The Water War

Today, as in 2000, Cochabamba has chronic water shortages. Where I live we can go days without running water. In the outlying and rural areas people rely on periodic tanker trucks which sell water by the barrel, which is often recycled from rich peoples’ swimming pools or siphoned off of drainage ditches.

These water issues came to a head in 2000, when Cochabambinos made it clear that water is a basic human right and that they wouldn’t be bullied into the Washington Consensus by the World Bank or by multinational corporations, in what’s often referred to as the Water War.

To explain the issue, I’ll start with a little macroeconomics lesson:

Bolivia is the poorest country in South America, the result colonial pillage and centuries of political instability and strong-arming. The mineral extraction economy is boom and bust and is often subject to hyperinflation. The government is highly indebted and often unable to provide the most basic services to its people. As such, Bolivia is at the mercy of the World Bank and the International Monetary fund.

The World Bank and IMF subscribe to neo-liberalism, a school of though which sees the market as a panacea for all development issues. They tend to privileges economic development over all else. Thus, social spending should be cut so that debts can be repaid more quickly and currencies should be devalued to stabilize the economy, at society’s expense. They also assume that what benefits developed nations will automatically benefit the developing nations they invest in. Thus, trade should be liberalized and the market deregulated so that developed nations have easy access to the markets in which they have advantages without the hindrance of labor and environmental laws. Finally, they believe that anything government can do, business can do better. Thus, all public services should be privatized, even if that means not everyone will have access.

The World Bank and IMF force poor nations to implement these neo-liberal reforms. They condition loans, development dollars and debt relief on so-called Structural Adjustment Policies. The policies are a package of austerity measures, currency devaluation, trade liberalization, deregulation, a focus on direct export and resource extraction, privatization and governance policies. While these policies can be helpful, they are usually more helpful to developed nations than developing nations, and they are often hurtful.

In Bolivia the cornerstone of structural adjustment has been privatization. The hydrocarbon, telephone, airlines and railways industries were quickly bought-off, the nation’s assets sold away at bargain basement prices. Water was less lucrative. When Cochabamba’s water rights went up for auction there was only one bidder. Water privatization was a condition of a much needed $25 million World Bank loan, so Bolivia was forced to accept the offer.

The buyer was Aguas de Tunari, coalition which included US corporation Bechtel. President Hugo Banzer signed a $2.5 billion, 40-year concession with a guaranteed minimum 15% annual return on the investment. The conditions of the concession required Aguas de Tunari to pay down water authority’s debt, expand and improve the existing water system, and finance the Misicuni dam project. The Misicuni dam project was, by all accounts, impractical, uneconomic and only beneficial to Banker’s wealthy backers, including the corrupt mayor of Cochabamba, Manfred Reyes Villa.

The concession and the corresponding Law 2029 gave Aguas de Tunari a monopoly over all water and sanitation in Cochabamba, including campesinos’ irrigation systems, communally built water networks and rainwater collection schemes. Aguas de Tunari was allowed to install water meters on wells residents had dug, charging them for the meters and the water. They quickly raised rates 35%, to about $20 a month. Minimum wage here, which most Bolivians don’t make, is $70 a month, so the hike was a huge burden.

Local residents organized, led by Oscar Olivera of La Coordinadora and Omar Fernandez of FEDECOR. When the government refused to recognize them and their popular referendum against Aguas de Tunari they began protesting. Retired and laid off miners and factory workers, lustrebotes, street vendors, university students, the middle class, cholitas, campesinos, cocaleros and just about everyone else in Cochabamba was involved in a four day general strike. Other protests broke out across the nation, and at one point there were blockades in five of the nine providences and a thousand-person march to La Paz (in a nation of only eight million).

In response President Banzer declared a state of siege, the Bolivian equivalent of martial law. Meetings of more than four people were prohibited, freedom of the press severely limited, and many of the opposition leaders arrested and sent to prisons in the Amazon region. The situation escalated, protesters and police exchanged rubber bullets, tear gas and molotov cocktails, there were hundreds of injuries and five deaths. In one case, which was caught on tape, an army captain fired into an unarmed crowd of demonstrators, killing high school student Víctor Hugo Daza.

After Daza’s death, the political situation became so unstable that the Aguas de Tunari executives were forced to flee the country. Desperate to change the laws in contention and end the strikes, the government rented planes to fly a quorum of delegates back to the capital. Water rights were turned over to La Coordinadora and Olivera declared victory for the people of Cochabamba.

Arguing that they had been forced out, Aguas de Tunari eventually filed a $40 million lawsuit with the WTO claiming compensation for lost profits. In 2006, the lawsuit was dropped. Banzer and the army perpetrators have not been brought to justice for their human rights violations. The water situation here has not improved at all. It’s still expensive, dirty and chronically unavailable.

Still, the water war was an incredible success. People here are proud that they stood up to a gigantic corporation and said no to neo-liberalism. Rightfully so. Bolivia stands as an early example of the other option, the possibilities outside of the Washington consensus. Bolivia is slowly but surely paying off their enormous debt, diversifying and expanding their economy, trying to protect human rights, foster an independent identity and act sustainably at the same time. They’re not alone. Today Argentina, Chile, Brazil, Ecuador, Nicaragua, Venezuela and Cuba stand with them and against neo-liberal imperialism.

This mural says ¨Bolivia is not in play.¨ I walk by it everyday, and it always makes me proud to be here.