The Demogracy

Bolivia's War Over Water

In early April the often-forgot country of Bolivia, tucked away in he Andes, grabbed the world's attention when the city of Cochabamba erupted in a public uprising over water prices. In 1999, following World Bank advice, Bolivia granted a 40 year privatization lease to a subsidiary of the Bechtel Corporation, giving it control over the water on which more than half a million people survive. Immediately the company doubled and tripled water rates for some of South America's poorest families.

Writing directly from the scene, The Democracy Center's executive director, Jim Shultz, captured the developments of this story as it broke, in a series of dispatches and articles that circulated to thousands around the world via the Internet and were also reprinted in newspapers and magazines across the U.S. and Canada. They are presented here in chronological order. Additional information and photos of the Bolivian water uprising are available at: www.americas.org.

TABLE OF CONTENTS

1) A War Over Water (February 4, 2000)
2) In The Andes - Echos Of Seattle (March 23, 2000)
3) Bolivian Protesters Win War Over Water (April 7, 2000)
4) Bolivia Under Martial Law (April 8, 2000)
5) Bloodshed Under Bolivian Martial Law (April 9, 2000)
6) Protests Continues As Sides Seek Agreement (April 10, 2000)
7) Bechtel Says Its Staying (April 11, 2000)
8) Blame Bechtel For Bolivia Uprising (April 12, 2000)
9) Bechtel Speaks - We Respond (April 29, 2000)
10) Behind Globalization, An Old Demand, Democracy (May 4, 2000)
11) The World Bank Speaks - We Respond (June 6, 2000)
12) Bechtel Corp. Vs. Bolivia's Poor (December 18, 2001)


Bolivia Water War #1

February 4, 2000

Author: Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published: "The Democracy Center On-Line" 2/4/00 Syndicated, Pacific News Service 2/8/00
Summary: An on the scene report from the February 4-5 protest in which the government of President Hugo Banzer sent police in the streets to block a peaceful march against water rate hikes.

A WAR OVER WATER

I've decided that the term "tear gas" doesn't quite capture the real experience involved. Even from close to a block away the white smoke pouring from the canister causes severe burning to your eyes and throat and immediately empties your nose of whatever snot you've accumulated for months. At ground zero the gas makes you vomit and nearly lose consciousness. Sometimes the canister projectiles hit people and split their heads open. Fortunately, this morning I found myself suffering from just the burning eyes and running nose class of symptoms. This morning tear gas was the Bolivian government's official response to a huge popular revolt here, over something very basic: water. At this writing, local news stations report one person dead (from a tear gas canister to the head) and at least thirty five hospitalized.

WHEN WATER BECOMES A VEHICLE FOR PROFIT

In recent years "privatization" has become an economic theology in Latin America, driven by a set of commandments written by the U.S., and the U.S.-dominated lenders, the Wold Bank and International Monetary Fund. The commandments are simple. Thou shalt sell your public enterprises to private corporations and investors, almost always from abroad. Thou shalt allow those new owners to do what they will with prices, wages and products. In exchange, supposedly, those businesses will receive a fresh transfusion of foreign capital (and the IMF and World Bank won't cut off your international loans). Bolivia's most recent governments have been very obedient to these foreign commandments, selling off everything from the national airline to the electricity system.

But then there was water. Last year the Bolivian government sold off Cochabamba's public water system to a pool of British-led investors who promised to pour millions of new dollars into expansion and improvement. Last month the owners raised up their new signs ("Aguas de Tunari") on all their facilities and also raised up something else: water prices, in many cases by more than double. Our own water bill, for example, leapt from $12 per month in December to nearly $30 in January. Similar increases hit almost everyone we know. By U.S. standards that may not be much, but for the many Bolivian families who often earn as little as $100 per month, these increases were catastrophic. Cochabambinos, who had paid scant attention to the deal when it was being worked out behind closed doors, were sent into shock and into action.

In mid-January a four day "paro civico" (general strike) over the water price hikes left the city at a total standstill - no cars, no buses, no air flights or bus transport in or out of the city. It was the kind of action that can only happen with broad popular support and it culminated in a mass march to the city's central plaza as thousands of angry water users, urban and rural, gathered and chanted just outside the windows of the government offices where protest leaders and officials were negotiating. Some of those in the talks were reportedly worried that the crowd might break down the door if they didn't emerge with some acceptable agreement. In the end what they agreed to was time, to talk more.

A PEACEFUL MARCH MET BY RIOT POLICE

Today was the deadline for those talks, to be marked by a peaceful mass march once again to the city's center. Last night the Bolivian government issued its response, sending more than 1,000 army and police in from outside Cochabamba and declaring the march banned and illegal, an especially loaded act from a President, Hugo Banzer, who in the 1970s had ruled for 7 years as an unelected dictator, Bolivia's companion to Augusto Pinochet. One of the protest's organizers, labor leader Oscar Olivera, publicly declared that the government's response was, "an expression of fascism that reflects a total incapacity of the government to have a dialogue." The government officially retorted that the marchers were just fringe troublemakers, not representative of the people of Cochabamba, and that the water increases had really been minor. Officials also asserted that the show of force was aimed at protecting "the public", an odd claim since it is the public which is marching.

This morning thousands of protesters marched toward the police lines. In the crowd I saw young and old, the poor and the middle class. They included a friend who works as an accountant at the local university and another who is a Catholic priest in his 70s, who walks slowly, even away from exploding tear gas. Many were people from rural towns who walked here on foot from ten miles and more away, despite government roadblocks aimed at keeping them out. Anyone dismissing this as a crowd of unrepresentative rabble rousers wasn't paying very close attention.

The protesters were eloquent as reporters made their way through the gas clouds seeking interviews. "We've returned to the 70's, to the dictatorship," said one man choking from the gas. "If they don't want to serve the people why do they want to be in the government?" asked a caller to a radio program. Live TV newscasts showed an unarmed man being beaten by soldiers with a club and a long rubber whip. The national government official in charge was also interviewed. "We are not affected," he said of the protests.

JUST OBEYING ORDERS

During a calm in the conflict I spoke to some of the young riot police sent in from the Capital, La Paz, armed with canisters, gas masks, shields and rifles. "I just follow orders," explained Angelo, a 24 year old wearing a full outfit of anti-riot gear. Local police might have seen their own mothers or aunts in the protest crowds and may have been less obedient.

" If you were ordered to kill me right now, you would kill me?"

"Claro [for sure]".

"Don't people here have a right to protest having the price of their water doubled."

"Yes, we all have rights...I'm following orders."

The question in Cochabamba this week is who, in reality, is initiating those orders. Is it a police captain sent here from out of town. Is it President Banzer? Or are those orders merely the natural consequence of an economic theology, developed from afar and run amok here, enough to send even old men and women into the streets facing tear gas and bullets just to keep having water they can afford?

Jim Shultz, executive director of The Democracy Center, lives and writes in Cochabamba, Bolivia.


Bolivia Water War #2

March 23, 2000

Author: Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published:    In These Times, 4/17/00 (edited version)
Summary:    A March update and summary of events in Cochabamba including interviews with protest leaders and a look at the role of the World Bank.

IN THE ANDES - ECHOS OF SEATTLE

Bolivians Take to the Streets Over Globalized Water Prices

Cochabamba, Bolivia: Two months after huge street protests broke up the meeting of the World Trade Organization in Seattle, the grassroots rebellion over the rules of economic globalization erupted in the streets again here in this city of half a million high in the Andes. This time the globalization battle was over something very simple, the price of water.

