Bolivia, a nation nestled high in the Andes, has a history steeped in struggle, populated by a peoples whose greatest accomplishment can be said to be their very survival. Cochabamba, one of the largest cities in Bolivia, is settled in a valley overshadowed by the stark Andean peaks that surround the city of 650,587. (metropolitan area pop. 1.938 Million)
Cochabamba is also one of Bolivia's most economically and socially progressive cities. However, its vibrant business and commercial districts belie the poverty that plagues the city as well as the entire country, the poorest in South America. A milder climate than most of the Andean region, Cochabamba's economic mainstays include such agricultural items as grains, sugar-cane, potatoes, coffee beans, cocoa beans and tobacco. (And of course, the cocaine industry sustains a lively black market)
In the 1980's, a stark drop in the price of tin, one of Bolivia's major exports, was quickly followed by a period of Hyper-Inflation that rapidly produced an economic crises. The turmoil spread quickly through the region. By the late 1990's, the Bolivian Government requested a $25 Million loan from the World Bank to avert a financial crises and to keep the local water co-op afloat. The World Bank balked. Instead, World Bank Officials suggested that Bolivia, specifically the cities of La Paz (Bolivia's Largest City) and Cochabamba, privatize their Water Utilities.
With few choices left to the nearly bankrupt Bolivian Government, a deal was reached with the California based Engineering giant Bechtel. Almost immediately, customers saw their water bills go up by more than 50%. To the hundreds of thousands of poor Cochabambans, this meant choosing between water to drink and food to eat. The Cochabambans rejected the very idea that someone could own the water and they were intent on stopping it.
Protesters began filling the streets, taking direct action by blocking traffic, as well as forming huge human chains and blockades. Throughout the city, the day's business was put on hold as the protesters filled the city and surrounded Bechtel's Bolivian headquarters. The (at the time) right-wing government responded by defending Bechtel's water-rights.
Videos taken at the time show that the Military Police were sent out in droves, as one witness described it, "[to] guarantee the judicial security of the company, [to] guarantee the profits of the company." Later he adds, "And there was such a complex relationship between them [Bechtel] that even the rainwater was privatized. The people were prohibited from gathering rainwater,"
As the situation on the ground deteriorated, the military grew more violent. Instead of the popularly elected government defending its people, it was defending the rights of foreign investors and Multi-National Corporations. At times, Cochabamba's streets looked as though it were amidst a civil war. The Military police fired openly into crowds, eventually killing a teenage boy and leaving countless others wounded.
Finally, Bechtel retreated back to California, and the water utilities were returned to local control, the war against privatization had been won by the Bolivian people, but not according to Bechtel.
Bechtel sued the Bolivian Government in a World Bank Trade Court, part of the ISDS clause in Trade deals similar to the ones currently being negotiated. Instead of requesting the $1 million Bechtel actually invested in the project, Bechtel wanted $50 Million in damages to future profits.
This in turn, sparked a second round of protests. This time, the protests went global. Bechtel, in an attempt to save face accepted a deal, the equivalent of 30 cents and a tarnished reputation before packing it up and heading home.
The Bolivian revolt however, is unique in it's resolution, and isn't how most World Bank Tribunals end. The rules are heavily tilted in favor of the Corporate complainant. Often times, the judges who make the rulings, are ex-corporate executives and lobbyists themselves.
ISDS clauses are found in every Free Trade Deal, including the TPP and the TTIP, both of which are currently being negotiated by President Obama and backed by Congressional Republicans. ISDS is used as a mechanism to protect Multi-Nationals from profit killing regulations in countries that have signed on to the treaties. If a foreign Corporation decides a new environmental rule or a worker protection Labor law hurts the companies bottom-line, it can take that Government to a World Bank Trade Court. If the company can sufficiently prove to this kangaroo court that the proposed rule or regulation hurts its profits (not a very high bar as far as legal standards are concerned), than that nation must scrap the rule or exempt the company from compliance.
This includes the United States. If a foreign company thinks, for example, President Obama's proposed EPA regulations will hurt its profits, it can sue, and potentially win, a challenge in a World Bank Trade Tribunal. Usually these challenges are held secretly and discreetly to avoid public scrutiny. Worst of all, in more than half of the cases, the company wins over the sovereignty of the nation-state it challenges.
Up to now, I have been on the fence about the TPP. Most economists think it will have little or no effect on jobs. Clauses found within the framework proposed, do contain some protections for displaced workers. Some economists also point to our dismal trade deficit as an example of why we need more open trade with the few still closed off regions of the world. Another argument used in favor of the TPP, is to gain dominance over the Pacific-rim region before China becomes too powerful of an influence there.
A few worry about currency manipulation, but as most political scientists acknowledge, no nation-state will give up it's sovereign right to devalue its currency in times of hardship or recession, least of which the United States, who's own Federal Reserve used unconventional methods to artificially lower long-term interest rates while expanding the monetary base during the latest recession. This was what the FED called Quantitative Easing.
The more I look into Free Trade Agreements however, the more horror stories I find. And the biggest horror story of all has yet to come. What happens when nation-states no longer have the legal authority to regulate businesses in their own countries? How long do we have before it becomes impossible to stop a big Bio-engineering Firm from dumping chemical waste into our own water supply or on our land? How many years before the biggest firms are raking-in more in profits than some of the worlds largest economies can raise from tax-revenues?
Bit by bit, nations are ceding their sovereign right to regulate. Unlike a popularly elected government, these Multi-National behemoths are the farthest thing from democratically elected. Yet, they retain the power to force the countries that sign on to free trade treaties to bow down to their every request. How long before these giant firms become bigger than the nations they operate in? Who will police them then?