Monday, April 06, 2009

The Cochabamba Water War and its Aftermath

This week marks nine years since Cochabamba's now-famous Water Revolt. It was during this week, in April 2000, that thousands of people – rural, urban, poor, middle class, young and not so young – took to the streets to reclaim their public water system from a foreign corporation, Bechtel.

The story of the Cochabamba Water Revolt has been retold many times in many ways these past nine years, in articles, films, book chapters, and in enough graduate theses to fill a room. The Democracy Center had the honor of writing the story first, from the middle of that violent yet inspiring April almost a decade ago.

Last year when I put the finishing touches on my chapter on the Water Revolt for our new book, Dignity and Defiance, Stories from Bolivia's Challenge to Globalization (UC Press), I knew that whatever I had to say or write about the Water Revolt I had said or written. That rule still abides.

Two Basic Facts

But because the story of the Water Revolt and its aftermath is so much more complicated than the myth of the Water Revolt, I want to use this anniversary to put the reality of that story back before our readers. And in my view that reality basically comes down to two things:

1. The Cochabamba Water Revolt was and remains a powerful David and Goliath struggle in which some of the most humble people in the world took on the forces of the World Bank, Bechtel, and a former dictator, Hugo Banzer, and took back a resource essential to life – their water.

2. Nine years later the public company reborn from that revolt, SEMAPA, is marked by an ongoing history of mismanagement and corruption which, combined with Cochabamba's rapid population growth, has left much if the city without the basic water they need and deserve.


In other words, Cochabambinos won the war in the streets but lost the battle to have honest and competent water service. In my chapter on the Water Revolt I was frank about this paradox, and have continued to be in my recent talks in the U.S.

Thanks to our publisher, University of California Press, the entirety of that chapter is posted on the Internet and can be read here. Below I am going to publish a few excerpts from that chapter to stimulate debate. But as I said, the story is complicated and if you want to know my complete analysis, you really have to read the whole chapter instead of taking bits and pieces out of context, as many might be tempted to do.

For those interested in more on the Water Revolt, here are some useful links:

The Democracy Center's full links to our work on the Water Revolt

The Democracy Center's Reports from the Street in 2000

A lengthy report in last Sunday's edition of the Cochabamba daily, Los Tiempos

The Bechtel Corporations Comments on the Water Revolt

William Finnegan's excellent 2002 New Yorker article on the Water Revolt
______________________________________

Excerpts from: The Cochabamba Water Revolt and Its Aftermath in Dignity and Defiance, Stories from Bolivia's Challenge to Globalization (UC Press)

The Revolt Begins – January and February 2000

If there remained any question whether residents of the city would rise up as people in the countryside had done, those doubts were swept away quickly in January 2000, thanks to Bechtel’s Cochabamba subsidiary. Just weeks after taking over the city’s water, Bechtel’s company handed users their monthly bills, complete with a spiffy new Aguas del Tunari logo and rate increases that averaged more than 50%, and in some cases much higher. For years afterwards, Bechtel officials would continue to lie about the extent of their rate increases, claiming that the price hikes on the poorest were at most 10%.[i] An analysis using Bechtel’s own data shows that the increases for the poorest averaged 43%.”[ii]

*
For two days Cochabamba’s graceful colonial center turned into a war zone. Every block leading to the plaza was converted into a battlefield. At one end police outfitted in full riot gear blocked the streets with tear gas cannons. At the other end, protestors – young people, old people, poor and middle class – held their ground with rocks and slingshots. Many wore an impromptu uniform of vinegar-soaked bandanas over the mouth and nose, and baking soda under the eyes to protect them from the gas. The doors of middle class homes would suddenly open up and water and bowls of food would appear, an offering of support to those standing up to the government in the streets.

*
Then on the afternoon of Monday, April 10, the government made an announcement. Officials of Bechtel’s company, who sat out days of violence watching it on television in a five star hotel and insisting they wouldn’t leave, had fled to the airport and left the country. The Bolivian government declared the contract canceled, saying in a letter to Bechtel’s people, “Given that the directors of your enterprise have left the city of Cochabamba and were not to be found…said contract is rescinded.”

__________

Impacts on Bolivian Politics

In Bolivia, the Water Revolt ignited a chain of events that provoked historic political and social change. For almost two decades Bolivian economics had been dominated by the Washington Consensus, market-driven policies pushed by the World Bank and the IMF and carried out by national leadership that was fiercely obedient to those policies. The Water Revolt shook those arrangements to their core.

