Keeping Score in the Bolivian Water Revolts: Consumers 2, World Bank 0

It appears at this writing that the people of El Alto have won Bolivia’s second citizen revolt against turning over water to foreign corporations. This is an important victory and important lesson for institutions around the world watching the politics of “The Washington Consensus”.

The World Bank has its fingerprints on both these water privatizations, in a big way. In 1997 the Bank made the privatization of water in two cities a pre-condition for loaning the Bolivian government funds it badly needed. Those cities were Cochabamba and El Alto-La Paz.

In the aftermath of the Cochabamba water revolt, the World Bank tried mightily to deny that it had coerced the privatizations, but one of the Bank’s own official reports documents it. For the record, here’s the link to see it yourself.

When Cochabamba’s privatization failed, the Bank declared it was a case of bad implementation, not flawed theory. In 2002 the World Bank declared the El Alto-La Paz water privatization “successful”. This week the people of El Alto announced that the Bank got it wrong.

Observers from all sides will try to pin a label on what happened this week in Bolivia – an indigenous uprising, the work of radicals secretly trying to subvert the government, etc. To be sure, there are many Bolivians philosophically opposed to putting the country’s natural resources into the hands of private corporations, and two failed experiences with water privatizations have proven them far more wise than naïve.

I think that at heart these water revolts are democracy in action, old-fashioned consumer rebellions. The facts are these. No one – not the Bolivian government, not the World Bank, and certainly not the multi-national corporations involved – ever asked the Bolivian people, “Hey, do you want to privatize your water?”

These deals were forced on the Bolivian people without their consent and they were both bad contracts from the start. Cochabamba’s water deal with Bechtel/Abengoa allowed huge rate increases and exorbitant profits. The El Alto-La Paz contract left tens of thousands of families without access to water.

The people who own the water, use the water, and were expected to pay the companies involved – they said NO. Milton Friedman said it – Markets work best when there is choice. Deals hammered out behind closed doors tried to deny that choice to Bolivians. They took it back.

To the water officials at the World Bank – a question. How many citizen revolts against handing water into corporate hands do you need before you start re-thinking the theory?