Afer the Water Revolution

A belated post of my article about Bolivians' struggles to deliver on the promises they made to themselves during two massive water revolutions in the past seven years. Hopefully, the story sheds some light on how much trouble the Evo Morales government is having meeting the needs of its constituents in the face of huge obstacles -- originating at home, and also abroad.

The privatization of Semapa was an intolerable insult. The Bechtel subsidiary got control of the municipality’s entire water system, including the city’s aquifer. Its contract contained a guaranteed profit margin of at least 15 per cent, indexed to US inflation rates. The company had intended to charge tariffs on all water consumed by everyone in Cochabamba—even if it came from neighbourhood wells built by consumer cooperatives whose construction was paid for by users and international aid. The subsidiary’s start-up capital was US$12,000—laughable, given that privatization had been sold as the only way to generate massive investments. During the few months the Bechtel subsidiary was in charge, water rates were hiked in inexplicable ways, with many users facing raises in the neighbourhood of 200 per cent.

Beyond the grotesque particulars of the Bechtel deal, the rate hikes exemplify the fundamental problem of privatization policy: it passes the cost of infrastructure expansion on to consumers who simply cannot afford it.

Read on.