From: Jason Mark (jason@globalexchange.org)
Date: Tue Apr 16 2002 - 19:00:10 EDT
Friends:
As many of you know, one of the scariest avenues of the privatization agenda
these days is the effort by multinational corporations to commodify the
world¹s dwindling water supply. Major companies such as San Francisco-based
Bechtel are‹often with the help of the IMF and the World Bank‹trying to sell
water to the highest bidder as they take control of local water utilities.
They are literally attempting to monopolize the very foundation of life.
This must be stopped. That¹s one of the many reasons why people will be
converging on Washington, DC this weekend to call for a radical overhaul‹and
even abolition‹of the IMF and World Bank.
Below you will find:
1. Details about the rallies in DC this weekend
2. A recent article from The New Yorker about the Bolivian backlash to the
privatization of water.
Hopefully those of you in the mid-Atlantic region will be able to join the
DC protests.
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1)
RALLY & MARCH FOR GLOBAL JUSTICE
outside the 2002 Spring Meetings of the IMF & World Bank!
Saturday, April 20, 2002
Assemble - 10:30 AM
@ World Bank & IMF HQs
19th & Pennsylvania Avenue, NW
Washington, DC
(Metro: Farrugut West (Orange & Blue Lines)
Rally - 11:00AM
March - 12:30PM
Mobilization for Global Justice & 50 Years Is Enough
Network
For Details call: 50 Years Is Enough Network @
202/IMF-BANK (463-2265) - 50years@50years.org
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2)
The New Yorker
April 8, 2002
LETTER FROM BOLIVIA
LEASING THE RAIN
The world is running out of fresh water, and the fight to control it has
begun.
By WILLIAM FINNEGAN
In April of 2000, in the central plaza of the beautiful old Andean city of
Cochabamba, Bolivia, the body of Victor Hugo Daza lay on a makeshift bier.
Daza, a seventeen-year-old student, had been shot in the face by the Army
during protests sparked by an increase in local water rates. These protests
had been growing for months, and unrest had also erupted in other parts of
the country. The national government had just declared martial law. In
Cochabamba, a city of eight hundred thousand, the third largest in Bolivia,
a good part of the population was now in the streets, battling police and
soldiers in what people had started calling la guerra del agua-the Water
War. Peasants from the nearby countryside manned barricades, sealing off all
roads to the city. The protesters had captured the central plaza, where
thousands milled around a tiled fountain and the catafalque of Victor Daza.
Some of their leaders had been arrested and taken to a remote prison in the
Amazon; others were in hiding. The chief demand of the water warriors, as
they were called, was the removal of a private, foreign-led consortium that
had taken over Cochabamba's water system. For the Bolivian government,
breaking with the consortium-which was dominated by the United States-based
Bechtel Corporation-was unthinkable, politically and financially. Bolivia
had signed a lucrative, long-term contract. Renouncing it would be a blow to
the confidence of foreign investors in a region where national governments
and economies depend on such confidence for their survival. (Argentina's
recent bankruptcy was caused in large part by a loss of credibility with
international bankers.) The rebellion in Cochabamba was setting off loud
alarms, particularly among the major corporations in the global water
business. This business has been booming in recent years-Enron was a big
player, before its collapse-largely because of the worldwide drive to
privatize public utilities.
For opponents of privatization, who believe that access to clean water is a
human right, the Cochabamba Water War became an event of surpassing
interest. There are many signs that other poor communities, especially in
Third World cities, may start refusing to accept deals that put a foreign
corporation's hand on the neighborhood pump or the household tap. Indeed,
water auctions may turn out to test the limits of the global privatization
gold rush. And while the number of populists opposing water privatization
seems effectively inexhaustible-the leaders of the Cochabamba rebellion
included peasant farmers and an unassuming former shoemaker named Oscar
Olivera-the same cannot be said of the world's water supply. There was a
great deal more than local water rates riding on the outcome of this
strange, passionate clash in Bolivia.
The world is running out of fresh water. There's water everywhere, of
course, but less than three per cent of it is fresh, and most of that is
locked up in polar ice caps and glaciers, unrecoverable for practical
purposes. Lakes, rivers, marshes, aquifers, and atmospheric vapor make up
less than one per cent of the earth's total water, and people are already
using more than half of the accessible runoff. Water demand, on the other
hand, has been growing rapidly-it tripled worldwide between 1950 and
1990-and water use in many areas already exceeds nature's ability to
recharge supplies. By 2025, the demand for water around the world is
expected to exceed supply by fifty-six per cent.
Some of the resource depletion is visible from outer space. The Aral Sea, in
central Asia, was until recently the world's fourth-largest lake. Then
Soviet planners dammed and diverted its source waters for cotton irrigation.
