BOLIVIA: Not A Drop To Drink

Publisher Name: 
The American Prospect

In El Alto, Bo livia, a populist drumbeat is being heard -- and it's about water.
Protesters say a foreign-owned company contracted to manage the city's
water system has failed to get enough of it to El Alto's poor. When
protesters shut down a major road, Bolivia's president, Carlos Mesa,
axed the state contract with the company, which is part-owned by the
gigantic French water corporation Suez.

It's not the first time Bolivian
protesters have sent a huge multinational firm packing. In 1997, the
World Bank forced Bolivia to privatize its water system as a loan
contingent. In 2000, residents of the city Cochabamba took to the
streets when connection fees rose steeply after a subsidiary of
California-based construction giant Bechtel took over. The Bolivian
government violently suppressed the protests, and the events were
documented and spread across the Internet by Jim Shultz, founder of the
Democracy Project, a Bolivian-based watchdog group.

In the end, Bechtel pulled out and
sued the Bolivian government for $25 million under a bilateral
investment treaty. The case is now pending. Water privatization has hit
bumps in Argentina, too, where President Nestor Kirchner has been
sparring with Aguas Argentinas, also a subsidiary of Suez, over claims
that the company has not lived up to its infrastructure investment

As global freshwater shortages
loom, water has become a political pulse point in Latin America, which
in recent years has increasingly backed away from the more conservative
policies of the 1990s and elected left-leaning governments.

The World Bank estimates that 76
million of the 510 million people in the Caribbean and Latin America do
not have access to safe drinking water. Bank officials embrace
privatization as a panacea, and multinational corporations are happy to
get closer to Latin America's vast water supply (when global water
shortages really hit, it's nice to be a supplier of last resort).

Here in South America, shoddy
delivery and treatment systems, poor oversight, and wasteful cultures
of use present their own problems for water. But the great sucking
noise will come from trade law, from developing countries signing their
water resources over to private companies via deals like the North
American Free Trade Agreement (NAFTA) and the Central American Free
Trade Agreement (CAFTA), deals that treat water as "goods" and

The International Forum on
Globalization, based in San Francisco, has mapped how noxious
provisions from NAFTA, now incorporated into CAFTA, will favor
multinational corporations and spell disaster for developing countries.

Consider NAFTA's Chapter 11, the
investor-state provision. Locked into CAFTA and favored for inclusion
in the Free Trade Area of the Americas (FTAA), the provision lets
corporations (investors) sue governments (states) if they feel they
have lost out on economic opportunity.

Translation: If any country,
state, or province lets only domestic companies export water,
corporations in the other signatory countries could sue for financial
compensation for "discrimination." And if a government attempted to ban
bulk water exports, says Antonia Juhasz, an International Forum on
Globalization analyst, the very act would automatically turn water into
a tradable commodity, which in turn would trigger the CAFTA or, if it's
resuscitated, the FTAA.

Under such a scheme, a lot of
Bechtels could sue a lot of Bolivias for money that might otherwise be
spent on lifting people from poverty.

Huhasz, in an IFG study, says
other trade provisions favored by the U.S. right could spell problems
for water-rich developing nations that sign up for regional trade
agreements: The idea of "proportional sharing," embedded in NAFTA´s
article 315, prohibits signatories from restricting resource exports,
cutting off a country´s ability to curtail water exports. Another is a
WTO principle that any new laws, including environmental laws, must be
"least trade restrictive," a provision the IFG report says has been the
death of many environmental laws. These are concepts that vastly expand
the rights of multinational investors trying to get close to Latin
America's water systems and supplies. The legalisms may be lost on most
Latin Americans, but the greed behind them certainly is not. Judging
from their presence on the Internet, the Cochabamba protests seem, like
Kent State or Tiananmen Square, to symbolize greater struggles. More
than a rejection of water privatization and commodification, they are
an indictment of aggressive, U.S.-backed trade policies, of insatiable
First World greed, of the corporate march across civil society.

The Economist, citing World
Bank statistics, recently report that privatization in the 1990s
expanded the access that Latin Americans have to water by 40 percent to
70 percent. But observers suggest that lower-tech options could come
before widespread corporate-favoring privatization contracts. Activists
such as Canadian Maude Barlow has suggested radical shifts in watershed
management and production, infrastructure repairs, reclamation of
outdated water systems, and drip irrigation as opposed to flood

Here in South America, the
lessons are getting clearer by the protest; the world would do well to
study the lessons of Cochabamba and El Alta. Global water shortages,
corporate creep, and devastating trade agreements are bringing us fast
to a place where, as one water company reportedly described it, water
has gone from an endless commodity taken for granted to "a rationed
necessity that may be taken by force."

AMP Section Name:Privatization
  • 110 Trade Justice
  • 190 Natural Resources