COCHABAMBA'S WATER REBELLION -- AND BEYOND

Sunday, February 11, 2001
by Lewis Dolinsky, San Francisco Chronicle

Protesters celebrated in Cochabamba, Bolivia, last April after the government rescinded a contract with a private consortium to run the city's water system.

Known for its artisan and farmers markets and the nearby coca fields, Cochabamba (population 500,000) is Bolivia's third-largest city. A successful insurrection there was one of last year's underreported stories:

An estimated 40 percent of the population had no piped water or sewage services. The municipal water company was in disarray. It was privatized. An international consortium took over, raised prices precipitously and was thrown out by the people, who blockaded the city for days. Before the federal government gave up in April and canceled a 30-year concession, troops were sent in, bullets and tear gas were fired, and a young man was killed.

This saga has a Bay Area connection. The private water company, Aguas del Tunari, which had 20 percent Bolivian ownership, was a creation of International Waters Ltd. IWL is a partnership between an Italian company, Edison SpA, and the giant Bechtel Corp. of San Francisco.

If Bechtel, or its offshoot, can go to Cochabamba, then Marcela Olivera of Cochabamba can fly to San Francisco, get her first view of the ocean ("it is very large") and tell her side of this controversy. Olivera assists her brother Oscar, a labor leader who is a spokesman for the Coordinating Committee for the Defense of Water and Life, usually referred to as La Coordinadora. This umbrella group of workers, peasants, environmentalists and human rights advocates took over the water system when the consortium was forced out.

Marcela Olivera says her brother is in danger: "The government has taken many actions against many people since April - raided houses, wiretapped phones. Death threats, most recently in October. Harassment is continual." The evidence is clear, she says, that the Bolivian investors in Aguas del Tunari have high connections in government. And are not good losers.

Olivera is concerned about what will happen, in weeks or months, after the Bolivian government settles its legal case with International Waters. She expects an attempt to take back the water. First, men with suits will come, saying: This just isn't working. Only if necessary, she says, men will come with guns.

For most in Cochabamba, this struggle is about money, not theory: When the water system was privatized, Bolivians making $100 a month were suddenly paying $20 of it for water. Some bills are said to have risen 200 percent, even 400 percent. Bechtel disputes such figures, saying rates typically rose 35 percent. That's still a lot.

Bechtel acknowledges that the contract set a "goal" (not a guarantee) of a 16 percent return on investment for Aguas del Tunari. The company was also locked into building large projects, including a dam that even the World Bank says is ill-advised. Aguas del Tunari had inherited $35 million in debt from the municipal utility and was expected to start paying it off.

The corporate version is that the private company started making improvements and raised prices as needed but structured increases to hit the big users. After February's protests, it rolled back prices and made refunds. Then in April, it was out. Not a happy experience.

A fact sheet from International Waters insists that opposition came not primarily from ordinary people but from the affluent or those who had a vested interest in the old "informal water market." IWL is sick of people saying that it bought the water system; it signed a legitimate contract to provide a service. It just happened to be the only bidder. And yes, Bechtel and IWL are in business to make money. Under terms of a bilateral agreement between Bolivia and the Netherlands, where IWL is incorporated, IWL is entitled to out- of-pocket expenses plus unrealized profits projected over the life of the deal.

Negotiations between International Waters and Bolivia are amicable, according to Michael Curtin, executive consultant to IWL, and "We expect to get our money." He will not say how much. Bolivia has shallow pockets. If a settlement is ever made public, the government of Hugo Banzer may have to admit that it paid a multinational corporation big money to do nothing.

Curtin doubts the government will try to retake the water system from La Coordinadora. He says four Bolivian regimes have failed to resolve Cochabamba's water problem; this one may say, "It's all yours." Olivera's fears may be exaggerated.

Down in Cochabamba, Jim Shultz, a San Franciscan, has plagued Bechtel with accusations and reports in his Center for Democracy e-mails. Shultz's ally Tom Kruse says the government might leave Cochabamba water in the control of La Coordinadora if this were not part of a larger struggle. At the urging of the International Monetary Fund and the World Bank, the Bolivian national airlines, oil and gas, telephone, rail lines - all have been sold off, or are being sold off, and often to foreign investors. Olivera was shepherded around the Bay Area by Antonia Juhasz of the International Forum on Globalization. Juhasz is warning in public meetings against a possible privatization of San Francisco water and takeover by Bechtel.

These are competing international conspiracies: Globalization and anti- globalization, privatization and the resistance to it. But what about Cochabamba's water? How does it taste? Is it getting to more people?

Olivera says, "The water is sweet" now that it is controlled by the people, and there are new hookups in the hills where the poorer poor live. Kruse says that service may be slightly better but that this is still a struggling enterprise. Curtin says he hears of some pipe connections in the hills but does not know about sewage service. When asked for a prognosis, Curtin mentions that a prominent economist among the group that took over the water system was educated in Moscow and taught in Havana. So he is not very good?

Curtin says: No, he's fine. He has as good a chance as anybody of solving this problem.