Control over water is one of the main incentives of the proposal for the Free Trade Area of the Americas (FTAA). The United States and transnational corporations want to use the neoliberal integration of the hemisphere to privatize water resources. They also want to use it to alter the course of water flows with megaprojects that environmentalists deem demented. But throughout Latin America people are organizing to counter these water management schemes by creating socially equitable and ecologically sustainable alternatives based on popular participation.

Voters in Uruguay Claim Victory Over Privatization

On Oct. 31, Uruguayans expressed their opposition to water privatization at the ballot box. In a plebiscite, the electorate approved a constitutional reform that defines water as a good belonging to the public trust and guarantees civil society’s participation in the management of the country’s hydrological resources.

The resulting article in the Uruguayan constitution says that “water is a natural resource essential to life,” adding that access to it and to sewage treatment services are “fundamental human rights.”

The plebiscite was promoted by the National Commission in Defense of Water and Life, made up of the state water company’s labor union and various civil society groups. The proposal obtained the support of 60% of the electorate. Presidential candidate Tabaré Vázquez, winner of the election that took place the same day, also supported the water plebiscite.

Subsequently, 127 organizations from 36 countries endorsed an open letter in support of the Uruguayan people’s decision. According to the document, the vote set “a historic precedent in defense of water, through its inclusion in a country’s Magna Carta by means of direct democracy.” They also pointed out that the approved constitutional reform “ensures the defense of sovereignty over a natural resource from the onslaught of transnational corporations.”

One of the enterprises most affected is the Spain-based Aguas de Costa. After it took charge of services in the Uruguayan department of Maldonado in 1992, water tariffs rose to seven times higher than in the rest of the country.

“The people have voted confirming that water, a scarce and perishable natural resource, must be a right of all and not a privilege of those who can pay for it,” said Uruguayan author Eduardo Galeano, commenting on the plebiscite. “The people have confirmed also that they’re not ignorant, and they know that sooner than later in a thirsty world water reserves will be as coveted as petroleum reserves, or more. We in countries that are poor but water-rich, must learn to defend ourselves. More than five centuries have passed since Columbus. How long will we keep trading gold for mirrors?”

“Wouldn’t it be worthwhile for other countries to submit the subject of water to popular vote?” Galeano suggested. “In a democracy, when it is real, who should decide? The World Bank or the citizens of each country? Do democratic rights really exist or are they just little fruits that decorate a poisoned cake?”

Privatization: Continental Disaster

The Uruguayan electorate’s decision is not surprising, considering the negative experiences that other Latin American countries have had with water privatization.

• From 1995 to 2001 the Compañía de Aguas, a subsidiary of French corporate giant Vivendi, administered the Puerto Rico Water and Sewer Authority (PRASA), with disastrous results. When the contract expired, the Puerto Rican Comptroller’s Office found 3,181 administrative, operational, and maintenance deficiencies in the water and sewage treatment facilities. Between 1995 and 2000 the U.S. Environmental Protection Agency fined PRASA $6.2 million for various violations. On top of all this, PRASA ended the year 2001 with $695 million in losses.
• In 2001 the Puerto Rico government put PRASA in the hands of another French company, Suez subsidiary Ondeo. Ondeo’s performance was as disastrous as its predecessor’s, and the government cancelled the contract, returning the company to the public sector in 2004.
• In 1992 Suez obtained a 30-year contract to administer the aqueducts in the city of Buenos Aires, Argentina. It took so long to build the sewers that sewage overflowed to the streets and basements, endangering public health.
• When Vivendi took control of the aqueducts in the Argentinean province of Tucum in 1995 with a 30-year contract, tariffs went up over 100%. The company left in 1998 after intense popular protests.
• The aqueducts in the Brazilian city of Limeira were privatized in 1995 and sold to Aguas de Limeira, a company that is 50%-owned by the France-based Lyonnaise des Eaux. Far from protecting jobs and providing affordable water, the corporation fired 40% of the aqueduct workers and drastically raised tariffs. The resulting savings were not used to improve the infrastructure but went instead to Aguas de Limeira’s stockholders and executives.
• When the Colombian city of Cartagena sold its aqueduct system to the Spanish company Aguas de Barcelona in the 1990s, 500 workers were fired summarily. The new Spanish employer did not even acknowledge the union’s existence.
• In the late 1990s, the World Bank forced Bolivia to privatize the aqueducts in the city of Cochabamba, and in 1999 the U.S.-based Bechtel Corp. obtained the contract in a process in which it was the only bidder. Within a few weeks Bechtel imposed drastic hikes in the service rates, provoking massive protests in which over 100 protesters were wounded and one killed by the armed forces. Eventually the government yielded to the clamor of the people and revoked the privatization. Bechtel is now suing Bolivia for $25 million.