The Aral has since lost half its area and three-fourths of its volume. Its
once great fisheries have vanished; all twenty-four species native to the
lake are believed to be extinct. The local climate has changed, and dust
storms now plague the region.
Aquifer depletion, though less visible, is an even more serious problem.
There is sixty times as much fresh water stored underground as in lakes and
rivers aboveground. And yet parts of northern China, to take one example,
are approaching groundwater bankruptcy. Beijing's water table has dropped
more than a hundred feet in the past forty years. In the United States, the
Ogallala Aquifer, which reaches from Texas to South Dakota and is
indispensable to farming on the Great Plains, is being drained eight times
faster than it can naturally recharge. In vast areas of India, Mexico, the
Middle East, and California's Central Valley the story is the same.
Meanwhile, more than a billion people have no access to clean drinking
water, and nearly three billion live without basic sanitation. Five million
people die each year from waterborne diseases such as cholera, typhoid, and
dysentery. This enormous, slow-motion public-health emergency is, in large
measure, a result of rapid, chaotic urbanization in the nations of the
Global South. Traditional water sources have been polluted, destroyed,
overtaxed, or abandoned.
Annual rainfall is not always a measure of water wealth. Poland, for
instance, gets plenty of rain, but its lakes, rivers, and groundwater are so
polluted that it has as little usable water as Bahrain. Arid regions with
the means to pay (Southern California, the Persian Gulf States) already pipe
water in from wetter areas. New technologies are being hurriedly developed:
huge fabric bags holding millions of gallons of fresh water are being hauled
by barges across the Mediterranean, and there are businessmen in Alaska who
believe that the state's earnings from fresh water will eventually dwarf its
earnings from oil.
For strategic planners at some of the world's largest corporations, the
global freshwater shortage coincides opportunely with privatization.
According to Johan Bastin, of the European Bank for Reconstruction and
Development, "Water is the last infrastructure frontier for private
investors." In the past fifteen years, municipal and regional water systems
have been steadily coming onto the international market. Two French
corporations, Vivendi Environment and Suez, lead the industry: Vivendi runs
eight thousand systems in a hundred countries; Suez has operations in a
hundred and thirty countries. The biggest American player, Bechtel, whose
directors include former Secretary of State George P. Shultz, has always
been notable for its political connections. The United States is itself a
field for direct foreign investment in water. Suez is running Atlanta's
water system, and Vivendi recently bought U.S. Filter, a national
water-services group, for more than six billion dollars.
But the main push is in the Global South, where, over the past twenty years,
the World Bank and the International Monetary Fund have effectively taken
control of the economies of scores of nations that are heavily in debt. The
Bank and the I.M.F. have been requiring these countries to accept
"structural adjustment," which includes opening markets to foreign firms and
privatizing state enterprises, including utilities. The Bank once had a
quite different approach to public works: it was an enthusiastic financier
of monumental projects, and would typically lend the money to build large
dams. Many of the dams were spectacular failures, delivering few, if any,
benefits (except to politicians and construction firms) while displacing
millions of people and leaving behind environmental destruction and public
debts. The Bank is now getting out of the dam business and into water
privatization. It often works closely with the conglomerates, helping them
to acquire the water assets of debtor nations.
The idea behind privatization is to bring market discipline and efficiency
to bear on a crucial and frequently corrupt sector. Supporters argue that
only private capital-which means, in practice, multinational
corporations-can afford to expand water and sanitation networks sufficiently
to reach the underserved poor. Since corporations are in business to make
money, they often increase water rates. But, in theory, higher water rates
can also help to promote conservation. Indeed, privatization advocates say,
any valuable commodity-and this includes health care and education-that is
provided free eventually gets taken for granted and wasted. According to
this argument, turning water into a tradable commodity may even be the only
practical way to avoid worldwide shortages and environmental disasters.
Public subsidies for essential services such as water may sound like humane
policy, but in the real world subsidies benefit the powerful, because they
have the resources to manipulate them.
In Cochabamba, which has a chronic water shortage, this unintended
consequence was grotesquely clear. Most of the poorest neighborhoods were
not hooked up to the network, so state subsidies to the water utility went
mainly to industries and middle-class neighborhoods; the poor paid far more
for water of dubious purity from trucks and handcarts. In the World Bank's
view, it was a city that was crying out for water privatization.