“We have always repeated those slogans ‘Death to the World Bank,’ ‘Death to the IMF,’ ‘Down with Yankee imperialism,’” said Olivera. “But I believe that it is the first time that the people understood in a direct way how the policies of the World Bank, free trade, free markets, is putting us at such a disadvantage among the most powerful countries.”[iii]

___________

Bechtel Strikes Back

In November 2002, a year and a half after they were forced out of Bolivia, Bechtel and its co-investors struck back. In Washington, in a secretive international trade court run by the World Bank, Bechtel’s water subsidiary filed a legal demand for $50 million – a prize equal to what it costs to run the Cochabamba water company for seven years.[iv]

For Bechtel, the World Bank trade court was an ideal forum, for both its secrecy and the long distance between it and the rebellious Bolivians who had caused them so much trouble. Hearings by ICSID tribunals are strictly closed-door. Neither members of the media nor the citizens who would ultimately pay a settlement are allowed to know when the tribunal meets, where it meets, who testifies, or what they say. The process assumes that the only representation that Bolivians needed was from the Washington law firm hired by the Bolivian government.

*
The campaign also took its demands directly to ICSID. In September 2002, with the legal support of Earth Justice, Water Revolt leaders formally requested legal status to join the case. That demand was backed by an International Citizens Petition endorsed by more than 300 organizations from 43 countries, calling on the World Bank trade court to open the case to public scrutiny and participation. The case that Bechtel hoped would be quietly settled in its favor behind closed doors had become a major public story.

On January 19, 2006 representatives for Bechtel and its co-investors arrived in Bolivia. Sitting next to officials of the government, they signed a formal agreement in which they abandoned their $50 million demand for a token payment of two Bolivianos (30 cents). Bolivia’s lead negotiator, Eduardo Valdivia, explained why Bechtel had finally decided to drop their case. “The CEO [Riley Bechtel] personally intervened,” he said. “He told his lawyers that the case wasn’t worth the damage to the company’s reputation.”[v] It was the first time that a major corporation had ever dropped an international investment case as a direct result of global public pressure.
___________

The People Take Over – But Not Really

In its first few months, SEMAPA enjoyed a wave of public goodwill. It rolled back rates to their pre-Bechtel levels and water customers quickly began paying their overdue water bills, refilling the company coffers that Bechtel’s representatives had drained during their brief tenure. Bechtel’s company left behind, among other things, an unpaid $90,000 electric bill. Coordinadora leaders also rode a wave of public popularity and received a stream of offers of technical assistance from public sector water managers across the U.S. and Canada. Public companies under privatization pressures there knew that SEMAPA’s success or failure would have a significant impact on the global water privatization debate and they wanted Cochabamba’s public company to succeed.

*
The one major reform that the Coordinadora did take up and did win, partially at least, was having a portion of the company’s board of directors elected directly from the community. But when the first elections were held in April 2002 to select those community members, less than 4% of eligible voters went to the polls. In a city where, just two years earlier, people had taken to the streets by the thousands and risked their lives to take back their water, there was virtually no public interest in the nuts and bolts of running the water company.

Soon afterwards, the Coordinadora technical team disbanded, and Coordinadora leaders shifted their sights beyond SEMAPA. Some focused on working directly with neighborhoods on water development projects. Some ran and won election to Congress. Others took up new national battles such as the demand for taking back control of the nation’s oil and gas. Over time, the water company’s management and performance began to draw all the same complaints as it did before privatization – inefficiency, corruption, and the padding of the payroll by the union representing SEMAPA workers.

____________

Unsolved Problems

Water experts who know SEMAPA well say that the company has failed to address its two biggest problems. In a valley still deeply thirsty for water, SEMAPA loses about 55% of the water it has to leaks in the pipes and to clandestine hook-ups. And despite a steady flow of financial support from international donors and lenders, including the Japanese government and the IDB, the company still doesn’t have a sustainable financing plan in place.

One water expert familiar with SEMAPA’s internal workings blames the problems on mismanagement. “It is an organization that is completely dysfunctional. They don’t generate enough income to cover their costs and they are letting the system deteriorate.”

_____________

Conclusion

Water privatization should not be held out as a matter of economic theology, something unchallengeable, by either its proponents or its critics. Privatization in general is not inherently good or evil. The debate is in the details. In Bolivia, there is a spiritual objection, among many, to ever putting water, the blood of the earth, into corporate hands. But in the case of water, that spiritual opposition to privatization also happens to be backed by experience and analysis. As a practical policy, water privatization suffers four huge problems.