Popular Participation: Alternatives to Privatization

According to the neoliberal discourse, the only alternative to privatization is monopoly control by the state, bureaucratic and corrupt as it may be. But several promising popular initiatives in South America show water can be managed in the interest of the people instead of for profit or political interests. The common thread in these examples is the public’s participation.

Porto Alegre

The Brazilian city of Porto Alegre is famous for hosting the World Social Forums. The aqueducts of this city of 1.4 million people, capital of the southern state of Rio Grande do Sul, have been under the people’s control ever since the Workers’ Party (PT) won the municipal elections in the 1990s. The entity that manages them, the Departamento Municipal do Agua e Esgoto (DMAE), belongs to the public sector but is financially independent from the state government and is funded by ratepayers. It is a non-profit enterprise that reinvests its income in infrastructure improvements.

The DMAE’s workings stand out because of the advanced level of public participation and democratic control over its operations and investments. It is governed by a council of local civil society representatives; operational and investment decisions must go through a participatory budgetary review. It’s part of a system also applied to many other areas of public life in Porto Alegre, as well as in Rio Grande do Sul, in which the citizens directly decide budget priorities.

The results of this participation policy are concrete. In Porto Alegre , a full 99.5% of the population has access to clean drinking water, a rate higher than any location in Brazil . The sense of belonging and responsibility that residents feel toward the DMAE translates to a high level of consciousness among the population regarding water conservation. People also willingly accept occasional rate hikes because they believe the money they pay is used prudently and responsibly. In any case, the DMAE’s rates are among the lowest in the country. At the same time water consumption in Porto Alegre is low because of educational campaigns and a progressive rate scale that favors the poor.

Other Brazilian Examples

Also in Rio Grande do Sul there’s the Companhia Riograndese do Saneamento (CORSAN), which provides water to 6.5 million people. After the PT won the state elections in 1998, CORSAN was reorganized and put under the control of some 80 popular assemblies that oversee its budget. It is now considered one of the five most efficient and effective water companies in Brazil, according to the Corporate Europe Observatory (CEO), a nongovernmental organization. However, CORSAN’s future is now in doubt since the centrist PMDB beat the PT in the last state elections.

Outside Rio Grande do Sul, in the northern city of Recife, the community fought successfully against the privatization of the state water company, a public utility that was a real disaster. After an extensive process of popular consultation, a municipal council was created to improve drinking water services. This council carried out a restructuring of the water company that in a few years resulted in a dramatic improvement in the service.

Ratepayer Co-ops

Ratepayer co-ops are another alternative to privatization. Since 1979 the company that provides water to the Bolivian city of Santa Cruz has been run by the Cooperativa de Servicios Publicos Santa Cruz (SAGUAPAC) and is today one of the best-managed water companies in all of Latin America. All the ratepayers are members of the co-op and have the right to vote in the general assembly of delegates, which in turn elects part of the administrative and supervisory boards of the water company. SAGUAPAC is financially independent and has a rate scale that favors those who use less water. Between 1988 and 1999 it was able to increase its service coverage from 70% of the population to 94%.

After studying the Santa Cruz model even the World Bank admitted “that cooperative solutions can be superior to either public or private approaches to utility management.” In one study, the bank praises Santa Cruz for its “efficient and transparent administration that appears to have virtually eliminated corruption.” It also states that “the Bolivia experience confirms that privatization is not a panacea.”

