IMF Loan to Bolivia Requires Privatization
International Monetary Fund (IMF) approves a $138 million
loan for Bolivia to help the country control inflation and
bolster economic growth. In compliance with IMF-drafted
"structural reforms" for the nation, Bolivia agrees to sell
off "all remaining public enterprises," including national
oil refineries and Cochabamba's local water agency, SEMAPA.
World Bank Discourages Water Subsidies
its Bolivia Public Expenditure Review, an economic
report prepared for the country, the World Bank maintains
that "no subsidies should be given to ameliorate the increase
in water tariffs in Cochabamba." Countries receiving loan
assistance from the World Bank and the IMF are often discouraged
from heavily subsidizing public services, as such expenditures
counteract IMF and World Bank formulas for reducing debt,
controlling inflation and attracting foreign investment.
Bolivia Leases Cochabamba Water System to Multinational
closed-door negotiations, the Bolivian government signs
a $2.5 billion contract to hand over Cochabamba's municipal
water system to Aguas del Tunari, a multinational consortium
of private investors, including a subsidiary of the Bechtel
Corporation. Aguas del Tunari was the sole bidder for the
privatization of Cochabamba's water system.
Aguas del Tunari Announces Its Plans; Bolivia Legalizes
October 11, Aguas del Tunari officially announces that it
has been awarded 40-year concession rights to provide water
and sanitation services to the residents of Cochabamba.
The consortium also announces that it will generate electrical
energy and irrigation water for the region's agricultural
sector. The major shareholder of Aguas del Tunari, Bechtel
subsidiary International Water Ltd., claims that water delivery
coverage and sewage connection will increase by at least
93 percent by the fifth year of private water management
in Cochabamba. That same month, the Bolivian parliament
passes Law 2029 (the Drinking Water and Sanitation Law),
which allows for the privatization of state drinking water
and sewage disposal services. In effect, the law would make
residents pay full cost for water services in Cochabamba.
Rising Water Prices Spark Cochabamba Protests
protesters shut down the city for four days, going on strike
and erecting roadblocks throughout the city. Residents protest
the privatization of their municipally run water system
and Aguas del Tunari's rate hikes, which have doubled and
tripled their water bills. Aguas del Tunari had informed
Bolivian officials that water rates would increase only
by 35 percent, to cover the cost of expanding water delivery
and to upgrade the city's water infrastructure.
Peaceful Protests Turn Violent
up with government inaction, The Coalition for the Defense
of Water and Life (La Coordinadora), led by union organizer
and antiglobalization activist Oscar Olivera, makes a peaceful
demonstration march to Cochabamba's city plaza.The march
is marred by violence for 2 days -- riot police meet demonstrators
with tear gas, injuring an estimated 175 and blinding two.
Word of the"War Over Water" Hits Western Press
War Over Water," an "on-the-scene" report on the clash between
riot police and protesters in Cochabamba, is published by
Pacific News Service correspondent Jim Shultz, who
also serves as executive director of the Cochabamba-based
The Democracy Center. Shultz will come to play a major role
in educating the public and the Western media about events
in Cochabamba by helping to expose the Bechtel Corporation's
involvement and organizing a mass email-writing campaign
directed to Bechtel's CEO, Riley Bechtel, to protest the
La Coordinadora Holds Unofficial Referendum - 96 Percent
Coordinadora holds an unofficial referendum in which an
overwhelming majority -- 96 percent of 50,000 voters --
disapproves of water privatization and Aguas del Tunari's
water contract in Cochabamba. Government officials refuse
to consider terminating the contract.
Protests Spread Beyond Cochabamba Borders
originating in Cochabamba's central plaza spread to La Paz
and other cities and outlying rural communities. Thousands
clash with riot police, erect roadblocks, and protest not
only the water-rate hikes but the country's overall economic
malaise and high unemployment.
La Coordinadora Leader Arrested
what water protest leader and La Coordinadora spokesperson
Oscar Olivera claims was a "trap," Olivera and his colleagues
agree to meet with government officials in Cochabamba about
the water-rate hikes. Police descend upon the meeting with
Cochabamba's mayor, the governor and other civic leaders,
briefly arresting Olivera and other coalition activists
present at the talks.
State of Siege: 17-Year-Old Boy Shot Dead
Hugo Banzer declares a "state of siege," a condition similar
to martial law, which can be enacted for 90 days under the
Bolivian constitution. It allows for the arrest and detention
of individuals without warrants and the enforcement of curfews
and travel restrictions. A 17-year-old boy, Victor Hugo
Daza, is shot dead by a Bolivian Army captain who opened
fire into a crowd of demonstrators. In March 2002, the captain
-- allegedly trained by the School of the Americas, a U.S.
military academy that has trained tens of thousands of Latin
American soldiers, intelligence officers and law enforcement
officials in combat tactics -- would be acquitted by a military
Ammunition, Tear Gas, Injuries and Deaths
police continue to assault protesters with live ammunition
and tear gas. Police mutiny in La Paz and Santa Cruz to
protest low wages. The April protests will leave six dead
and dozens injured and forcibly detained by authorities.