I went to Villa San Miguel, a ramshackle settlement on an arid hillside a
couple of miles south of Cochabamba, to find out how the global water
business looks from the ground. My guide was a student named Fredy
Villagomez, who grew up in Villa San Miguel and helped organize an
independent water cooperative for the barrio. The cooperative is one of
dozens that have been formed in recent years, in part with international
aid. We rode out of the old city in a clattering taxi, down a road jammed
with trucks, buses, minivans, donkeys, and pedestrians. It was a hot, clear
afternoon; Mt. Tunari, a seventeen-thousand-foot peak, glittered in the
northwest. Cochabamba sits in a wide, fertile valley at eight thousand
feet-only a middling elevation in Bolivia, where the capital, La Paz, is at
twelve thousand feet. To the east, beyond the mountains, lies the Amazon
rain forest. Cochabamba is more than four hundred years old, but a recent
influx of migrants from the countryside has caused its population to
quadruple since 1976. Today, Cochabamba is ringed by dozens of barrios
marginales-dusty, impoverished settlements that have sprung up to house the
newcomers. Basic services-electricity, transportation, sanitation, water-are
catch-as-catch-can in the barrios marginales.
"We started digging our well in 1994," Villagomez told me. Stocky,
soft-spoken, with Indian features and thick eyeglasses, he was leading me
down a rocky path to a small cinder-block pump house. "The planning took
years. It was an expensive project, and a lot of work. All the residents
helped, and we finished in 1997." The cooperative received technical
assistance from Danish aid workers; there is a dirt road in the barrio-the
Avenida Dinamarca-named for them. Villagomez urged me to peer into the dim
pump house, which contained a single electric pump. "The well is a hundred
and twelve metres deep," he said.
I thought that sounded awfully deep. Villagomez agreed. "Before, the water
under this valley was at only twenty metres."
The well made a major difference to Villa San Miguel. Clean water was
suddenly plentiful and relatively cheap-households paid the water
cooperative between two and five dollars a month to cover the costs of
running the pump and maintaining the system. "It gives water to two hundred
and ten families," Villagomez said. "We felt a lot of pride in this
achievement."
Then, in 1999, the Bolivian government conducted an auction of the
Cochabamba water system as part of its privatization program. The auction
drew only one bidder: a consortium called Aguas del Tunari. The controlling
partner in the consortium was International Water, a British engineering
firm that was then wholly owned by Bechtel. (An Italian company later bought
a half interest.) But the government, unfazed by its own weak bargaining
position, decided to proceed.
The terms of the two-and-a-half-billion-dollar, forty-year deal reflected
the lack of competition for the contract. Aguas del Tunari would take over
the municipal water network and all the smaller systems-industrial,
agricultural, and residential-in the metropolitan area, and would have
exclusive rights to all the water in the district, even in the aquifer. The
contract guaranteed the company a minimum fifteen-per-cent annual return on
its investment, which would be adjusted annually to the consumer price index
in the United States. On cooperative wells such as Villa San Miguel's-which
the government hadn't even helped build-the new water company could install
meters and begin charging for water. Residents would also be charged for the
installation of the meters. These expropriations were legal under a new
water law that had been rushed through the Bolivian parliament.
The first Cochabambinos to question the terms of the water privatization
were not the small water cooperatives that faced expropriation and crushing
bills but local professionals-mainly engineers and environmentalists-and a
federation of peasant farmers who rely on irrigation. They began calling
public meetings to air their concerns. The government ignored them. At a
contract-signing ceremony, the President of Bolivia and the mayor of
Cochabamba drank champagne with consortium executives. The news of impending
expropriations and rumors of big water-price hikes began to circulate. The
list of alarmed groups-neighborhood associations, water cooperatives, the
labor unions-grew. There were street protests, and a broad coalition
emerged, called the Coordinator for the Defense of Water and Life, or simply
La Coordinadora, led by Oscar Olivera.
Olivera, who is forty-six, at first seems an unlikely leader. He wears a
black leather-billed cap, which makes him look like a gentle, would-be
street hood from the Beat era. He is small and sad-faced, and he often looks
downward, inward-as if he were thinking extremely hard about something
unpleasant. It's an especially striking manner in Bolivia, where virtually
everyone presents a placid, reserved face to the world. Olivera's
grandfather worked in Bolivia's huge tin mines; his father went to work as a
carpenter when he was a child. Olivera started out as a machinist in a shoe
factory, then went on to work for the factory's union. He is now the head of
a confederation of factory workers' unions. Oddly, his air of distraction
doesn't seem to unsettle anyone around him. Working people volubly engage
him wherever he goes, calling him Oscarito.
"Companeros," Olivera would tell crowds. "It's become a fight between David
and Goliath, between poor people and a multinational corporation. They have
a lot of money, and they want to take away our water."