In 1999, under direct pressure from the World Bank, the Bolivian government sold off Cochabamba's public water system to a consortium of British-led investors. In January, the new owners handed local water users their monthly bills, emblazoned with a spanking new corporate logo and hikes in water rates that for many families were more than double. In a country where the minimum wage is less than $100 per month, many users were hit with water bills of $20 and higher.

The new water company (Aguas Del Tunari) and its government allies may have thought the residents of this valley city would take the increases calmly. They thought wrong. In mid-January, led by a newly-glued together alliance of labor, human rights and community leaders, Cochabamba residents shut down their city for four straight days with a general strike. All transportation came to a halt, roads were blockaded, no buses were allowed in or out of town, and the government was forced to the negotiating table, agreeing to a price rollback and a two week deadline to work out the details.

Bolivian Troops And US Tear Gas

Soon after, however, it became clear that the government's promises were vanishing into thin air. Movement leaders announced plans for a massive but peaceful march to the city's Central Plaza on February 4th. Bolivia's President, Hugo Banzer, who ruled the country as a dictator from 1971-78 (a neighbor and close ally of Augusto Pinochet), responded by bringing in more than 1,000 police and soldiers from outside the city and imposing a military takeover of Cochabamba's center. For two days, while popular leaders and government officials held tense negotiations, police showered tear gas and rubber bullets on rock-wielding protesters, men and women, young and old, poor and middle class. More than 175 protesters were injured and two youths blinded. Almost all the tear gas used was manufactured in the U.S. and Embassy officials here acknowledge that the US has donated gas here before to use against protesters. Asked for this article if US-donated gas was used against the water protesters, the Embassy responded with a waffling, "to the best of our knowledge" no US-donated gas was used.

"Taking Everything And Turning It Willy-Nilly Into A Commodity"

The privatization of water is just the latest in a decade-long series of sales of Bolivian public enterprises to international private investors, the airline, the train system, the electric utility, as government officials carefully toe the neoliberal line that "private is better". While the promises have been about an infusion of new investment, the more obvious results have been a weakening of labor standards, increases in prices, and reductions in services (the train service is gone altogether).

Privatizing Cochabamba's water was a major item in the World Bank's June 1999 country report for Bolivia, which specifically called for "no public subsidies" to hold down water price hikes. Poor countries like Bolivia only reject World Bank advice at the peril of being cutoff from international assistance. In a process with just one bidder, local press reports calculated that investors put up less than $20,000 of up-front capital for a water system worth millions.

The question of privatization is a complicated one, a good idea in some cases, a bad one in others. Yet, for the World Bank and other international funders, privatization is less an analysis than a theology, one that US researcher Thomas Kruse explains, "takes everything and turns it willy-nilly into a commodity." Here in Cochabamba, says Kruse, "Water was the straw that broke the camel's back."

Water or Food?

Tanya Paredes is a mother of five who supports her family as a clothes knitter. Her water bill went up in January from $5 per month to nearly $20, an increase equal to what it costs her to feed her family for a week and a half. "What we pay for water comes out of what we have to pay for food, clothes and the other things we need to buy for our children," she explains. It is worth noting that well-paid World Bank economists in Washington will now pay less for water than Paredes, about $17 per month, what they might spend on one dinner in a Georgetown bistro.

Price hikes like these made support for the protests wide spread. "Everyone took a role," says Oscar Olivera, the Cochabamba labor leader who has become the protests most visible leader. "Youth were on the front lines, the elderly made roadblocks." When protest leaders called on the radio for a citywide transportation stoppage in response to the police takeover downtown crackdown, little old women with bent spines were out in the streets within minutes, building blockades with branches and rocks.

The February uprisings forced government officials to promises a full rate rollback and a review of the water company contract, a pact that movement leaders want annulled entirely. "We're questioning that others, the World Bank, international business, should be deciding these basic issues for us," says Olivera. "For us, that is democracy." If the latest government promises also vanish into thin air more strikes and protests are certain to follow.

Jim Shultz, executive director of The Democracy Center, lives and writes in Cochabamba, Bolivia.



Bolivia Water War #3

April 7, 2000

Author:    Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published:    San Jose Mercury, 4/8/00
Summary:    An article written just after protest leaders climbed to their third floor balcony and declared victory to thousands of cheering supporters, the victory reversed by the government just a few hours later with a declaration of a "state of siege".

BOLIVIAN PROTESTERS WIN WAR OVER WATER

COCHABAMBA, BOLIVIA

In a stunning concession to four days of massive public uprisings, the Bolivian government announced late Friday afternoon that it was breaking the contract it signed last year that sold the region's water system to a consortium of British-led investors.

A general strike and road blockades that began Tuesday morning in Cochabamba shut down the city of half a million, leaving the usually crowded streets virtually empty of cars and closing schools, businesses and the city's 25-square-block marketplace, one of Latin America's largest.

The government's surprise agreement to reverse the water privatization deal follows four months of public protest. It came just as it appeared that President Hugo Banzer Suárez was preparing to declare martial law, possibly triggering fighting in the streets between riot police and the thousands of angry protesters who seized control of the city's central plaza.

GREATER MEANING

While rumors are surfacing that the government might backtrack on their promise, for Bolivians the popular victory apparently won over water has much wider meaning. ``We're questioning that others, the World Bank, international business, should be deciding these basic issues for us,'' said protest leader Oscar Olivera. ``For us, that is democracy.''

The selling-off of public enterprises to foreign investors has been a heated economic debate in Bolivia for a decade, as one major business after another -- the airline, the train system, electric utilities -- has been sold into private (almost always foreign) hands. Last year's one-bidder sale of Cochabamba's public water system, a move pushed on government officials by the World Bank, the international lending institution, brought the privatization fight to a boil.

In January, as the new owners erected their shiny new ``Aguas del Tunari'' logo over local water facilities, the company also slapped local water users with rate increases that were as much as double. In a city where the minimum wage is less than $100 per month, many families were hit with increases of $20 per month and more.

Tanya Paredes, a mother of five who supports her family as a clothes-knitter, says her increase, $15 per month, was equal to what it costs to feed her family for 1 1/2 weeks. ``What we pay for water comes out of what we have to pay for food, clothes and the other things we need to buy for our children,'' she said.

Public anger over the rate increases, led by a new alliance, known here as ``La Coordinadora,'' exploded in mid-January with a four-day shutdown of the city, stunning the government and forcing an agreement to reverse the rate increases.

In early February, when the promises never materialized, La Coordinadora called for a peaceful march on the city's central plaza. Banzer (who previously ruled as a dictator from 1971-78) met the protesters with more than 1,000 police and an armed takeover of La Cochabamba's center. Two days of police tear gas and rock-throwing by marchers left more than 175 protesters injured and two youths blinded.

February's violent clashes forced the government and the water company to implement a rate rollback and freeze until November, and to agree to a new round of negotiations.

DEAL SCRUTINIZED

Meanwhile, La Coordinadora, aided by the local College of Economists, began to scrutinize both the contract and the finances behind the water company's new owners. While the actual financial arrangements remain mostly hidden, the city's leading daily newspaper reported that investors paid the government less than $20,000 of up front capital for a water system worth millions.

Amid charges of corruption and collusion in the contract by some of the officials who approved it last year, La Coordinadora announced what it called la última batalla (the final battle), demanding that the government break the contract and return the water system to public hands. The group set Tuesday as the deadline for action.

Government water officials warned that private investors were needed to secure the millions of dollars needed to expand this growing region's water system. They argued that breaking the contract would entitle the owners to a $12 million compensation fee, and pleaded for public patience to give the new owners time to show the benefits of their experience.

