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."
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.
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
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.
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
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
the Rain" is co-produced by FRONTLINE/World and NOW
with Bill Moyers.
Producer: David Murdock