today for the battles over the TTIP, the TPP, and the effort to hand global corporations enormous new legal powers.

The Water Revolt

It started here in Cochabamba, Bolivia, in April 2000, when citizens rebelled against the takeover of their public water system by a foreign corporation.

In what became known as the Cochabamba Water Revolt, thousands of Bolivians faced down bullets and batons to take back their water from Bechtel, the California engineering giant. Within weeks of taking over the local public water system, Bechtel’s Bolivian company had hit water users with price increases averaging more than 50 percent, and often far higher. Families faced stark choices between keeping water running from the tap or food on the table.

So they rebelled.

Protesters shut down this city of half-a-million people three times with blockades and general strikes. The right-wing government sent in soldiers and police to defend Bechtel’s contract, killing a teenage boy and leaving hundreds of others wounded. But the protests only increased, and finally Bechtel was forced to flee Bolivia, returning the water to public hands.

A year later, however, Bechtel struck back — this time in a World Bank trade court. The company demanded not only the $1 million it had invested in the country, but a full $50 million — the rest being the future “profits” the company claimed it had forgone by leaving.

Bechtel’s case against Bolivia sparked a second rebellion. This one was global and just as powerful, a citizen action campaign that stretched worldwide. In the end, Bechtel would walk away not with the $50 million that it demanded from Bolivians, but just 30 cents and a badly damaged public image. The case also ripped the mask off a system of secret trade courts that today sits at the heart of the trade debate.

A System Designed for Corporate Advantage

Here in Bolivia, a soccer team from anywhere else would be foolish to play a match against a Bolivian team in La Paz, the nation’s capital. At nearly 13,000 feet above the sea, most foreigners find it a serious challenge just to climb a staircase, much less chase a ball for 90 minutes.

The legal venue chosen by Bechtel — the World Bank’s International Center for the Settlement of Investment Disputes (ICSID) — has a similar quality. It’s a playing field tilted deeply to corporate advantage.

It’s no small irony that Bechtel went to the World Bank, since it was the World Bank that set the Cochabamba Water Revolt in motion to begin with.

In 1997, World Bank officials made the privatization of Cochabamba’s public water system a condition of loans the bank was issuing to expand water service in the country. So Bolivia’s government was compelled to offer a 40-year lease to Bechtel, complete with a guaranteed annual profit of 16 percent — a gouging deal backed by the willingness of the government to shoot its own people if required.

The World Bank’s ICSID and other international tribunal systems are a corporate dream. The tribunals that decide these cases are made up of lawyers who move from being highly paid corporate defenders in one case to supposedly impartial judges in the next, a blatant conflict of interest. It’s a system where testimony is commonly sealed and where cases are heard thousands of miles away from the communities involved.

Unsurprisingly, corporations win either a full or partial victory more than half the time.

The Court of Public Opinion

The citizen campaign that took on Bechtel refused to wage its fight in the confines of Bechtel’s carefully chosen judicial comfort zone.

The organization I run, the Democracy Center, and our Bolivian and global allies took aim at Bechtel instead on the battlefield where citizen movements do best: the court of public opinion. That campaign became a powerful early prototype for how to organize in the age of the Internet, driven not so much by an orchestrated grand plan as by sheer, viral inspiration.

Through our own articles and our work with journalists from the New Yorker, PBS, and elsewhere, the Democracy Center kept telling, over and over again, the powerful narrative of a David and Goliath victory on the streets of Cochabamba. Water Revolt leaders from Bolivia also traveled across the world to share their story directly.

We hung that story not just around Bechtel’s corporate neck, but the neck of its CEO and namesake, Riley Bechtel. We even released his personal email address to thousands of people. As people reached out to us to get involved, we armed them with the hard evidence and some advice on strategy, encouraging them to take whatever action they were moved to take that could build pressure on the corporation.

The result was a beautiful, global spectacle of citizen power.

In San Francisco, activists shut down Bechtel’s headquarters by chaining themselves together in the lobby. A local coalition also got the San Francisco Board of Supervisors to pass a city resolution calling on Bechtel to drop its Bolivia case — just as the company was negotiating a major city contract.

In Amsterdam, people mounted a ladder outside Bechtel’s local office and renamed the street for the teenager killed by soldiers during the Cochabamba Revolt. In Washington, protesters picketed the house of the president of Bechtel’s Bolivian water subsidiary. At the South Africa Earth Summit, Bolivian activist Marcela Olivera recruited organizations to join a “Citizens Petition to the World Bank” calling on Bechtel to drop the case. EarthJustice filed a legal petition demanding public participation, and the Institute for Policy Studies mobilized Washington NGOs.

