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Fiji Water Playing Chicken With Fiji [Updated]

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Fiji Water has long been embroiled in controversy on the island of Fiji, where the company has held exclusive access to a massive aquifer for nearly 20 years–all the while barring the water-starved Fijians from tapping it for their own use. Up until now, Fiji Water has paid an “extraction tax” of just one-third of a cent per liter. But now the Fijian government has upped the ante by charging 15 cents per liter for companies (read: Fiji Water) that extract over 3.5 million liters of water a month. As a result, Fiji Water plans to leave the island–or so the company claims.

John Cochran, President and COO of Fiji Water, explained the company’s position in a statement released this week:

“This new tax is untenable and, as a consequence, FIJI Water is left
with no choice but to close our facility in Fiji, effective Monday, Nov.
29, 2010. We are saddened that we have been forced to make a business
decision that will result in hardship to hundreds of Fijians who will
now be without work…We consider the government’s current action as a taking of our
business, and one that sends a clear and unmistakable message to
businesses operating in Fiji or looking to invest there: The country is
increasingly unstable, and is becoming a very risky place in which to
invest.”

It all sounds fairly ominous. The Fiji Times reports that employees have been informed of the decision to shut down the factory, and that “many openly wept as general manager Paul Davies informed the workers
that the decision was
made by John Cochran, president and chief operations officer of Fiji
Water, to shut the factory immediately.”

But Fiji water might just be playing chicken with the notoriously unstable Fiji government, which last experienced a coup in 2006–the country’s fourth since 1987. Mother Jones explains that the Fiji government tried to impose a 20 cent per liter tax on Fiji Water in 2008–and reneged on the idea just a few days after Fiji shut down its factory and threatened to leave permanently. The same thing could happen again.

Indeed, Cochran said in his statement that “Fiji Water remains willing to work through this issue with the Fiji
government, as it would be our preference to keep operating in Fiji.” That would be mostly good news for the island–while Fiji Water may deprive some local residents of tap water, it does provide jobs and a modicum of economic stability to a country in turmoil.

Update:

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Less than two days after firing workers and shutting down its Fiji-based factory, Fiji Water has reopened operations and agreed to pay the government’s extraction tax, according to Mother Jones. We’re not sure what inspired the decision–the government didn’t back down on the tax, as it did in 2008–but it looks like the company’s original move was just a bluff.

 

Ariel Schwartz can be reached on Twitter or by email.

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About the author

Ariel Schwartz is a Senior Editor at Co.Exist. She has contributed to SF Weekly, Popular Science, Inhabitat, Greenbiz, NBC Bay Area, GOOD Magazine and more

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