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



Timeline: Cochabamba Water Revolt
September 1998
IMF Loan to Bolivia Requires Privatization

The 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.

June 1999
World Bank Discourages Water Subsidies
In 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.
September 1999
Bolivia Leases Cochabamba Water System to Multinational Consortium
After 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.
October 1999
Aguas del Tunari Announces Its Plans; Bolivia Legalizes Water Privatization
On 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.
January 2000
Rising Water Prices Spark Cochabamba Protests
Cochabamba 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.
February 4-5, 2000
Peaceful Protests Turn Violent
Fed 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.
February 8, 2000
Word of the"War Over Water" Hits Western Press
"A 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 company's actions.
March 22, 2000
La Coordinadora Holds Unofficial Referendum - 96 Percent Want Out
La 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.
April 3, 2000
Protests Spread Beyond Cochabamba Borders
Protests 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.
April 6, 2000
La Coordinadora Leader Arrested
In 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.
April 8, 2000
State of Siege: 17-Year-Old Boy Shot Dead
President 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 tribunal.
April 9, 2000
Ammunition, Tear Gas, Injuries and Deaths
Riot 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.
April 10, 2000
Bolivian Government Changes Course - Gives Control to La Coordinadora
The 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.
April 12, 2000
World Bank President States that Water Should Not be Publicly Subsidized
When 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."
April 16, 2000
Activists Protest IMF and World Bank Meetings in Washington
Thousands 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 longer scared."
August 6, 2001
Bolivian President Resigns
Suffering 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.
November 2001
Aguas del Tunari Seeks Restitution from Bolivian Government
Aguas 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.
November 27, 2001
Oscar Olivera Arrested in Cochabamba
Oscar 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.
November 30, 2001
Charges Against Olivera Dropped
After 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.
December 18, 2001
Bechtel Defends Role in Bolivia
Jim 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.
February 2, 2002
Bechtel's Actions Called a "David-versus-Goliath face-off"
A 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.
February 25, 2002
Aguas del Tunari and Bechtel Seek $25 Million from Bolivia
The 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.
April 23, 2002
Olivera Leads Protest Against Bechtel
Oscar 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 >>