From one corner of the world to another, Bechtel was seized upon by angry Lilliputians tying a mighty corporate Gulliver to the ground.

The Power of Storytelling

In January 2006, besieged Bechtel officials flew to Bolivia and signed a deal with the Bolivian government under which it dropped its World Bank case for two shiny 1 boliviano coins — the cost of a local bus fare. No other major corporation, before or since, has ever been forced to drop such a major trade case by a campaign of citizen pressure waged against it.

In the end, Bechtel was defeated by something very simple: a story. It was a narrative about people fighting for their water, and of a corporation content to see them killed in order to squeeze the poor for profits it never earned. The mighty corporation could never escape the moral power of that story. We hit Bechtel with it using not just one tactic, but every tactic we could think of — from legal briefs to direct action. We didn’t waste time debating which approach was more worthy.

The trade battles before us today, including the TPP and TTIP, must also be fought with stories that lift the issue above technical jargon and into popular understanding.

And there’s no shortage of stories to tell. The tobacco giant Phillip Morris demands $2 billion from Uruguay for the sin of strengthening health warnings on cigarette packages. The people of El Salvador face a $300-million case from a Canadian-Australian mining company because El Salvadorans were able to block toxic mining operations. Germany faces a demand of €700 million from a nuclear energy company because, in the aftermath of the Fukushima disaster, popular movements won a moratorium on new nuclear power plants in the country.

Telling the stories of cases like these is essential to building a broader public understanding of what’s at issue in these arcane negotiations: a corporate power play against basic democracy.

“It is impossible to overstate the impact of the people’s victory in Cochabamba against Bechtel,” Noami Klein observed recently. “At a time when winning real victories seemed like a distant dream, we suddenly saw that it was still possible to win, even against a giant U.S. multinational.” In the battle of the Bolivian people against Bechtel, David beat Goliath not only once, but twice. In the midst of the current battles on trade, the spirit of both those victories and their concrete lessons well deserve our remembrance.

Jim Shultz is executive director of the Democracy Center and lives in Cochabamba, Bolivia. He tweets at @jimshultz.

  • Aquifer

    So, OK – every time a company mounts another suit – will it be necessary to mount such a campaign? Rather exhausting, wouldn’t you say? And will every small country, let alone community, be able to inspire such a mounting of support? As the article points out – “No other major corporation, before or since, has ever been forced to
    drop such a major trade case by a campaign of citizen pressure waged
    against it.”

    So wouldn’t it be a lot smarter, better and safer to use the electoral process to see that folks that would sign such deals don’t get or stay in office?

  • PETER CHILDS

    In order to get good people into office, voters have to be lifted out of their ignorance and sloth lest they continue to elect incompetent people or simply to not vote at all. This is one of the most important effects of the kind of campaigns described in this article. So, all off the above, I’d say.

  • Robert Hodge

    Agree with both comments. While we spend our days in stupefying ignorance chasing “dancing stars”,”amazing races” and/or the next “teen/voice Idol”, dipped in our cell phone technology, the stealth arm of Corporate Influence pads the nests of their lackey henchmen in “Government” to do the bidding we so blithely comply with. Power gives up NOTHING without a struggle. A struggle I lament we may no longer even care to debate, let alone resolve, to any conclusion that benefits the people…

  • D Kessler

    The exact same thing is getting ready to happen here in the good ol USA with the TPP. We are being sold out by our own government again. Have you ever tried to put the toothpaste back in the tube?
    OPEN YOUR EYES AMERICA WE ARE BEING SOLD OUT TO THE BIG CORPORATIONS AND MOST OF US DONT EVEN KNOW IT.
    Wake up.

  • Aquifer

    Lifting out of ignorance – you are correct, that must be our job … But we can’t rely on MSM to do that, they only deepen it. And, it seems to me, relying on social media, as widespread as we think it to be, will still leave out a lot of folks, perhaps the majority, as they don’t visit the sites that we use to do that …
    I have maintained for sometime that we need to do direct, organized consistent outreach in the form of hand delivered, say, monthly newsletters – stuffing them in doors, etc. – old fashioned low tech stuff – the way Thomas Paine did it – shucks, it worked for him! It is cheap, substituting shoeleather for the big bucks we don’t have – we could organize delivery by and within zip codes to cover neighborhoods and tailor them to those neighborhoods – a different approach for suburbs, say than cities – one size does not fit all :) But i can’t seem to get folks interested enough in that approach to get it organized on a big enough scale …

  • Aquifer

    See above reply to Peter …

  • PETER CHILDS

    IMO this is just the kind of creative thinking we need. It’s still an uphill fight to get traction for such ideas but the worse it gets the better it gets in that more of us awaken and we get closer to the critical mass of awareness necessary for real change. Keep on keeping on!

