The World Bank Tries to Re-Write Bolivian History

As any Bolivian newspaper reader knows, paid political propaganda is a staple of the Sunday editions. Running full-page ads, or whole inserts, aimed at self-promotion is a practice that crosses ideological lines.

In the same edition readers might be treated to twenty column inches of Evo Morales wrapping himself in the wonders of Bolivia's new aid plan for the elderly, side-by-side with four pages of photos of Cochabamba Governor Manfred Reyes Villa cutting ribbons at newly paved roads. All this of course is at Bolivian taxpayer expense.

Well, now the World Bank's Bolivia office has decided to get into the propaganda game. This month it produced a snazzy little 22-page booklet that it is distributing by the tens of thousands in three major Bolivian dailies, in La Paz, Cochabamba, and Santa Cruz. The booklet is titled, "Ten Things They Never Told You About the World Bank in Bolivia."

There is, however, a good reason that Bolivians aren't used to hearing some of the Bank's ten boasts – it's because they aren't true. In fact, a few of the Bank's claims wander so far into fiction that one wonders whether the Bolivia office has hired Pinocchio and Associates Inc. as its new public relations firm.

Inside the Imagination of the World Bank: We Won the Bechtel Case for You!

The real whopper among the Bank's claims is 'Thing They Never Told You #6': "The Aguas del Tunari Conflict [the Bechtel vs. Bolivia case] was resolved by an arbitration facilitated by the World Bank."

The Bank writes:

In 2002, after being expelled from Cochabamba the company Aguas Del Tunari [Bechtel's subsidiary] presented a demand before ICSID [The International Center for the Settlement of Investment Disputes, the World Bank-operated trade court]. In the end the controversy resulted in favor of the Bolivian state, which bought the shares of the company for a price of 2 dollars. This shows that arbitrations can prevent trials against countries and serve to resolve conflicts.

Perhaps a short look at the facts the Bank seemed to miss:

First, it was the World Bank itself that set the entire Bechtel-in-Cochabamba fiasco in motion. In 1997 the Bank made privatizing Cochabamba's water a condition of any further aid for expanding water service in the country. In the aftermath of the 2000 Water Revolt – following the bloody death of a 17-year-old boy and the wounding of more than a hundred others – Bank officials went to work to disclaim any connection to the privatization. But even those denials ended after The Democracy Center led reporters to a World Bank report confirming the Bank's demand that the water be privatized.

Second, the World Bank did not protect Bolivia from facing a case against it by Bechtel. It provided the venue where Bechtel filed the case, shielded from the public and press. Under the Bank's helpful graces Bechtel sought $50 million from Cochabamba water users, after having invested less than $1 million.

In 2002 when Cochabamba water users petitioned the Bank to open the case to public participation and media scrutiny, a tribunal headed by a World Bank appointee rejected the request, insisting that the case be handled in secret. Not surprisingly, none of this appears in the Bank's little booklet.

It seems quite clear that the Bank would love for Bolivians to believe that the Bank itself deserves credit for the case being settled for pennies. That honor however, goes not to the institution that aided Bechtel, but to Bolivian Waqter Revolt leaders and the thousands of citizens on five continents that pressured Bechtel to drop its Bolivian demand.

Other Bedtime Stories from the Bank

The Bolivia office of the World Bank's attempt at spin does not end with its re-write of history on Bechtel vs. Bolivia.

Take 'Thing They Never Told You #3': "The World Bank decided not to collect the debt that it had with Bolivia." This makes it sound like Bank officials just woke up one day with a big smiles on their face and a song in their hearts and out of great generosity suddenly decided to excuse Bolivia from paying back all the money it owed. Not mentioned is the fact that debt cancellation, in Bolivia and elsewhere, came only after a decade of aggressive campaigning by religious communities and others worldwide, who pointed out the heavy burden that the world's poorest were bearing to finance bogus development deals pushed and financed by the Bank. Maybe Bank officials just missed all those protesters outside the doors of their annual meetings.

Or consider ‘Thing They Never Told You #4’: “The World Bank is one of the least expensive sources of financing on the planet.” Whether this is true with regard to the Bank’s interest rates may be a reasonably debated point. But not included in the Bank’s definition of ‘cheap’ is the payment taken in lost democracy. Assistance from the World Bank is never a simple cash transaction, but one full of dictates and conditionalities about how nations should conduct their economic life – such as thou shalt privatize.

Banks making student loans, for example, do not generally dictate your college major. Nor do banks making home loans insist that you should paint your house green and not yellow. The World Bank however does not blanche at such demands and as a result of these conditions over the past decades; the price of World Bank loans in Bolivia has been very high indeed.

