Water war

Print edition : February 14, 2003

Anti-privatisation agitators confront the police in Cochabamba, a file picture. - TOM KRUSE

A spirited struggle by the people of Cochabamba in Bolivia against a water multinational reverses privatisation and offers lessons for people engaged in the search for alternatives that are democratic and accountable to the people.

"THE next world war will be over water," remarked the former Vice-President of the World Bank, Ismail Serageldin, some years ago. That cliched quote, while highlighting the potential for conflict among nations in a water-starved world, does not quite reflect the rising tide of popular anger against growing inequalities in the distribution of water within countries, resulting in water-haves and water have-nots. In particular, the growing tendency of governments to hand over water resources to private companies threatens massive social upheaval. Almost three years after the "water warriors" of Cochabamba, the third largest city in Bolivia, successively reversed the acquisition of the city's water resources by a multinational company, they remain a symbol of hope to people for whom access to water is a basic human right.

In September 1999, the Bolivian government granted a 40-year contract to supply water to Cochabamba to Aguas del Tunari, a subsidiary of the United Kingdom-based International Water Limited, which was itself a subsidiary of Bechtel, the biggest, United States-based water multinational. Aguas' was the only bid made, and it was worth $2.5 billion. The company got the rights not only to supply water to the municipality's network but also for industrial, agricultural and residential uses in all of Cochabamba province. Moreover, the company obtained the rights over all water sources in Cochabamba, including the aquifers.

The company's rights over all water resources were so extensive that peasants and other users who had formed cooperatives to harvest water were prohibited from accessing water. In effect, all rights to access water in Cochabamba were handed over to Aguas. And, reminiscent of Enron's power project in India, the Bolivian government guaranteed the company a 15 per cent rate of return on capital and linked water tariffs to the consumer price index in the U.S., denominated in U.S. dollars. For its part, the Bolivian government passed Law 2029 (the Drinking Water and Sanitation Law), enabling the privatisation of drinking water services, aimed at "full cost recovery" of all water-related services.

In December 1999, Aguas raised water tariffs by between 30 and 300 per cent in Cochabamba. In Bolivia, where the legal minimum wage was about $100 a month, the new tariffs accounted for a quarter of the monthly wages of working class families. However, the first to protest were engineers and environmental activists in Cochabamba. The movement against the tariff increase gathered momentum as neighbourhood associations, peasant cooperatives, factory workers, youth and women joined together in a broad social coalition. It succeeded in reversing the deal, but only after a four-month-long "Water War", in which several people lost their lives and hundreds suffered injuries.

The Coordinator for the Defence of Water and Life, or simply La Coordinadora, which succeeded Aguas after the popular rebellion forced it out of Bolivia in April 2001, now runs the water system in Cochabamba. Oscar Olivera, a machinist in a shoe factory in Bolivia, and a hero of the four-month-long struggle, was recently in Hyderabad to attend the Asian Social Forum, where he received thunderous ovations wherever he referred to the Cochabambian success story. Asked about his experience at the hands of the Bolivian military and police, Olivera said, "I would rather speak about the brave people of Cochabamba."

Oscar Olivera.-P.V. SIVAKUMAR

Cochabamba, with a population of about 1.5 million, suffered acute water shortages in the last 50 years. Olivera said that the privatisation process was "utterly non-transparent and was pushed under the pretext that privatisation would relieve shortages," He said the earlier system was "inefficient, and like almost all other state-owned enterprises, it functioned as if it were the private property of the political party ruling Bolivia." The lack of "social control and people's participation" in the management of the water board had alienated it from the people to the point that when the system was privatised, people hardly felt a sense of loss, until the massive tariff increases by Aguas galvanised the poor into action.

Before Aguas acquired control of the system, about 45 per cent of the population of Cochabamba did not have access to piped water supplied by the municipal system. After Aguas' entry this section suddenly found that it came under the control of the private company's operations even though it was not served by the company in any manner. Oliver said that in rural Cochabamba, where people had traditionally considered ponds, lakes and other local sources of water the property of their communities, were not allowed to access water from these sources. Water was no longer a collectively owned resource; it had become a commodity owned exclusively by a private monopoly.