  • Dawn Wolfson

    Which brings us to the many campaigns around the US to get big political contributions out of our politics. Until that happens, very few candidates like the ones you describe will ever get into office.

  • Jim Shultz

    Thanks for the comments here on my article. Yes, I agree, we need to change the whole system not just fight each case. But the key to getting to the broader public on this, I believe, are the stories not the technical jargon, as we did on Bechtel.

  • Jon

    And note that the people of Bolivia did not rely on “voting out the rascals” in an electoral system that is fatally corrupted–voting machines that are hacked to flip vote totals, gerrymandering, refusal to even debate 3rd party candidates–the list goes on. Creative confrontation of various types is the order of the day.

  • Aquifer

    And that won’t happen until you get these folks out of office -

  • Dawn Wolfson

    Catch 22?

  • Aquifer

    No, i think the automatic assumption that wealth always wins is unwarranted – underfunding of 3rd parties, say, makes it more difficult, but not impossible, to win ….

  • Aquifer

    Thanx for the encouragement – have been mostly met with a wall of silence – too “lo-tech”, apparently, in this day and age …..

    I have been trying to get folks who have activists websites, like the Greens, who have regular readers of like mind, to set up a system where the idea would be presented – e.g – a database based on zip codes – “I live in such and such zip code, anyone interested in hooking up for such an endeavor, contact me … ” I would love to try it in my own neighborhood, but have no idea how to connect, and the effort would need, methinks, some sort of “imprimatur” from the org. to gain adequate legitimacy among members – but so far no luck ///

    The idea would be – folks would get together say once a month, decide on the topic, write the newsletter, divide up the territory, then distribute it – if we employ cartoons and humor, it won’t matter so much if it’s “lo-tech” :)

  • Dawn Wolfson

    It isn’t just money, it’s attitudes. People are pragmatic. Many won’t vote third party because they don’t believe they can win.

  • PETER CHILDS

    I think it’s a great idea, whether or not its time has come. I know (after thirty-five years of activism) how discouraging it can be when large amounts of effort appear to yield small results. But every drop is worth putting in the bucket, and I (the eternal optimist) continue to feel that all our efforts will turn out to have been well worth while. If you want to see why and if, as seems to be the case, you don’t mind running pretty far ahead of the pack, check out my book “Of Thee I Sing; The American Experiment and How It Can Still Succeed” (e.g. Amazon)

  • Aquifer

    “Can’t win” – the standard meme fostered by TPTB to insure no competition to the duopoly – and brilliant – if i want to convince you not to do something, all i have to do is convince you, the “pragmatic” you, it “can’t be done” and you won’t even try, and if you don’t try it indeed won’t be done … but in the case of elections, this is obviously absurd – any candidate on the ballot “can win” if enough folks vote for her/him …

  • Dawn Wolfson

    Exactly the problem, and something “our side” needs to get better at fighting. The other side is so good at it…

  • Aquifer

    Agree! And i think one of the things we really need to do is combat these memes loudly and often – the “can’t win one” as above, the “spoiler one” (the D/Rs are the “spoilers” – they have spoiled our climate, our economy, our education ….) and “TINA” (of course there are alternatives, they are on the ballot, for Pete’s sake, all we have to do is pull the lever) – and i think we have to be pro-active in that, give them the lie even before they are pulled out, as they are often unspoken, though ever present, in people’s minds …

  • BarleySinger

    the electoral process(in its current form) does not have any such people to vote for. A successful election campaign of any significance take hundreds of millions of dollars. You have to pay for expensive TV time. Before the “fairness doctrine” was struck down, there were large limits on how much a station could push one candidate at the exclusion of another…even more so on the news. That is not the case today.

    The game is rigged. In order to win at all, you have to choose a different game.

  • BarleySinger

    no it isn’t cheap. Not compared to email. The cost of the paper and photocopying, and envelopes, and postage (even if you presort and bulk mail) is staggering.

    This is why Pat Robertson was so sucessful in getting his Christian Coalition people into office.

    * First off he was rich and willing to spend his own cash.
    * second he owned a media network and used it.
    * Third he used local churches as grass roots location to register people to vote, and then tell them (with the help of local ministers) that “the devil” was going to get them… God would be gone from America, if they did not vote his way.

