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May 01 2008
Supplied or written by Susan Spronk

http://upsidedownworld.org/main/content/view/1255/1/

 

In the month of February, an unusual plight fell upon the city of La
Paz. Torrential rains that hit the region ruptured the water main that
services the wealthiest zone of the city, leaving the residents of the
Zona Sur (Southern Zone) without water for several days. While it is
common for residents in poor barrios not to have access to piped
water, upper and middle class residents are accustomed to hearing the
gush of clean, running water every time they open the tap. Seeking
someone to blame, gold-ringed fingers pointed immediately to the
'incompetent' management of the public water company, resurrecting
debates about privatization put temporarily to rest by the "Water
Wars" of 2000 and 2005.

Bolivia has played a starring role in the history of neoliberal water
privatization. Images from the Cochabamba Water War-the popular
insurrection against the multinational water company run by American
construction giant Bechtel in April 2000-have been beamed into screens
and television sets across the planet. The defeat of Bechtel is widely
credited as the first great victory against corporate globalization in
Latin America. The demand for public water that emerged in the
Cochabamba Valley eventually diffused to El Alto, the poor neighboring
city of La Paz, where a three-day civil strike organized by local
neighborhood organizations in January 2005 forced then-President
Carlos Mesa to cancel the contract with French multinational, Suez.
Because of these struggles, the world has also looked to Bolivia for
alternatives to privatization.

Eight years after Bolivia's first Water War, however, the
unsatisfactory performance of the two water companies that were
returned to public control raises questions about the viability of the
public-state alternative in 'weak' states of the global South.

Moving beyond the Privatization Debate

In the 1990s, two opposing positions on the question of private sector
participation emerged within the literature on the water sector: those
who embraced private sector participation and those who defended state
forms of ownership and control. The trouble with this debate is that
it presents "public" (read: state) and "private" forms of provision as
polar opposites. In Bolivia, water justice activists have articulated
a third position which suggests that the "public"/"private" debate
misses the point. According to this view, the barriers that impede
access of the poor to water services-poverty and political
powerlessness-are likely to persist whether the water company is
publicly or privately owned. It is therefore not enough to simply
return water to public hands.

Given the poor performance of many public water companies, water
justice activists in Bolivia stress the importance of collective
ownership and popular democracy as the means by which to improve
utilities. As Oscar Olivera, one of the spokespersons from the
Bolivian water justice movement argues, "the true opposite of
privatization is the social re-appropriation of wealth by
working-class society itself-self-organized in communal structures of
management, in neighborhood associations, in unions, and in the rank
and file." [1]

As of yet, however, the water justice movement in Bolivia has come
short of achieving its goals of democratizing the water companies
based upon this notion of communal ownership and control. Indeed, the
struggle for "social control" within the renationalized water
utilities in La Paz-El Alto and Cochabamba have provoked the negative
reactions of key power holders in the local political economy,
including international financial institutions, and the municipal and
central governments that have impeded progress.

The New Water Company in La Paz-El Alto

While the government promised to cancel the privatization contract in
the neighboring cities of La Paz and El Alto in January 2005, it took
over two years for the government to follow through. The key stumbling
block was the government's fear that Suez, the French multinational
that controlled the private consortia, would retaliate with a
multi-million dollar lawsuit in an international investment court,
similar to the one launched by Bechtel in 2002. [2] After two years of
closed-door negotiations, the government gave Suez a golden handshake
and formed a temporary water company, called "EPSAS", to take its place.

In the sweetheart deal signed in January 2007, the Bolivian paid Suez
and other shareholders US$5.5 million to compensate them for their
lost investments. The government also assumed at least US$9.5 million
of company's debts owed to international financial agencies such as
the International Financial Corporation (the private sector lending
arm of the World Bank), the Inter-American Development Bank and the
Andean Development Corporation. Half of the company's income now goes
to paying debt, which has seriously impeded the cash flow. [3] Hence,
the company had difficulty coming up with the money to make emergency
reparations to solve the water problems of the Zona Sur in February.
In short, having already sucked the company dry, Suez has no need to
go to launch a lawsuit in international court: It has already been
compensated for financial "damages" despite the fact that it made at
least US$1.5 million per year during the course of the contract plus
paying Suez another $1 million "management fee." [4]

The EPSAS is intended to be a transitory company, but the deadline by
which time it was to be replaced passed some months ago. The
government struck an inter-institutional commission, which includes
participation by FEJUVEs in La Paz and El Alto, the two mayors, and
representatives from the Water Ministry, to evaluate proposals for a
new water company. As time has passed, the FEJUVE-El Alto, which was
once the most militant member of the commission, has lost much of its
steam.

