Committee for the Abolition of Illegitimate Debt

Civil society organisations meeting in the People’s Social Summit in Lima denounce the recent decision of ETI and Telecom Italia this month to demand that the New York State Court freeze the accounts of the National Telecommunications Company (ENTEL) as part of a strategy of aggression against the government of Bolivia.

Lima, 15 May 2008

Meeting in Lima during the People’s Social Summit Linking Alternatives 3, the organisations signed below, denounce the recent acts of aggression of Telecom Italia against the Bolivian people. The Italian transnational company (with ten per cent control of the Spanish company Telefonica) has asked the New York State Court to freeze the accounts of the National Telecommunications Company (ENTEL) which are valued at tens of millions of Euros. ETI/Telecom Italia has chosen to use this measure in the context of a legal case against Bolivia presented on 12 October 2007 before the International Center for Settlement of Investment Disputes (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 6^th 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”.

https://icsid.worldbank.org/apps/ICSIDWEB/Pages/default.aspx which is part of the World Bank World Bank
WB 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.

). It is a measure that could have serious impacts for one of the most impoverished countries in Latin America, given that a decision in Telecom Italia’s favour would lead to the money in the frozen accounts being handed over directly to the company.

As a result of neoliberal policies in the 1990s, the most strategic economic sectors of the economy were privatised and handed over to transnational capital. This has had grave economic, social and environmental impacts. The current Bolivian government’s policy is to revert this situation and recuperate the sovereignty of the Bolivian people over these sectors, in order to contribute to Bolivia’s development. In April 2007 Bolivia announced its intention to retake control of ENTEL via legal means, through discussion and negotiation. The company’s response was to present before ICSID on 12 October 2007 a formal demand to put together an arbitration tribunal against Bolivia, asking for compensation for a fictitious harm to its investment.

It is a controversial legal demand and is particularly unjustified for various reasons. Firstly, it doesn’t respect Bolivia’s sovereign decision taken on 2 May 2007 to withdraw from ICSID, a private World Bank tribunal, which enables transnationals to make direct demands on States who have benefited in at least two-thirds of cases. Secondly, there is considerable evidence that ETI/Telecom Italia did not invest what was promised in Bolivia and has failed to provide adequate services to the Bolivian population. Moreover, ETI/Telecom Italia owes approximately $82 million dollars in defaulted taxes in Bolivia.

Thirdly, it is incomprehensible that ETI/Telecom Italia is using the Bilateral Investment Treaty between Bolivia and the Netherlands, through the use of a Dutch company set up without an address and which only has a postal letter box. ETI, a subsidiary of Telecom Italia, is the biggest shareholder of ENTEL and a company practically without employees. It is part of a group of Dutch companies which include International Communication Holding (ICH) N.V. (with no employees) and Telecom Italia International N.V. (with seven employees), the holding company of Telecom Italia. It was established by Telecom Italia in the Netherlands in order to benefit from tax advantages offered in the country, and the Bilateral Investment Treaties which it has signed with a number of countries in the South.

A case has been brought against ETI/Telecom Italia, Telefónica, ICSID, and the Dutch Government for not respecting the right of the Bolivian people to a sovereign development in the Permanent People’s Tribunal which is meeting at the moment in Lima, Peru organised by a bi-regional network from Europe, Latin America and the Caribbean.

Therefore, international civil society organisations signed below, in solidarity with the Bolivian people, vigorously condemn the decision of ETI/Telecom Italia to freeze the accounts of ENTEL in New York, calling on the company to end its litigation in ICSID and to respect Bolivia’s sovereignty.

Signatories:

Alianza Social Continental; Amigos de la Tierra América Latina y el Caribe; CAOI, Perú; Movimiento Boliviano por la Soberanía y Integración Solidaria de los Pueblos, Bolivia; Jubileo Sur; Acción Ecológica, Ecuador; ACIN-Colombia; ACSUR Las Segovias, Estado español; Agrupación Rodolfo Walsh, Argentina; ASUD, Italia; ATTAC Argentina, ATTAC Chile,Ayllus del Perú, Perú; Bolivia Trópico Cbb, Bolivia; Campanya “Qui deu a Qui”, Cataluña ;Campanya « No et Mengis el Món”, Cataluña; CEIBA-Amigos de la Tierra Guatemala; Censat-Agua Viva, Colombia; Centro de Mujeres Candelaria, Bolivia; CNDC, Bélgica; Colegio Alvino Maestro, Perú; Confederación General de Trabajadores del Perú, Perú; Confederación Nacional de Mujeres Campesinas de Bolivia- Bartolina Sisa (CNMCB-BS); Confederación Sindical Única de Trabajadores Campesinos de Bolivia (CSTUCB); CONFEUNASSC C-N-C Ecuador; Consejo de Amautas Indígenas del Tahuantinsuyu, Bolivia; Consejo NAC-Pueblos Originarios, Perú; CRBM, Italia; Cross Cultural Bridges-Holanda/Bolivia;Dialogo 2000, Argentina; Ecologistas en Acción, Estado español;Encuentro Popular, Costa Rica; Entrepobles, Cataluña; Estados UnidosFEANSIRTRASALUD, Venezuela; Federación de Mujeres El Alto, Bolivia; FEJUVE El Alto, Bolivia; FENASINDPRES, Venezuela; FENATRAU, Venezuela; FENTAP, Perú FENTRASEP, Venezuela; FERMYPE, Bolivia; FETRATEL, Venezuela; FOESIFV, Italia; Food and Water Watch, EEUU; Foro Social SMP, Perú; Fredimadd, Bolivia; Fuerza Socialista Bolivariana de Trabajadores, Venezuela; Fundación de Investigaciones Sociales y Políticas (FISYP, Argentina); FUTEV, Venezuela; Institute for Policy Studies, EEUU; MIPES, Perú; Ojalá, Holanda; OMAL-Paz con Dignidad, Estado español; Organización Desarrollo Comunitario, Perú; Oxfam International, Bolivia; Programa Chile Sustentable, Chile; Red Intercultural, Ecuador; Red Jubileo, Perú ; Rede Brasil sobre Institucoes Financeras Multilaterais, Brasil; REDES-Amigos de la Tierra (Uruguay), Seis Federaciones del Trópico, Bolivia; SINAFUM, Venezuela; Sindicato STEE-EILAS, Euskadi; Taller Ecologista, Argentina; Teatro-Remte, Bolivia; Terre des Hommes, Italia; Transnational Institute, Holanda; Xarxa de l’Observatori del Deute en la Globalització, Estado español; Red Venezolana contra la deuda/CADTM –Venezuela

More information:

Nick Buxton
Transnational Institute
NICK BUXTON
Postal Address: Casilla 2411, Cochabamba, Bolivia
Tel: +591 725 99050
Email: nick at nickbuxton.info
Blog: http://www.nickbuxton.info

Mónica Vargas
Xarxa de l’Observatori del Deute en la Globalització .