The World Bank warmly calls Bolivia an "early adjuster." Other poor,
indebted countries have had to be forced to accept structural adjustment,
but in Bolivia the World Bank and the I.M.F. have enjoyed a deep
understanding with successive governments since 1985. Public enterprises-the
railways, the telephone system, the national airlines, the great tin mines
of Oruro and Potosi-have been sold, mainly to foreign investors. (This fire
sale goes on: a Bolivian government Web site lists dozens of factories,
refineries, cement plants, paper mills, and municipal utilities that are
still available.)
The tin mines, as it happens, had been nationalized after a popular
revolution in 1952, which also destroyed the semi-feudal hacienda system
that had been in place in Bolivia for centuries. The United States played an
unlikely role in that revolution. The Eisenhower Administration, already
busy undermining left-wing governments in Guatemala and Guyana, accepted the
new government's plea that it was not Communist (even if some of its allies
were) while demanding, and getting, a new investment code that permitted
American companies to start operating in Bolivia's eastern oil fields. The
United States increased food aid to help the new government survive, and saw
to it that "state capitalism" became the official economic model.
An Army coup overthrew the elected government in 1964, leading to the first
in a long string of military regimes. (Many of the officers involved had
received "counter-insurgency" training in the United States.) They were not,
except during a period in the late nineteen-seventies, as violent as those
in Chile, Argentina, and Brazil. The unions and the left were repressed, but
not so severely as to engender a guerrilla movement. By 1982, however, when
civilian rule was finally restored, the Bolivian economy, plundered by the
generals, was in ruins, and hyperinflation soon took hold, hitting an annual
rate of twenty-five thousand per cent in 1985.
Enter "the Boys," also known as "the Chicago Boys," after a group of
economists, educated at the University of Chicago, who implemented
free-market policies (known in Latin America as neoliberalism) in Pinochet's
Chile. In Bolivia they were led by Gonzalo Sanchez de Lozada, a wealthy mine
owner who was then Minister of Planning (he was later President). Sanchez
worked closely with Jeffrey Sachs, the Harvard economist who became famous
for the "shock therapy" he designed for post-Communist Poland.
Bolivia's shock treatment was ferocious. The currency was devalued, all
price and wage controls were abolished, government spending was cut, and the
state-owned tin mines were effectively closed. The economy went into instant
recession; unemployment soared. The inflationary spiral, however, was
broken, and good relations between the government and the I.M.F. were
restored, initiating a new flow of foreign investment and loans.
And for the past sixteen years Bolivia has dutifully followed the dictates
of the World Bank and the I.M.F. Most of its people, however, have nothing
to show for it. Poverty was never significantly reduced. This is not unusual
in Latin America, where the poverty rate is higher today than it was in
1980-after a full generation of nominal democracy and ever-increasing free
trade. But Bolivia, like Argentina, really put on what Thomas L. Friedman,
the Times columnist, calls "the golden straitjacket" of liberalized economic
policies. The predicted foreign investment materialized, but the prosperity
did not. Landlocked, with a population of eight million and a wretched
infrastructure, Bolivia remains the poorest country in South America.
Hugo Banzer, who was Bolivia's military dictator in the nineteen-seventies,
became President again after the last election, before stepping down last
August in favor of his Vice-President, Jorge Quiroga, because of illness.
Quiroga now sits at the head of a "megacoalition." The political class in
Bolivia has always been small, rich, and overwhelmingly white, but rarely
have the major parties, all business-aligned, shared a ruling philosophy so
peaceably as in recent years. The consensus was that nothing and no one
should be exempt from the discipline of the market. Then Bechtel came to
Cochabamba and, as the local peasants put it, tried to "lease the rain."
When the first monthly bills from Aguas del Tunari arrived, in January,
2000, stunned business owners and middle-class householders began to join
the Coordinadora's protests. Some bills had doubled, and ordinary workers
now had water bills that amounted to a quarter of their monthly income.
Aguas del Tunari seemed to have given little thought to how its plans would
be received in Cochabamba. The International Water executives who were
actually doing the work in the city were engineers, not marketers, and,
being newly arrived from abroad, they were not attuned to the problems or
passions of the Bolivian public. Geoffrey Thorpe, the company's manager,
simply said that if people didn't pay their water bills their water would be
turned off.
In truth, the price hikes were not as arbitrary as they seemed. The
consortium had agreed, in its contract, to expand the city's water system.
This was going to be expensive, as was the large-scale repair job required
by the deterioration of the existing system. "We were confident that we
could implement this program in a shorter period of time than the one
required by the contract," Didier Quint, the managing director of
International Water, said. He added, however, "We had to reflect in the
tariff increase all the increases that had never been implemented before."