Shortly after the water war, the FEJUVE-El Alto proposed a model for a
"public-social company" with a very high level of popular
participation, including a popular assembly with elected delegates
from all regions of the city which would formulate the policy of the
water company. [5] Facing pressure from the mayors of La Paz and El
Alto and international donor agencies-all of whom favour the formation
of a public-private partnership-, the proposal has slowly transformed
into a "light" version with a minimal level of public participation.
[6] According to Felipe Quispe (no relation to the Aymara leader, "el
Mallku"), the representative of the FEJUVE-El Alto on the commission,
the FEJUVE-El Alto now has a rather minimal demand: that one
representative from each neighbourhood organization is included on the
board of directors of the new water company. [7]

While political pressure from politicians and donor agencies is partly
to blame for the FEJUVE's decision to water-down the proposal, it is
also the result of internal strife that has considerably weakened the
organization's capacity for collective action since the election of
the left-of-centre Movement toward Socialism (the MAS) in December
2005. As a long-time observer of Bolivia social movements, Raquel
Gutiérrez, observed in a recent interview, social movements in Latin
American countries in which left governments like the MAS have been
elected are "in a bit of a gray moment." She provides two reasons for
the uncertainty which prevails amongst community leaders: "One, the
governments in power and the policies that they are implementing are
perceived by practically everyone as insufficient. Two, the movement?s
struggles, and the emergence of what seemed like a new form of
politics, of direct participation, of assembly, of a horizontal
process of gaining consensus via extensive, multi-level deliberation,
of virtually holding our own destiny in our hands hit a wall." [8]

The politics of cooptation related to hierarchical political
structures have also affected the FEJUVE-El Alto. The MAS appointed
Abel Mamani as the head of the newly created Water Ministry in January
2006. Upon his appointment, Manami was immediately criticized for
using the organization as a launch pad for his own political ambitions
and turning his back on the social movements responsible for his fame.
Carlos Rojas, who served on the same FEJUVE executive as Abel Mamani
(2004-2006), comments that the legal status of the new 'public'
company is ambiguous: "Aguas del Illimani [the private consortia
controlled by Suez] never really left. The new water company has the
same administrative structure as the private company: It employs the
same people; it is registered under the same number; it has the same
bank account as the old company." [9] Indeed, the EPSAS is a sociedad
anónima (equivalent to a "limited" company in English). As such, it is
not wholly "public": EPSAS has two private shareholders and it is
regulated by commercial instead of public law. Disconcertingly, the
cost of a potable water connection has gone up from $155 to $175 under
the new administration.

When I asked why the FEJUVE-El Alto has not kicked up much fuss about
the fee hike, Rojas explained that the government has effectively
neutralized the new leadership by buying them off with promises of
political appointments and economic resources. For example, the FEJUVE
is rumored to have purchased a new vehicle with money received from
the government that is used by the executive.

Over his two year term, Mamani's performance as Water Minister has
been the subject of much controversy. In November 2007, a number of
scandals implicating Mamani hit the press. He was promptly dismissed
under a cloud of suspicion. The leaders of FEJUVE-El Alto immediately
demanded that Mamani be replaced by another leader from El Alto.
Instead, the government chose Walter Valda as interim Minister, whose
experience in the water sector is with campesinos in Chuquisaca. The
inter-institutional commission has not met since the change of
leadership in November. The question as to how or whether the EPSAS
will be replaced hangs in the air.

Cochabamba Water War: "We Won the Struggle but not the War"

After the Water War, "social control" was supposed to resolve the
problems with corruption that have historically plagued public
utilities. While the former board of directors was staffed exclusively
by professionals and politicians, since April 2002 three members
elected from the macro-district sit on the board. However, the many
problems that have historically plagued public utilities have remained
unresolved with a minimal degree of "social control."

Over the past eight years, the public water company in Cochabamba,
SEMAPA, has gone from one crisis to the next. Since the company was
returned to public hands after the Water War of 2000, two general
managers have been dismissed for acts of corruption. The most recent
general manager, Eduardo Rojas (2006-2007), was even worse than
Gonzalo Ugalde (2002-2005). While both used the company as a botín
politico (political booty), filling the company with their family
members and friends, Rojas tended to hire white-collar workers
(consultants and secretaries) who work at high salaries but do not
provide a public service, while the latter mostly hired blue-collar
workers to repair and expand the infrastructure. Due to these and
other problems, the Inter-American Development Bank (IDB) cancelled
the payments of an $18 million loan, the first part of which was to be
dedicated to the "modernization" of the company. The utility is once
again scrambling for finances in order to maintain and expand the
city's water and sanitation system.

