Foreign Investment

As Techdirt has reported, corporate sovereignty chapters in TAFTA/TTIP and TPP have emerged as some of the most controversial elements in those agreements. Meanwhile, countries that already have bilateral investment treaties (BITs) with investor-state dispute settlement (ISDS) mechanisms are looking for ways to get rid of them in order to avoid the loss of sovereignty they imply. One nation that already has considerable experience in this area is Bolivia. A new report provides fascinating background information on exactly how it has gone about this (pdf), with valuable lessons for others looking to do the same. Things began back in 2000, during what was called the "Water war." After Aguas del Tunari, a subsidiary of the US company Bechtel, had taken control of water supplies in the central Bolivian city of Cochabamba, it raised prices to such an extent that the poorest citizens struggled to pay for drinking supplies. This led to demonstrations in the streets, with many people injured (original in Spanish.) Control of the water company was removed from Bechtel, which demanded $50 million compensation for the loss of its investment. The case was finally settled in 2006, when Bechtel agreed to sell its shares in the water company to the Bolivian state -- for 2 Bolivianos (then about $ 0.30).