Among the vast majority of Cochabamba water users, however, that patience had run out. Two weeks ago, an inquiry surveyed more than 60,000 local residents about the water issue and more than 90 percent voted that the government should break the contract. During one of the marches this week protesters stopped at the water company's offices, tearing down the new ``Aguas del Tunari'' sign erected just three months ago.

Tuesday, city residents took to the street with bicycles and soccer balls -- only a few cars moved across town to take advantage of the day off from work and school. By Wednesday, armies of people from the surrounding rural areas, fighting a parallel battle over a new law threatening popular control of rural water systems, began arriving, reinforcing the road blockades, and puncturing car and bicycle tires. Thursday night, with another day of wages lost and no sign of movement from the government, public anger started to erupt.

PROTESTERS ARRESTED

A crowd of nearly 500 surrounded the government building where negotiations, convened by the Roman Catholic archbishop, were taking place between protest leaders and government officials. In the middle of negotiations, the government ordered the arrest of 15 La Coordinadora leaders and others present in the meeting.

``We were talking with the mayor, the governor, and other civil leaders when the police came in and arrested us,'' said Olivera, La Coordinadora's most visible leader. ``It was a trap by the government to have us all together, negotiating, so that we could be arrested.''

In response, thousands of city and rural residents filled the city's central plaza opposite the government building, carrying sticks, rocks and handkerchiefs to help block the anticipated tear gas. Television and radio reports speculated all day that the president would declare martial law, and there were reports of army units arriving at the city's airport.

Freed from jail early Friday morning, the leaders of water protests agreed to a 4 p.m. meeting with the government, called by the archbishop. At 5 p.m., government officials still had not arrived and the plaza crowd waited tensely for the expected arrival of the army.

Suddenly and unexpectedly, the archbishop walked into the meeting and announced that the government had just told him that it had agreed to break the water contract. Jubilant La Coordinadora leaders crossed the street to a third-floor balcony, announcing the victory to the thousands waiting below, many waving the red-green-and-yellow Bolivian flag, as the bells of the city's cathedral echoed through the city center.

"We have arrived at the moment of an important economic victory," Olivera told the ecstatic crowd.

Jim Shultz, executive director of The Democracy Center, lives and writes in Cochabamba, Bolivia.



Bolivia Water War #4

April 8, 2000

Author:    Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published:    Distributed to international media via e-mail 4/8/00
Summary:    An emergency alert to the media sent out just after the Bolivian government's declaration of a "state of siege".

BOLIVIA UNDER MARTIAL LAW

As of 10 am Saturday morning Bolivia was declared under martial law by President Hugo Banzer. The drastic move comes at the end of a week of protests, general strikes, and transportation blockages that have left major areas of the country at a virtual standstill. It also follows, by just hours, the surprise announcement by state officials yesterday afternoon that the government would concede to the protests' main demands, to break a widely-despised contract under which the city of Cochabamba's public water system was sold off to foreign investors last year. The concession was quickly reversed by the national government, and the local governor resigned, explaining that he didn't want to take responsibility for bloodshed that might result.

Banzer, who ruled Bolivia as a dictator from 1971-78, has taken an action that suspends almost all civil rights, disallows gatherings of more than four people and puts severe limits on freedom of the press. One after another, local radio stations have been taken over by military forces or forced off the air. The neighborhood where most of the city's broadcast antennas are located had its power shut off at approximately noon local time. Through the night police searched homes for members of the widely-backed water protests, arresting as many as twenty. The local police chief has been instated by the President as governor of the state. Blockades erected by farmers in rural areas continue across the country, cutting off some cities from food and transportation. Large crowds of angry residents, many armed with sticks and rocks are massing on the city's center where confrontations with military and police are escalating.

Jim Shultz, executive director of The Democracy Center, lives and writes in Cochabamba, Bolivia.




Bolivia Water War #5

April 9, 2000

Author:    Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published:    Distributed to international media and activists via e-mail 4/9/00
Summary:    An emergency alert to the media and activists sent out on the second day after the Bolivian government's declaration of a "state of siege. The first direct link between the crisis directly to the Bechtel Corporation.

BLOODSHED UNDER BOLIVIAN MARTIAL LAW

PROTEST LEADERS SAY U.S. BECHTEL CORPORATION SHARES RESPONSIBILITY

Cochabamba, Bolivia: During the second day of martial law, declared here Saturday following a week of widespread public protests over the privatization of water, protests continued and hundreds gathered to bury the body of a 17 year old boy killed here by the Bolivian army. Reports from local press and from human rights monitors place the death toll here at at least three and more than 30 others injured. Victor Hugo Daza, the 17 year old, was killed just blocks from the city center by a bullet wound to the head. Local press reports also identified 17 protest leaders arrested and flown to a remote jungle prison, under the government's martial law actions. Soldiers continue to occupy the city's center.

The main leader of the Cochabamba water protest, labor leader Oscar Olivera,, said Sunday that the San Francisco-based Bechtel Corporation shares the blame for the deaths and injuries here. According to the corporation's Web site, Bechtel is one of the primary investors behind the privatized water company, Aguas Del Tunari and its corporate parent International Water Limited (Source: http://www.bechtel.com/whatnew/1999artsq4.html).

"The Bolivian government, ignoring the wishes of the people, clearly demonstrated in the streets for five days, is protecting the profits of the Bechtel Corporation [and other investors]," said Olivera, reached where he is in hiding to escape government arrest. "The blood spilled in Cochabamba carries the fingerprints of Bechtel."

Late this afternoon it was reported that a high ranking Bolivian official responsible for water matters, Luis Uz?, has announced that the Bechtel affiliate had decided to leave Bolivia. That news, absent a written agreement is being viewed with skepticism by water protest leaders. A national government reversal of a similar announcement here on Friday is what preceded the declaration of martial law Saturday morning by President Hugo (who ruled Bolivia as a dictator from 1971-78).

A high level delegation representing the national government is expected to arrive in Cochabamba Monday for negotiations to resolve the water conflict, though it remains unclear if the leaders of the official "Coordinadora" that leads the water protests, since most are under arrest or in hiding. The Coordinadora reiterated its demand Sunday that the government break its contract with the Bechtel-affiliated water company, as well as lift immediately the state of martial law and provide compensation to the injured and families of those killed.

Jim Shultz, executive director of The Democracy Center, lives and writes in Cochabamba, Bolivia.


 

Bolivia Water War #6

April 10, 2000

Author:    Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published:    Distributed to international media and activists via e-mail 4/10/00
Summary:    An update alert to 1300 media and activists.

PROTESTS AND VIOLENCE CONTINUES IN BOLIVIA AS SIDES SEEK AGREEMENT TO END CRISIS

Cochabamba, Bolivia: As many as six thousand protesters continued to pour into the city's central plaza Monday on the widespread public unrest continues to bring normal life throughout the nation to a near halt. The enormous uprising here was sparked initially by a public battle in Cochabamba over the selling of the region's public water system to an affiliate of the San Francisco-based Bechtel Corporation, but the strength of the water protests here sparked parallel protests across the nation including a police strike in La Paz, the nation's capital, and marches by farmers regarding water, roads and other local issues.

Those leaders of the Cochabamba water protest who were not arrested and jailed over the weekend came out of hiding today to begin a new round of negotiations with secondary level officials of the national government. Late this afternoon details of an accord were released to the media and public which includes, among others, the following components: a) an agreement that the Bechtel affiliate, Aguas del Tunari, will leave the country; b) that the dozens of civic leaders arrested over the weekend will be released; c) the government will approve reform of the national water law that is the object of rural protests over maintaining local water control; d) financial compensation for the families of at least six people killed in the past week and scores of others injured.

