BOLIVIA: Who Will Bring Water to the Bolivian Poor?

The people of this high Andean city were ecstatic when they won the "water war."

After days of protests and martial law, Bechtel - the American multinational that had increased rates when it began running the waterworks - was forced out. As its executives fled the city, protest leaders pledged to improve service and a surging leftist political movement in Latin America celebrated the ouster as a major victory, to be repeated in country after country.

Today, five years later, water is again as cheap as ever, and a group of community leaders runs the water utility, Semapa.

But half of Cochabamba's 600,000 people remain without water, and those who do have service have it only intermittently - for some, as little as two hours a day, for the fortunate, no more than 14.

"I would have to say we were not ready to build new alternatives," said Oscar Olivera, who led the movement that forced Bechtel out.

Bolivia is just days away from an election that could put one of Latin America's most strident antiglobalization leaders in the presidency. The water war experience shows that while a potent left has won many battles in Latin America in recent years, it still struggles to come up with practical, realistic solutions to resolve the deep discontent that gave the movement force in the first place.

That discontent may have found its most striking incarnation in Bolivia. Here, protests against the introduction of stronger market forces have toppled two presidents since 2003. And the discontent has given Evo Morales, a charismatic Aymara Indian and nationalistic congressman who has channeled much of the anger of his poverty-stricken country, a slight lead in the polls ahead of the Dec. 18 elections.

Frustrated that the economic restructuring prescribed by the World Bank and International Monetary Fund failed to translate into sustained growth and reduced poverty, country after country in Latin America has either discarded or is questioning much of the conventional wisdom about relying more on market forces - known as the "Washington consensus" - from the privatization of utilities to the slashing of social spending to unfettered trade.

Much of the policy turn has come under pressure from the streets and the results have varied wildly.

Argentina, for instance, has bounced back from economic collapse by ignoring crucial aspects of I.M.F. orthodoxy the last four years, while accepting others. Ecuador is tottering on the brink of political tumult even as the eight-month-old government of President Alfredo Palacio tries ramping up social spending. In Venezuela, President Hugo Chávez is forming state companies and spending lavishly - some say recklessly - on social programs, pleasing the poor, but failing to generate much foreign investment or business not linked to the overarching oil industry.

Bolivia's back-tracking, more a product of roiling protests than government policy, began after the country became among the first in Latin America to apply market prescriptions wholeheartedly in the mid-1980's. The I.M.F. later asked for far-reaching measures in exchange for loans and other aid, and promised steady growth, up to 6 percent a year, that would cut into poverty.

Bolivia's economy, though, grew at a dismal pace. Even the fund, in a 2003 memo, noted that a fall in per capita income and employment contributed to "rising social tensions that erupted recently."

The fund and other institutions that helped guide Bolivia's economy blame grinding corruption, poor infrastructure and high pension costs. Officials at the I.M.F. also note that Bolivia, like other countries that seek help, come only when they are wracked by economic troubles that require tough choices.

"If you're spending more than you're earning, for a while that's fine," said Caroline Atkinson, deputy director of Western Hemisphere operations for the fund. "But if your borrowing gets too huge, then no one wants to fund you anymore, and you have to cut back."

But to Bolivians, the experiment was marked by failure. Privatized companies like the railroads went bust, while the energy industry is generating $100 million less in taxes and royalties than it did when it was state-run, budget officials said. "They did everything right," said Joseph Stiglitz, a Nobel-winning economist at Columbia University who has been critical of the I.M.F. formula. "They liberalized, they privatized and they felt the pain. Now it's 20 years later and they're saying, 'When is the gain?' "

In the end, market changes pushed by the I.M.F., the World Bank and American-educated Bolivian economists fueled anger that severely weakened governments and gave rise to Mr. Morales. Making his name leading Bolivia's powerful coca growers' federation, Mr. Morales has in the last four years used his outsider status, his "up by the bootstraps" journey from very poor origins on Bolivia's high plains and his Indian roots to rail against market changes he says favor foreigners, not Bolivians.

That is why Mr. Morales is pushing for a "nationalization" of the gas industry that, while not leading to expropriation, will increase taxes and royalties on foreign energy companies; those combined levies were raised earlier this year to 50 percent. He also wants to tighten borders to keep out cheap products and focus the government's attention on cooperatives, a loose mix of indigenous and socialist business practices.

"We will have an economy based on solidarity and reciprocity," Mr. Morales said in an interview. "We do not dismiss the presence of foreign investment, but we want it to be real, fresh investment to industrialize our hydrocarbons, all under state control."

The proposals, to be sure, are vague. Mr. Morales, who did not finish high school, is guided on economic matters by Carlos Villegas, a left-leaning economist, and by his running mate, Álvaro García, a socialist intellectual, professor of sociology and former guerrilla who articulates the party's position.

Much of the anger that has given Mr. Morales momentum began here in his home city, Cochabamba. The arrival of Bechtel quickly prompted heated protests when the water company increased rates, arguing that it needed more money to finance investment and expand service. In some cases, poor people ended up paying double their previous costs. It also became clear that Bechtel would not expand service to the impoverished south, where the company had no profits to gain from an expensive expansion.

The ouster of the company meant the return of Semapa - but this time with more community control. Semapa has expanded service in fits and starts, with those receiving piped water and sewage service increasing to 303,000 people, from 248,000. The company also managed to lower costs and, oddly for a government company, reduce the work force.

But Semapa still grapples with petty graft and inefficiencies, managers at the company said. Its most serious problem, though, is a lack of money. The company cannot secure big international loans, and it cannot raise rates, since few here could pay them.

For a wide-scale expansion that would include a new dam and aqueducts, $300 million is needed, an enormous amount for a company whose capital budget is just shy of $5 million.

"I don't think you'll find people in Cochabamba who will say they're happy with service," said Franz Taquichiri, one of the community-elected directors of Semapa and a veteran of the water war. "No one will be happy unless they get service 24 hours a day."

On a tour of Semapa's facilities, Luis Camargo, the operations manager, explained that the water filtration installation is split into an obsolete series of 80-year-old tanks and a 29-year-old section that uses gravity to move mountain water from one tank to another. It is fine for a smaller city, he said, but what is needed now is to develop high-altitude reservoirs, a hugely expensive undertaking.

"We're trying to be realistic, and we're looking for aid from Canada and other countries," explained Mr. Camargo, who has worked at Semapa 20 years.

Thousands of people have given up on ever getting Semapa's water. At Rafael Rodríguez's home and small restaurant, a spigot in the yard provides water three hours a day from a community well. He has little good to say about Bechtel, but he noted that Semapa's pipes were far from reaching the neighborhood.

"I was hoping water would get here, but it just has not happened," Mr. Rodríguez, 43, said.

Community organizations, each with an average of 200 families, pool money to drill 200 feet into dry, soft dirt, searching for water that is then delivered through small, cheap pipes to homes in the vicinity of each well.

Still, there are many people who cannot even depend on wells. Edwin Villa, 35, lives in a neighborhood that gets its water through deliveries made two or three times a week by freelance water dealers.

The deliveries are sporadic, he said, and sometimes the water contains tiny worms. His children ask for piped water, but there is not much he can tell them.

"Our hope is that someday Semapa will reach this far," he said. "It would just be magnificent."

AMP Section Name:Natural Resources
  • 187 Privatization

Stay Informed