Upside Down World
Private Rivers: Will Transnational Water Companies Swallow El Salvador’s Water Supply?
Written by Paul Pollack
Wednesday, 22 February 2006
The office of SETA, El Salvador’s water workers union, sits like a mouse at the elephant’s feet. The union’s plain, two room office sits next door to the huge, block-long two story building which is the headquarters for El Salvador’s national water company, ANDA (National Water and Sewage Administration). Inside the SETA office, union reps equipped with an old computer and chairs with broken rollers are bracing for a fight against government attempts to privatize their industry. Representatives for SETA say losing the fight could mean the "extinction" of their union and limits on Salvadoran’s access to clean water.
Tropical El Salvador receives in rainfall three times what its 6 million inhabitants consume annually, but water is a delicate topic where less than 6 in 10 households have it piped in. Even in urban San Salvador, where potable water is more pervasive, service is unpredictable.
"We wake up at four o’clock in the morning to fill our containers," says Azucena, who lives in San Martín, a San Salvador suburb. "If not, you have to wait three days until it comes again." To demonstrate, she turns the knob to the only faucet in her two room home. Nothing comes out.
Sometimes water stops running for days, sending residents scrambling to bathe or relieve themselves at friends’ houses. Those who can afford $15-20 a month can buy drinking water from private companies that sell five gallon containers door-to-door out of large blue trucks. The cost is about 6 times the monthly ANDA bill and out of reach for most Salvadorans. About 70 percent of people with a job earn the minimum wage of $158 per month.
Workers say that President Tony Saca is pushing a privatization proposal to comply with requirements couched in a 1998 loan from the InterAmerican Development Bank (IDB). The IDB loan was revised to rebuild water systems destroyed by a devastating 2001 earthquake. Strangely, the revision also provided money to "decentralize" ANDA, set up smaller municipal water companies and open them to public-private concessions. The government has yet not passed ANDA reform legislation, but 19 municipalities, representing 18,000 household water connections, are voluntarily experimenting with a variety of concession formats.
SETA workers argue that concessions are stepping stone to full privatization. "The government is exacting an institutional sacking of ANDA to justify the need for concessions," says Wilfredo Romero, General Secretary at SETA. He notes that ANDA’s 2006 budget is 15% lower than 2005. Funding is lower than any time in the 2000’s-an amazing fact considering that one-third of the country lacks water in the home.
According to the right-wing daily La Prensa Graphica (12/27/2005), the majority of this year’s cut-$13.3 million-came from the "investment" section of ANDA’s budget, a 37 percent slash from the 2005 level.
"There’s no way that local municipalities can maintain the level of funding of a national entity like ANDA," says Oscar Carpio, SETA’s Secretary of Negotiations, "So, in most cases, local water management will eventually be fully concessioned to private investors."
Despite the deep cuts in their budget, ANDA officials seem non-plussed. In a La Prensa Gráfica interview, ANDA President Manuel Arrieta calmly maintained that co-investment is the answer to the budget shortfall. "If we add up what we receive from international cooperation and other institutions, we’ll maintain the amount of investment that we had [in 2005]."
Free Trade, Water Privatization and the IFI’s
The IDB, the World Bank and the International Monetary Fund are the largest purveyors of water privatization worldwide. These international financial institutions primarily pitch their privatization plans through "Structural Adjustment" loans, where lender nations promise to reform sections of their economies as a condition for receiving loan money.
In World Bank vernacular, "hydro-sector reform " is a euphemism for the privatization and "structural adjustment" of laws governing water management and usage. Behind the charitable guise of providing water to the poor, the majority of the water projects are implementing changes that shift control of water management and propriety over water itself from democratic forums (like city councils and state legislatures) to corporate board rooms.
The consumer watchdog group Public Citizen reports that the IDB and World Bank together administer about 133 different water and sewage-related projects, funded to the tune of $9.7 billion. The majority of these projects are in Africa and Latin America, while most of them include some type of "hydro-sector reform."
The World Bank often makes the decentralization of national water administrations (such as ANDA) and the implementation of concessions to private corporations mandatory reforms included under the conditions of its projects and loans.
Another common reform is known as "cost recovery," whereby lender nations agree to operate national or municipal water companies at a profit. Until "cost recovery" was implemented, most national governments subsidized water delivery since access to water has been traditionally viewed as a right, not a privilege. However, as structural adjustment forces governments to abandon the universal access doctrine, poor folks are stuck with higher water bills and forced to make excruciating trade-offs between water, food, medicine or school fees.
The IDB in El Salvador
While the IDB has been pushing privatization in El Salvador since the 1998 loan was approved, resistance from consumer groups, environmentalists, and the opposition FMLN political party have stalled wholesale implementation. In August 2005, SETA, as part of a larger activist coalition, prevented the introduction of a bill that would have mandated concessions in 152 of the 262 municipalities throughout the country.
The bill would have gutted ANDA and ceded its management role to newly formed municipal water companies, as the IDB loan stipulated.
The stalling of the bill was sweet, but short-lived. SETA reps worry that if the ruling ARENA party wins a Congressional majority in March elections, the bill will be re-introduced-signaling a gloves-off fight over whether corporations have providence over El Salvador’s water.
CAFTA’s Hidden Influence
As political parties gear up for the coming water law debate, the Central American Free Trade Agreement is set to go into effect for March 1, 2006. cUnder CAFTA, multi-national water companies must be given "national treatment," though there is no obligation for corporations to sell water nationally. If a new concessions law is passed, as Saca and his friends at the IDB wish, multi-national water corporations could start hawking over El Salvador’s lavish supply with an eye toward more lucrative consumer markets.
