Telecom Italy/Telefonica
vs. Bolivia: Corporate Power vs. People's
Sovereignty
In April of 2007, the Bolivian
government announced its intention of renegotiating the terms of privatization
of telecom corporation Entel, which had benefited
Italian company STET since 1995 (today Telecom Italia, in which Spanish
corporation Telefonica has 10% of the shares). This
is a strategic sector for the social and economic development. For this reason
the government determined the need to have a greater participation in the
company to manage it according to the public interest. Telecom Italia appealed
to the Investment Protection Treaty signed between Bolivia and the Netherlands and the International Center of the Settlement
of Investment Disputes (ICSID) a World Bank's secret arbitration panel, which
has traditionally favored transnational
corporations.
On April 23rd 2007, the Bolivian government ordered to transfer
47% of Entel's shares to the Ministry of Public
Works. These shares belonged to Bolivian public pensions fund, ran by Zurich
Financial Services and Prevision (AFP), a subsidiary of Spanish bank BBVA. The
government began a negotiation with ETI Entel to buy
3% of its remaining shares in order to have 51% of owership
in the company and to be able to manage it. Telecom Italia, through Euro
Telecom International SV (ETI), a company registered in the Netherlands but directly
controlled by the Italian transnational corporation,
protested over a threat against its econonmic
interests.
A month later, on May 2nd, 2007 the Bolivian government
announced that it did not recognize the ICSID jurisdiction over its territory,
something which had to enter into force after six months. On October 12th, 2007, just after the 6 months
period expired, ETI filed a lawsuit against Bolivia before the ICSID
and asked for the opening of an arbitration case to request compensations for
the losses implied by the Bolivian decision and over the investments the
company had supposedly made in the country. On October 31st, two days before Bolivia´s withdrawal from ISCID was officially announced,
Ana Palacio (former Foreign Minister under José María Aznar administration)
the then ICSID Secretary General, filed ETI's case
and began the arbitration process, in which Bolivia refused to
participate.
The case ETI vs. Bolivia before ICSID shows
how the companies fail to comply with the national environmental and health
laws in these countries, besides appealing to the ICSID, a body which lacks a
democratic process. But on top of this, this case does not respect Bolivia´s sovereign decision of withdrawing from ICSID.
ETI claims that it invested
millions of dollars in Bolivia and that it has
improved its services. However, and despite not having obtained high profits,
the company has failed to fulfill with tax payments
in the country and it ows Bolivia over 100 million
dollars (for unpaid taxes and for evading taxes when it was privatized).
Meanwhile, Entel's
privatization has caused a large number of labor
conflicts (working conditions worsened) and conflicts with the users (since the
company failed to make the investments it had promised). It is worth noting
that both Spanish company Telefónica, which has
failed to take responsibility in this case (although it has 10% of the shares
in Telecom Italia), and Telecom Italia, have a long record of social conflicts
in Latin America, Spain and Italy.
A network of 11 organizations
operating in Italy, the Netherlands, Spain, the US and Bolivia are filing this
case before the Peoples' Permanent Tribunal, accusing four main actors: Telecom
Italia, the government of the Netherlands, Telefónica
and ICSID for having a negative impact on the right of the Bolivian people to a
sovereign development and for acting in the economic interests of corporations
with a clear corporate social responsibility.
Key issues: New
Constitutionalism and privatization of Justice
Denouncing organizations: Observatorio de la Deuda en la globalización ODG (Cataluña, Estado Español), Transnational Institute/ Corporate Europe Observatory CEO/
SOMO (Holanda), Campaña por la Reforma de la Banca Mundial CBRM, Asud,
Transform (Italia), Fundación Solón
(Bolivia), Institute for Policy Studies (Estados Unidos)