Cochabamba

Another endeavor in Bolivia that points toward popular control is taking place in Cochabamba. After returning the aqueducts to public control, the grassroots organizations created Coordinadora del Agua to provide the liquid in a democratic and egalitarian way. The Coordinadora del Agua rewrote the statutes of SEMAPA, the local water company, to facilitate direct popular participation in its board of directors. In May 2002 three of the seven members of the board were elected by the residents of Cochabamba.

The major problem that the Coordinadora del Agua faces is SEMAPA’s enormous debt, which puts it under the boot of international financial institutions, such as the Inter-American Development Bank (IDB). But the IDB, like the World Bank, is ideologically hostile to anything that contradicts the neoliberal gospel. Also, Bolivian elites are doing everything they can to cause the Coordinadora del Agua’s failure, says the CEO in a recent report on alternatives to water privatization.

Privatization at Any Cost

In spite of these cases of positive engagement, the U.S. government and transnational corporations insist on privatization and neoliberal orthodoxy in the management of water. The main tool to push the privatization agenda is the Free Trade Area of the Americas (FTAA). Under the FTAA’s terms, foreign investors will be able to sue and demand compensation from governments for any law or rule that affects their profits. This could mean costly economic sanctions to the country that revokes privatizations of aqueducts or tries to limit or prevent the international trade in water, even if such attempts are motivated by environmental or public health reasons.

Such investor protections already exist in the North American Free Trade Agreement (NAFTA), which covers Canada, the United States, and Mexico. The treaty defines water as a tradable good, obligating all levels of governments--from Puerto Rico to Hawaii and from Chiapas to Alaska--to sell their water resources to the highest bidder under threat of being sued by private companies.

The ill effects of this approach can be seen in the 1998 case in which the U.S. company Sun Belt sued the Canadian government for $10 billion for violating NAFTA. The grievance was that the government of British Columbia prohibited the mass export of its potable water when Sun Belt wanted to import it to thirsty California. In another case, the U.S. firm Metalclad Corp. successfully sued the Mexican government for $17 million after Mexican authorities barred the operation of the company’s hazardous waste treatment and disposal facility in San Luis Potosí state, and the company claimed that was an unjust expropriation. These and many other NAFTA cases are omens of what Central and South America can expect from the FTAA.

The investor protections provided by NAFTA and the proposed FTAA do not even exist in the World Trade Organization (WTO). At this time only states can present grievances to the WTO, but this will change if the Multilateral Agreement on Investment (MAI) is approved. With the MAI, transnational corporations will be able to use the WTO to sue any member country that limits their activities and profits in any way.

With neoliberal globalization a massive increase is expected in activities that consume fresh water, such as manufacture, monoculture-based agribusiness, and urban concentration. According to the World Bank the next world war will not be over oil but over water. The U.S. Central Intelligence Agency claims that by 2015 water will be one of the major causes of international conflict. And the United Nations forecasts that the demand for the liquid will exceed the supply by 56% in 2025, should current trends continue.

Megaprojects to Detour Water Supplies

The FTAA’s neoliberal regime comes with a series of megaprojects of unprecedented proportions, which aim to detour water flows throughout the hemisphere. These projects are charted in three infrastructure plans: the North American Water and Power Alliance (NAWAPA), the Plan Puebla Panama (PPP), and the Initiative for the Integration of the Regional Infrastructure of South America (IIRSA).

NAWAPA includes designs to build aqueducts, tunnels, and pumping stations to divert fresh water from Canada’s mountainous west and Alaska, where this resource is abundant, toward the United States’ arid west. This water would be stored--among other places--in a reservoir some 308 kilometers long planned for the Rocky Mountains.