The Bolivian official who negotiated the accord claimed on television here that it had the support of Bolivian President Hugo Banzer. However, given the turn of events Friday, in which a similar agreement over the water company's departure was promised by officials and then rescinded, protest leaders appear to be taking a wait and see attitude before calling off the general strike and transportation blockages and asking protesters to go home. There has been no written agreement or direct statement by Banzer as of yet, nor from Bechtel's affiliate here. The thousands gathered in Cochabamba's plaza appear to be growing more angry as each day passes without a believable accord. Many have walked to the city on foot from as far as 70 miles away.

Meanwhile, human rights groups tonight are expressing deep concern about the possible escalation of government repression Monday night, as government officials state publicly that they are preparing to more aggressively enforce the "state of emergency" restrictions on civil liberties declared here on Saturday by President Banzer.. Sweeps late Friday night through private homes in the city resulted in the arrest and jailing of more than a dozen civic leaders, most of whom were then transported by air to a remote prison in Bolivia's jungle.

President Banzer has appointed the second new Governor for the state of Cochabamba in three days, Army General Walter Cespides. Cespides is most known here for being at the head of the army's violent repression of civil protest in the Chapare region in April 1998 which left many dead and injured. The Cochabamba Permanent Assembly on Human Rights reported this afternoon that at unknown number of people who have been arrested in the past three days are now unaccounted for and not present in any of the jails or prisons in Cochabamba.

In addition, there are army troops posted at various entrances to the city, just outside highway blockades erected and protected by hundreds of peasants farmers from the rural areas outside the city. A confrontation at a similar blockade near La Paz over the weekend resulted in the deaths of at least two farmers and one soldier. Meanwhile, throughout most of they city blockades streets remained calm as children idle from closed schools played stickball and soccer in the street. Women from various neighborhoods went door to door gathering food and cooking for the thousands of protesters in the plaza.

Jim Shultz, executive director of The Democracy Center, lives and writes in Cochabamba, Bolivia.



Bolivia Water War #7

April 11, 2000

Author:    Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published:    Distributed to international media and activists via e-mail 4/10/00
Summary:    An update alert to international media disclosing a major discrepancy between statements by the Bolivian government and the Bechtel Corp. regarding their departure from Bolivia.

WHILE BOLIVIA SAYS BECHTEL AGREEMENT IS BROKEN BECHTEL SAYS ITS STAYING

The week long civil unrest sparked by water privatization that paralyzed much of Bolivia began to come to an end Tuesday morning following a signed agreement between protest leaders and the government. However, that agreement is now in dispute due to a communication just released by Bechtel and it's London partner, International Waters Limited.

Central to that agreement is a Monday letter from Bolivia's Superintendent of Basic Sanitation, Luis Guillermo Uz? Fernández, to Geoffrey Thorpe, the head of Bechtel's subsidiary, "Aguas del Tunari". The letter states that, because Thorpe and other company officials have now left Bolivia the government is retaking control over Cochabamba's water system and "I communicate to you that said contract [between the company and the government] is rescinded."

However, early Tuesday Bechtel released a statement vie e-mail, to the hundreds of people who have written to the corporation demanding its departure from Bolivia. That statement, referring people to a release from its London partner, International Waters Limited, does not refer in any way to the company leaving Bolivia. To the contrary, the statement declares, "We are in urgent discussions with local leaders to determine an appropriate resolution to the water shortage problems facing the Cochabamba region. We remain flexible in our approach and hopeful that the government and community can reach consensus on a solution that allows the water delivery system to be expanded and improved."

Much of the turmoil of the past week has been caused by promises made by government officials about the water company's departure, followed by reversals of those promises later. If that happens again, additional civil resistance could easily break out again, for the fourth time in as many months.

NOTE TO REPORTERS: I strongly urge you to immediately contact the Bechtel Corporation's corporate headquarters in San Francisco [415-768-1234] and ask about this direct conflict in the corporation's public statements and that issued late yesterday by the Bolivian government. Please send me copies of anything you write and any additional information you obtain, to be shared with reporters in the Bolivian press following this story.

Jim Shultz Executive Director The Democracy Center

TEXT OF STATEMENT BY BECHTEL CORPORATION RELEASED APRIL 11

In response to your e-mail message about Cochabamba, we provide the following statement issued Tuesday morning, the 11th, by International Water Ltd., a water development company owned by Bechtel Enterprises and Edison S.p.A. Edison S.p.A., an affiliate of Group Montedison, is Italy's largest private energy services company. Aguas del Tunari, mentioned below, is the IWL-led consortium that negotiated the Cochabamba water concession. If you have further questions or comments, please contact IWL's London headquarters at (44-171) 766-5100. Alternatively, you may send e-mail to mail@iwltd.com

We are saddened by the violence that has occurred in Bolivia this past week.

We are also dismayed by the fact that much of the blame is falsely centered on the government's plan to raise water rates in Cochabamba, when in fact, a number of other water, social and political issues are the root causes of this civil unrest. Several of these factors have all led to the tensions on display throughout the country:

  • proposed water legislation (unrelated to the Aguas del Tunari concession) that requires farmers and others to obtain permits for water extraction
  • unemployment and other economic difficulties facing Bolivian citizens
  • a government crackdown on coca-leaf production
  • and police protests over salaries.
We are in urgent discussions with local leaders to determine an appropriate resolution to the water shortage problems facing the Cochabamba region. Currently more than 40% of the region's citizens have no direct access to water resources. We were invited by the government to participate in a privatization program to develop long-term solutions to provide safe and affordable water and wastewater services. During the past several months we have been part of a number of meetings with government and community leaders to identify acceptable options to ease the transition from public to private management. We remain flexible in our approach and hopeful that the government and community can reach consensus on a solution that allows the water delivery system to be expanded and improved.

International Water
11 April 2000




Bolivia Water War #8

April 12, 2000

Author:    Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published:    Syndicated by Pacific News Service 4/12/00
Summary:    A refutation of the claims made by Bolivian officials Monday that the week's uprisings over water were organized and financed by narcotraffickers, a spin widely published in the U.S. on Tuesday.

BLAME THE BECHTEL CORP. NOT NARCOTRAFFICKERS FOR BOLIVIA UPRISING

Bolivia, that landlocked country high in the Andes, which few in the U.S. ever think about, has been in the news. A week of enormous, often violent, civil uprisings here left at least seven people dead, more than a hundred others injured and flashed pictures of the nation abroad that made government leaders here very nervous for their and the nation's foreign image. Quick to put blame in the easiest place possible, government spokesman, Ronald MacLean, told the few international reporters here Monday, "I want to denounce the subversive attitude absolutely politically financed by narcotraffickers."

For reporters and editors who have never been here it may be an easy line to swallow, but it would take about two minutes on the ground to figure out how big a lie the Bolivian government seeks to spin. The issue in the past week's uprisings had nothing to do with drugs, it was about water. The culprits weren't narcotraffickers hiding out in the jungle but the well-tailored executives of the Bechtel Corporation sitting smugly in their downtown San Francisco offices a hemisphere away.

The roots of the uprisings here began last year when, under heavy pressure from the World Bank, the Bolivian government sold off Cochabamba's public water system to a Bechtel subsidiary, "Aguas del Tunari". The details of the deal are secret, with the company claiming the numbers are confidential "intellectual property". What is very clear, however, is that Bechtel's people here were intent on getting as much as they could as fast as they could out of the people's pockets in South America's poorest country. Within weeks of hoisting their new corporate logo over local water facilities the Bechtel subsidiary hit local water users with rate hikes of double and more. Families earning a minimum wage of less than $100 per month were told to fork over $20 and more, or have the tap 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. For Bechtel's CEO, Riley Bechtel, that's snack money at Fisherman's Warf. For Parades it's her family's food budget for a week and a half.

