Frontline World

BOLIVIA - Leasing the Rain, June 2002


Synopsis of "Leasing the Rain"


by William Finnegan

An Interactive Investigation

Cochabamba Water Revolt

Facts and Stats about Bolivia

Background, key players, the world's water woes



The StoryMan being restrained during riots; Riot police on motorcycles; Woman protesting

Watch Video Cochabamba is a town of 800,000 situated high in the Andes Mountains of Bolivia. Two years ago, a popular protest there turned into a deadly riot. The army battled civilians in the streets on and off for three months, hundreds were arrested, a seventeen year-old boy was shot and killed, the government of Bolivia nearly collapsed. The issue was water.

The spark was privatization. A private consortium, dominated by the Bechtel Corporation of San Francisco, had taken over Cochabamba's water system and raised water rates. Protestors blamed Bechtel for trying to "lease the rain."

New Yorker writer William Finnegan traveled to Cochabamba to learn about the water war and to see what lessons could be drawn about privatization, globalization and the growing anger in Latin America over economic inequality.

Bolivia is the poorest country in South America. 70% of its people live below the poverty line. Nearly one child in ten dies before the age of five. The Bolivian economy, never strong, was wrecked by hyperinflation in the 1980s.

Desperate for relief, Bolivia has been faithfully following the dictates of the international lending community for the past fifteen years -- selling its airline, railroads, mines and electric company to private -- usually foreign-controlled -- companies. The economic shock therapy tamed inflation but led to severe recession and massive unemployment.

In the 1990s, Bolivia, under pressure from the United States, eradicated its most lucrative export - coca - the leaf that is used for cocaine.

"Drugs, illegal as they may be, they were 3% of the GDP, 18% of exports," Luis Quiroga, Bolivia's vice president during the water war, tells Finnegan. "Bad as it was, damaging as it was, if you look at it from a purely business standpoint...It [the drug trade] was Milton Friedman heaven: all privately run, no taxation, no regulation and in essence -- if you want to look at it cynically -- duty free access to markets," observes Quiroga, who is now Bolivia's president.

Politicians like Quiroga fully supported the eradication of coca, but the loss of drug money made the country even more dependent on international financial institutions like the World Bank. The Bank advised the country to continue selling its remaining assets, including water.

Cochabamba put its water system up for auction in 1999. Only one bidder showed up. The company, called Aguas del Tunari, a division of the large American construction firm Bechtel, promised to expand water service. In exchange the contract guaranteed the company a 15-17% profit.

Two months after taking over the water system, Aguas del Tunari raised the water rates. People, resentful and angry, took to the streets in protest. One of their leaders was Oscar Olivera, a long-time union activist. He and others tapped into the anger many Bolivians feel about their country's long history of political corruption and foreign domination.

"Everyone was protesting, everyone," journalist Luis Bredow tells Finnegan. "I've never seen anything like it in Bolivia. Housewives were throwing stones at the police. It really was a revolt."

Although a major American corporation was at the center of the conflict, not a single U.S. newspaper had a reporter on the scene. But news of the uprising was reaching a worldwide audience through the Internet, thanks to Jim Shultz, an American activist living in Cochabamba. Shultz shows Finnegan how he organized an e-mail campaign to pressure Bechtel to leave town.

The company finally withdrew and the uprising subsided.

But did anyone really win the water war?

Aguas del Tunari filed suit against the Bolivian government asking for $25 million in compensation. The case is being heard in Washington D.C., in an arbitration court run by the World Bank.

The water warriors who ousted Bechtel took control of the water system, vowing to run it as a human right, not as a commodity. But without new investment, they have been unable to improve or expand service.

Neither the government, nor the World Bank appears willing to help them.

NOW With Bill Moyers"Leasing the Rain" is co-produced by FRONTLINE/World and NOW with Bill Moyers.

Producer: David Murdock

Correspondent: William Finnegan

Editor: Amanda Zinoman