    It worked

  • Aquifer

    I think you missed my point …
    1) e-mails are only good for those who get them … many of the folk we need to reach are not on relevant mailing lists …
    2) we are not rich and do not have our own media networks
    3) the cost of copying can be split up among those in any particular zip code by those involved in the distribution …
    4) there are no postage costs – these would be delivered by using good old shoe leather ….
    5) a moral case can, and, IMO, should be made for pursuing many of the causes progs hold dear …

  • Aquifer

    Disagree – many ballots have good alt choices, e.g. Stein for Pres. in ’12, and anyone on a ballot can win if enough folks vote for ‘em …

    As for TV time, i have suggested an alternative “lo-tech” approach in another post – hand delivered newsletters ….

    And what “game” do you propose?

  • George King

    “A Common Enemy”, at the end of the day, most causes share the same common enemy: corporations and the 1%”elitist. “When we all hate somebody together, it makes us [Republicans or Democrats] work together to fight them. You always see the most patriotism when there’s an enemy to battle against.” ~ Toby Russell, Common Enemy.
    “When we all hate somebody together, it makes us [Republicans or Democrats] work together to fight them. “You always see the most patriotism when there’s an enemy to battle against.” ~
    Toby Russell, Common Enemy.

    Our enemies reside from within and from without. Terrorist in the ME are much like the odds of a lighting strike yet we don’t strike down our
    Constitution and Bill of Rights to prevent a lighting strike. As Dr. Spock would say that is not logical!

    Over the past several decades, multinational corporate Goliaths have helped to write and rewrite hundreds of rules skewing tax, trade, investment and other policies
    in their favor. The extraordinary damage these policies have caused has become increasingly apparent to the communities and governments most directly affected
    by them. This, in turn, has strengthened the potential of a movement that’s emerging to try to reverse the momentum. But just like David with his slingshot, the local, environmental and government leaders seeking to revise rules to favor communities and the planet must pick their battles carefully. If you are or are not a member of a religious group discussions should be pursued in haste regarding these words.

    “A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules,” “As long as the problems of the poor are not radically resolved by rejecting the absolute
    autonomy of markets and financial speculation, and by attacking the structural causes of inequality, no solution will be found for the world’s problems or,
    for that matter, to any problems,” he wrote. “Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of
    exclusion and inequality. Such an economy kills,” Francis

    Corporatist who have the politicians by a strangle hold by either bankrolling their elections (not to mention their bank accounts) or just shear intimidation of their current strangle hold on the commons…and the list goes on. (Congress has abdicated its Oath and Duties)

    All those battling this should order & read “Deer Hunting with Jesus” (Dispatches from America’s class war) by Joe Bageant.

    We have seen this before and some Brave Patriots have resolved this before.

  • George King

    “A Common Enemy”, at the end of the day, most causes share the same common enemy: corporations and the 1%”elitist. “When we all hate somebody together, it makes us [Republicans or Democrats] work together to fight them. You always see the most patriotism when there’s an enemy to battle against.” “When we all hate somebody together, it makes us [Republicans or Democrats] work together to fight them. “You always see the most patriotism when there’s an enemy to battle against.” ~ Toby Russell, Common Enemy.

    Our enemies reside from within and from without. Terrorist in the ME are much like the odds of a lighting strike yet we don’t strike down our
    Constitution and Bill of Rights to prevent a lighting strike. As Dr. Spock would say that is not logical!

    Over the past several decades, multinational corporate Goliaths have helped to write and rewrite hundreds of rules skewing tax, trade, investment and other policies in their favor. The extraordinary damage these policies have caused has become increasingly apparent to the communities and governments most directly affected by them. This in turn, has strengthened the potential of a movement that’s emerging to try to reverse the momentum. But just like David with his slingshot, the local, environmental and government leaders seeking to revise rules to favor communities and the planet must pick their battles carefully. If you are or are not a member of a religious group discussions should be pursued in haste regarding these words.

    “A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules,” “As long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation, and by attacking the structural causes of inequality, no solution will be found for the world’s problems or, for that matter, to any problems,” he wrote. “Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills,” Francis

    Corporatist who have the politicians by a strangle hold by either bankrolling their elections (not to mention their bank accounts) or just shear intimidation of their current strangle hold on the commons…and the list goes on. (Congress has abdicated its Oath and Duties)

    All those battling this should order & read “Deer Hunting with Jesus” (Dispatches from America’s class war) by Joe Bageant.

    We have seen this before and some Brave Patriots have resolved this before.

  • Dawn Wolfson

    I can tell you’re not a Star Trek fan. (evil grin)
    The book looks very interesting. I am thinking of picking up a copy. I try and tell people that we need to talk to people on the right and focus on our similarities and understand our differences, and I mostly just get scorn that we could possibly have anything in common. Most of my activist friends on the ground agree with me.