Global Policy Forum

Not a Drop to Drink


In Parched Latin American Countries,
the Battle over Water is Ready to Explode

By Kelly Hearn

American Prospect
February 25, 2005

In El Alto, Bolivia, a populist drumbeat is being heard -- and it's about water. Protesters say a foreign-owned company contracted to manage the city's water system has failed to get enough of it to El Alto's poor. When protesters shut down a major road, Bolivia's president, Carlos Mesa, axed the state contract with the company, which is part-owned by the gigantic French water corporation Suez.

It's not the first time Bolivian protesters have sent a huge multinational firm packing. In 1997, the World Bank forced Bolivia to privatize its water system as a loan contingent. In 2000, residents of the city Cochabamba took to the streets when connection fees rose steeply after a subsidiary of California-based construction giant Bechtel took over. The Bolivian government violently suppressed the protests, and the events were documented and spread across the Internet by Jim Shultz, founder of the Democracy Project, a Bolivian-based watchdog group. In the end, Bechtel pulled out and sued the Bolivian government for $25 million under a bilateral investment treaty. The case is now pending. Water privatization has hit bumps in Argentina, too, where President Nestor Kirchner has been sparring with Aguas Argentinas, also a subsidiary of Suez, over claims that the company has not lived up to its infrastructure investment promises.

As global freshwater shortages loom, water has become a political pulse point in Latin America, which in recent years has increasingly backed away from the more conservative policies of the 1990s and elected left-leaning governments. The World Bank estimates that 76 million of the 510 million people in the Caribbean and Latin America do not have access to safe drinking water. Bank officials embrace privatization as a panacea, and multinational corporations are happy to get closer to Latin America's vast water supply (when global water shortages really hit, it's nice to be a supplier of last resort).

Here in South America, shoddy delivery and treatment systems, poor oversight, and wasteful cultures of use present their own problems for water. But the great sucking noise will come from trade law, from developing countries signing their water resources over to private companies via deals like the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA), deals that treat water as "goods" and "investments." The International Forum on Globalization, based in San Francisco, has mapped how noxious provisions from NAFTA, now incorporated into CAFTA, will favor multinational corporations and spell disaster for developing countries.

Consider NAFTA's Chapter 11, the investor-state provision. Locked into CAFTA and favored for inclusion in the Free Trade Area of the Americas (FTAA), the provision lets corporations (investors) sue governments (states) if they feel they have lost out on economic opportunity. Translation: If any country, state, or province lets only domestic companies export water, corporations in the other signatory countries could sue for financial compensation for "discrimination." And if a government attempted to ban bulk water exports, says Antonia Juhasz, an International Forum on Globalization analyst, the very act would automatically turn water into a tradable commodity, which in turn would trigger the CAFTA or, if it's resuscitated, the FTAA. Under such a scheme, a lot of Bechtels could sue a lot of Bolivias for money that might otherwise be spent on lifting people from poverty.

Huhasz, in an IFG study, says other trade provisions favored by the U.S. right could spell problems for water-rich developing nations that sign up for regional trade agreements: The idea of "proportional sharing," embedded in NAFTA´s article 315, prohibits signatories from restricting resource exports, cutting off a country´s ability to curtail water exports. Another is a WTO principle that any new laws, including environmental laws, must be "least trade restrictive," a provision the IFG report says has been the death of many environmental laws. These are concepts that vastly expand the rights of multinational investors trying to get close to Latin America's water systems and supplies. The legalisms may be lost on most Latin Americans, but the greed behind them certainly is not. Judging from their presence on the Internet, the Cochabamba protests seem, like Kent State or Tiananmen Square, to symbolize greater struggles. More than a rejection of water privatization and commodification, they are an indictment of aggressive, U.S.-backed trade policies, of insatiable First World greed, of the corporate march across civil society.

The Economist, citing World Bank statistics, recently report that privatization in the 1990s expanded the access that Latin Americans have to water by 40 percent to 70 percent. But observers suggest that lower-tech options could come before widespread corporate-favoring privatization contracts. Activists such as Canadian Maude Barlow has suggested radical shifts in watershed management and production, infrastructure repairs, reclamation of outdated water systems, and drip irrigation as opposed to flood irrigation.

Here in South America, the lessons are getting clearer by the protest; the world would do well to study the lessons of Cochabamba and El Alta. Global water shortages, corporate creep, and devastating trade agreements are bringing us fast to a place where, as one water company reportedly described it, water has gone from an endless commodity taken for granted to "a rationed necessity that may be taken by force."

About the Author: Kelly Hearn is a correspondent for The Christian Science Monitor and a former science and technology reporter for United Press International.



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