It should have come to nor surprise to Riley Bechtel or the Bolivian government that increases like these would send people into the streets, which it did. In January Cochabambinos shut down their city for four straight days with general strikes and transportation stoppages. The Bolivian government promised to force rates down to put, seeking to end the protests, promises broken within a few weeks. When thousands tried to march peacefully here on February 4th, President Hugo Banzer (Bolivia's Pinochet-style dictator for most of the 1970s) returned to his old ways, calling out the police and hammering people with two days of tear gas that left 175 injured and two youths blinded.

After months of promises made and broken by the government and Bechtel's company, the people of Cochabamba made it clear they'd had enough. In a popular survey of more than 60,000 residents last month, 90% said it was time for Mr. Bechtel's subsidiary to go and return the water system to public control. When residents here staged a final city shutdown starting last Tuesday, the Bolivian government came to the corporation's rescue, saying the company must not leave.

When the protest, overwhelmingly supported by people here, refused to back down after four days the Bolivian government declared a "state of siege" arresting protest leaders from their beds in the dark of night, shutting radio stations down in mid-sentence, and sending soldiers into the street with live bullets. On Saturday afternoon when 17 year old Victor Hugo Daza was killed by a shot through his face it had finally come to the ultimate penalty for challenging Bechtel's control of local water - death. As protest leader Oscar Olivera said in a statement afterwards, "The blood spilled in Cochabamba carries the fingerprints of Bechtel."

It is true that the strength and international attention of Cochabamba's water protests did embolden, and become linked with, other protests around the country, marches by people in the countryside over a new law taking away control of rural water systems, a police strike in the capital city of La Paz, complaints about unfinished highways in other areas of the country. But when people marched 70 miles on foot from small towns to joint the protest, when women came door to door in my neighborhood gathering food donations to cook and take to the people at the conflict's center, narcotrafficking had about as much to do with it as Elian and Fidel.

In the middle of the protest, the mayor of a small town outside of the city explained to me, "This is a struggle for justice, and for the removal of an international business that, even before offering us more water, has begun to charge us prices that are outrageously high." Late Monday it appeared that Bolivians had gotten their way, as government officials released a letter it had sent to company executives, accusing them of fleeing the country and therefor nullifying the contract they signed last year.

Tuesday morning Bechtel released a statement of its own. Like the Banzer government, Bechtel sought the pin the blame on anything but themselves. "We are also dismayed by the fact that much of the blame is falsely centered on the government's plan to raise water rates in Cochabamba," said the $12 billion per year corporation, "when in fact, a number of other water, social and political issues are the root causes of this civil unrest." Bolivians may be mad about a lot of things, but it was Bechtel's greed and Bechtel's price hikes that was the centerpiece of the protests this past week, and the damage and death left behind. If Riley Bechtel has any doubt about that he can come here. There are about 100,000 angry Bolivian mothers who would love nothing better than to steer him straight.

Jim Shultz, executive director of The Democracy Center, lives in Cochabamba, Bolivia





Bolivia Water War #9

April 29, 2000

Author:    Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published:    The Democracy Center On-Line 4/29/00
Summary:    In late April, Bechtel's International Waters subsidiary released a new statement, directly as a letter to Jim Shultz and The Democracy Center, accusing us of reporting "misconceptions". Bechtel also posted the letter on its corporate Web site. This letter is The Democracy Center's response.

Dear Readers:

Apparently the e-mail messages that many of you have sent in the past weeks to Mr. Riley Bechtel, regarding his corporation's role in the Cochabamba water uprisings, have gotten his attention. On Tuesday I received a lengthy public response from Mr. Didier Quint, the head of Mr. Bechtel's subsidiary that oversaw the corporation's fiasco here in Bolivia. I know that many of you have received the same letter. Bechtel's subsidiary also submitted a shorter version as a letter (accusing me of "misconceptions") to the San Francisco Examiner, in rebuttal to my article published there and in the Toronto Star.

Today I am releasing my response, included in full below. Those of you who know my work well know that I do not take accuracy lightly. My reports from Cochabamba this past month have been based on my personal eyewitness accounts and extensive interviewing from the center of action, on occasion at personal risk. I stand by each one. In contrast, Bechtel's response was written from the quiet of far off London and is riddled with numerous, profound, and documentable misstatements of fact.

I hope those of you interested will read my response closely. As the letter points out, Bechtel, in addition to all of the other damage it has contributed to in Cochabamba, is now demanding a $12 million compensation payment in exchange for leaving. I think that is intolerable. If you are interested in sharing your own opinion about that demand or any other aspect of the matter, I encourage you to do so directly via e-mail to:

Mr. Didier Quint
dplquint@iwltd.com
Mr. Riley Bechtel
rbechtel@bechtel.com
Send a copy to:   Bechtel Public Relations Division globrep@bechtel.com

Again, my response to Bechtel is included at the end of this note. Copies of Mr. Deider's letter to me and to the Examiner (along with as my original article) have been posted by Bechtel on its corporate Web site.

Thank you for your ongoing interest and support.

Jim Shultz
The Democracy Center

MY RESPONSE TO BECHTEL

April, 29, 2000

Mr. Didier Quint
Managing Director
International Water LLC
Mr. Riley Bechtel
Chairman and CEO
Bechtel Enterprises

(via e-mail)

Dear Mr. Quint and Mr. Bechtel:

This letter is in response to Mr. Quint's April 25th e-mail to me and his letter to the San Francisco Examiner, regarding the civil uprising over water prices in Cochabamba. While I appreciate your effort to share your views on this matter, it is disappointing to see the extent of your misunderstanding of the basic facts and your unwillingness to accept any responsibility for your actions here. From your offices in London and San Francisco I am sure you had to rely on your companies' local representatives for information. It is clear they have briefed you very, very poorly.

To be clear, most everyone in Cochabamba would agree with your assessment about the need for more and better water. Cochabambinos are anxious to solve their water problems and many once had high hopes that your company would help to do this. You are also not alone in your questioning of the Misicuni dam project. Your account of your secret negotiations with the Bolivian government provides much more detail then had been available publicly and I have shared it with civic leaders and journalists here.

Most importantly, your account confirms what water rights leaders here have been saying for months - that the contract agreed to by the government was a failure from the start, a virtual guarantee that thousands of poor families would be hit with water rates they could ill afford. But let's be clear on one other point. While you complain bitterly about that contract, you are just as much a party to it as the Bolivian government. You negotiated it, you signed it, and you implemented it, knowing well the injustices and social eruptions it would cause. You did not enter into that contract as an act of public spirit. You saw an opportunity to make a profit here and you took it. One additional point you left out of your summary - your companies also demanded and won a provision in that same contract guaranteeing you, come hell or high water, an average 16% annual return on your investment (contract annex #5), leaving Bolivia's poor to bear all the financial risk.

That said, let me now address your profound misstatements of fact about the public protests and your water price hikes that triggered them:

  1. You state, "Several wealthy interests paid poor people - many bussed in from outside the area - to demonstrate against the concession." Apparently your local representatives failed to inform you that, during the seven days of protests here in early April, protesters blockaded all highways in and out of Cochabamba. There was no bus service, commercial or otherwise, or any other ground transportation entering or leaving the city. Not even bicycles were allowed through without having their tires flattened. If you have any doubt about my account you should consult with the Bolivian government, which specifically cited the blockades as a reason for its declaration of a "state of emergency" on April 8. Before you make this claim again I suggest your provide your proof. I spoke personally with many who came here from the rural communities, on foot from as far as 40 miles. No mysterious unnamed interests paid them to do so. They came to reclaim control of their water.