A History That Can Not Be Rewritten with Spin

There is certainly one thing that the World Bank got right – its image in Bolivia is miserable. The World Bank played a leading role in decades of so-called 'structural adjustment' policies that wrecked Bolivian industries, traded away natural resources at bargain prices, and left the country deeply in debt for boondoggle projects that often just benefited the small elite that cozied up to the Bank's ideological agenda. In fact, during the time in which Bolivia was supposedly deciding these issues 'democratically', the Bank had dozens of Bolivian public officials on its own consultant payroll, just to make sure the Bank's bidding was done correctly.

I am not, as some others are, a 'World Bank hater'. However, if the Bank's office here thinks that it can remake its image through public relations and spin, it may have another hard Bolivia experience ahead of it. Asked by e-mail about how much in Bank dollars the Bolivia office spent on the booklets, the Bank offered only that they cost 14 cents ($US) a piece to print but would not reveal how many they had printed nor the cost of distributing them. Secrecy, it seems, remains a World Bank reflex. But based on the number of Sunday papers distributed in the three cities (well more than 100,000), the Bank's public relations project was not a cheap enterprise.

The World Bank has a new representative in Bolivia, Oscar Avalle. If fiction is how Mr. Avalle intends to guide his tenure in Bolivia, he won’t be doing Bolivia, the World Bank, or himself any favors. My guess is that he can expect to hear from Bolivian social movement leaders about his opening act, and the welcome will not be a warm one.


Note: We have sent this Blog post to the World Bank's Bolivia office and invited officials there to respond, as they may wish, in the comments section below.

President Bush's New Choice to Lead the World Bank

Readers:

Last week’s news brought the long-awaited resignation of World Bank President Paul Wolfowitz, following conflict of interest revelations involving the job promotion of his romantic partner.

In choosing Mr. Wolfowitz to head the Bank in January 2005, President Bush selected a man who had been one of his government’s most vocal cheerleaders pushing the U.S. into its Iraqi quagmire. As Deputy Secretary of Defense, Wolfowitz was arguing for an Iraq invasion even before 9/11. His declarations about how easy it all would be included this now-famous prediction beforehand:

“I think what you’re going to find, and this is very important, you’re going to find Iraqis out cheering American troops.” He added, “I think the ethnic differences in Iraq are there but they’re exaggerated.”

On the basis of this gift of foresight and analytic ability, President Bush put Mr. Wolfowitz in charge of one of the world’s most important lending institutions, raising the question – exactly how bad do you have to screw up in the Bush Administration to be held accountable?

Based on the astuteness of Mr. Bush’s last nomination, it is reasonable to ask if he has taken any more care in replacing Mr. Wolfowitz. This week the President nominated his former trade representative, Robert B. Zoellick. Mr. Zoellick has an advantage people in politics like, a remarkably easy act to follow. Initial reports in the standard press have been favorable.

But who is Mr. Zoellick and what philosophies and policies is he likely to bring to the World Bank (assuming, as is likely, that his nomination is approved by the Bank board)?

In this post we want to share some useful insight from a close colleague of ours, Sarah Anderson of the Institute for Policy Studies. Below is a brief article by Sarah on the appointment of a man who once suggested that the attacks on September 11, 2001 were inspired, in part, by Americans who took to the streets to challenge conservative World Bank economic policies.

Jim Shultz


Mr. Hardball Goes to the World Bank
By Sarah Anderson, Institute for Policy Studies

Nine days after the September 11 terrorist attacks, I opened up The Washington Post and stared right into the flinty mind of one Robert B. Zoellick, the Bush administration’s pick for new World Bank president.

While the rest of the country was still in a haze of horror and confusion, Zoellick had seized the moment to advance his agenda as U.S. trade representative. In a commentary titled “Fighting Terror with Trade,” he argued that Congress needed to pass fast track trade negotiating authority as part of their support for the “War on Terror.”

Having failed to sell the legislation on its merits, Zoellick had moved with breathtaking speed to take advantage of public fears and pressure on lawmakers to stand with the president during a national crisis.

In a speech at the Institute for International Economics four days later, Zoellick really let loose by insinuating that there were links between the September 11 terrorists and anti-globalization protestors.

“In the wake of the shock of 13 days ago, many people will struggle to understand why terrorists hate the ideas America has championed around the world,” Zoellick said. “It is inevitable that people will wonder if there are intellectual connections with others who have turned to violence to attack international finance, globalization, and the United States.”

Zoellick’s hardball tactics worked. President George W. Bush, and President Bill Clinton before him, had tried in vain to renew fast track (now re-branded Trade Promotion Authority), which allows the Executive Branch to negotiate new deals that Congress must vote up or down. Anger over the negative impacts of existing pacts, such as the North American Free Trade Agreement (NAFTA), on jobs and the environment had prevented both presidents from obtaining this authority.

But the new “fight terrorism with trade” sales pitch helped turn the controversial trade bill into a test of wartime patriotism. It passed by one vote in the House of Representatives.