According to Alejandra Castillo, with the Committee in Solidarity with the People of El Salvador (CISPES), water privatization combined with CAFTA’s new rules "will leave poor Salvadorans high and dry."
CAFTA rules guarantee that a country cannot voluntarily reduce the export level of a good or service provided. Therefore, if El Salvador becomes a water exporter, CAFTA, not national policy makers will decide whether water will flow in El Salvador’s homes or be sold internationally.
CAFTA also gives corporations the right to sue national and local governments if a company feels that its "right to profit" has been infringed. Laws ensuring that local populations be prioritized in the provisioning of water, as well as environmental laws guaranteeing water quality could be viewed as "barriers to trade." In the case of NAFTA, the trade treaty CAFTA was modeled after, the threat of corporate lawsuits has often been enough to deter or overturn anti-corporate legislation.
"If we take the electricity sector and telecommunications as guides, privatization has meant higher rates, lower quality, less access, and less sovereign control over our public services," said Castillo. "CAFTA multiplies those effects, since it brings in the international heavy hitters and the rules they play by."
El Salvador’s recent past is peppered with privatization attempts that led to increases in prices, mass firings and, in some cases, massive popular resistance to defend access to public services. The sale of telecommunications sector and the attempt to privatize the parts of public healthcare system provide starkly contrasting outcomes.
In 1998, ANTEL, the former state-owned telephone company, was sold to France’s Telecom, which then sold it to Carlos "Hank" Slim’s America Mobil. (Slim is considered the Bill Gates of Mexico.) The privatization led to the layoff of 5000 workers, the loss of seniority, salary cuts and the dissolution of ASTEL, the ANTEL workers’ union.
ASTEL activists were targeted and fired. Three years passed before workers could overcome government obstacles and legally re-constitute a union, now known as SUTTEL. In the meantime, the rate for a home phone line shot up to $30 per month, second highest in Central America. (Costa Rica’s still-not-privatized phone company offers the region’s lowest rate at just under $11 monthly.)
Not all government attempts at privatization have gone to plan. In 2002, the nurses and doctors of the Salvadoran Social Security Hospital System (Sindicato de Trabajadores del Instituto Salvadoreño del Seguro Social/STISSS) (Sindicato de Medicos Trabajadores del Instituto Salvadoreño del Seguro Social/SIMETRISSS) went on strike to oppose the implementation of a healthcare voucher system and the privatization of hospital janitorial services.
Tens of thousands took to the streets in "white marches" (named for hospital employees’ white scrubs) to defend Article 65 of the Salvadoran Constitution, which guarantees universal healthcare for all. Resisting jail and constant repression, healthcare workers and protesters forced the government to retract its privatization proposal. Moreover, the Legislative Assembly passed the "State Guarantee of Health and Social Security," scribed by activists to reinforce Article 65 and bury the healthcare privatization issue. Doctors and nurses fired for taking part in the strikes were ordered re-hired by the Supreme Court.
Resistance to water privatization has been common throughout Latin America since the World Bank and the IDB began quietly administering hydro-sector privatizations in the 1980s. But many nations are faced with the unenviable position of agreeing to water privatization by signing off on structural adjustment loans or being without the resources necessary to provide service in the first place. In this context, the movement to defend water in Cochabamba, Bolivia in 2000 raised eyebrows because of its mass character, its pressure on the Bolivian state and its principled opposition to corporate control of water.
The Bolivian government granted Bechtel-subsidiary "Aguas del Tunari" a 40-year contract to run Cochabamba’s water system in 1999. The contract imposed fines for home rainwater collection and increased rates by 100 percent. The increase meant that many families were spending one-fifth of their monthly incomes on potable water. Others simply went without. In January 2000, a four-day strike against the Aguas de Tunari contract froze the city. Negotiations between movement leaders and city officials went nowhere. The government sent 1000 soldiers and imposed Martial Law. Protests of any kind were explicitly banned.
Despite the repression, the anti-privatization movement gained strength and ensuing protests resulted in 200 people injured, and one dead. When the government desperately negotiated a rate rollback with Aguas de Tunari, movement leaders didn’t budge. By April 2000, tens of thousands of Cochabamba residents were regularly participating in anti-privatization actions. Finally, the government nullified the contract and created a new publicly elected water commission.
Bechtel, for its part, is suing Bolivia in World Bank arbitration court for $25 million for breach of contract.
Like Bolivia, mass movements in Honduras, Nicaragua, and Costa Rica have significantly stalled or stopped plans to decentralize national water agencies. All three countries, however, have initiated co-investment "pilot projects" allowing private investment in some cities.
Historic memory of Latin American resistance to privatization is not lost on Salvadoran officials as they continue their march to decentralize ANDA and implement co-investment.
In Nov. 2005 a forum was held on Water Management at the San Salvador Sheraton Hotel. A government water technician obediently explained, "Co-investment is not the same as privatization. We’re not talking about a Cochabamba here."
Activists in the audience roared, but the declaration revealed the government’s cognizance of recent history: officials here have tweaked their strategy and they’re hoping no one notices.
Meanwhile, residents like Azucena in San Martín continue to suffer the effects of an under-funded public water system held hostage by the drive to privatize.
"They charge me about $7 per month, but water only comes every three days," she says. "I don’t know who is responsible, but service should be better."
From his humble office in the shadow of ANDA’s formidable block-long complex, Oscar Carpio of SETA squares himself in a creaky, worn-out office chair.
"When they privatized other services in El Salvador, collective contracts were torn up and the unions were declared illegal. Some workers weren’t prepared for what hit them," said Caprio. "We will be."