The first is the natural way in which it prices water beyond what low-income people can afford. The World Bank is an advocate of “market pricing” of water and in the Cochabamba case it directly argued against subsidies that might have made water affordable for the city’s poorest families.[vi] In nations both impoverished and wealthy, people with low incomes cannot afford the actual market cost for basic services. In the U.S., states commonly provide “lifeline rates,” subsidizing everything from electricity to basic phone service. In Cochabamba, privatization and Bechtel’s profit demands priced water out of reach for many families.

The second problem is the distance that privatization puts between water users and those who make the real decisions. How is a teacher, or seamstress, or a farmer in Cochabamba supposed to have any measure of influence on a major foreign corporation a hemisphere away? For all of the public company’s faults, at least in Cochabamba today, when people want to complain they know where to go and they get attention. Bechtel proved immune even to bloodshed.

Third, privatization opponents are justified in worrying about the protection of workers rights. While there is certainly, in Cochabamba, a clear record of the water company union taking too much control, labor rights still matter and private companies are by nature, far less interested in those rights than public companies.

Lastly, it is important to note that while World Bank officials evidently deemed the Bolivian government insufficiently competent to run its public water systems, it acted as if that same government was sufficiently competent to negotiate a handover of its water to a huge foreign corporation and to capably regulate that corporation’s work. This too proved false theory.

Photo by Thomas Kruse.

[i] “Cochabamba and the Aguas del Tunari Consortium,” Bechtel Corp., San Francisco, CA, March 2005, p. 3, http://www.bechtel.com/pdf/cochabambafacts0305.pdf
[ii] See, “Bechtel Vs. Bolivia the Water Rate Hikes By Bechtel’s Bolivian Company,” at: http://democracyctr.org/bechtel/waterbills/waterbills-global.htm
[iii] “Leasing the Rain.”
[iv] The $50 million figure comes from a January 10, 2007 interview by the author with Eduardo Valdivia, the Bolivian government’s chief negotiator on the case.
[v] Interview with the author, Cochabamba, January 2006.
[vi] “Bolivia Public Expenditure Review, executive summary,” World Bank, Washington, DC, June 14, 1999, p. 1.

Labels:

23 Comments:

Anonymous Anonymous said...

For an interesting perspective on the topic, read a paper published recently (March 2009), written by David Bonnardeaux: "The Cochabamba Water War: An Anti-Privatisation Poster Child?"

http://www.policynetwork.net/uploaded/pdf/Cochabamba_March09.pdf

Spanish version:
http://www.policynetwork.net/uploaded/pdf/Cochabamba_Marzo09.pdf

5:26 PM  
Anonymous Anonymous said...

Thank you

10:43 AM  
Anonymous A Richoux said...

thing is you are not "selling the rain" or "the blood of the earth". they are selling the effort it takes to clean and transport the water to you. if you want to collect rain water you can do that. its called a cistern. We have one in the country. of course if the screen isn't right you get mosquitoes in your water, but thats good protein.

12:06 PM  
Anonymous Anonymous said...

Thomas, you mention in relation to the Cochabamba water privatization issue that Bolivia was not "sufficiently competent to negotiate a handover of its water to a huge foreign corporation and to capably regulate that corporation’s work." HOWEVER, Aguas del Illimani (itself a private consortium) in La Paz/El Alto were doing just fine until the nationwide renationalisation debate subsumed it and political pressure reached such a point that the contract was canceled. Aguas del Illimani, at the time was the only company in Bolivia to receive an A+ rating. It had the the highest coverage rates in the country (98.85% in drinking water and nearly 80% in sanitation in the concession area).

1:58 PM  
Anonymous Anonymous said...

LULZ, poor fools, led to believe they were fighting for their dignity. Well I hope you like your dignity with no running water. There's a reason they'll stay third world forever.

3:21 PM  
Blogger Frank_IBC said...

You could have saved yourself 2,200 words by simply writing, "no, the situation with regard to the water supply in Cochabamba has not improved even in the slightest, since we kicked out Bechtel nine years ago."

Maybe you could write a similar article about the supply of cooking gas in El Alto since the Gas War of 2003.

6:02 PM  
Anonymous Bolivia Libre said...

Your organization was among the first ones to write about it because it was helping leading it and is the ONLY one that romanticized it because it was your jackpot, nothing else but destroying the water system in Cochabamba trough the uprising of violent mobs can be attributed to the DC; well, and this blog where I like practicing my English.

Saying that the people were conscious about the reason they went to the street is a big lie you won’t accept; as you don’t accept that the hundreds of cocaleros in the streets, which you hide under the term “rural” were there because they had other “higher” intentions, which they achieved. So did the strong “aguateros” unions that were the first ones going to the street and have gained a lot poisoning the people of Cochabamba with their contaminated cistern water, thanks to you and your glorious war.

