CIADI/Telecom Italia: ¡hands off Bolivia!

7 December 2007

“Some multinational companies take over our natural resources, privatize basic services, fail to pay taxes and then, when they have no arguments in their defense, they go to the so-called ICSID ICSID The International Centre for the Settlement of Investment Disputes (ICSID) is a World Bank arbitration mechanism for resolving disputes that may arise between States and foreign investors. It was established in 1965 when the Washington Convention of that year entered into force.

Contrary to some opinions defending the fact that ICSID mechanism has been widely accepted in the American hemisphere, many States in the region continue to keep their distance: Canada, Cuba, Mexico and Dominican Republic are not party to the Convention. In the case of Mexico, this attitude is rated by specialists as “wise and rebellious”. We must also recall that the following Caribbean States remain outside the ICSID jurisdiction: Antigua and Barbuda, Belize, Dominica (Commonwealth of) and Suriname. In South America, Brazil has not ratified (or even signed) the ICSID convention and the 6th most powerful world economy seems to show no special interest in doing so.

In the case of Costa Rica, access to ICSID system is extremely interesting: Costa Rica signed the ICSID Convention in September, 1981 but didn’t ratify it until 12 years later, in 1993. We read in a memorandum of GCAB (Global Committee of Argentina Bondholders) that Costa Rica`s decision resulted from direct United States pressure due to the Santa Elena expropriation case, which was decided in 2000 :
"In the 1990s, following the expropriation of property owned allegedly by an American investor, Costa Rica refused to submit the dispute to ICSID arbitration. The American investor invoked the Helms Amendment and delayed a $ 175 million loan from the Inter-American Development Bank to Costa Rica. Costa Rica consented to the ICSID proceedings, and the American investor ultimately recovered U.S. $ 16 million”.
. And then, in that World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

tribunal, no country wins against the multinationals. So why do we need an ICSID where only the multinational companies can win?” – President Evo Morales of Bolivia

Another World Bank/Multinational Attack on Bolivia – Stop ICISD and Telecom Italia

Once again, Bolivia is under attack by multinationals and the World Bank. In 2000, the people of Cochabamba, Bolivia took back their water system after it was privatized to US based Bechtel Corporation, and prices were hiked up to 300%. Bechtel struck back, suing Bolivia through the World Bank’s International Centre for Settlement of Investment Disputes, or ICSID. But pressure from citizens and social organizations around the world succeeded in forcing Bechtel to back off – and the suit was finally dropped.

Now, Telecom Italia – one of the world’s largest telecom operators and the dominant telephone company in Bolivia – has followed suit. The public phone company in Bolivia, ENTEL, was taken over by the Italian company in 1995.

When Bolivia suggested that Telecom Italia has provided faulty service, has not reinvested profits from Bolivia to benefit Bolivians, and then set up a commission to explore recovering control of the once-public company, Telecom went to the World Bank to sue Bolivia. At ICSID Telecom is claiming Bolivia has “destroyed” it’s investment – even though the company continues to operate and make money.
Bolivia, having learned from it’s lessons from Cochabamba, pulled out of ICSID on May 2, 2007. Yet the World Bank’s ICSID still admitted the case on October 31st.

After decades of privatizations and corporate privilege, Bolivia is saying “enough” – enough corporate profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. before public service, enough World Bank providing private “justice” for multinationals, at the expense of countries like Bolivia.

Bolivia needs your help. Learn about the case, and fight back:

1.Learn more about the Telecom case at ICISD, and how international law and the World Bank/ICSID give corporations “super powers” that can trump people’s rights and development, and why Bolivia left ICSID.

2.Join in calling on ICISD and Telecom Italia to back off.

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