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FEJUVE EL ALTO, Bolivia, and FDCL, Berlin, will present a case regarding the water sector policies in Bolivia of the German (completly government owned) technical cooperation agency GTZ at the tribunal on “NEO-LIBERAL POLICIES AND EUROPEAN TRANSNATIONAL CORPORATIONS IN LATIN AMERICA AND THE CARIBBEAN”? to be held in Vienna from may 10-13, 2006. The Tribunal has been prepared by the EU-LAC BI-REGIONAL NETWORK and will be held under the auspices of the PERMANENT PEOPLES’ TRIBUNAL (PPT).

Place: Kongresshaus, Margaretengürtel 138, Vienna

Enzando Alternativas 2


THE CASE: GTZ in Bolivia: Privatization of water

GTZ is actively promoting a so-called 'German model' of private sector participation (PSP) in the water sectors of several Latinamerican countries. A lot of these efforts are underway in Bolivia. Experiences gathered here shall be used in other countries as well.

Development agencies like GTZ play an increasingly important role in detecting and creating business opportunities for transnational enterprises. By influencing legislation and regulation they pave the way for private sector involvement in a broad range of state sectors. In doing so, they regularly clash with social movements fighting for accessible and democratically controlled public services.

The GTZ case exhibits the close collaboration of consultants, diplomats, government officials, development banks and European corporations, jointly pushing for investor-friendly regulatory reforms.

The Bolivian example also provides insights into development agencies' modified strategies, which after the series of failed privatisations turn to more gradual, steplike approaches of water commercialisation.

With annual investments of about 350 million € Germany is the second largest bilateral donor in the water sector. GTZ, the corporation in charge of implementing, inter alia, publicly financed water projects, closely collaborates with KfW Development Bank, the financing arm of German development assistance. Both institutions are executing a heavily funded 'public private partnership' programme of the German government which aims at facilitating investments of German or other EU firms in developing countries.

The German government chose Bolivia as one of four reference countries where a broad range of development projects are to be implemented, particularly in water supply and sanitation as well as in irrigation. However, Bolivian social movements sharply criticise these activities, accusing GTZ of paving the way for the privatisation of water supply and water resources. According to these accusations, GTZ strongly influenced Bolivian legislation in order to get a legal foundation for so-called 'Sociedades Anónimas Mixtas' (SAM) in the water sector. SAMs are owned by public and private shareholders which may freely sell their shares, thus enabling creeping privatisation of water works. Furthermore, establishing SAMs also means to turn the whole area, where a SAM is operating, into a 'concession zone' and thereby forbidding alternative legal forms for the collective use and ownership of water resources. In the aftermath of the 'Cochabamba water war' Bolivian social movements fought successfully for the introduction of legal forms called 'Registro' and 'Licencia' into the new Bolivian water law which protect collective water systems, inter alia those of indígenas and campesinos.

In consequence of the "Cochabamba water war" the citizens’ movement has achieved modifications of law 2029 which led to the new law 2066 for drinking water and sanitary supply, which was also passed in april of 2000. Most notably it was acomplished to anchor the rights of social organizations and local comunities with regards to their own watersystems and –sources, which can be protected by the application for own juridical titles (licencia and registro) to the Superintendencia de Saneamiento Básico. While the ‘licencia’ (article 46) protects the rights of small communities, town districts and social organizations, which directly provide water and sanitary supply services, the ‘registro’ title protects the supply structures of indiginous and rural communities, farmers associations and unions which by means of the traditional system of ‘usos y costumbres’ self-administrate themselves (article 49). Furthermore article 50 respects their rights to dispose of their own water sources. In the same way article 34 ensures the autonomy of their supply systems to small cooperatives, neighborhood councils and independent settlements with regards to the concessionary as long as they dispose of the necessary juridical title and fulfill respective quality standards. Law 2066 therefore considerably limits the monopoly-rights of the concessionaries within their supply-area. Finally the new law 2066 has anchored important consultation-mechanisms. Before a local authority can undertake calls for tenders or sign contracts for supply-fees and prices the social organizations have to be consulted (articles 13(f) and 57). Jointly with them a written comment (the so-called ‘opinión técnicamente fundamentada’) has to be delivered to the Superintendencia, which has to authorize the documents for the call for tenders and the fees (see Ley 2066).

The terms for the implementation of law 2066 were to be elaborated by means of a national participative consultation process. The World Bank financed this process and the Bolivian government instructed the GTZ to coordinate and implement regional workshops, which took place between the end of 2000 and the beginning of 2001 in Cochabamba, La Paz, Sucre and Santa Cruz.

