rn: Privatizing the WORLD’s water (WLD Bank)


Jan Slakov

Date: Wed, 26 Apr 2000 20:33:18 -0400
From: Eric Fawcett <•••@••.•••>
Subject: sfp-93c: Privatizing the WORLD's water systems

In sfp-93 and sfp-93b the story behind the riots in Bolivia was told -
privatization and price hikes of water; and on April 24, we got a reply
from David McLaren of CELA, who told us about the vulnerability of Canada
to privatization and export of our water. 

The situation is bad worldwide: "nearly 1,000 executives and bureaucrats
gathered in The Hague in March 2000 to review and refine a programme to
privatise the world's water systems," quoted from the article below, which
also tells of the perfidy of the World Bank in Bolivia - of course the
riots there, as in Ecuador were a one-day event so far as our mainstream
media are concerned.  We shall perhaps one day learn the truth ourselves,
when it may be too late.

New British empire of the dammed
Bolivia's water supply is the latest acquisition of thirsty British firms
in the service of Uncle Sam

by Gregory Palast            OBSERVER (London)  Sunday April 23, 2000

With the front pages jammed with photographs of two dead white farmers in
Zimbabwe, the news from Bolivia - 'Protests claim two lives' - was pushed
into a tiny World in Brief in the Guardian, and not mentioned elsewhere.
What a shame. While Zimbabwe is partially about an imperial past, Bolivia
is the story of Britain's imperial future.

First, let's correct the arithmetic. The count in Bolivia is now six dead
after the military fired at demonstrators opposing the 35 per cent hike in
water prices imposed on the city of Cochabamba by the new owners of the
water system, International Waters Ltd (IWL) of London. IWL, like many of
Britain's multinational operators, is controlled by a larger US
corporation, in this case San Francisco-based construction giant Bechtel.
Best known here as builder of the London Underground Jubilee Line
extension, Bechtel recently set off on a quest to own and operate water
systems worldwide. United Utilities, originally co-owner of IWL is now
merely 'strategic partner' in the venture.

Following the Cochabamba killings, Hugo Banzer (once Bolivia's dictator,
now elected President), declared a nationwide state of siege, abolishing
civil liberties. On 12 April, just after the martial law declaration,
World Bank director James Wolfensohn told reporters: 'The riots in
Bolivia, I'm happy to say, are now quieting down.'

I contacted Oscar Olivera, a trade union official and leader of the
protests, to ask him how he had organised the riots. On 6 April, Olivera -
with a coalition of 14 economists, parliamentarians, lawyers and community
leaders - accepted a government invitation to discuss the IWL price hikes.
After entering the government offices in Cochabamba, Olivera and his
colleagues were arrested. With Olivera in chains, the riot outside the
building could only have been directed by the leader of the 500
protesters, Cochabamba's Roman Catholic Archbishop.

There is, of course, the possibility that Wolfensohn had got it wrong, and
that the people he called rioters were in fact innocent victims of deadly
repression. Olivera, one of five protest leaders released, flew to
Washington to try to speak with Wolfensohn. But the director is a busy man
and Olivera left without having a meeting.

The price hikes that triggered the water war were driven by IWL's need to
recover the cost of the huge Misicuni dam project. Water from the dam
system will cost roughly six times that of alternative sources. Why would
IWL want water from a ludicrously expensive source? Just possibly because
IWL owns a part of the Misicuni dam project.

The public had one other problem with IWL's charging for the dam project:
there is no dam. It has not yet been built. It is a basic tenet of
accounting that investors, not customers, fund capital projects. The
risk-takers then recover their outlay, with profit, when the project
produces a product for sale. This is the heart, soul and justification of
the system called 'capitalism'. That's the theory. But when a monopoly
operator gets its fist around a city's water spigots, it can pump the
funds for capital projects from captive customers rather than

Samuel Sora, the Bolivian government's former consultant on the water
projects, said he was unable to extract from IWL evidence of it having put
any funds at all into the operation. Water prices could, he fears,
eventually rise by 150 per cent.

Luis Bredow, publisher of the newspaper Gente told me 'no money was
shelled out by anybody' for Cochabamba's water company. His own
investigation concluded that the operators grabbed the entire system for
nothing. He attributes these exceptionally favourable terms to IWL's
partnership with former Bolivian President Jaime Paz Zamora, leader of a
political party allied to Banzer.

IWL's London spokesman said little more than: 'How did you find out that
IWL was involved in Cochabamba?' (The company's Bolivian group is called
Aguas de Altuni.) In fact, the British company's involvement is getting to
be ' misterioso '. President Banzer, to quell the spreading
demonstrations, announced cancellation of the water privatisation on 5
April. But the next day, word leaked that IWL was back in the saddle at
the water company and people nationwide took to the streets again.

On 10 April, the panicked government declared that the foreign consortium
had 'abandoned' its franchise when its British chief executive supposedly
fled the country. But last Thursday we tracked the IWL executive to a
hotel in La Paz where, his associates told me, they were about to open
negotiations with the Banzer government. From its US headquarters, Bechtel
issued a statement denying that the upheaval in Bolivia had anything to do
with its water price hikes.

It can't be said that the British-American operators brought misery to
Cochabamba; they found plenty already there. Intestinal infection leading
to diarrhoeal illness is Bolivia's number one child killer - the result of
water hook-ups and sanitation reaching only 31 per cent of rural homes.

World Bank director Wolfensohn has a solution to the lack of water: raise
the price. So pay up, he demanded of the protesting Bolivian water users.
But this contradicts the internal counsel of his own experts. In July
1997, at a meeting in Washington, the Bank's technocrats laid before the
Bolivians the case against Misicuni, and even warned about social upheaval
if prices rose. According to a World Bank insider, the Bank's hydrologists
and technicians devised a water plan for Cochabamba at a fraction of
Misicuni's bloated cost.

So why did Wolfensohn attack protests against a project the World Bank
itself found dodgy? Because there are larger plans not discussed with the
Bank's low-level minions. Long before ministerial limousines clogged the
US capital, the big policy decisions were settled in far-flung 'sectoral'
meetings. In the case of water, nearly 1,000 executives and bureaucrats
gathered in The Hague last month to review and refine a programme to
privatise the world's water systems.

But private operators can turn profits only if prices rise radically and
rapidly. IWF secured from Bolivia a 16 per cent real guaranteed return.
This profit boost is itself enough to account for the initial 35 per cent
hike in rates. To assist such 'reform', the IMF, World Bank and Inter-
American Development Bank have written sell-offs into what they term
national 'master plans'. Consortia such as IWL were formed to capture
these cast-off public assets.

The justifiable basis for the sell-offs was that privateers committed to
deliver capital for desperately needed system repairs and expansion. But
the promises rapidly wilted. Cochabamba's protest organisers knew that
just across the border in Buenos Aires, the region's first privatisation
consortium eliminated 7,500 workers, whereupon the system bled from lack
of maintenance and prices jumped. The new owners of the Buenos Aires
system notably include Anglian Water.

Britain is re-establishing imperial reach through rapid low-capital
takeovers of former state assets, concentrated in infrastructure where
monopoly control virtually guarantees an outsized profit. It all seemed a
riskless romp - until a few thirsty, angry peasants decided they could
stop it.
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