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22 April 2009 | Interviews | Resisting neoliberalism
They Never Lose
Iberdrola transnational company filed claim against Guatemala before ICSID due to reduction of electricity tariff rates in poor sectors.
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Iberdrola transnational company, which owns shares of Empresa Eléctrica de Guatemala, filed a complaint against the Central American country before the International Center of Settlement of Investments Disputes (ICSID) of the World Bank, to take back the reduction of tariffs implemented by the authorities which aimed at reducing costs of energy for the poor sectors of the population.
Guatemalan government subsided retail consumers in order to absorb the negative effect that the global financial crisis will certainly have on their economy, due to the fact that a great part of the population receives remittances from Guatemalan people living in the US.
The company opposed this measure, and based on the Investment Protection Agreement in force signed between Spain and Guatemala, the company aims at subjecting the Central American country and maintaining an extraordinary level of profits.
The subsided tariffs are in force since August 2008 and implied a reduction of approximately one dollar per kilowatt per hour per month for houses, and almost eight dollars for small companies.
Despite the request for arbitration, in which the company will surely win since this is not an impartial justice instance, the Guatemalan government stated they will submitt their arguments and that they will not back out on the decision.
As if this wasn´t enough, TecoEnergy and Ferrovías Guatemala also filed a complaint against Guatemala, based on the Free Trade Agreement (FTA) with the US.
ICSID must decide if they accept the case or not and form an arbitration tribunal.
However, the situation is quite representative since Guatemala and the other Central American countries are discussing an Association Agreement with the European Union, which is based on the protection of companies as opposed to the authorities of the country and the rights of the population.
This is why Guatemalan social organizations believe this is the time to make Iberdrola leave their country, and also to put an end to the negotiation rounds of the agreements with the EU. “If this is what happens now, what would be our situation if we sign an Association Agreement whose scope is even greater than that of the FTA?, stated from Guatemala Mario Godinez, member of Friends of the Earth Latin America and the Caribbean.
“The profits obtained by Iberdrola in our countries almost exceed our GDP, so they can´t possibly be arguing loss of profits to the ICSID”. Godinez also stated than in several areas to the west of Guatemala, the population has started to deny access to the company´s officials in rejection and resistance to their presence in the country.