The PPP has as one of its key elements the establishment of industrial corridors with transportation and communications infrastructure from Mexico to Panama, and several inter-oceanic roads. Its objective is not only to facilitate the movement of commodities between the Pacific and Atlantic oceans but also to take maximum advantage of the region’s cheap labor and natural resources in export agribusiness, maquiladoras, and tourist resorts. All of this will require considerable quantities of electricity and fresh water, which will come from large reservoirs and hydro projects, especially in Guatemala’s Petén and Mexico’s Chiapas state. Part of this water would be pumped north to facilitate the growth of maquilas and agribusiness in northern Mexico, where rain is scarce.

IIRSA includes plans for industrial corridors, water canals, and super highways that will connect the most remote corners of South America to the global economy. Some of these would cross the Andes mountain range to link the Amazon Basin, which contains 20% of the world’s drinkable water, to megaports to be built on the Pacific Coast.

One of IIRSA’s projects is the construction of a Grand Canal that will connect the Plata, Amazon, and Orinoco rivers. This hydro pathway must be visualized as a direct exit to the Caribbean and route toward the Mississippi River in the United States, says Mexican economist Giancarlo Delgado Ramos, a researcher with the Latin American Social Sciences Council. “Here is where the scenario of super giant bags full of South American water being dragged toward the northern power ( Florida) could unfold.”

Other ambitious IIRSA hydro projects are planned for the Plata River, whose basin (3.1 million square kilometers) is the nodal axis of Mercosur’s productive zone. The U.S. National Science Foundation has set up a multidisciplinary project to study the basin and its resources. It is also being surveyed by the American Association for the Advancement of Science as part of its Science for Sustainable Development project, with financing from the Ford and Rockefeller foundations, as well as corporations including Coca Cola, Nestle, Kellogg, IBM, and Kodak. Grassroots and progressive sectors in South America hold that all this scientific research is being carried out in the service of the transnational corporations’ agenda.

Guarding Guarani Aquifer

Another closely watched resource is the Guarani Aquifer, located between Argentina and Brazil, with an dimension of 1.2 million square kilometers and a production of 40 to 80 cubic kilometers of water a year.

The Global Environmental Facility, the environmental arm of the World Bank, is financing the Environmental Protection and Sustainable Development Project of the Guarani Aquifer. This project, based in Montevideo, has the support of the Organization of American States, the International Atomic Energy Agency, and the governments of the Netherlands and Germany. Its alleged end is the protection of the aquifer by insuring its rational use, but popular organizations and progressive sectors suspect that its real motivations are different.

The Brazilian movement Grito Das Aguas notes with concern that the project will consolidate the knowledge accumulated during years of research in different Latin American universities to put it at the disposal of corporate interests. With this information, the great economic groups will be able to steer their investments toward their primary objective: the creation of a water market. This de facto implementation of a new hydro-geopolitic of domination would jeopardize Latin American sovereignty.

Rich countries need the developing world’s natural resources to continue to make the profits that are necessary to the neoliberal capitalist model, warns Grito Das Aguas. The group adds that since in the past their wealth was generated through the super-exploitation of their own reserves, developed countries today face serious problems in increasing their productive capacity.

Looking Ahead

Hydroelectric projects and the looting of Latin America’s blue gold and other natural strategic resources, such as biodiversity and oil, will run into difficulties if the opposition manages to coordinate its efforts, notes Delgado Ramos. The possibility of reversing the march toward mayhem depends on how solid the social wall is that’s built to detain the different projects. But it also depends on how active a role the Latin American elites take in promoting and implementing them.

For its part, the Corporate Europe Observatory affirms the need to support popular initiatives like those in Porto Alegre, Cochabamba, and Santa Cruz, but at the same time to question the policies of institutions such as the Inter-American Development Bank and the World Bank, which favor privatization at the expense of any other option. The pivotal but sensitive issue of foreign debt must also be dealt with since the debt burden undermines the sovereignty of countries and causes a disastrous flow of capital from the poor South to the rich North.

Ultimately, the future of water access and use will depend in large part on the success of resistance to free trade regimes such as those of the WTO and the FTAA. These agreements force member countries to sell their water resources to the highest bidder, at the expense of any social or environmental consideration.

For media inquiries, email americas@ciponline.org or call (202) 536-2649.