The consortium had also agreed to finish a stalled dam project known as
Misicuni, which would pipe water through the mountains. This aspect of the
deal seemed to make little sense-the World Bank had commissioned studies
that pronounced Misicuni uneconomic. But the dam project had less to do with
how privatization works in theory than with the reality of how multinational
corporations must come to terms with local politics.
Plans for the Misicuni Dam have been around for decades. The mayor of
Cochabamba, Manfred Reyes Villa, had campaigned hard to complete it and was
undeterred by questions about whether it was worth building. Reyes Villa was
a popular mayor. People liked to say that his good looks got him the women's
vote-he is better known by the nickname Bombon (Sweetie)-but his political
instincts are sharp. Despite the widespread poverty in his city, he had
pulled off major vanity projects, including a gargantuan white statue of
Christ on a hilltop. (This Cristo de la Concordia is supposedly six feet
taller than its rival in Rio de Janeiro.) Reyes Villa had been a real-estate
developer before he became mayor, and everyone in Cochabamba was quick to
note the proximity of most new roads and parks to Bombon's properties. His
political party, the New Republican Force, was a personal vehicle as well as
a formidable municipal patronage machine, and people said that N.F.R., its
Spanish abbreviation, stood for "Nueva Forma de Robar" ("New Form of
Robbery"). Reyes Villa lived in conspicuous splendor, and when I visited,
soldiers were guarding his estate. There was a wall-size oil painting of his
family. "Poverty is growing here, with wealth being concentrated in very few
hands," he told me earnestly while we sat in his mansion. Still, Bombon won
elections, his party was in President Banzer's megacoalition, and he had
national ambitions. More to the point, some of his main financial backers
stood to profit fabulously from the Misicuni Dam's construction. When the
central government first tried to lease Cochabamba's water system to foreign
bidders, in 1997, and did not include Misicuni in the tender, Bombon stopped
it cold. It was only the inclusion of the project in the Aguas del Tunari
contract that got the Mayor on board.
The Water War began in earnest in February, 2000. "The people went to the
plaza to demonstrate against the contract," Fredy Villagomez told me. "The
young men were in the city center, trying to hold the plaza. Others were
here, maintaining a barricade across the highway. The women were cooking for
those on the barricade. There were many campesinos passing by, walking to
Cochabamba to join the rebellion." Crowds of regantes-peasant
irrigators-arrived in the city, marching under village banners, or wiphala.
The women, cholitas, wore fine straw hats and shimmering pleated velvet
dresses, and their black hair was braided in long pigtails woven together in
back with bright ribbons.
Most of the troops that Oscar Olivera could personally call out for
demonstrations were jubilados-retired factory workers, old union men
shuffling under battered fedoras, like faded figures on a postcard from some
antipodal workers' state of another era. For a great many Bolivians, the
labor unions retain an association with a time when workers were organized
and proud, and when Bolivia's railroads and airlines and mines belonged to
Bolivians. It made symbolic sense, then, that Olivera, the leader of the
Cochabamba rebellion, was a union man, even though only a minority of
Cochabamba's factory workers are still union members. (In the union
confederation's dingy offices on the corner of Cochabamba's central plaza,
soccer trophies fill the shelves, but when I asked about them the
receptionist explained that the unions could no longer field a team.)
The growing crowds of Coordinadora supporters were drawn instead from the
informal sector of pieceworkers, sweatshop employees, and street venders
that has expanded enormously since the advent of structural adjustment and
the closing of the tin mines. These men and women, most of them young, had
more flexible schedules than workers in regular factories. Students from the
University of Cochabamba, some of them middle-class anarchists, also joined
in, carrying banners denouncing the World Bank, the I.M.F., and
neoliberalism. But the front-line troops, particularly after the conflict
sharpened and the authorities began to fire live bullets, proved to be the
city's street children-an adolescent army of the homeless which has been
growing in recent years.
The government's response escalated steadily. After the first protests, a
ministerial delegation was sent to Cochabamba. By the end of the month, the
water-price hikes had been rolled back, but the protests continued. Then the
government sent in troops from Oruro and La Paz. Nearly two hundred
protesters were arrested, and seventy civilians and fifty-one policemen were
wounded. The Catholic archbishop of Cochabamba tried to mediate. In March,
the Coordinadora held an unofficial referendum, counted nearly fifty
thousand votes, and announced that ninety-six per cent favored the
cancellation of the contract with Aguas del Tunari. "There is nothing to
negotiate," the government replied.
In April, protesters again occupied Cochabamba's central plaza, and when the
Coordinadora's leaders, including Oscar Olivera, arrived at the governor's
office for a meeting they were arrested. After they were released the
following day, some went into hiding. Then more leaders were arrested, and
some were taken to a jungle prison in the Amazon. The house of Oscar
Olivera's parents was searched four times.
