When structural adjustment fails – the Bolivian water wars

A German version of this article can be found here: https://sauraandlimon.wordpress.com/2013/02/15/die-kriege-von-cochabamba-eine-parabel-fur-die-zukunf-des-wassers/


In 2000, the neoliberal globalization revealed its ugly face. A Western corporation buys the rights for a Bolivian city’s water supply – and the citizens cannot afford their water anymore. The World Bank and the International Monetary Fund (IMF) have operated so-called “structural adjustment” programmes, which are supposed to help developing countries by giving them loans.

But the reforms that such programmes demand from the developing countries are harsh and controversial. The slogan: budget cuts and privatization. Between 1993 and 1997, the administration of Bolivia’s president Gonzalo Sánchez de Lozada y Sánchez de Bustamante carried out the privatization, in 1999 the water supply system was also opened up for private investors. This step was a harsh decision that had a negative impact on many Bolivians. The economy did recover for a period of time, but what price had been paid for this?

In the last year of the last millennium, the Bolivian authorities signed a 40-year contract about the water supply of Cochabamba, the nation’s third-biggest city, with the consortium Aguas de Tunari, which consisted of the San Francisco-based Bechtel Corp. and the International Water Ltd. from London. Over the course of the next weeks, the price doubled or even tripled , a fact the World Bank was well aware of. In February 2000, citizens who were simply unable to pay their water bills, halted the city’s traffic and went on strike for days. The protests were mostly peaceful until the police used tear gas and injured 175 demonstrators, two of which went blind. In April, the local administration seemed to be ready for talks, meeting with representatives of the protest groups. However, some of the activists were arrested at the height of negotiations, turning the process into a farce.

The protest movement could not be stopped anymore, however. The protest rallies took place before city halls, there was solidarity all over. The authorities’ reaction was more than harsh: fifty arrests, dozens of injured protesters. Police units searched activists’ homes, taking some to a remote jungle prison.

For 90 days, a state of emergency had been declared, resulting in the limitation of civil liberties. Arrests without warrants, bans on protest rallies, restriction of the freedom of the press became daily routine in the Latin American country.

On April 10, 2000, finally, local authorities withdrew the permit to govern the water system from Aguas de Tunari. Nineteen months later, the consortium sues for compensation before a World Bank court of arbitration, and in the meantime another activist is arrested just to be released again. In December 2001, the Bechtel Corp. defends its modus operandi, blaming the skyrocketing prices on an alleged wasteful use of water. The riots were not caused by the company’s behavior, according to Bechtel, but by political instability. Bechtel also emphasizes that its complaint before the arbitration body is merely a “request for dispute mediation” rather than a lawsuit. The PR move has little impact on the public image of the issue, however: a February 2002 front-page report in the San Francisco Chronicle calls Bechtel’s case against Bolivia a “David versus Goliath stand-off”, given that Bechtel’s 2000 revenue was $14 billion compared to Bolivia’s national budget of $2.7 billion. A few weeks later, Oscar Olivera, a Bolivian activist, leads a group of 125 protesters to Bechtel Corporation’s California headquarters. Olivera explains that with the $25 million Bechtel seeks in damages against Bolivia, a city of 125,000 people could afford water supply. A few years later, a settlement was reached in which both sides promise to drop charges against each other.

History repeats itself: in 2005, thousands of inhabitants of El Alto, Bolivia, could not afford water and sewage system. The French Suez corporation had bought the right to manage the city’s water system and demanded a $445 fee from those who wanted connection to the pipes. At first, it looked like the privatization of El Alto’s water could be reversed, but when Suez threatened to sue, the city council wavered. But in this case, another public uprising ensured that, in the end, the water concession was taken from Suez and given to a public enterprise.

The Cochabamba and El Alto water wars are not isolated local incidents which only need to concern Bolivians. They have uncovered massive problems that arise out of the IMF/ World Bank structural adjustment policies. Privatization of common property has become a fundamental part of neoliberal policy, all too often neglecting the negative impact on the general population.

Sources include:



https://www.freitag.de/autoren/juloeffl/ins-wasser-gefallen-privatisierung-in-cochabamba [German]

http://www.amnesty.de/umleitung/2004/deu05/089 [German]


Image source: Wowaconia/ Wikimedia

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