Bolivian Government Changes Course - Gives Control to La
latest wave of protest-related violence culminates in a
historic victory for the residents of Cochabamba and their
supporters. After four days in hiding, Oscar Olivera signs
an agreement with the Bolivian government that guarantees
the withdrawal of Aguas del Tunari, grants control of Cochabamba's
water to La Coordinadora (the grassroots coalition led by
Olivera), assures the release of detained protesters, and
promises the repeal of water privatization legislation.
Legislation that would have charged peasants for water drawn
from local wells is also removed.
World Bank President States that Water Should Not be Publicly
asked about the events in Cochabamba during a press conference
in Washington, D.C., World Bank President James Wolfensohn
maintains that people in Bolivia and elsewhere should be
charged for the use of public services (such as water),
as public subsidies of such services lead to waste. According
to Wolfensohn, "The biggest problem with water is the waste
of water through lack of charging."
Activists Protest IMF and World Bank Meetings in Washington
of antiglobalization activists attempt to blockade IMF and
World Bank meetings in downtown Washington, D.C. The protesters
call for the cancellation of hundreds of billions of dollars
in debt owed by the world's poorest nations and cite Bolivia
as a recent example of corporate greed in the globalized
marketplace. Oscar Olivera is present, saying, "The people
have recaptured their dignity, their capacity to organize
themselves-and most important of all, the people are no
Bolivian President Resigns
from lung and liver cancer, Hugo Banzer resigns and hands
over the Bolivian presidency to 41-year-old Vice President
Jorge Quiroga, a Cochabamba native and former IBM executive.
Quiroga is sworn in on August 7 to serve out the last year
of Banzer's five-year presidential term until August 2002.
Under the provisions of the constitution, Quiroga is barred
from seeking re-election.
Aguas del Tunari Seeks Restitution from Bolivian Government
del Tunari applies to the International Centre for Settlement
of Investment Disputes (ICSID), an arbitration body created
by the World Bank. Aguas del Tunari alleges that the Bolivian
government violated a bilateral trade agreement with the
Netherlands (where International Water Ltd. is incorporated)
when it revoked the consortium's Cochabamba water contract.
Oscar Olivera Arrested in Cochabamba
Olivera is arrested in Cochabamba by Bolivian authorities
on charges of "sedition, conspiracy, instigating public
disorder and criminal association." Warrants based on similar
charges are issued for two other members of The Coalition
in Defense of Water and Life. Olivera is released the same
day but must report to a police station every 72 hours.
Charges Against Olivera Dropped
hundreds of letters arrive protesting the arrest of Oscar
Olivera, a government official issues verbal assurances
that the charges against Olivera and his two colleagues
will be dropped. Olivera is no longer required to report
his whereabouts to authorities every 72 hours.
Bechtel Defends Role in Bolivia
Shultz writes to Bechtel CEO, Riley Bechtel, asking him
to forego pursuing legal action against Bolivia through
the International Centre for Settlement of Investment Disputes
(ICSID). Bechtel spokesperson Gail Apps responds by stating
that "it is important to understand the difference between
water rates (the unit rate paid for water) and water bills,
which depend on the amount of water actually used. For the
poorest people in Cochabamba rates went up little, barely
10 percent. ..." Apps further suggests that the political
instability in Bolivia, rather than people's ire at water-rate
hikes, was responsible for the "civil unrest." She also
emphasizes that Bechtel's request for dispute mediation
by ICSID does not constitute a lawsuit.
Bechtel's Actions Called a "David-versus-Goliath face-off"
front-page article appearing in the San Francisco Chronicle
describes Bechtel's pursuit of $25 million in damages for
breach of Aguas del Tunari's water contract as a "David-versus-Goliath
face-off." The article notes that Bechtel's revenues in
2000 exceeded $14 billion, while Bolivia's national budget
is $2.7 billion. Amidst all the accusations as to who or
what was at fault (Bolivian corruption, excessive water
consumption, and so forth) Oscar Olivera attributes the
source of the conflict to corporate greed.
Aguas del Tunari and Bechtel Seek $25 Million from Bolivia
case of Aguas del Tunari, the consortium led by International
Water Ltd., against the Republic of Bolivia is officially
registered with the World Bank's International Centre for
the Settlement of Investment Disputes (ICSID). Aguas del
Tunari and its parent corporation, Bechtel, seek $25 million
in damages for breach of an exclusive 40-year multimillion
dollar contract to bring drinking water and sanitation services
to Bolivia's third-largest city, Cochabamba. According to
a senior counsel at ICSID, Aguas del Tunari's case against
Bolivia is "just beginning," and the two parties are now in the process of selecting a tribunal of arbitrators for resolving the dispute -- a process which can take several months and the intervention of ICSID. The tribunal's ruling may not be announced
for two years, about the average length of time for a dispute
to be settled through ICSID-mediated arbitration.
Olivera Leads Protest Against Bechtel
Olivera leads a group of 125 protesters to Bechtel's headquarters
in San Francisco. Olivera urges the corporation to drop
its demands for compensation, claiming, "With the $25 million
they are seeking, 125,000 people could have access to water."
Bechtel officials agree to meet with Olivera. The next day
Olivera accepts the Goldman Environmental
Prize Award. He had been bestowed the honor earlier in 2001, but could not accept because he was in hiding from Bolivian authorities.
"Timeline: Cochabamba Water Revolt" by Sheraz Sadiq, Associate Producer for FRONTLINE/World. For
more on the players in the Cochabamba water revolt, visit NOW
with Bill Moyers >>