We have no spiritual objection for water to be privaitized or be put in corporate hands; what was promes to us by you and your acolytes is to have it free and in abundance if we take it over from the corporation. We do, and I can speak for more than 2/3 of Bolivians, an spiritual objection not to fight for the free and easy t get commodity.

We Bolivians don’t see water as the blood of the earth, that is your invention, it is a necessity as is oil as energy or food; and so is in every single country in the world, those that are smart have them conveniently in the hands of the private sectors; the other have Democracy Centers screwing them up for “economic theology”.

The privatization of water systems have work before Bechtel, just give a look at SAGAPAC in Santa Cruz, the envy of any water company in the Country, entity that for some reason you consistently failed to mention. Last but not least, is ironic that in your own words you are proving the World Bank was right, you should be in their payroll

10:29 PM  
Anonymous Anonymous said...

Oh boy, our little buddyboy Bolivia Libre has blown another mental circuit.

Yeah, all those people in the streets in 2000 were there because some gringos conned them all into it. Those new water bills from Bechtel with the big increases had nothing to do with it.

And I hear it was the Mormons that secretly got Evo elected.

Bolivia Libre's ideology basically boils down to one thing: anytime people in my country do something he doesn't like, we are all just stupid.

And being stupid is something he is an expert on.

Oh you silly boy. Enjoy the Miami weather.

11:31 PM  
Anonymous Anonymous said...

Go light on the boy. He's just having a little tantrum because his Blog can't crack 10 visitors a day. His last article was on why Bolivian cats don't like Evo Morales. He speaks for 2/3 of them.

11:48 PM  
Anonymous Anonymous said...

Its ok now...M has the new James Bond on the case

8:54 AM  
Anonymous Narciso Paco said...

Jim "I dye my hair" Schultz - your voice was co-opted by capitalist interests the minute you took money from Soros. Doesn't the source of your funding act much like Bechtel? Sure, you can attempt to make a case that water is different, but, in the words of Evo, "debemos recuperar los recursos naturales". From that perspective, minerals and water are no different.

9:54 AM  
Anonymous Anonymous said...

The so called revolt just shows that dispite the natural riches of this country it will continue to be a third world mess>

I can't wait to leave

2:02 PM  
Anonymous Anonymous said...

I am one of the so called wealthy residents that benefit from the highest rates of connection and state subsidies. The thing is that I don't get any water, I get mud 2 hours per day (from 3 to 5 am). I end up spending a lot of money in water filters and bottled water. Somebody said it well, there's a reason we'll stay third world forever.

6:58 PM  
Anonymous Anonymous said...

NP, just curious. What is the deal with the hair dye comment? Can you clarify?

8:43 PM  
Anonymous El Grindio said...

I have two responses:
1) As to another anon's "I can't wait to leave",
why wait when you should leave now?
2) Regarding the comment directed in this manner, I will clarify: "NP, just curious. What is the deal with the hair dye comment? Can you clarify?"
It was NP's ad hominem attack of Jim's thoughtful post. Bereft of a counterargument and unable to respond in a cogent manner NP's comment only serves to:
A) try to impeach Jim's ethos by making an irrelevant remark that he thinks is a put down;
B) disguise the fact that his comment does not address the substance of Jim's positions; and
C) hides that he fails to provide a link between Jim's funding and how it is against Evo's idea that "debemos recuperar los recursos naturales".

Since it works with people like you, the right wingers employ it often.

12:19 AM  
Anonymous Anonymous said...

I did a digital blow-up of Jim's hair and it looks the same to me as in earlier photos on the Web. Could be combed better.

10:53 AM  
Anonymous Anonymous said...

All I have to say after witnessing the chaotic and embarrassing session of congress yesterday is: How can any rational being support the Morales Regime?

Seriously, as much as we all want a better Bolivia, MAS actions and results to date, which are very well summarized by what happened yesterday, cannot possible be any good for Bolivia. Since the Banzer days, I have followed politics closely, and never would have I expected, to see such scene in Congress. Even in the darkest days of Garcia Mesa or Natusch Bush there has been so much acrimony atmosphere with such great disposition for violence. It is going to be a long, may be bloody road, to December.

This can all be traced back to the water revolt. Here a group of uneducated and ill informed cochalas were manipulated by interests groups against their own welfare. Bechtel bears responsibility for not fighting to the end and collecting what was rightfully theirs. As it was, the rebel rousers led the people to believe that violence and extra-judicial activities were a good thing, or in spanish: justo y necesario. Why pay for something when you can set up a roadblock and get it for free?