Protests had begun to break out in other parts of the country-in La Paz,
Oruro, and Potosi, and in many rural communities-and national peasant
organizations held demonstrations. By this point, most of the country's
major highways were blocked.
Bolivia's rulers have always harbored a deep fear that the country's Indian
majority might one day rise up and kill them in their beds-or, more
realistically, trap them in their cities. In 1781, an Indian rebel army,
having killed all the Spaniards in a regional capital, laid siege to La Paz
for several months. The rebellion was ultimately defeated by troops brought
from Buenos Aires, but white Bolivia's fear of a horizon suddenly filling
with angry Indians has never fully dissipated, and on April 8, 2000, the
Banzer government declared a national state of siege. This meant martial
law, and it allowed for mass arrests. The minister who announced the decree
also said-in a remark that Bechtel's spokesman in London quickly picked
up-that the uprising in Cochabamba was being financed by narcotraficantes.
The state of siege, along with the comments about drug traffickers,
backfired in Cochabamba. The small coca-leaf farmers, known as cocaleros,
from the lowlands east of Cochabamba, had indeed joined the protesters, but
ordinary Bolivians draw a sharp distinction between cocaleros and the
wealthy, Army-bribing, customs-bribing narcotraficantes. Many of the
cocaleros are ex-miners. Water is not their issue-they are more concerned
about a coca-eradication program sponsored by the United States-but their
natural sympathy was with the protesters. And the cholitas in their velvet
dresses, and the jubilados marching in their rumpled fedoras, and the water
warriors in their bandannas did not appreciate the suggestion that they were
insincere.
The day the state of siege was declared, the main plaza in Cochabamba was
filled with people. The Army fired tear gas into the narrow streets of the
old city, where protesters had built barricades. Demonstrators blocked all
roads into the city; the government cut off power to local radio and
television stations. Middle-class matrons took wounded protesters into their
homes and beauty salons to nurse them, and bowls of vinegar mixed with water
and baking powder-useful for soaking bandannas for protection from tear
gas-appeared outside a thousand respectable doorways.
Then, from behind a line of military police, a sharpshooter in civilian
clothes fired a rifle into a crowd of unarmed civilians. He was caught on
video by a Bolivian television crew, and was later identified as Robinson
Iriarte de la Fuente, a Bolivian Army captain who had been trained in the
United States. Victor Hugo Daza, the seventeen-year-old student, who was on
his way home from a part-time job, was, according to eyewitnesses, among the
crowd that Iriarte fired into. He was hit in the face and died instantly.
Dozens of other people were treated for bullet wounds. By the time Daza had
been raised onto his bier and the police and the Army had been repeatedly
prevented from seizing his body, there was clearly no future for Aguas del
Tunari in Cochabamba.
The company's executives were told that the police could no longer guarantee
their safety, and fled Cochabamba for the lowland city of Santa Cruz. They
may have noted that, several weeks earlier, Mayor Reyes Villa had left their
side. When the people took to the streets en masse, Bombon had assessed
their mood and stepped away from Aguas del Tunari so fast that it was as if
he had never seen these foreigners before. He was not the only one trying to
distance himself; when water privatization collapsed in Cochabamba, the
World Bank's representatives insisted that the fiasco had nothing to do with
them. The government informed Aguas del Tunari that, because the company had
"abandoned" its concession, its contract was revoked. (The company argued
that it had not left voluntarily but had been pushed out.) The day after
Victor Hugo Daza's funeral, Oscar Olivera announced the consortium's
departure to thousands of exhausted, disbelieving demonstrators from the
balcony of his union's offices above the plaza.
The Coordinadora had swept the field so completely that a new national water
law was immediately passed-"written from below," as the water-rights
campaigners say. Banged together by parliamentarians and water specialists
from the Coordinadora who gathered in La Paz, the new law gave legal
recognition to usos y costumbres-traditional communal practices-by
protecting small independent water systems, guaranteeing public consultation
on rates, and giving social needs priority over financial goals. This
triumph seemed to the water warriors too good to be true, and it was. Laws
in Bolivia are implemented-if, indeed, they are ever implemented-only after
bylaws have been attached and approved, and the government soon made it
clear that, in the case of the new water law, this process could take years.
After the Bechtel consortium's exit, the management of Cochabamba's water
was returned to the old public utility known as SEMAPA, which was thoroughly
overhauled. The new board of directors included Coordinadora
representatives, who vowed to treat water as a "social good" and not as an
ordinary commodity. But so far the fervently envisioned transformation of
Cochabamba's water system has been fitful at best. Service is still poor.