By fueling paranoia about free trade critics, Zoellick helped secure Department of Homeland Security funds to deploy 2,500 law enforcement personnel in Miami during trade talks in the fall of 2003. Police fired rubber bullets and tear gas at peaceful demonstrators, causing scores of injuries.

That same fall, Zoellick had aimed verbal bullets at developing country leaders who refused to embrace his trade agenda. In a Financial Times commentary, Zoellick accused Brazil, India and other key middle-income nations of employing the “rhetoric of resistance” and the “politics of protest.” These countries had formed a bloc to persuade the United States to reduce its multi-billion dollar per year agricultural subsidies in exchange for other concessions.
Casting all pretense of diplomacy aside, Zoellick accused Brazil of being the leader of the “won’t do” nations that were to blame for the collapse of World Trade Organization negotiations.

This time, the hardball approach didn’t work as well. During his remaining year and a half as chief trade negotiator, Zoellick was unable to revive the WTO talks, which remain stalled today. His jabs at Brazil no doubt also contributed to the death of the hemispheric Free Trade Area of the Americas (FTAA). Zoellick left his trade post for the State Department the same week that now-forgotten deal was due to be concluded.

Critics of corporate-driven trade agendas celebrated Zoellick’s failures as a trade negotiator. Since he was deaf not only to the concerns of many developing country governments, but also to those of civil society groups in the United States and abroad, it was certainly preferable to have no deals than bad ones.

But is a tone-deaf, name-calling steely opportunist a good choice to lead the World Bank? The Bank’s official mission, after all, is to fight global poverty, not promote U.S. corporate interests. And after the Wolfowitz uproar, one might have expected the Bush administration to pick a more genteel and broad-minded successor to lead this global institution.

For more than 60 years, however, the United States has enjoyed the unwritten privilege of crowning the Bank’s leader. And unfortunately, despite the wreckage of the Wolfowitz debacle, there appears to be little resistance from the rest of the world to the imposition of yet another Bush administration insider. Even the Brazilian government has decided to adopt a “can-do” attitude on the Zoellick nomination.

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies in Washington, DC, and was a staff member of the Congressionally appointed International Financial Institutions Advisory Commission (the Meltzer Commission).

The original version of this article, published by Foreign Policy In Focus can be found here.

Bolivia Pulls Out of World Bank Trade Court

It is an institution little known outside the world of international corporate attorneys, but it can assert power greater than national governments. It is called the International Centre for Settlement of Investment Disputes (ISCID), a secretive trade court operated by the World Bank in Washington.

This week three Latin Governments began the process of unraveling its powers. At a summit meeting the governments of Bolivia, Venezuela, and Nicaragua announced that they were ending their participation in ICSID. They are pulling out. The move is an important event in the evolving politics of global trade.

ICSID is the same trade court handpicked by the U.S. Bechtel Corporation, in its unsuccessful effort to sue Bolivians for $50 million in the aftermath of the Cochabamba Water Revolt that ousted the company. The ICSID process is highly secretive. The public and the media aren't allowed to know when or where case tribunals meet, who testifies or what they say. An international pressure campaign waged by more than 300 groups in 43 countries eventually led Bechtel officials to drop their case in January 2006, for a token payment equal to thirty cents. Read more about the case here.

The three Latin American governments declared at a summit in Merida, Venezuela, "[We] emphatically reject the legal, media and diplomatic pressure of some multinationals that ... resist the sovereign rulings of countries, making threats and initiating suits in international arbitration."

The Washington-based Institute for Policy Studies and Food & Water Watch just released a report analyzing how the World Bank/ICSID dispute resolution process "has given global companies unprecedented power to undermine governments’ authority to protect human rights and natural resources and pursue national development strategies." That report can be read here.

The ability of Bolivia and the other countries to completely disengage from ICSID still remains in some doubt. What binds Bolivia to the World Bank trade court is not Bolivian law but a whole set of bilateral trade agreements with other countries that invoke ICSID as the agreed to mechanism for arbitration. According to one attorney familiar with the process, many of those agreements allow for dispute resolution to take place through other mechanisms that are less secretive and more balanced in terms of national rights. However, other agreements only invoke ICSID as the arbiter and in those cases Bolivia will have to negotiate new arrangements.

In a world of tightening global economic rules, most written to favor corporations just like Bechtel, ICSID has become a major policeman. To be sure, governments and investors will not always see eye to eye on things after contracts are signed and disputes will need to be settled fairly. But that should not be a license to do so in secret, hidden even from those who will bear the cost, in cash, or in the repeal of important environmental and consumer protections.

Saying "hasta la vista" to ICSID is a step toward reclaiming sovereignty and it should not come us a surprise if other countries start to follow Bolivia's lead.