  2. You state: "The Coordinadora [the civic alliance that led the protests] was mostly composed of people and organizations having an interest in the parallel water market or being part of the most affluent sector of the population." The Coordinadora's affluence will certainly be news to its members. The coalition is led by the union that represents minimum wage factory workers. Its members also include organizations of peasant farmers, environmentalists, youth, and others. Could you explain which of these groups you count as affluent?

  3. You state, "Opposition to the proposed new water law also came from coca leaf growers who, the state asserted, were supported by their cocaine connection." It seems hypocritically convenient that you would so blatantly criticize the Bolivian government on the one hand and yet so readily parrot their false political spin on the other. I have shared your charge in the past few days with many people here who participated in the protest and I think the best response comes from Franz Pedrazas, a local taxi driver. You raised his water rates last January from $10 per month to $20, an increase equal to more than what he earns in a day driving a cab for 12 hours. Regarding your charge that nacrotraffickers were behind the protests he says, "It's a big lie. I'm not a narcotrafficker. If I were why I would I be driving a cab? The farmers aren't narcotraffickers either."

  4. Finally, you state: "The typical rates for water and sewage services rose 35%. Low income residents were to pay 10% more and the largest hikes (106%) were reserved for the highest volume users, the most affluent." After four months I am still looking, with no success, for someone here who had a rate hike of just 10%. I have interviewed dozens and dozens of families about their rate hikes. Even among the poor, rate increases of at least 100% were the most common and many people suffered increases much higher. Your claim will be big news to Mr. Pedrazas, the cab driver, to Tanya Paredes, a mother of five who knits baby clothes for a living (her increase was 300%), and thousands of others. If you don't wish to believe my account I would gladly send you copies of the local newspaper investigations that also confirm the extremity of your rate hikes.
As a parent, one of the lessons I have tried to teach my children is the importance of telling the truth and of accepting responsibility, rules that should apply as well to large corporations. The people of Cochabamba have suffered four months of upheaval because of your conduct here. A 17 year old boy is dead. Two youths are blinded. More than 100 are injured. Those who opposed you had their homes ransacked in the dark of night and were flown off to a remote jail in the jungle in an effort to silence them. In your defense you rely on lies and seek to blame everyone from peasants to well-drillers. Whatever credibility you had left has only been tarnished all the more.

I tried, as did many other journalists here, to reach your local representative, Mr. Geoffrey Thorpe, for comment during the uprisings. Neither my calls nor anyone else's were returned. In fact, on several occasions, he hung up on those few reporters who managed to reach him. You may also find it of interest that, while the people of Cochabamba were having their blood spilled on the streets, your subordinates were busy taking away the water company's computers and financial and personnel records. Your subordinates also left behind bank accounts that were empty and more than $150,000 in unpaid bills. On top of all this suffering and damage you now have the audacity to demand a compensation payment of $12 million from the Bolivian people.

I am afraid that the misconceptions in this matter are not mine, but yours. Despite your apparent views to the contrary, the people of Cochabamba are not stupid, nor are they misled. It may not be the public relations message you would like to project, but the facts speak for themselves: You came here to make a profit, agreeing to a contract that insured water rates far beyond what people could afford. You implemented those rates, provoking exactly the social eruption you anticipated. Even as people here died demanding that you leave you refused to go and hid behind the violent repression provided for you by your partners in the Bolivian government.

I assume your letter was intended to make you and your actions sound reasonable to a public audience. If you actually want to have your behavior be reasonable I encourage you to stop spinning misinformation, return what you have taken, reconcile your unpaid bills, and withdraw your demands for $12 million from those so ill-able to afford it. I will share this response publicly, as you have your letter to me.

Sincerely,

Jim Shultz
Executive Director
The Democracy Center
Cochabamba, Bolivia


Bolivia Water War #10

May 4, 2000

Author:    Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published:    Syndicated by Pacific New Service 5/4/00
Summary:    A wrap-up piece reflecting on the experience of being in the center of back to back April protests, in Bolivia and in Washington, DC, over the issue of economic globalization.

BEHIND THE NEW GLOBALIZATION PROTESTS
LIES AN OLD DEMAND, DEMOCRACY

Watching coverage of the protests in Washington DC last month it would be easy to have the reaction, "Now what is this all about?" For most people the names World Bank, International Monetary Fund and World Trade Organization are signals to change the channel or move on to something a little closer to home. However, what erupted in Seattle last December and marched on to Washington in April is not some passing fancy. It is, in fact, the start of an important, worldwide political movement and, while its slogans and messages may still be rough, the issues that movement raises are among the most important we will face for much of the new century.

Within the U.S. much of the last century was marked by one citizen effort after another aimed at curtailing the abuses and excesses of corporations and the marketplace - child labor laws, the regulation of monopolies, the right to organize unions, minimum wage laws, consumer protection, environmental protection, and more. All these have been important steps forward in U.S. economic life. Today, as the economy turns more and more global by the week, individual nations are becoming less and less able to set such rules.

Steadily, the economic decisions that affect our daily lives are leaving the hands of governments we elect and falling into the arms of multinational corporations and global economic institutions that we do not. The movement we saw being born in the streets of Seattle and Washington is an echo of all those same fights for economic justice, only this time the issues and the battles have gone global.

As thousands of students, working people, environmentalists and others were preparing to gather in Washington, from far off Bolivia came a powerful example of what that protest was about. Bolivia, in many ways, is the poster child for what happens when a poor country is left to the whims of global economic planners. This little-thought-of land of high mountains and lush jungles is saddled with a huge international debt which benefited mainly the wealthy but now bears down on mainly the poor. The cost of paying the annual interest on that debt cuts deeply into revenues that could be used for health, housing or education. Similarly, at the command of the International Monetary Fund (IMF), the Bolivian government is about to change the national labor laws, weakening the right to organize unions and other worker protections.

Then there is the issue of "privatization". For years the World Bank has pressed hard on poor countries like Bolivia to sell off their public enterprises to international investors. Fearful of losing access to World Bank credit, the Bolivian government has eagerly complied. One by one it sold off the national airline, the train system, and electric utilities. Last year it traded away the public water system in Cochabamba, a city of more than half a million. In a secretive, one-bidder deal, a 40 year lease was sold to a subsidiary of San Francisco-based Bechtel Enterprises.

It took little time to understand what all this elaborate global economics meant to the mostly-poor families who live here. Before Bechtel's subsidiary even finished hoisting its new logo over local offices, it hit local water users with rates of double and more. Franz Pedrazas, who supports his family driving his taxi 12 hours a day, seven days a week, had his rates doubled, an increase equal to what he makes in a day. Even in the U.S. it seems unlikely that consumers would take calmly a utility increase equal to a day's pay. Cochabambinos, many earning a minimum wage of less that $60 per month, reacted with unity. They shut down their city with a one week general strike and took to the streets to demanding water rates they could afford and democratic control of the water system.

The reaction of the government, the corporation, and the World Bank was a case study of the New World Order. Bolivia's President, Hugo Banzer (who ruled the country as dictator for most of the 1970s) declared a "state of emergency", pulled the plug on radio stations, sent soldiers into the street (killing a 17 year old boy and injuring hundreds more) and tried to blame the water protests on "narcotraffickers". Bechtel's subsidiary refused to leave, lied about how much they had increased water prices, and hid behind the government's repression. World Bank director, James Wolfensohn, asked about the Bolivian water uprising at a Washington news conference, defended the Bank's price increase policy with cool, clueless economic theory. "It's just a fact that if you give public services away," said the $300,000 per year Bank head, "that does lead to certain waste."

