The Second Water War in Bolivia


Cochabamba, Bolivia — Five years ago the issue of water privatization exploded here when massive public protests forced out the California engineering giant, Bechtel. Within weeks of taking over the city’s public water company Bechtel hiked up rates by as much as 200%, far beyond what the city’s poor could afford to pay.

Now a new Bolivian water revolt is underway 200 miles north in the city of El Alto, a growing urban sprawl that sits 14,000 feet above sea level and is populated by waves of impoverished families arriving from the economically desperate countryside.

As in Cochabamba, the public water system of El Alto and its neighbor La Paz, the nation’s capital, was privatized in 1997 when the World Bank made privatization of water a condition of a loan to the Bolivian government. The private consortium that took control of the water, Aguas del Illimani, is owned jointly by the French water giant, Suez, and a set of minority shareholders that includes, among others, an arm of the World Bank.

Community groups in El Alto charge that by pegging rates to the dollar, the company has raised water prices by 35% since it took over. The cost for new families to hook up their homes to water and sewage totals more than $445, an amount that exceeds more than six months of income at the national minimum wage.

More seriously, El Alto water advocates and the government say, the company has left more than 200,000 people with no possibility of access to water at all by failing to expand water infrastructure to the municipality’s growing outskirts. “Without water there is no life so really it is life that the company is depriving the people of El Alto,” says Julian Perez, an advisor to the Federation of El Alto Neighborhoods.

Lack of access to clean water is a chief cause of child illness in Bolivia, where nearly one in ten children dies before age five. Families living in El Alto’s outskirts rely on water from wells which advocates say are contaminated with industrial waste.

“Aguas de Ilimani committed to cover all of the city of El Alto and they haven’t done it,” says Perez. Community organizations are now organizing for a massive public action in January to take back the water company by force, unless the Bolivian government initiates a process to cancel Suez’ contract and put the El Alto water company back in public hands.

“Once the people begin to mobilize we will continue to the final battle,” warns Perez. “We will win or we will lose.”

The company disputes the charge that it has left large numbers of residents without water service. It estimates the number of people living in areas outside the network to be about 30,000 and says it is not required to extend service to them. “That’s where the contractual obligations of the concession end,” said Alberto Chávez Vargas, the company’s director of operations. “You can’t assign the company with obligations that are outside the contract.”

Bolivian government officials agree with the community groups that the Suez contract has failed the people of El Alto. “The contract is unacceptable. It leaves 200,000 people without water,” says Jose Barragán, the Vice Minister of Basic Services who has been negotiating with the El Alto groups. “If the company is willing to expand service to 200,000 people then we can talk about it. If Aguas de Ilimani isn’t prepared to solve the problem I’ll join with the people in El Alto and demand that the company leave.”

Cochabamba’s experience five years ago casts a shadow over the new water revolt brewing to the north. Both the government and community leaders say they want to resolve the dispute without the kind of government repression and violence that left one 17 year old boy dead and more than a hundred others wounded. Cochabamba water leaders are also in active communication with their counterparts in El Alto.

“The taking of installations by force would be a demonstration of legal insecurity and consequently could be considered a lack of compliance with the contract [on the part of the government],” adds Chávez Vargas. “That would obligate the company to take all of the legal actions required to claim its rights.”

The Cochabamba revolt and its aftermath, however, also holds a lesson for Suez and its co-owners. After Bechtel was forced to leave, the company and its fellow shareholders filed a $25 million legal action against Bolivia, in a secretive trade court operated by the World Bank. That demand – which far exceeds all reasonable estimates of the company’s investment – has drawn a firestorm of international protest and caused substantial damage to Bechtel’s public reputation.

Last week Barragán, who is also in charge of dealing with the Bechtel case, revealed that the company wants to drop its demand, in exchange for a token payment equal to thirty cents. According to Barragán, Bechtel’s exit is being held up by one its partners in the Cochabamba water company, the Abengoa corporation of Spain. Abengoa now finds itself in the sights of social justice groups worldwide who are pressuring the Seville-based corporation to drop its demand for millions of dollars from Bolivia’s poor. El Alto groups warn that Suez will also soon find itself walking in Bechtel’s footsteps – a target of both local protest and international pressure.

Regardless of whether the people of El Alto succeed in forcing Suez to leave, the issue will remain, as it has in Cochabamba – where will the funds come from to provide poor families basic access to safe water. The cost of providing water and sewage hookups to the homes that lack them in El Alto would cost as much as $25 million, on top of the costs of expanding the basic water infrastructure to the city’s new neighborhoods.

In cities like Cochabamba and El Alto it is clear that poor water users can not pay the full costs of water at the market prices demanded by private companies. Cross-subsidies from wealthier water users to poor ones can help but still don’t come close to covering the enormous costs of constructing water systems. Neither can a poor nation like Bolivia afford to cover water costs out of its national treasury, which already falls short of covering other basics such as heath and education.

In 2002 the United Nations Committee on Economic, Social and Cultural Rights declared, “The human right to water is indispensable for leading a life in human dignity. Water, and water facilities and services, must be affordable for all.” In Bolivia and elsewhere the question remains: Who will help the poor pay the bill?

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