Bolivia's Water War Victory

by Jim Schultz

Earth Island Journal, Autumn 2000


At 10am, President Hugo Banzer places Bolivia under martial law. This drastic move concludes a week of protests, general strikes and transportation blockages that have jerked the country to a virtual standstill, and follows the surprise announcement of government concession to protesters' demands to break a $200 million contract selling Cochabamba's public water system to foreign investors.

The water system is currently controlled by Aguas del Tunari, a consortium led by London-based International Water Limited (IWL), which is itself jointly owned by the Italian utility Edison and US-based Bechtel Enterprise Holdings. Upon purchasing the water system, the consortium immediately raised rates by up to 35 percent. That untenable hike sparked the protests.

In January, "Cochabambinos" staged strikes and blocked transit, effectively shutting their city down for four straight days. The Bolivian government then promised to lower rates, but broke that promise within weeks. On February 4, when thousands tried to march in peaceful protest, President Banzer had police hammer protesters with two days of tear gas that the 175 people injured and two youths blinded.

Ninety percent of Cochabamba's citizens believed it was time for Bechtel's subsidiary to return the water system to public control, according to results of a 60,000-person survey conducted in March. But it seems that the government has come to Bechtel's rescue, insisting the company remain in Bolivia. President Banzer, who ruled Bolivia as a dictator from 1971-78, has suspended almost all civil rights, banning gatherings of more than four people, and severely limiting freedom of the press. "We see it as our obligation, in the common best interest, to decree a state of emergency to protect law and order," Banzer trumpeted.

Local radio stations have been closed or taken over by military. News paper reporters have been arrested. Police conducted nighttime raids searching homes for water protesters and arresting as many as 20 people.

The local police chief has been installed as state governor. The "emergency government" now consists of a president (Hugo Banzer), a governor (Walter Cespedes) and a mayor (Manfred Reyes Villa), each of whom is a graduate of the notorious School of the Americas in Ft. Benning, Georgia (infamous for training foreign military personnel in terror and assassination techniques).

Rural blockades erected by farmers have cut some cities off from food and transportation. Large crowds of angry residents armed with sticks and rocks are massing in the city centers, where confrontations with military and police escalate.

Tear gas has engulfed thousands of demonstrators in downtown Cochabamba, while a large military operation is mobilizing to clear the highways in five of the nation's nine provinces.

All this puts Cochabamba on the front-line in the battle against a globalization of water resources. The Coordiadora de Defense de Aguay la Vida (CDAV, Coalition in Defense of Water and Life), a broad-based collaborative including environmental groups, economists, lawyers, labor unions and local neighborhood organizations, spearheads the campaign to prevent loss of local control over water systems. Its leaders either have been arrested or driven underground.

Bechtel Crumbles, Flees Bolivia

It has been one hell of a week here. The CDAV, led by 45-year-old machinist Oscar Olivera, has kicked the Bechtel Corporation out of Bolivia! (I'd like to see a consumer revolt in my home state of California match that!) The people stood up to President Banzer and martial law. I am in awe at what we were able to accomplish together, all across the globe, using the Internet. Hacking away at this keyboard in a corner of the Andes that few people in other places ever think about, we sent the news of what happened here out to many thousands of people around the world. In a matter of hours, we transformed the Bechtel Corporation from "the invisible hand behind the scenes" to a corporation right smack on the hot seat.

Thousands of emails streaming into its San Francisco headquarters from Mexico, England, Canada, Iceland, India, Pakistan, Egypt, Nepal, Australia and the US forced the corporate behemoth to respond. Bechtel's equivocating public relations statement generated caustic headlines in Bolivia and caused the Bolivian government to state definitively that Bechtel's water company isn't coming back.

Bechtel is a global giant, posting more than $12.6 billion in revenue in 1998 - $2.4 billion on Latin American projects alone. IWL is its arm through which it pursues water-privatization schemes such as Aguas dei Tunari. Bechtel, Inc., has trumpeted that IWL "with its partners, is presently providing water and wastewater services to nearly six million 'customers in the Philippines, Australia, Scotland, and Bolivia and completing negotiations on agreements in India, Poland, and Scotland for facilities that will serve an additional one million customers."

The World Bank's Role

On Wednesday, a Finnish news reporter forced World Bank Director James Wolfensohn to comment directly on the Bolivia water protests. Wolfensohn argued that giving public services away leads inevitably to waste, and said that countries like Bolivia need to have a "a proper system of charging." The former Wall Street financier claimed Bank-backed privatization of the Cochabamba water system was by no means directed against the poor. In La Paz, Bolivia, protest leader Oscar Olivera responded, "In Mr. Wolfensohn's view, requiring families who earn $100 per month to pay $20 for water may be 'a proper system of charging,' but the thousands of people who filled the streets and shut down Cochabamba last week apparently felt otherwise."

In a June, 1999 report, the World Bank stated, "No subsidies should be given to ameliorate the increase in water tariffs in Cochabamba," arguing that all water users including the very poor should receive bills reflecting the full cost of a proposed expansion of the local water system. (Water-users in wealthy suburbs surrounding Washington, DC, home to many World Bank economists, pay approximately $17 per month for water, less than what many Colombians were asked to pay after water was privatized in one of South America's poorest countries.)

Olivera continued, "I'd like to meet with Mr. Wolfensohn to educate him on how privatization has been a direct attack on Bolivia's poor. Families with monthly incomes of around $100 have seen their water bills jump to $20 per month - more than they spend on food. I'd like to invite Mr. Wolfensohn to come to Cochabamba and see the reality he apparently can't; see from his office in Washington, DC."