In Cochabamba the protests ended in victory. Amidst a flurry of finger pointing between Bechtel and the Banzer government, the corporation fled from its offices and turned its attention to trying to snatch a $12 million exit payment. The leader of the water protests, Oscar Olivera, accepted an invitation to come to Washington where global justice advocates were just beginning to gather. Standing next to him in the middle of the Washington march, I asked the 45 year old machinist what he thought of the nation's capital. "It looks just like Cochabamba," he told me, "young people and police everywhere."

It was, in fact, the young people, that gave real life to these twin protests on opposite sides of the equator. Beneath the economics, the slogans, the street confrontations and the rest, young people in Bolivia and in the U.S. smelled what the young always notice first, the arrogance of power. It is true that setting the rules for the new global economy will not be easy and the issues are not all so simple. Yet beneath it all there is once principle that is simple. People, regular people who work for a living, want a say in the decisions that shape their economic futures. They believe that these decisions should not be simply left to the arrogant commands of Banzer, Bechtel, the World Bank, or the IMF. The issue in the streets of Cochabamba and Washington last month was an old one - democracy.


Bolivia Water War #11

THE WORLD BANK SPEAKS - WE RESPOND June 6, 2000

June 6, 2000

Author:    Jim Shultz (E-mail)
Executive Director, The Democracy Center
Published:    Distributed by e-mail to The Democracy Center's Bolivia list
Summary: In early May, Christopher Neal, the World Bank's External Affairs Officer Latin America & the Caribbean, wrote to us to complain about inaccuracies in our reporting on the Cochabamba water protests and the World Bank's role.

This exchange of letters includes Mr. Neal's message and our response.

OUR RESPONSE TO THE WORLD BANK

Christopher Neal External Affairs Officer Latin America & the Caribbean The World Bank (via e-mail) Dear Mr. Neal, This letter is in response to your May 10 e-mail to us regarding the recent civic uprisings over water prices and water privatization here in Cochabamba, Bolivia. Please forgive our delay in responding. We were both traveling outside the country when your message arrived. We appreciate you taking time to represent the World Bank's official view on the events that happened here. We assume that you are a person of goodwill whose concern for the poor is genuine. However, as residents of Cochabamba we must say that your representation of the World Bank's role in the tragedy that occurred here is seriously incomplete.

As you well know, following the completion of water privatization here last January, the people of this valley saw their water bills climb by double and more. To seek recourse they were forced to shut down their city for a week, and to endure government tear gas, bullets, and repression which left a 17 year old boy dead and more than 100 others injured. While the World Bank may wish it were otherwise, the events that set this tragedy in motion lead directly back to the Bank and its heavy handed privitization policy in Bolivia.

First, despite your statement that the World Bank, "advised the government against proceeding with the privatization plan and water tariff increases,

" the facts are absolutely clear that the World Bank relentlessly forced privatization of the water system, over the clear objections of many Bolivian citizens and leaders. In February 1996 the World Bank told Cochabamba's mayor that unless it privatized its water system the city could forget receiving any additional World Bank assistance for local water development. In July 1997 World Bank officials told Bolivian President, Gonzalo Sánchez de Losada, during meetings in Washington, that the privatization of the Cochabamba water system was also a pre-condition of receiving international debt relief from the World Bank, the International Monetary Fund and others.

Far from opposing privatization, the World Bank used every coercive power at its disposal to force water privatization on the people of Cochabamba. The process that resulted was carried out in a shroud of secrecy, with just one bidder, and by a government completely unequipped to adequately negotiate with or regulate a private monopoly.

Second, in your letter you place the blame for the water rate hikes entirely on the Misicuni dam project, which you explain was vigorously opposed by the Bank. We agree that the Bank's opposition to the dam is well-documented, and we have never said otherwise in any forum. In fact, the Bank's doubts about the project are shared by many here in Bolivia, despite the insistence by many local interests the project move forward. Yet, while you at the Bank argued the Misicuni project was absurd and overpriced, at no time did you disapprove of the tariff increases; just the opposite. The Bank insisted on price increases to cover costs of the Misicuni project despite knowing the project is commercially unjustifiable. The Bank staff wrote - in bold type - in its June 14, 1999 "Bolivia: Public Expenditure Review", that "No public subsidies should be given to ameliorate the increases in water tariffs in Cochabamba" By issuing that command to the Bolivian government, did you expect any result other than the public erruptions that occured here?

Third, the Misicuni project was clearly not the sole reason for the enormous rate hikes forced on people here. World Bank debt also played a key role. International Waters Limited and the Bechtel Corporation, the owners of the company that implemented the rate increases, claim that the Misicuni project was responsible for well-less than half of the increases (see April 25 letter from Mr. Didier Quint to Jim Shultz posted at www.Bechtel.com). Those increases were also forced by the company's demand for a guaranteed profit (an average 16% per year, according to their contract) and by huge foreign debts agreed to by the Bolivian government - including millions owed to the World Bank. The World Bank made these loans to a public enterprise in which it evidently had no confience whatsoever, yet, nevertheless, it expects local water users to now pay off that debt in the form of higher water prices.

Fourth, another reason that rate hikes were so high, especially for the poor, is the World Bank's insistence that all of the operating and maintenance and project costs be born entirely through water tariffs, with no opportunity for public subsidies. In a policy dictated with absolutely no input from the people actually affected, the World Bank made it abundantly clear to the Bolivian government that Cochabamba water users should pay whatever the market dictates. The World Bank seems driven by an economic theory that water prices for the poor must be kept high in order to keep families from wasting water. In addition to your statements, that theory was also articulated by World Bank director James Wolfensohn, when asked directly about Cochabamba in an April news conference in Washington. Mr. Wolfenshohn explained that people in Bolivia and elsewhere would waste water unless there was a "proper system of charging," adding, "It's just a fact that if you give public services away, I think everyone would agree that that does lead to certain waste." In the world where clothes washers, dishwashers, water heaters, and automatic sprinkler systems are commonplace, perhaps using elevated prices to discourage waste makes sense. Here, however, families own none of those luxuries. Most have water entering their home for an hour every day or two. Market pricing for water here in Cochabamba goes well beyond discouraging waste. It threatens to put water entirely out of reach. It is no surprise that the end result of World Bank policy was the bloody fiasco that occurred here in April. To have demanded privatization under such conditions makes the Bank directly complicit in what followed. You can not send a boulder racing down a mountain side and then claim no responsibility for the damage caused when it hits its target. Let us be clear. We are not apologists for poorly run public enterprises. The former public water system was plagued by corruption and mismanagement. We are working closely with civic groups here in their effort to construct a public water system that is efficient and well-administered. Nor are we opposed to private investment and involvement in public services such as water. Clearly, private investment is critical in a poor country such as Bolivia.

The heavy-handed and anti-democratic approach to forced privitization that the World Bank implemented here is precisely the kind of policy that has led to the recent wave of international protest against the Bank. If the World Bank wants to be of genuine assistance in Cochabamba it should begin by looking at the debt it holds over water users" heads, and negotiate forgiveness of that debt in exchange for water rates which the poor can afford. Rather than pursue its relentless demand for privatization, the World Bank should support genuine efforts to create well-run, well-financed public systems that allow local residents to keep control of their water. Finally, we would be delighted to invite you to come to Cochabamba. This would be an opportunity for you to bring in to the public light what the World Bank intended with its demand for privatization. Such a visit, by giving you an opportunity to hear from those directly affected, would also expand your understanding of what led to the violent rejection of water privatization. Sincerely,

Jim Shultz and Tom Kruse
Cochabamba, Bolivia

THE WORLD BANK'S LETTER TO US

Dear Mr. Schultz & Mr. Kruse Americas.Org website We've received a few media calls prompted by incorrect information on your website under the title "Globalization and War for Water in Bolivia". Your web articles erroneously suggest that the World Bank supported the recent Cochabamba water privatization project, in which the government of Bolivia accepted an offer from Consorcio Aguas de Tunari. In fact, the World Bank advised the government against proceeding with the privatization plan and water tariff increases that sparked tragic violence in Cochabamba last month.

