''Water cannot be a private business because it converts it into a merchandise and thus violates human rights. Water is a resource and should be a public service" - Evo Morales, current President of Bolivia
In 2000, violent protests erupted in the third largest city of Bolivia: Cochabamba. The protesters were angry that their water bill was doubled, and took to the streets to express their discontent. More than 50 detained, dozens injured, and six died following government intervention. A few days later, the government terminated their contract with the water company Aguas del Tunari, and thus water was nationalized again.
A crumbling economy
In the late 1990s the Bolivian economy was falling. To continue receiving loans valued at over 600 million USD from the World Bank and the International Development Bank, it was necessary for them to privatize as many enterprises as they could, and started with water. Due to their crumbling economy, Bolivia acquiesced to their request and allowed two companies, Agua del Illimani and Agua del Tunari, to take over the water in the cities of La Paz and Cochabamba, respectively. These two companies are subsidiaries of two powerful multinationals, the French company Suez and the American company Bechtel. Increasing poverty levels After the privatisation, the water company of Agua del Tunari raised the water prices to over 50 % the normal price. According to the World Bank itself, poverty levels in the country soared 2 % to a high of 19.6 %, after the privatization process. As stated by the University of Wisconsin-Eau Claire, this leads to a "price stress" for the population, leading the people to drink contaminated water to avoid the expensive cost. This was done in a city where the average man earns only 100 USD per month, and where the water cost his family 20 USD a month. Anger After three months in these condition, in January 2000 Cochabamba citizens took to the streets to vent their frustration and anger. After four months of continuous protests around the country, the government was forced by popular action to stop the privatization of the people’s most important utility on April 10. They were replaced with public utility companies, and the Bolivian government terminated the law allowing privatisation. |
Disputes
Soon after, Bechtel filed a case for 25 million USD against Bolivia in the International Centre for Settlement of Investments Disputes (part of the World Bank Group) for compensation and lost profits over what was supposed to be a 40 year contract (starting from 1999). Supporters of Bolivia started protesting against Bechtel around the world, notably the "Water Warriors" in San Francisco, United States. On January 2006, after years of embarrassment, the dispute was settled with a symbolic compensation of 30 cents. New government, new solutions Current Bolivian president Evo Morales, elected in 2006, created a wholly separate ministry dedicated to water called the Ministerio de Medio Ambiente y Agua (Ministry for Environment and Water), and appointed the head of the water protests in Bolivia as the minister. The government has created a water plan, analyzing the current problems and laying out their plan of action, including the quantity of investments needed. In line with the water reform, the government is currently considering passing a law called “Water for Life”, a law eliminating the concept of a concession. A concession is when a private company is granted full rights to run an operation. It is fully financed and operated by the company. It is defined for a certain period of time. The government continues its attempt to stop the privatization of water. According to the World Bank, the city of Santa Cruz, the largest city in Bolivia, has the best managed water utilities because of its system of cooperatives, which are utilities owned by the consumers. |
Water is a commons. . . It cannot be owned as private property and sold as a commodity. - Vandana Shiva, Water Wars
The case of water in Bolivia is regarded as the largest failure of a privatisation attempt.