A Reply to Protesters' Allegations Against Bechtel

June 4, 2003 In April, Bechtel was awarded a contract by the U.S. Agency for International Development to help the Iraqi people rebuild their country. Protest leaders have mobilized opposition to Bechtel on the basis of false claims and innuendo. Here are claims from their leaflets―and the facts.
CLAIM: “A Bush Administration plan for ‘a broad-based Mass Privatization Program’ of state-owned industries in Iraq may also include water, raising the specter of Bechtel seizing Iraq's water to increase profits at the expense of the Iraqi people.”
FACT: Contrary to this speculation, Bechtel’s only contract in Iraq is for rebuilding the seaport, power grid, water treatment plants, hospitals, and other civilian facilities. Bechtel has not been asked to manage any of Iraq’s water systems or other utilities.
CLAIM: “Just over a year ago, the San Francisco Board of Supervisors canceled a contract with Bechtel for the management of the city’s water systems upgrade. Bechtel was doing unnecessary and overpriced work and charged the city for tens of thousands of dollars’ worth of personal expenses. Many also feared that Bechtel had its eye on privatizing the city’s water.”
FACT: Bechtel did not overcharge or underdeliver. The San Francisco Public Utilities Commission determined that the quality of work by Bechtel’s joint venture generally “exceed(ed) the requirements.” Extensive audits by the City Controller found only “minor errors in paying some of its staff.” At no time did Bechtel seek to “privatize the city’s water.”
CLAIM: “After privatizing the water systems in Cochabamba, Bolivia, a Bechtel subsidiary made the price of water so expensive that many, particularly the poorest, could no longer afford it. Bechtel then, at best, sat still while the Bolivian government met mass public protests with deadly force.”
FACT: As it had done in the capital of La Paz, the Bolivian government turned to the private sector because public mismanagement of Cochabamba’s water system left 40 percent of the population without service. The rest got poor quality water only a few hours each day.
A private consortium, which was 27.5 percent owned by Bechtel and included Bolivian investors, began operating the city’s water system in November 1999. The government raised water rates in Cochabamba by an average of 35 percent in January 2000 to pay down previous debts and finance improvements in the water system. Even these higher rates were 20 percent lower than the South American average. Responding to public criticism, the government rolled back rates in February and the consortium refunded customers the difference.
Unrest in Cochabamba was sparked by multiple causes and peaked two months after rates had been rolled back.
CLAIM: “In the 1980’s, with the help of then Middle East envoy Donald Rumsfeld, Bechtel aggressively lobbied the Iraqi government to allow Bechtel to build an oil pipeline from Iraq to Jordan, while Hussein was simultaneously bombarding his own people and the people of Iran with chemical weapons. Hussein called off the deal. Now Hussein is out and Bechtel is in—this time, pumping water instead of oil.”
FACT: The Iraqi and Jordanian governments started planning the pipeline in early 1983, long before Rumsfeld’s mission. Rumsfeld did not “aggressively lobby” on Bechtel’s behalf or even mention its name in his meetings with Iraqi officials, which covered a host of other subjects, including the Gulf War, Middle East peace, and terrorism. Bechtel has never pumped oil or water in Iraq.