Even within the existing network, many neighborhoods have service only
occasionally, and the valley's aquifer continues to sink. Corruption has
reportedly been reduced, but an intolerable situation persists: the poor in
Cochabamba, those who are not on the network and who have no well, pay ten
times as much for their water as the relatively wealthy residents who are
hooked up. The new SEMAPA, having driven away international capitalists,
desperately needs new capital. Since simply raising water rates across the
board is politically impossible, that means new partners or new loans.
The Bolivian government has little interest in seeing the new SEMAPA
succeed. Neither is it likely to get much help from the World Bank. In
recent years, the Bank has been widely accused of not fulfilling (or even
seriously pursuing) its self-proclaimed mission of fighting poverty, and, in
response, has changed its description of its mandate, emphasizing
"empowerment" and "pro-poor coalitions" over fiscal discipline. What its
officials do when confronted by an actual pro-poor coalition is, of course,
another matter. In Bolivia, its representatives have never met with the
leaders of the Coordinadora.
The Coordinadora's leadership knows that an old-fashioned state-centered
solution to Cochabamba's water crisis would be unsatisfactory. The new
SEMAPA has not won the hearts of many in Cochabamba-it is, after all, still
the water company. But, its supporters point out, at least it is Bolivian.
"The tragedy is that the solution to Cochabamba's water problem has been
pushed off for at least another five years," Michael Curtin, a
Washington-based executive who became president of Aguas del Tunari after
its removal from Cochabamba, told me. Curtin had been involved in the deal
as a consultant for International Water, and represents the interests of
Bechtel and its partners in talks with the Bolivian government. In November,
2001, after negotiations had deadlocked, the consortium filed a complaint
against the Bolivian government in a World Bank trade court in Washington.
The complainant was Aguas del Tunari, but the political weight was supplied
by Bechtel. The company's claim is being made under a bilateral investment
treaty between Bolivia and, of all places, the Netherlands. It seems that
International Water, which was originally registered in the Cayman Islands
(which has no comparable investment treaty with Bolivia), moved its
registration to Amsterdam soon after the Cochabamba contract was signed.
Bechtel and its partners are demanding at least twenty-five million dollars
in compensation for the broken contract. While trade-court proceedings are
notoriously slow, nobody seems to believe that the Bolivians can afford that
kind of money.
Still, the prospect of one more financial burden is the least of the
government's worries in connection with what people in Bolivia refer to as
the Bechtel case. The truly frightening part is the impact that the Water
War has had on the foreign-investment climate. "Right now the situation is
'You can't trust Bolivia,' " Curtin said. The United States Embassy agrees.
"It was a pretty significant blow," an Embassy official told me. A
subsequent auction to sell the La Paz telephone company drew no bidders at
all. The United States has not yet decided, the official added, whether to
formally designate the breaking of the contract in Cochabamba an
expropriation. That will depend on the settlement, if there is one, that is
reached in the case. Having the United States label the episode an
expropriation would be a blow to Bolivia's hope of seeing any new foreign
investment in the near future.
And yet Jorge Quiroga, Bolivia's new President, is bullish on his country's
prospects. Quiroga, who is forty-one, is tall and fair. He graduated in 1981
from the University of Texas, where he studied industrial engineering, and
worked for I.B.M. in Austin as a self-described "corporate yuppie" before
moving back to Bolivia with his American wife, Virginia. "We will be the
vital heart of South America," Quiroga predicted repeatedly when I visited
him in his ornate, republican-era office in La Paz. Gas exports will lead
the way. A long-awaited transcontinental highway connecting Brazil and Chile
will pass through Cochabamba. Fibre-optic cables will be laid. One of the
biggest things delaying Bolivia's economic progress? The hypocrisy of the
United States and Europe on free trade. "Bolivia is the most open economy in
Latin America," Quiroga said. Meanwhile, American and European farm
subsidies, along with tariffs on textiles and agricultural products, make it
impossible for Bolivia to sell its exports in the Global North. "They tell
us to be competitive while tying our arms behind our backs."
When I asked him about the Water War, he looked uncomfortable. "A lot of
things certainly could have been different along the way, from a lot of
different actors," he said. But, like Michael Curtin, he was certain of one
point: "The net effect is that we have a city today with no resolution to
the water problem." In the end, he said, it will be "necessary to bring in
private investment to develop the water."
Quiroga insists that the World Bank and the I.M.F. are not running Bolivia.
If it sometimes looks as if they are, that is because technocrats in the
government (he has been one) use what he calls "the I.M.F. blackmail" on
politicians-warning them that loans will stop if hard fiscal choices are not
made, and thus giving them some cover, when in truth there have been no
direct threats from the Bank or the I.M.F.
