The Guardian May 3, 2000

Bolivian people fight for public water

The working people of Bolivia's third largest city are involved in a 
torrid struggle to regain control of their municipal water supply, sold 
late last year to a foreign transnational corporation that promptly jacked 
up the price of water by 35 per cent, almost doubling what poor people have 
to pay.

On October 11, 1999, the Aguas del Tunari Consortium, which despite its 
name was dominated by British corporation International Water Limited 
(IWL), announced that it had signed a 40-year concession agreement with the 
Republic of Bolivia to provide potable water and sewer services for the 
City of Cochabamba, and to supply water for irrigation and the generation 
of electrical energy for the Cochabamba Valley.

"We intend to provide high quality service to the customers of Aguas del 
Tunari and to build a strong relationship with the local community and 
Government of Bolivia, said Don O'Shei, Chief Operating Officer of 
International Water Ltd.

"We want to demonstrate our commitment to becoming an integral part of the 
community we serve.

The sale of Cochabamba's public water system was pushed on the Government 
of President Hugo Banzer Suarez (formerly dictator from 1971-78 and more 
recently elected President) by the World Bank.

IWL, through Aguas del Tunari, was the only bidder in a sale that has been 
blasted as corrupt and rife with backhanders and payoffs to government MPs.

In January, the company steeply increased water rates.

In a city where the minimum wage is less than $100 per month, many families 
were hit with increases of $20 per month and more.

In mid-January people rose up in anger, barricading roads and demonstrating 
in the city centre for four days, stunning the Government and forcing an 
agreement to reverse the rate increases.

The Government's failure to honour its undertaking, however, provoked 
another mass march in February that was met by 1,000 police with teargas. 
After a two-day street battle, 175 demonstrators had been injured (two were 

IWL justified its rate increases on the grounds that it had to recover the 
costs of a proposed new dam (the huge Misicuni dam project) to augment the 
valley's limited water stocks. But World Bank experts had previously 
advised against the dam option, saying it was unnecessary and too expensive 
(six times costlier than alternatives) and recommending several much 
cheaper options.

IWL however announced it was going ahead with building the dam, and 
although it has not spent a cent on the dam as yet, it is already 
attempting to "recover the costs from its customers.

IWL's contract with the Bolivian Government apparently gives it the 
Cochabamba water system for no money upfront on a promise that the company 
will invest $320 million in the water system over five years.

IWL is actually a subsidiary of Bechtel Enterprises Holdings, Inc, the 
project development, finance, ownership, and asset management entity of 
giant San Francisco-based engineering and construction transnational the 
Bechtel organisation. Not surprisingly, Bechtel turns out to be part of the 
consortium that will build the new dam.

The dam proposal has aroused strong opposition from peasants, coca growers 
and others who fear it will lead to even more excessive rate increases for 
irrigation and other rural water services.

Faced by blatant price gouging by a transnational over a necessity of life 
like water, protests actions grew in Cochabamba in March, and people from 
rural areas came into the city to join them.

In early April, the Government agreed to meet with the organisers of the 
protests, but once they arrived for the "negotiations the Government had 
them arrested. Enraged at such perfidy, the people rioted and forced the 
Government to release the protest leaders.

In an apparent  and for a time successful  attempt to defuse the 
situation, the Banzer Government announced that IWL was pulling out of the 

The jubilant people celebrated, but the next day the Government reneged, 
claiming it was necessary to "guarantee the rights of foreign investors. 
Instead Banzer declared a 90-day State of Emergency and sent troops into 

Anti-privatisation activists went into hiding or were arrested. Troops 
occupied the city centre. Thirteen days later, under mounting pressure from 
the trade unions and the Catholic Church, the state of emergency was 

Its toll was one military and four civilian deaths, 88 people wounded and 
21 union leaders arrested, as well as various governmental defeats.

Though all forms of protest had been banned, streets and roads were 
occupied by demonstrators throughout the 13-day state of emergency.

The Union Confederation of Peasant Workers of Bolivia (UCPWB) organised the 
largest blockade of national roads in the last two decades as part of a 
parallel struggle indigenous peasants were waging against the Banzer 
Government over the controversial Water Act, a law that had forced them to 
pay for using water from natural springs and wells.

The indigenous peasants were successful and the Government had to withdraw 
the Water Act. Felipe Quispe Huanca, leader of the UCPWB warned that the 
recent events were "just a rehearsal.

In the capital La Paz the Government had to deal with a police strike (and 
accompanying hunger strike by police wives)  eventually agreeing to a 50 
percent pay rise for lower level police.

Four days after the state of emergency was lifted, the entire Cabinet 
resigned, saying: "We have agreed to leave the President with the widest 
and most absolute freedom to choose his collaborators.

Meanwhile, unrest, blockades and disruption continue in Cochabamba. The 
struggle against Bechtel and IWL is not over.

For Bolivians and others, the significance of the uprising in Cochabamba is 
its pitting of ordinary people against the neoliberal policies of the World 
Bank. The neoliberal (economic rationalist) model has been vigorously 
pursued in Bolivia since 1985 and its deficiencies are plain for all to 

"We're questioning that others, the World Bank, international business, 
should be deciding these basic issues for us, said protest leader Oscar 
Olivera. "For us, that is democracy.

But the transnational corporations that are the prime movers of the 
neoliberal model for the world have other ideas about who should control 
such vital things as the world's water. Gregory Palast, writing in the 
Observer on April 23 this year, sounds an ominous warning.

"Why, he asks, "did [World Bank Director] Wolfensohn attack [the Bolivian] 
protests against a project [the Misicuni dam] the World Bank itself found 
dodgy? Because there are larger plans not discussed with the Bank's low-
level minions.

"Long before ministerial limousines clogged the US capital [for the April 
IMF summit], the big policy decisions were settled in far-flung `sectoral' 

In the case of water, nearly 1,000 executives and bureaucrats gathered in 
The Hague last month to review and refine a programme to privatise the 
world's water systems.

"But private operators can turn profits only if prices rise radically and 
rapidly. IWL secured from Bolivia a 16 per cent real guaranteed return. 
This profit boost is itself enough to account for the initial 35 percent 
hike in rates.

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