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An Analysis of the Cochabamba Water Wars

By Jennifer Young

Corporate globalization and privatization of resources can be attributed as the reason for the majority of modern day water wars. Over the course of the last three decades, international institutions like the World Bank and the International Monetary Fund have mandated that many countries of the “Global South” privatize their industries and infrastructural services as a means of bringing them out of debt. “The Global South” is a term used to refer to countries that rank middle or low on the Human Development Index, i.e. countries who rank less than 0.8 on a scale of 1 based on factors including life expectancy at birth, mean years of schooling, expected years of schooling, and gross national income per capita. Proponents of free trade believe that privatization and lack of government regulation can help low- and medium-development countries to build more stable, productive economies, thus helping them to raise their standard of living. Numerous examples prove to the contrary; privatization, instead of helping to bring a country’s citizens out of poverty, actually further impoverishes and disenfranchises them. One of the most famous examples of a privatization-induced water war in recent memory was the one, which erupted in Cochabamba, Bolivia in 2000.

Decades of rule by corrupt military dictatorships brought Bolivia into serious debt by the 1980s. Despite the restoration of civilian rule in 1982, the country remained on economically shaky ground. In 1985, it suffered from hyperinflation at twenty-five thousand percent. Desperate to attract foreign investors, the Bolivian government contacted the World Bank for financial assistance as a last resort. For twenty years, Bolivia compiled with the various mandates of the World Bank. Under the belief that these mandates would lead to independent development, the Bolivian government slowly privatized its railways, telephone system, national airlines, and parts of its scientific research sector. Still, development was slow. In 2000, the World Bank refused to renew its loan, worth $25 million in USD, to Bolivia unless the country compiled with privatization of its water sector. Three main cities were targeted, Santa Cruz de la Sierra, La Paz, and Cochabamba, where the public water systems were particularly antiquated and inefficient. The conditions in the former improved, La Paz had mixed results, and Cochabamba deteriorated. As Oscar Olivera explains in his book !Cochabamba!: Water War in Bolivia, the World Bank’s plan of privatization led access to piped water to decrease from 70% to 40% in Cochabamba and water losses to increase to a high of 40%. Interestingly, the World Bank mandated privatization only in cities where the local utilities had been unsuccessful in improving the water facilities. Santa Cruz was not included in this list but La Paz and Cochabamba were.

The World Bank’s projects in these three cities ended in 1997 but the problems were just beginning. As it had the greatest need for development, Cochabamba’s water utilities were put up for auction by the World Bank and the consortium Aguas de Tunari bought the contract. Aguas de Tunari was made up of five multi-million, international companies: one from Britain, one from the United States, one from Italy, one from Spain, and two from within Bolivia. Cochabamba’s water utilities went under the monopoly jurisdiction of this consortium, which proceeded with the more costly of two possible projects, called the Misicuni project. This involved the construction of a new dam accompanied by a 38% tariff increase on water supplies to fund the dam’s construction. In addition to that, the Bolivian government passed Law 2029, which virtually gave Aguas de Tunari a monopoly over all water resources within the country. To pay the large amount of debt that the local utility company in Cochabamba had accumulated and begin the creation of the damn, Aguas de Tunari enacted a large rate increase on water prices. For many families, this meant that almost a third of their monthly income now had to go towards their water bill. In early January of 2000, massive protests against the World Bank, the IMF, and neoliberal globalization, erupted in the streets of Cochabamba. Peasant irrigators, factory workers, university students and a large number of homeless orphaned street children followed under the direction of leaders, most notably Oscar Olivera. The protests put Cochabamba’s economy on hold for four days as the majority of its workers had gone on strike. On Febuary 4, 2000, the now thousands of protestors were met by police and military in Oruro and La Paz; two days of open conflict occurred between the two sides. 200 protestors were arrested; around 70 were injured, as were 51 policemen. For the next four months, protests and conflict continued.

The President of Bolivia declared a state of emergency in April, which effectively gave the government permission to do whatever it needed to do to stop the unrest. The catalyst occurred on April 8, 2000 when the army captain, Robinson Iriarte de la Fuente, shot into a large crowd, injuring many and hitting the seventeen year old Victor Hugo Daza in the face, mortally wounding him. To pacify the angry crowds, the government agreed to meet with Oscar Olivera to sign an agreement, removing Aguas de Tunari from power over Bolivia’s water resources, releasing detained prisoners, and repealing Law 2029. Power over Cochabamba’s resources was returned to the local utilities, called La Coordinadora.

The aftermath of the protests was multifaceted. At a meeting of the World Bank and IMF in Washington D.C. in April of 2000, protestors blockaded the entrances to the respective meeting places to boycott neoliberal privatization and corporate globalization, citing the water wars in Bolivia as a prime example of the horrible results of projects motivated by such principles. Around two years later, on April 23, 2002, Oscar Olivera led over 100 protestors to the headquarters of the only member of Aguas de Tunari located in the western hemisphere, Bechtel, demanding a meeting with the leading officials. Coincidentally, the following day, Olivera was awarded the Goldman Environmental Prize. The Bolivian government met with Aguas de Tunari on January 19, 2006, officially ending the company’s contract with the country. The reasons given were the civil unrest that had occurred as a result of Aguas de Tunari’s presence in the country.

Despite the violent conflict that occurred in Bolivia, the then-president of the World Bank, James Wolfensen, declared that public subsidies are the real source of water shortages. On April 12, 2000, he declared, “The biggest problem with water is the waste of water through lack of charging.”

What are your views on his claim? What is the solution to water shortage and unequal water distribution? Public management, private management, or some balance between the two? jyoung16@masonlive.gmu.edu