Instead of playing the role of the moderator the GTZ slipped into the role of a party and brought in own proposals for the implementation or the law, which envisioned the creation of regional water federations transcending municipalities in the form of a mixed-economy stock company, so-called "Sociedades Anónimas Mixtas" (SAM). These regional water federations should be treated as regional concessionary areas where the alternative water titles Registro and Licencia are not valid. Equally the GTZ supported a determining role of the Superintendencia de Saneamiento Básico which should regulate the owners of the different water titles (Registro, Licencia, Concesión) without any form of participation of the social organizations and municipalities.

In consequence of the aggressive lobbying by part of the GTZ (and intervening German embassy members) the presidential decree DS 26587 set the legal foundation for the mixed stock companies propagated by the GTZ.

The Plan Bolivia for the water and sewage sector for the period 2002-2007 elaborated by the GTZ by order of the bolivian government constitutes another affront and was equally realized without any consultation of the water committees, cooperatives and alternative suppliers.

This water sector policy for Bolivia jointly devised by GTZ and KfW is at the same time an integral part of a structural adjustment credit of the World Bank, as can be seen in a respective Bank-document (World Bank 2004a: 21 pp. and annex 5). According to this the structural adjustment program was materialized by "close coordination and technical support of KfW and GTZ" and this especially with regards to the "water-, sanitary- and social protection components" of the program (ibid.: 36). At the same time the document refers to an anounced German co-financing of the adjustment credit amounting to 8 million Euros, which could rise up to 21 million Euros (ibid.: 2).

A new law passed by the government in april of 2004 for the external financing of water suppliers and/or EPSAs (Entidad Prestadora de Servicios de Agua Potable y Alcantarillado Sanitario) constitutes another element of the German Plan Bolivia propagated and agressively promoted by the GTZ which furthers commercialization. Law 2649 opened the way for all water suppliers (EPSAs) to get to know the promise of public funds, including concessionaries and private companies (World Bank 2004a: 21). According to law 2066 of april 2001 for the water and sanitary sector, however, only suppliers of the alternative water titles "licencia" and "registro" can draw on funds from public projects and programs (see law 2066). As these public programs finance themselves mainly by means of cooperation funding the new law 2649 opens the possibility for water corporations active in Bolivia to benefit of state programs and international cooperation funds. Social organizations presume the consortium Aguas del Illimani led by Suez, which in 1997 was assigned with the concessionary contract for water and sewage supply for La Paz and neighboring El Alto, to be the main beneficiary of this new law.

Therefore, the GTZ concept of SAMs not only endangers municipal water works and water cooperatives but also existing systems of collective water provision in rural areas. By doing so the GTZ politics in Bolivia threatens the ESC-Right to Water, disrespects the UN International Covenant on Economic, Social and Cultural Rights (1966), the UN Millenium Development Goals, the UN Charter: Preamble and Chapter 1, paragraphs Two and Three (1945), and the UN Global Compact (1999).

Unfortunately, GTZ already managed to establish two SAMs in Bolivia, a third one is due to be launched in the southern province of Tarija. However, another SAM attempt in the Cochabamba province sparked protests of local communities which where answered with violent repression leaving several people injured.

Furthermore, shortly after the recent announcement of the Bolivian government to terminate the water concession of the Suez-led consortium 'Aguas del Illimani' in La Paz and El Alto, both cities' mayors suddenly advocated the GTZ model of a 'Sociedad Anónima Mixta' for the successor company. This proposal ran totally against the will of El Alto's federation of neighbourhood councils FEJUVE whose protests against Aguas del Illimani, that left nearly 200.000 inhabitants of El Alto unserved, forced the government to cancel the contract. FEJUVE now negotiates with government officials in order to create a non-profit water enterprise. Apparently, the two mayors' SAM proposal followed an intervention of the German Embassy that, according to a press statement, urged for an 'amicable' solution of the crisis and explicitely supported the creation of a mixed enterprise ('empresa mixta').

Finally, the German Embassy threatened that without such a solution, Germany wouldn't provide any development aid for mitigating El Alto's water problems. This harsh German intervention must also be seen against the backdrop of a 12 million € KFW credit for the enhancement of El Alto's sewage disposal in the mid-nineties which served as a de facto subsidy for the multinational Suez.

FDCL, april 2006


More information  about the pro-privatization policies of the GTZ in Bolivia  can be found here.

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