In his Sept. 30 op-ed column, "A Protest Teach-in Spoiled by Facts," Sebastian Mallaby said the World Bank did not promote the disastrous water privatization project in Cochabamba, Bolivia, because it objected to the inclusion of a dam project. That contention is not supported by the facts.
According to the World Bank's own audit department, the bank required that Bolivia privatize the water system in Cochabamba as a condition for the extension of a loan. A subsidiary of the San Francisco-based Bechtel Corp. was the only bidder on the project. In 1999 the bank expressed misgivings about the surge in water prices anticipated under the plan but nonetheless said that the government should "focus its efforts" on privatization in Cochabamba. Further, it insisted that all users should pay in full for their water without public assistance, even though the privatization meant that rates increased on average by 50 percent and as much as tripled for some of the poorest customers.
The World Bank and the International Monetary Fund regularly require countries to privatize their water systems and increase consumer water rates as conditions of loan receipt and debt reduction. For example, a 2001 review of World Bank water and sanitation loans found that the bank required water privatization measures in more than half of its loans and required an increase in water rates in 80 percent.
Globally, the provision of water is a $400 billion-a-year business. A few corporations are cashing in -- and using the World Bank and IMF to do so.
In Cochabamba, the government and the Bechtel consortium refused to listen to the people until they rose up in protest. Before privatization was abandoned, the government had sent 1,000 soldiers to the city, which resulted in the death of a 17-year-old boy and dozens of injuries.
Unfortunately, the Cochabamba tale is not over. In February 2002, the World Bank's International Center for the Settlement of Investment Disputes accepted a $25 million lawsuit brought by the Bechtel consortium against Bolivia for the recovery of the profits the company had hoped to earn there.
That the World Bank shares in the culpability for this disaster is irrefutable.
International Forum on Globalization
International Policy Analyst
Friends of the Earth
© 2002 The Washington Post Company