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Bolivia was required to privatize pubic enterprises to secure loans ... Bolivia has sold its national railroad, airline, telephone companies to foreign ...

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the cochabamba water war

The Cochabamba Water War

A Flashpoint in the Global Conflict Over Natural Resources Privatization

  • Bolivia is the poorest country in South America
  • History of colonial, foreign, and class exploitation
  • Cochabamba is the third largest city in Bolivia, pop. 600,000
water social good vs economic good
Water: Social Good vs. Economic Good
  • Water is a “human right”, necessary for life, as acknowledged by the UN
  • Water is also an economic good that must be delivered to people for consumption
  • Theory that commoditizing water can lead to conservation by pricing, efficient service provision, and low cost through competition
  • Water systems have traditionally been run by the state as public enterprises
bolivia and structural adjustment
Bolivia and Structural Adjustment
  • Structural Adjustment – the deregulation/liberalization of the economy by privatizing state run businesses
  • Since 1985 the World Bank and IMF have influenced Bolivia to adopt a “neo-liberal” economic structure to stimulate growth and attract foreign investment
  • Bolivia was required to privatize pubic enterprises to secure loans from the Bank and IMF
  • Bolivia has sold its national railroad, airline, telephone companies to foreign owners, and in the case of Cochabama, the water works
the case for privatization in cochabamba
The Case for Privatization in Cochabamba
  • Only 57% water coverage in the city under the public utility SEMAPA
  • SEMAPA notorious for corruption and poor water service
  • Advocates of privatization argued that corporate control would allow the water works to run more efficiently and provide better service to more people
  • The World Bank influenced the Bolivian government to privatize Cochabamba’s water by offering a $14 million loan and $600 million in debt relief
  • September 1999: Bolivian government signs $2.5 million single bidder contract turning Cochabamba’s water system over to Aguas Del Tunari- 55% owned by Bechtel.
  • January 2000: Residents protest rising water rates; shut down city for 4 days
  • February 4-5 2000: Protests become violent. Police use tear gas on protesters, injuring 175 and blinding 2.
  • March 22: Unofficial referendum reveals 96% of residents disapprove of Aguas Del Tunari’s contract- government refuses to consider termination

  • April 6: Protest leader and anti-globalization activist Oscar Olivera arrested
  • April 8: 17 year old shot in face by Bolivian army captain– later acquitted by military tribunal. Overall, 6 dead and dozens wounded.

  • April 10: Government signs agreement guaranteeing removal of Aguas Del Tunari, giving control of water supply to grassroots organization La Coordinadora
  • Agreement also guarantees release of detained protestors.

the case for privatization
The Case For Privatization
  • “The biggest problem with water is the waste of water through lack of charging.” – James D. Wolfensohn, World Bank President
  • The EU has suggested that all WTO nations should open up their water systems to competition and foreign ownership.
  • The World Bank believes that because many country’s public sectors do not have the money or expertise to deliver water systems, the private sector should be utilized to handle this task.
  • However, the World Bank also believes that it is necessary to set up regulatory frameworks to ensure that a monopoly private provider delivers water at an affordable price.
bechtel s response
Bechtel’s Response
  • There were several other preexisting factors:
    • Proposed water legislation that would require farmers

to obtain permits for water extraction.

    • Unemployment and other economic difficulties
    • A government crackdown on coca-leaf production
    • Police riots over salaries
  • The system was in shambles when it was first acquired. Service was unavailable to 40% of the city’s population.
  • Those without connections bought water from tanker trucks at exorbitant rates that were several times higher than what they would pay if they were connected to the system.
  • Aguas del Tunari was able to increase the availability of water by 30% during the time it was managing the system.
bechtel s response12
Bechtel’s Response
  • The government of Bolivia raised the water rates.

Half of the increase was necessary for paying

down the more than $30 million debt that was

accumulated under the public utility that had

previously operated the system.

  • The higher rate was still 20% lower than the South American average – including the Bolivian capital of La Paz.
  • The increase in water bills were due more to the fact that increased water availability increased water usage, not the rate increase itself.
  • The rates were rolled back on the second week of February. Those who had already paid their bill at the higher rate were refunded the difference.
water s future in cochabamba

Water’s Future in Cochabamba

“Water promises to be to the twenty-first century what oil was to the twentieth…”

- Fortune Magazine May 2000

current situation
Current Situation
  • Bechtel $25m Suit being decided in confidential World Bank Court
  • Water supply under nationally controlled
  • 2003 gas wars underscore Bolivians’ fears of foreign exploitation
effects in bolivia
Effects in Bolivia
  • “The other great success of this movement is that we have lost our fear.” -Coordinadora, 2/6/2000
  • Renewed Strength of Peasant Protests
  • 2003 Ouster of President in Gas Riots
  • Strong Support of Indigenous Leaders
international effects
International Effects
  • Bolivia: a triumph over neo-liberal exploitation
  • Power of Bolivian Infrastructure
  • Fear of similar exploitations in Iraq and worldwide
  • Privatization of Basic Human Needs
  • Fiercely disputed Free Trade Area of the Americas (FTAA)
  • Stoehhr, Jacob. “Searching for Truth and Water: Deconstructing Cochabamba’s “Water War.”