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Water Charges

The International Experience

Bolivia – ‘The Straw That Broke The Camel’s Back’
In 1999 the Bolivian government, at the behest of the World Bank, signed a deal to privatise the water system of Cochabamba – a city of half a million people.

Early the next year, the city’s mostly poor residents were hit with water bills which had doubled, and sometimes tripled, as a result of this deal.

For example, in a region where the monthly minimum wage is around $100 per month, water bills jumped by up to $30 for the same period.

This was the first outworking of the agreement signed between a government lead by Hugo Banzer and the Bechtel Corporation, giving the company a 40-year lease over Cochabamba’s water supply.

Banzer was a 1970s ‘strong-man’ dictator in Bolivia, acting in consort with fellow-travellers like Augusto Pinochet in suppressing progressive politics across Latin America. The Bechtel Corporation has interests across the globe and makes annual profits in the region of $12 billion.

Faced with the extortionate cost of a resource that they needed to survive, the people of Cochabamba immediately took to the streets to defend their right to access their own water.

A general strike was called and Cochabamba was brought to a complete standstill by the collective action of its citizens.

The government response was predictable and brutal – tear gas was the weapon of choice with a least one demonstrator dying as a direct result.

The government, however, was forced, in the face of rising opposition to the negotiating table with demonstration leaders. A deal was struck but quickly reneged on by the government. It appeared the regime was determined to accede to the World Bank’s demand for “no public subsidies” to hold down the water price hikes.

The general strike continued with support growing in the rest of Bolivia for the demands of the people of Cochabamba. In the words of North American researcher, Thomas Kruse, “water was the straw that broke the camel’s back.”

Following another broken promise by the Bolivian government, martial law was introduced, with many of the leaders of the Cochabamba uprising arrested and transported to a remote prison. Meanwhile, radio stations across the city were taken over by the army to prevent communication between protestors.

Finally, faced with sustained resistance in Cochabamba and growing unrest throughout Bolivia the government was forced into a definitive backtrack.

With the subsequent return of the water system to public control, recriminations began between Bechtel and the Bolivian government as to who had broken the 1999 contract. Bechtel even had the audacity to levy a $25 million charge on the impoverished Bolivian population for unfulfilled profits.

The winners, on the other hand, celebrated. The citizens of Cochabamba had wrested back control of their most precious natural resource from the hands of the profiteers.

A lot has changed in Bolivia in the seven years since the ‘water war’. Evo Morales was elected on the back of a massive social movement for radical change and the socialist president has begun moving vast swathes of previously privatised national assets back into public control. A vindication for the Cochabamba citizenry if ever there was one.

As one of the leaders of the ‘water war’, Oscar Olivera proclaimed, “We’re questioning that others, the World Bank, international business, should be deciding these basic issues for us. For us, that is democracy”.

England & Wales
Described as “the greatest act of licensed robbery in our history” by none other than the (English) Daily Mail, the privatisation of the water service in England and Wales has proved an unmitigated disaster for working people.

In 1989, the Thatcher government privatised the Regional Water Authorities to an extent not thought possible by other pro-capitalist regimes. The water service was transferred hook, line and sinker into private hands.

At the time of privatisation the British government claimed that it would create competition which in turn would improve the service and drive prices down. Nothing could have been further from the truth.

The Act which brought the new state of play into force gave virtual ownership of the water system to private companies. They were given exclusive 25-year concessions for sanitation and water supply, protecting them against any possibility of competition. The British government also wrote off all the debts of the water companies before privatisation (£5 billion). To top it all off, the new companies were offered for sale at 22 per cent below their market value.

Clearly, this was not a case of creating competition but of creating a private monopoly.

As in most acts of privatisation, the obvious impact on the English and Welsh working public was price increases. Average water prices rose by more than 50 per cent in the first four years of private administration. In the five-year period up to 2009, average water bills are expected to rise by another 18 per cent.

Unsurprisingly, the major effect of these price increases has been to boost the profits of the companies involved. Profit margins for water companies operating in England and Wales are up to four times greater then those of their counterparts in mainland Europe.

These companies are not known for their ethical practices. For example, in 1998 Wessex Water, a subsidiary of the infamous transnational Enron, was found guilty of discharging one million gallons of raw sewage into a Dorset marina in the middle of summer time.

One of the major consequences of the privatisation of the water system is that access to water becomes defined as a privilege as opposed to a right. In 1994, 18,636 households in England and Wales had their water supply disconnected.

The prevalence of such disconnections has undoubtedly had an impact on the public mindset. A 1996 report by Save the Children found that low-income families were being forced to compromise generally accepted health standards in order to conserve water.

The same report also found a correlation between water disconnections and rising rates of dysentery.

Essentially, the privatisation of the English and Welsh water systems has been a lesson in neo-liberal economics – jobs have been cut and safety has been sacrificed as the law of profit reigns supreme.

However, even this has failed to satisfy some of the World Bank ilk. In the Bank’s journal, one correspondent criticised the water privatisation scheme in England and Wales for not providing “an incentive for efficient water use.”

What this means in reality is the placing of meters in the homes of low-income families to ensure they use only what they can afford. The needs of these people obviously do not intrude into the equation.

Coincidentally, the British government wants to place these meters in homes around the Six Counties, while the Twenty-Six County administration is planning to place water meters in its own schools.