Olivera said people reacted immediately to the changes, which had dramatically affected their lives. Blockades and pickets were a regular means by which people protested across Cochabamba. Entire families came out on the streets, adults with the furniture, and even children, with their toys. In March 2000, La Coordinadora conducted a referendum in Cochabamba, in which 50,000 voters participated; 96 per cent of the voters disapproved privatisation of water resources in general, and of the Aguas contract in particular. For five months the battle raged between the people and the Army and the police. The government reacted by bringing in the military to handle the protests. The massive protests snowballed into a general strike in April 2000, to which the government reacted by imposing "a state of siege", martial law in effect. However, soon afterwards, the government rescinded the contract with Aguas.

Olivera told Frontline that the La Coordinadora "does not have a vertical structure of leadership". It organised all sections of the Bolivian people, ranging from street vendors to hotel owners, who felt threatened by the monopoly of the private company. Decisions were taken in huge congregations of general bodies. Meanwhile, the movement had moved ahead. It was not merely concerned with dismantling the privatisation of water sources; it was geared to establish new structures, which would function democratically, be responsive to the needs of the people and offer reasonable rates for water. The new system is neither a state-owned nor a private company, and is still evolving. The La Coordinadora is assisted by the local College of Economists in Cochabamba. The people of Cochabamba elect the board of directors. Olivera said: "The struggle in Cochabamba is not just about water; neither is it just a struggle against privatisation. People are sick of not being consulted, not being taken into account, and not being allowed to say how their resources should be used." Meanwhile, in other parts of Bolivia, water continues to be controlled by private companies, among them a leading water multinational, Suez.

Bolivia is one of the poorest countries in Latin America. It also has a long track record of being a client of the International Monetary Fund (IMF) and the World Bank. In fact, the World Bank, in its report, Bolivia Expenditure Review, stated that "no subsidies should be given to ameliorate the increase in water tariffs in Cochabamba." A year earlier, the Bolivian government agreed to "sell all remaining public enterprises" while accepting an IMF loan amounting to $138 million, ostensibly for controlling inflation and promoting economic growth.

In October 2001, Aguas filed a petition before the International Centre for Settlement of Investment Disputes (ICSID), which is part of the World Bank group. The company sought a compensation of $25 million from the Bolivian government for cancelling the Cochabamba contract. Incidentally, The New York Times, in a July 2002 editorial, referred to the ICSID as a "secret trade courts". In August 2002, more than 300 prominent personalities, representing civil societies in countries across the world, wrote to the World Bank asking it to refrain from handling the dispute. They pointed out that the Bank was itself not a "neutral party" in the dispute, because it had pushed the privatisation of water resources in Bolivia. They pointed out that Bechtel/Aguas's claim of ICSID jurisdiction rested on Aguas' "bogus claim" that it was a Holland-based company. This, they said, was a clever device to make use of the fact that Bolivia and Holland had a bilateral agreement, which invokes ICSID arbitration in trade disputes involving companies in either country. The signatories pointed out that Bechtel/Aguas registered the company in Holland after it signed the controversial water contract in Bolivia. Referring to the instance as one of "forum shopping", they pointed out that the Dutch government had already repudiated the company's use of the device. The signatories expressed apprehension that the Bolivian people would not be allowed or be able to take part in the hearings of the panel. Instead, they asked the World Bank to send members of the tribunal to Bolivia to gather first-hand testimony from the people of Cochabamba, who have been directly involved in the case.

Olivera was awarded the Goldman Environmental Prize in 2001. His role at the vanguard of the struggle in Cochabamba, and the subsequent establishment of a participatory model in water management, were cited as outstanding endeavours in the field of promoting sustainable development. He was also the recipient of the Letelier-Moffitt Human Rights Award in 2000 for his courageous role in the movement against privatisation.

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