The World Bank now requires all its client governments to submit a
"poverty-reduction strategy," and Quiroga gave me a sketch of Bolivia's. He
had recently been to a meeting of the World Economic Forum-he goes almost
every year-and his remarks struck me as having an up-to-the-minute
cosmopolitan gloss. The Bolivian state has "socialized" its spending away
from production toward education and health, he said, because that's the one
sure route to real development. Quiroga sighed. "But we'll still be talking
about poverty reduction twenty-five years from now, when one of my daughters
is sitting here being interviewed."
Some things, certainly, never change. Last month, Captain Robinson Iriarte
was acquitted of all responsibility for the death of young Victor Hugo Daza.
The case had been transferred from the civilian criminal-justice system-no
judge was willing to hear it-to a military tribunal, which has final
jurisdiction over the cases it hears. Upon his acquittal, Iriarte was
promoted to the rank of major.
Claudia Vargas, a lawyer in La Paz who worked for Bolivia's fledgling
utility-regulation body, travelled often to Cochabamba. The leaders of the
new SEMAPA, she told me, were unnecessarily preoccupied with the idea that
the central government was going to make another attempt to privatize the
city's water. "I tell them, 'Don't worry. Nobody is going to try that again
for a long time.' Really, they have a lot of problems in Cochabamba now, and
that is not one of them."
Vargas is young and chic, and she had recently finished a postgraduate
course in development administration in thoroughly deregulated Britain. She
nonetheless has an unfashionable enthusiasm for regulation. It's still
poorly understood in Bolivia, she thinks, and it got a very bad name in
Cochabamba when her boss (now retired) appeared to shill both for the
government and for Bechtel's consortium, which he was supposed to regulate.
Vargas was appalled both by the Aguas del Tunari contract and by the
consortium's performance. She thinks that the members of the Coordinadora
"are still the good guys in the film," but that some of them are, at best,
misguided. "In the name of usos y costumbres, a lot of terrible things are
done." Water-truck operators, for instance, "drill polluted water and sell
it. They waste a lot of water. But the world is changing. Within five years,
they will be charged for water-and they will be regulated."
Trying to find a path outside the binary of state or market control, the
Coordinadora has no model. Its leaders vow to treat water as a "human
right," and yet they know it cannot be provided free. They also know that
their water company-and Bolivia generally-cannot survive without foreign
investment. Meanwhile, Manfred Reyes Villa has started making his move to
regain control of SEMAPA. In elections to be held soon, his party will run
candidates for all the seats on the water company's board that are now
occupied by the Coordinadora. Their campaigns will be far more extravagant
and crowd-pleasing than anything Oscar Olivera and his colleagues are likely
to stage. Bombon knows his constituency. He has also announced his candidacy
for President.
The juggernaut of water privatization has hardly slowed. Bechtel, through
International Water, has closed two major water deals in the past year,
winning a thirty-year concession for the port city of Guayaquil, in Ecuador,
and a controlling stake in the water company of Tallinn, the capital of
Estonia. Many water privatizations seem likely to deliver eventually on
their backers' promises of improved service. In Chile, fierce opposition to
concessions has been overcome in several cities by innovative price
structures, including water vouchers, that assure poor residents of an
adequate supply of clean water.
At the same time, water privatizations have been backfiring all over Latin
America. In Panama, popular anger about an attempted privatization helped
cost the President his bid for reelection. Vivendi, the French
multinational, had its thirty-year water contract with the Argentine
province of Tucuman terminated after two years because of alleged poor
performance. Major water privatizations in Lima and Rio de Janeiro have had
to be cancelled because of popular opposition. Trinidad recently allowed a
management contract with a British water giant to expire. Protests against
water privatization have also erupted in Indonesia, Pakistan, India, South
Africa, Poland, and Hungary.
One large-scale Bolivian water privatization that the World Bank still
points to with pride took place a few years ago in La Paz. The concession
was awarded to Suez, which honored its commitment to expand the La Paz water
network to several poor neighborhoods just outside the city. This area,
known as El Alto, is home to nearly three quarters of a million people,
virtually all of them Indians recently arrived from the countryside. But a
problem emerged. It seemed that the people in El Alto weren't using enough
water. Accustomed to Andean peasant life, they were extremely careful with
water, never wasting a drop, and they continued to be so even after they had
taps installed in their homes. This was good conservation, but it was bad
for Suez's bottom line, and the corporation was disappointed in the return
on its investment. After it appeared to raise its rates, which were pegged
to the dollar, when the local currency was devalued the general happiness
with the contract evaporated and residents began to complain about the
service. When I was in La Paz, the people of El Alto were marching against
Suez. When I asked a World Bank official about the situation, she agreed
that there was a basic problem: those Indians needed to learn to use more
water. (c)
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