The Global Sociology Blog

Bolivia is quite an interesting country, politically, these days. It seemed to have been at the forefront of some major struggles relating to the globalization of capitalism. First, there were the water wars, so brilliantly presentes by a PBS Now report (back in the days where the show was an hour long, hosted by Bill Moyers) in partnership with Frontline World, the best TV program available in the US on world affairs, IMNSHO.

What were the water wars? In many ways, Bolivia’s economic situation at the beginning of the 21st century was comparable to that of a lot of peripheral countries. So, when Bolivia elected a former IBM executive for president, he decided to modernize the country, strengthen the currency and reduce debt levels, as well as open the country to foreign investment. To do so, he called on to the World Bank for help and received the same one-size-fit-all list of requirements to make Bolivia part of the global economy and attractive to foreign investments. One such recommendation was the privatization of water in Cochabamba, a city in the Andes with 800,000 inhabitants, largely poor and indigenous.

The problems started when only one company bid for the water distribution system, Aguas del Tunari, a subsidiary of corporate giant Bechtel. It was a sweet deal for Aguas del Tunari as the government guaranteed them a 15 to 17% profit margin (so much for liberalization and letting the market set prices). Immediately, Aguas del Tunari jacked up the price of water so that a lot of peasants could no longer afford it. More than that, privately dug wells were by law to be controlled by Aguas del Tunari. Finally, once private, water distribution decreased and shortages started. Unsurprisingly, unrest and riots ensued, followed by government repression. Ultimately, the executives of Aguas del Tunari fled the country, but sued the Bolivian government for 25 million dollars (the lawsuit was withdrawn in 2006). In Cochabamba, indigenous and labor leaders decided to take over water distribution but no one, neither the government not the World Bank, offered to help them. (Liberation’s Autour du Monde blog has a good summary of the issue here and here)

The victory of the peasants and indigenous peoples over the corporate giant opened the way for the election of Evo Morales in 2005, the first indigenous president. It is not a surprise that one of his first decisions was to create a Ministry of Water headed by one of the leaders of the demonstrations. The public company that now manages water distribution in Cochabamba can boast that it has extended the grid and kept prices low based on a sliding scale. In the absence of support from the government or the World Bank, most financing for infrastructure comes from European foreign aid and non-governmental organization. There are still problems, though: about half the city receives no water and has to rely on water cisterns and individually-dug wells. The infrastructure is aging and the public company has produced only deficit.

This struggle seems to be a catalyst of all the issues related to economic globalization: the role of international institutions such as the World Bank, the power of Transnational Corporations such as Bechtel, the reduction in power of national government used only as conduits to liberalization, the winners and losers of structural adjustment programs, the plight of indigenous peoples, and the difficulties involved in trying to forge an alternative model for the delivery of basic services, conceived as rights rather than commodities. All these issues zeroed in on Cochabamba and there does not seem to be an easy or just solution to all this.

What is very clear, however, is that the global economic system is not a fair one. It is heavily biased in favor of investors and large corporations, and stacks the deck against peasants, indigenous peoples and labor. So far, attempts at correcting such gross imbalances have been unsuccessful and the current riots related to the food situation are a global extension of the conflict that exploded in Cochabamba in 2000. Unless the issues of the inequalities and loss of quality of life are addressed, it is a fair assessment to say that the global economic system will generate more chaos and instability in the world.