Privatizing water.

• Author: Runyan, Curtis
• Position: Essay

On April 8, 2000, Robinson Iriarte de la Fuente, a U.S.-trained captain in the Bolivian army, lifted his rifle and fired into a barricade line of protestors. The previous evening, Bolivia's President Hugo Banzer had imposed martial law and called in the military to clear the streets in Cochabamba, the country's third largest city. Despite the crackdown, thousands of people--retired workers, middle-class students, street children, small-scale farmers--had stormed the central plaza to continue their months-long demonstration against the government's privatization of the city's water works.

The World Bank had threatened to withhold $600 million in debt relief if Bolivia did not privatize its water utilities. So in September 1999, Cochabamba signed over control of its aging, inadequate waterworks to Aguas del Tunari, an international consortium led by the U.S.-based corporation Bechtel. Water bills in the average household rose in one month by 35 percent. Meanwhile service generally remained sporadic, with water running less than four hours a day in many parts of the city. In response, the Coordinadora for the Defense of Water and Life, a coalition of labor organizers, environmentalists, and social activists, organized a general strike that shut down the city.

Iriarte's shot instantly killed 17-year-old student Victor Hugo Daza, enraging the protesters. Hundreds more were injured. With the violence growing, the executives of Aguas del Tunari fled the city. Government officials called an emergency meeting and rescinded the water contract, saying the company had abandoned its 40-year, $2.5 billion concession.

The protesters declared victory. The Bolivian government returned control of the water system to the utility, and has involved the Coordinadora. "The people--not the leaders--said no to privatization of water because it is a resource we cannot live without," said labor organizer and head of the Coordinadora, Oscar Olivera, at a speech a few days later in Washington, D.C. But Cochabamba's water troubles are far from over.

Privatization of state-run industries and utilities has long been a prescription of the World Bank and the International Monetary Fund (IMF). But privatization "shock therapy," intended to help indebted countries lure investment from international corporations, has only recently been applied to public water systems. When world leaders at the Rio Earth Summit in 1992 recognized water as an "economic good," they were...