On a more positive note, there are two important signs of that things
might improve. First, there are signs of renewal in the water workers'
union. For over twenty years, the SEMAPA union was controlled by a
"union mafia." Union leaders were suspected of running a system of
clandestine connections that was estimated to cost the utility almost
$100,000 a month in lost revenue. A small group of employees have been
working to democratize the union. Largely thanks to their efforts, the
head of the union was fired in October 2005 for organizing an illegal
strike that aimed to protest the dismissal of the corrupt general
manager. For the first time in over twenty-five years, the elections
that were held to replace him were conducted using secret-ballot.
Members also had a choice between two platforms of candidates. Nine
out of ten members turned out to vote; over 70% of the members voted
for the new leadership who expressed their commitment to union
democracy. [10]

Second, the association of community water systems of the poor,
southern zone of the city (ASICA-Sur) has made a lot of progress in
the past few years. ASICA-Sur has temporarily withdrawn from the
struggle to reform SEMAPA, instead dedicating itself to the task of
building water systems in poor areas that lack networked water
services. Recently, ASICA-Sur has secured financing from the European
Union to build secondary water networks in Districts 7 and 14.
According to Abraham Grendydier, these systems will be administered by
independent user groups, which will buy water in bulk from the public
water company. [11] In the short term, the initiatives of ASICA-Sur
risk furthering fractioning the system, which is more accurately
described as an "archipelago" than a network. In light of the numerous
problems with SEMAPA, however, ASICA-Sur has made tactical decisions
that will eventually help achieve the goal of "water for all."

Given the problems confronted by SEMAPA in the past years, the local
perception is that if SEMAPA serves as a model for anything it is for
what can go wrong in a public water company. As Norma Barrera, one of
the employees who have been working to reform the utility, put it,
"The whole structure of the company needs to be changed from top to
bottom. Putting a few good people at the top is not going to change
anything when the structure is rotten to the core." [12] Amongst
activists, opinion is divided regarding the main culprit. For some, it
is the fact that the mayor controls the budget. For others, it is the
problem of corruption and the lack of capacity of the citizen
directors. Efforts to outline alternatives and debate the future of
the public water company continue.

Conclusion

While the local results of the Cochabamba Water War may have been
disappointing, its impact on the private sector rippled across the
globe. Beginning in 2002, large multinational water companies
announced that they are retreating from the poor countries of the
global South, preferring instead to focus their investments in more
lucrative markets. Indeed, the majority of privatization loans
approved by the World Bank in 2006 for the water and sanitation sector
were located in China. [13] In the face of this global market shift,
water justice activists in Latin America, widely considered to be both
a birthplace of neoliberalism and its alternatives, can afford to be
less defensive and critically scrutinize the failings of both private
and public water companies.

It is undeniable that reform of the local state and public utilities
are required in order to extend universal services. Examples of public
water utilities suggest that there are several factors that help to
determine success which have thus far been lacking in Bolivia. Public
companies are more likely to perform well when they are subject to
pressure from well-organized user groups, but as the Cochabamba
example demonstrates, this is not enough. The presence of democratic
trade unions with a "public service ethos" is also an important, since
it is the ultimately the workers who execute the decisions. Perhaps
most importantly, however, quality water services require large
amounts of public investment. The progressive municipal government of
Paco Moncayo in the neighboring city of Quito, Ecuador, for example,
expanded potable water services from 65% to almost 98% within only
seven years thanks to a cash injection from the government and
international sources. The water company, EMAAP-Q, is publicly owned
and operated and considered one of the five best public water
companies in Latin America.

Since most social movement efforts have necessarily focused on the
problems with privatization, the factors that determine quality public
management are poorly understood. Now that the multinationals are in
retreat, however, there is more political space to discuss real
alternatives.

Susan Spronk is currently conducting research on the role of trade
unions in water companies in Bolivia, Ecuador and Peru. She can be
reached at ss956@cornell.edu or susanspronk@yahoo.ca.

References

1. Olivera, Oscar and Tom Lewis, ¡Cochabamba!: Water War in Bolivia,
2004, p. 156-157

2. See Food and Water Watch, "Cochabamba - Victory over Bechtel,"
2007, available at http://www.foodandwaterwatch.org

3. "EPSAS destina la mitad de ingresos a deudas pasadas," La Razón,
November 9, 2007

4. See Carlos Crespo Flores, "Soberanía y autogestión en la
terminación del contrato con AISA y el futuro del servicio" bolpress,
January 12, 2007, available at www.bolpress.com.

5. Julián Pérez (2005) "Social Resistance in El Alto-Bolivia: Aguas
del Illimani, a Concession Targeting the Poor," in Reclaiming Public
Water, available at http://www.tni.org/books/publicwater.pdf

6. Carlos Crespo Flores (2006) "Hacia una política de los bienes
comunes del agua en Bolivia: La desafíos y contradicciones de la
agenda post 'Guerra del Agua'", Paper presented at the Engineers
without Borders conference, Barcelona, España, available here.

7. Felipe Quispe, interview with author, El Alto, February 11, 2008

8. Raquel Gutiérrez, interviewed by Marcela Olivera and Stefan Frank,
2008, available at
http://www.ubnoticias.org/en/article/we-won-but-we-lost

9. Carlos Rojas, interview with the author, El Alto, March 5, 2008

10. Hector Ugarte Rivero, Secretary General of the SEMAPA union,
Cochabamba, February 26, 2008

11. Abraham Grendydier, President of ASICA-Sur, Cochabamba,
Cochabamba, February 29, 2008

12. Norma Barrera, Head of ODECO office of SEMAPA, Cochabamba,
February 26, 2008

13. See data from the World Bank's Private Participation in
Infrastructure database, available at http://ppi.worldbank.org



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