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December 19, 2005

The Future of Latin America: Another Such Victory and We Are Lost

"Another such victory and I am lost," said Pyrrhus of Epirus after beating Rome's legions. Juan Ferrero writes about another such victory--this time for the left in Bolivia:

Who Will Bring Water to the Bolivian Poor? - New York Times: COCHABAMBA, Bolivia - The people of this high Andean city were ecstatic when they won the "water war." After days of protests and martial law, Bechtel - the American multinational that had increased rates when it began running the waterworks - was forced out... its executives fled... protest leaders pledged to improve service... celebrated the ouster as a major victory.... Today, five years later, water is again as cheap as ever, and a group of community leaders runs the water utility, Semapa. But half of Cochabamba's 600,000 people remain without water, and those who do have service have it only intermittently - for some, as little as two hours a day, for the fortunate, no more than 14.

"I would have to say we were not ready to build new alternatives," said Oscar Olivera, who led the movement that forced Bechtel out.... [W]hile a potent left has won many battles in Latin America... it still struggles to come up with practical, realistic solutions to resolve the deep discontent that gave the movement force.... [I]n Bolivia... protests against the introduction of stronger market forces have toppled two presidents.... Frustrated that the economic restructuring prescribed by the World Bank and International Monetary Fund failed to translate into sustained growth and reduced poverty, country after country in Latin America has either discarded or is questioning much of the conventional wisdom about relying more on market forces....

Bolivia's back-tracking, more a product of roiling protests than government policy, began after the country became among the first in Latin America to apply market prescriptions wholeheartedly.... Bolivia's economy, though, grew at a dismal pace.... The fund and other institutions... blame grinding corruption, poor infrastructure and high pension costs... note that Bolivia, like other countries that seek help, come only when they are wracked by economic troubles that require tough choices.... But to Bolivians, the experiment was marked by failure.... In the end, market changes... fueled anger that severely weakened governments and gave rise to Mr. Morales... [who] has in the last four years used his outsider status, his... very poor origin... and his Indian roots....

That is why Mr. Morales is pushing for a "nationalization" of the gas industry that... will increase taxes and royalties on foreign energy companies.... He also wants to tighten borders to keep out cheap products and focus the government's attention on cooperatives.... "We will have an economy based on solidarity and reciprocity," Mr. Morales said in an interview. "We do not dismiss the presence of foreign investment, but we want it to be real, fresh investment to industrialize our hydrocarbons, all under state control."

The proposals, to be sure, are vague. Mr. Morales, who did not finish high school, is guided on economic matters by Carlos Villegas, a left-leaning economist, and by his running mate, Álvaro García, a socialist intellectual, professor of sociology and former guerrilla who articulates the party's position.

Much of the anger that has given Mr. Morales momentum began here in his home city, Cochabamba. The arrival of Bechtel quickly prompted heated protests when the water company increased rates, arguing that it needed more money to finance investment and expand service.... It also became clear that Bechtel would not expand service to the impoverished south, where the company had no profits to gain from an expensive expansion. The ouster of the company meant the return of Semapa.... Semapa has expanded service... to 303,000 people, from 248,000.... But Semapa still grapples with petty graft and inefficiencies... [and] a lack of money. The company cannot secure big international loans, and it cannot raise rates.... For a wide-scale expansion that would include a new dam and aqueducts, $300 million is needed, an enormous amount for a company whose capital budget is just shy of $5 million.

"I don't think you'll find people in Cochabamba who will say they're happy with service," said Franz Taquichiri, one of the community-elected directors of Semapa and a veteran of the water war.... [W]ater filtration installation is split into an obsolete series of 80-year-old tanks and a 29-year-old section that uses gravity to move mountain water from one tank to another.... "We're trying to be realistic, and we're looking for aid from Canada and other countries," explained Mr. Camargo, who has worked at Semapa 20 years....

At Rafael Rodríguez's home and small restaurant, a spigot in the yard provides water three hours a day from a community well. He has little good to say about Bechtel, but he noted that Semapa's pipes were far from reaching the neighborhood.... Edwin Villa, 35, lives in a neighborhood that gets its water through deliveries made two or three times a week by freelance water dealers. The deliveries are sporadic, he said, and sometimes the water contains tiny worms. His children ask for piped water, but there is not much he can tell them. "Our hope is that someday Semapa will reach this far," he said. "It would just be magnificent."

Posted by DeLong at December 19, 2005 12:25 PM