Bolivian governments and the private sector have studied alternatives to increase water supply and expand water service in Cochabamba for more than 20 years. In 1997, the Bolivians asked the World Bank to analyze a water project, called Misicuni, whose $252-million financing requirement led to the tariff hike, and compare it with another proposal, known as the Corani Project. The Bank advised against proceeding with the Misicuni project, as our analysis was that neither the public nor the government could afford its high price tag. Instead, the Bank favored the alternative project, known as Corani, as offering a lower-cost, fully private-financed option under which no tariff increases would have been permitted for at least five years.

This note is to request that you correct the misleading information about the Bank's role in the Bolivian water sector at the earliest opportunity. I would also be most appreciative if you would contact me to obtain more information about the Bank's role, so that you can inform your readers more accurately about the World Bank's acitivities. The Bank is working on many fronts to resolve the global water crisis. More than a billion of the world's people do not have access to clean, safe water. Three billion don't have adequate sanitation. A recent report by the World Bank-sponsored World Commission on Water estimates that demand for water will rise by 40 percent over the next 20 years.

Meanwhile, much water is wasted. In many countries, factories, farmers and middle-class consumers enjoy subsidies that shift the burden of paying for the water they use --- and often waste --- to the government. These costs leave governments unable to finance the water pipes, pumps, sewers and tunnels so urgently needed by the poor in the urban shantytowns and small rural farms of the developing world. Largely as a result of this, millions die each year from water-related diseases.

The challenge we face is finding the resources needed to provide clean water and sanitation for everyone. Many countries' public sectors do not have the money or the expertise needed to deliver safe water to all their citizens. Consequently, they look to the private sector to build, maintain and manage water systems.

This has prompted opposition from those who, apparently, believe that public sector ownership is the only appropriate model for water service delivery. Others, including the World Bank, believe that shutting the private sector out of water services altogether will prevent the poor from gaining access to the water they need. That's why the Bank is working with governments to involve the private sector in water delivery.

But there is an essential caveat. Governments need to set up the regulatory frameworks needed to ensure that a monopoly private provider delivers water at an affordable price to consumers. The Bank is helping many of them do that. This means governments negotiate with the private providers where and what kinds of water investments are made. They also provide subsidies targeted at those who need them, namely the poor. In Santiago, Chile, for example, the municipal government introduced a 'water stamps' program that covers part of the cost of water for low-income residents. The result is that more people have access to water, and water use is more efficient.

Christopher Neal
External Affairs Officer Latin America & the Caribbean
The World Bank Room I 8 - 178 1818 H Street NW
Washington, D.C. 20433
email: cneal1@worldbank.org
Phone: (202) 473-7229 FAX: (202) 522-3698


Bolivia Water War #12

BECHTEL CORP. VS. BOLIVIA's POOR
December 18, 2002
Author: Jim Shultz (JShultz@democracyctr.org)
Executive Director, The Democracy Center
Syndicated, Pacific News Service 12/19/01

Summary:

An updated report on efforts by Bechtel's subsidiary, Aguas del Tunari, to initiate a legal demand of $25 million against the Bolivian government for “damages” incurred as a result of the April 2000 water revolt.
This holiday season many of us will once again see or read Charles Dickens" “A Christmas Carol”, the tale of that symbol of selfishness and greed – Scrooge. This year the corporate giant, Bechtel Enterprises, is bringing Scrooge to life in the latest chapter of its assault against the people of Bolivia, the poorest country in South America.

Two years ago a Bechtel subsidiary took over control of the water system of Bolivia's third largest city, Cochabamba. Within weeks, the company doubled and tripled water rates for the poor. Mothers living on minimum wage of $60 per month were ordered to pay $15 or more just to keep water running out of the tap. Faced, quite literally, with a choice between water or food, people took to the streets to demand that rates be lowered. Bechtel's representatives refused and the Bolivian government called out soldiers to protect the contract. One 17 year old, Victor Hugo Daza, was shot in the face and killed. More than a hundred others were seriously wounded. I was there. I saw it happen.
Eventually, in April 2000, the company left. It had no choice, the protests and the government's violent response wouldn"t end until Bechtel's company was gone. Fleeing corporate officials took the hard drives from the computers, the cash left in the company's accounts, and sensitive personnel files. They also left behind an unpaid electric bill for $90,000. Now the company says it wants more. Last month it filed a demand of $25 million against the Bolivian people, claiming as an “expropriated investment” the millions of dollars in potential profits it had hoped to make and wasn"t allowed to.

Bechtel's water takeover in Bolivia and the popular revolt against it has become an international poster child for the excesses of economic globalization. Now Bechtel's legal action against Bolivia is becoming a poster child for how corporations are manipulating global trade laws to take further advantage of the world's poor. Bechtel's legal move last month came in the form of a “request for arbitration” to the little-known International Centre for Settlement of Investment Disputes (ICSID) an arm of the World Bank -- the same institution that pressured the Bolivian government into privatizing its water system in the first place. Like the negotiations that produced the Bechtel contract, the arbitration will be held in complete secrecy, with no opportunity for Bolivians to review a case that could potentially force them to fork over millions of dollars to the same company that threw them into violent crisis last year.
Even Bechtel's access to this arbitration was the result of clever legal manipulation. As Bechtel admits, the only reason it can force Bolivia into such an arbitration is under terms of a treaty between Bolivia and Holland. How did a company based in California get itself covered by a trade treaty between Bolivia and Holland? Just as the company was setting up shop in Bolivia two years ago it quietly filed papers to shift its subsidiary's corporate registration to Holland, apparently in anticipation of exactly the sort of fiasco it ended up creating. The Bolivian President, desperate to look friendly to foreign investment, may well be eager to write the company a check just to bring the conflict to an end.

For Bechtel, with revenues of more than $14 billion annually, $25 million is about what the company takes in before lunch on any given workday. For the people of Bolivia and the families that have already suffered so deeply once because of Bechtel's involvement in their lives, $25 million means much more. Here that is the annual cost to hire 3,000 rural doctors, 12,000 public school teachers, or hooking up 125,000 families who don"t have access to the public water system. Which one of these does Bechtel suggest be cut in order to pay them off?
Bechtel's public relations department denies the company's responsibility in this matter, claiming that Bechtel is only a minority shareholder in the subsidiary that did business in Bolivia. This too is a convenient manipulation. The fact is that the Bolivia subsidiary only has minority shareholders, but Bechtel is, quite clearly, the largest among them. Just we strive hard, as parents, to teach our children the importance of taking responsibility for our actions, so Bechtel should be held to no less a standard.

The corporate giant has a choice. It can direct its public relations staff to make glib statements about fairness, while its lawyers take aim at Bolivia's poor, or it can do something extraordinary. It could decide that the Bechtel has already done enough damage to Bolivia's poor and rescind its legal action. It could even do so on condition that the Bolivian government agrees to dedicate that $25 million to directly serving the poor. Bechtel's corporate mission statement declares the company's commitment to work with communities, “to help improve the standard of living and the quality of life.” In Bolivia, by any definition imaginable, Bechtel has failed that standard miserably. Now the corporation must decide if it wants to repeat that same mistake again.