Today we have devolve into this: congressmen physically coherced, a congress under siege, and people taking justice into their own hands, not to mention endemic corruption. Bolivia is now a much weaker nation than it was before the Water war. Street violence and illegality have become the norm. All under the excuse that we are poor or as part of a epic fight against imperialism/capitalism/globalization. In all of this, the greatest victims are of course the poor and marginalized. The very same people that Evo, Jim and Fidel "I-own-the-largest-fleet-of-minibuses-in the-country" Surco are supposed to be helping today face even higher prices and lower prospects of employment than when Bechtel or Enron were in town. Instead of a full stomach and water, Evo has filled their heart with hate and promises blood instead of water.

7:41 AM  
Anonymous Anonymous said...

As it's with all "perfect Latin American idiots" who promoted and organized death and destruction under the excuse of "retaking our natural resources," "social justice," "equality," and all other useless lefty blabbering, the only ones who didn't get "soaked" and rather prospered are such "idiots." (i.e. Olivera et al) There is more debt and corruption in SEMAPA and less water availability than ever for the masses who supported this wanton stupitidy called the "Water War." Jim, one of many foreign friends that the "perfect Latin American idiot" has does know this, but casually dismisses it with a casual, "Yeah, but..." No, Jim. There is NO excuse that you could ever come up with the water situation in Cochabamba is worse than ever. Besides, your viral hate against Bechtel makes one question your objectivity. Water is NOT free (unless it rains on your buckets) and is NOT a human right. Public water management has been un unmitigated disaster around the world and you know it.

Speaking of something else, I know that Cuchi Cuchi worshipper has gained a few (OK, a lot) of extra kilos living a decadent "la vida loca" as president and I knew he was a narcissist despot, but pretending to go Jenny Craig to force his fraudulent Electoral Law to pass through stretches things a bit. As during his old times as scruffy coca union rabble rouser, the "Jenny Craig-in-Chief," wearing sneakers and an old shirt and pants and sitting below barely understandable cardboard signs taped to mirrors and written by undoubtedly "alphabetized Cuban style" bipeds, casually chewed on Choquehuanca's "breakfast of champions" coca for the cameras in the elegant Burned Palace, all the while demanding his fraudulent Electoral Law to pass through. A bunch of monolito lovers (i.e. groveling patooty kissers) displayed equal single digit IQ and followed suit.

Problem is, everybody knows that Jenny Craig "Bolivian Style" -- hunger strikes -- have the curious effect of causing the opposite effect: one gains weight instead of losing it. You see, when all the attention from the press and cameras are gone for the day, that's when the fat faking Gandhi pretenders engorge themselves with salteñas, empanadas, chicha, and beer. Always has been, always will be.

I don't know if Cuchi Cuchi worshipper's political intentions will be successful or not, but I'm willing to bet he'll gain a few kilos. I say at least 5. Do I hear 6? 10?

;-)

The Croats are Morales' Jews
Beni is Morales' Katrina

9:19 AM  
Anonymous Anonymous said...

The posts above are a reminder of the real value of this comments section, it offers the clear voice of the Bolivian elite. These are the people who think that Bolivia would be better off if it reterned to the days of the violence and torture of Banzer. Certainly they would be better off, as they were at the time.

The expression of the Bolivian people is found at the polls where all partiipate, not in the comments of a few ranters who own laptops, speak English, and who sit at a keyboard pretending to be the voice of the people.

10:12 AM  
Anonymous Anonymous said...

Banzer was democratically elected president by the Bolivian people afterwards, ari? The other times he ran for president, he was a close second or third, so spare me the boring mantra of "Bolivian elite."

;-)

The Croats are Morales' Jews
Beni is Morales' Katrina

12:08 PM  
Anonymous Anonymous said...

I'm not saying that we should return to the way things were in the 70s, just observing that in those days there was more peace, jobs, and food. Even those in the furthest corners of Bolivia, were better off then they are today. The upper middle and upper clases have made progress, but the vast mayority of the population was better off under Goni than under Evo.

12:36 PM  
Anonymous Anonymous said...

www.comocayogoni.com

Facts on how Goni the democrat was illegally forced out of power by the huns under Morales and Quispe.

12:14 PM  
Blogger Neil Kevin said...

Cochabamba suffered four months of upheaval because of Becthel's conduct. A 17-year-old boy is dead, two youths are blinded and more than 100 others were injured. Those who opposed the water privatization scheme had their homes ransacked and some were flown off to a remote rainforest jail in an effort to silence them.

perdre du poids

2:59 AM  

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