Bolivians win Water War II

Another multinational water privatizer is closing shop in South America’s poorest and perhaps boldest country. On Monday neighborhood organizations in the Bolivian city of El Alto launched an indefinite general strike demanding that Aguas del Illimani—a company operated by French giant Suez—immediately return the city’s water system to public control. By Thursday they were marching en masse to the capital to claim their victory and reiterate demands that extend to issues of electricity and gas.

In an email sent Friday morning, Suez spokesperson Luan Greenwood says “Aguas del Illimani has not been informed officially that the water contract has been revoked.” But Bolivian news reports say the government has issued “Supreme Declaration 27973” which cancels the contract with Aguas del Illimani for water and sewer services in the twin cities of El Alto and La Paz, the national capital. Given the overwhelming and inescapable public pressure, the government appears to have had little choice.

Greenwood says “shareholders will use all the legal recourses at their disposal to protect their rights. Ending a contract that is compliant and obtaining indisputable results will not be an easy task for the Bolivian government.” Suez owns 55% of Aguas del Illimani shares, the World Bank 8% and South American investors the remainder.

Closed for business

While presidents, prime ministers and mayors around the world confidently declare their jurisdictions “open for business”, the people of Bolivia are taking down the “open” sign.

The events in El Alto and La Paz follow the landmark 2000 Water War in Bolivia’s third largest city, Cochabamba. After five months of dramatic public revolt, the people of Cochabamba regained control of their water system from U.S. giant Bechtel and its water privatizing partners.

As for Suez, Greenwood says the company is “quite simply held hostage in a purely ideological battle. The local electricity company Electropaz is also in the same position, as is the local branch of Telecom Italia. Who’s next, one may ask?”

That seems to be the exact question on the minds of the powerful neighborhood organizations. Key among their other demands is the call for a reversal of recent government-decreed increases in diesel and gas prices. The increases have sparked major protests in various parts of a country and resulting turmoil in government. Bolivia has oil and gas reserves second only to Venezuela on the continent, and Bolivians seem fed up with their resources benefiting foreign shareholders rather than their own nation.

Between a rock and a general strike

With the crescendo of popular unrest and civil society confidence, President Carlos Mesa issued a peculiar January 12 release stating he is receiving many emails asking him not to resign or reduce gas prices. Mesa’s predecessor was driven from the country in October 2003 after oil-related protests left dozens dead.

Concerns about water services in El Alto (pop. 800,000), where poverty is extreme, had been heating up in recent months. People were dissatisfied with the lack of service in certain outlying areas and high costs. New connections for water and sewer ran as high as $445 (all figures in US dollars). According to UN data, 34% of Bolivia’s 8.6 million people live on less than $2 a day and the minimum wage is about $66 per month.

The company says it has fulfilled and surpassed all contract obligations (which exclude certain areas of the city) and has “always been sensitive to the demands of unserved populations in El Alto and always taken great care to cater for the needs of customers living under the poverty belt.” Greenwood further notes that prices and contract parameters are set not by the company but by the government.

But as in Cochabamba, the underlying issue for the people is less the company itself than a system in which decisions impacting daily life are made by governments more responsive to global financial pressures than their citizens. The changes taking shape in Bolivia appeared to be aimed more at regaining democratic control of the country’s affairs than at particular multinationals per se.

Oscar Olivera, who heads the organization that was at the forefront of the Cochabamba struggle, says the issue is not simply private versus public but rather the establishment of participatory local control of resources. “The people want to participate in the management of all that affects their daily lives,” says Olivera. “The people want to construct a new model.”

Jim Shultz, who helped break the story of the 2000 Water War to the world from the streets of Cochabamba, notes a key factor in that case and the current one: the people never had a say in the privatization. It was imposed on them by a government under international pressure.

The World Bank, in its zeal for privatization, pressured the Bolivian government into granting the concessions for water services in Cochabamba and El Alto/La Paz. Despite denials of such influence, a Spring 2002 report by the World Bank’s Operations Evaluation Department says “the President of Bolivia decided to privatize the La Paz and Cochabamba water and sewage utilities, a [World] Bank condition for the two year extension of the loan to 1997.” The Bank provided nearly one quarter of the $68 million price tag for the initial five year phase of the project.

Cochabamba aftermath

The struggle with Aguas del Illimani/Suez could draw out. The Democracy Center, which Jim Schultz heads, is still dealing with the last vestiges of the 2000 Cochabamba water conflict. Bechtel and its partners sued the government of Bolivia for canceling their contract, but after international pressure Bechtel agreed last month to drop the suit in exchange for a reported 2 Bolivianos (about 30¢). But its junior partner, Abengoa of Spain is holding out. Shultz hopes the current letter-writing campaign spearheaded by his organization will convince Abengoa to drop the suit. Abengoa did not respond to my inquiry.

Next: Oil

As significant as the events in El Alto/La Paz are, the much bigger battle for public control of the nation’s huge oil and gas reserves looms. Current protests of gas prices are only the latest expression of a people determined to see its country’s resources benefit Bolivians not foreign shareholders. A pending Hydrocarbons Law may well prove a defining moment for Bolivians and perhaps for the international decorporatization movement.

With this latest shot in the public arm, the momentum of the people appear practically unstoppable. Their advance on the “open for business” signs in their coveted oil fields seems inevitable.

Will Braun is a writer from Winnipeg, Canada. To follow developments in Bolivia visit <>.

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