The past week's uprisings in Bolivia provide a leading example of the abuses of international economic policies, including the privatizing public enterprises such as drinking water.

Bechtel Blames "Narcotraffickers"

In 1999, the Bolivian government, under heavy pressure from the World Bank, sold Cochabamba's public water system to Bechtel's Aguas del Tunan. Details of the deal remain secret, with Bechtel claiming the numbers constitute "intellectual property"

That Bechtel's subsidiary was intent on obtaining maxi mum returns on its investment, as quickly as possible, is clear. Within weeks of hoisting their corporate flag over local water facilities, Aguas del Tunari hit up water-users with rate hikes of double and more. Families earning a minimum wage of less than $100 per month were dunned for $20 and more and threatened with having the water shut off. Tanya Paredes, a mother of five who supports her family as a clothes-knitter, was hit with an increase of $15 per month - equal to her family's entire food budget for ten days and a 300 per cent increase over her previous bill.

On April 8, 17-year-old Victor Hugo Daza was shot thorough the face and killed: The ultimate penalty for challenging Bechtel's control of local water supplies. As protest leader Oscar Olivera remarked in the aftermath of this needless tragedy, "The blood spilled in Cochabamba carries the fingerprints of Bechtel."

Bechtel, seeking to pin the blame on anything but its own irresponsible corporate venality, released a statement claiming that "a number of other water, social and political issues are the root causes of this civil unrest." Moving to shift the blame, Bolivian government spokesman Ronald MacLean told reporters the "subversive" protest was "absolutely politically financed by narcotraffickers."

But the uprising had nothing to do with drugs: It was all about water. And the real culprits are not narcotraffickers hiding deep in la selva, but the well-groomed executives of the Bechtel Corporation sitting smugly in their San Francisco Financial District offices a hemisphere away.

Bechtel Speaks, We Respond

A series of editorials I wrote for several US papers triggered a public response from Didier Quint, head of the Bechtel subsidiary that oversaw the fiasco in Bolivia, in which he accused me of misrepresenting the facts. I do not take accuracy lightly My reports from Cochabamba were based on eyewitness accounts and extensive interviews drawn from the center of the action, sometimes at significant personal risk. Bechtel's response, written from far-off London, was riddled with numerous, profound and documentable misstatements of fact.

Quint's interpretations confirmed what Bolivian water-rights protesters have been saying for months: The contract made with Bolivia's government was a dud from the very beginning, a virtual guarantee that thousands of poor families would be hit with water rates they could not afford. Bechtel now complains bitterly about that contract, but the fact remains that they negotiated it, signed it and implemented it. It was in negotiations for that same contract that Bechtel's companies demanded, and won, a provision guaranteeing the company an average 16 percent annual return on its investment, leaving Bolivia's poor to bear all the financial risk.

According to Quint, "Several wealthy interests paid poor people to demonstrate against the concession." Apparently, Quint's local contacts failed to relate that during the seven days of protests, all highways in and out of Cochabamba were blocked, with no ground transportation functioning. Many protesters traveled by foot from rural communities, some from as far as 40 miles. No mysterious unnamed interests paid them to do so - they came to reclaim control of their water.

Quint claimed that the Coordinadora, the civic alliance that led the protests, was composed of "people and organizations having an interest in the parallel water market or being part of the most affluent sector of the population." In fact, the coalition is led by a union representing minimum wage factory workers and including peasant farmers, environmentalists and youth.

Quint alleged that "opposition to the proposed new water law also came from coca leaf growers... supported by their cocaine connection." The best response to that comes from local taxi driver Franz Pedrazas, whose water rates rose last January from $10 per month to $20, an increase equal to more than what he earns driving a cab for 12 hours. "I'm not a narcotrafficker," Pedrazas protested. "If I were, why I would I be driving a cab? The farmers aren't narcotraffickers either."

Quint also claimed that "The typical rates for water and sewage services rose 35 percent. Low-income residents were to pay 10 percent more and the largest hikes (106 percent) were reserved for the highest volume users, the most affluent." After four months, I am still looking without success for someone who had a rate hike of just 10 percent. Even among the poor, rate increases of at least 100 percent were common and many people suffered increases much higher. Local newspaper investigations confirm the extreme rate hikes.

As did other journalists here in Bolivia, I attempted to reach Bechtel's local representative, Geoffrey Thorpe, for his comments during the seven days of the uprising. None of my calls was returned. On several occasions, Thorpe is reported to have hung up on the few journalists who did manage to reach him by telephone.

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. While the people of Cochabamba were having their blood spilled on the streets, Quint's subordinates were busily removing the water company computers and financial and personnel records. Bechtel's fleeing administrators left behind emptied bank accounts and more than $150,000 in unpaid bills. On top of all this suffering and damage, Bechtel now has the audacity to demand a compensation payment of $12 million from Bolivia.

If Bechtel wants to recover a shred of its decimated corporate good will, it has got to stop spinning out misinformation and disinformation. It must return what it has stolen, reconcile its unpaid bills and withdraw its outrageous demands for $12 million more from people who owe it nothing - not even a drink of water.


To protest Bechtel's water policies, contact: Riley Bechtel [] or Didier Quint] and Bechtel's Public Relations Division, 456 Montgomery St., San Francisco, CA 94104 [globrep@bechtel. com, www. bechtel. com.

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