Private Rivers: Will Transnational Water Companies Swallow El Salvador?

El Salvador’s water workers union (SETA, in Spanish) is bracing for a fight against government attempts to privatize that country’s water, and by extension, their jobs. 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. 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, about 70% of Salvadoran workers earn the minimum wage of $158 per
month. The average water worker earns between $250-$350 per month,
depending on seniority.

SETA 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 loan provided money to
“decentralize” ANDA, set up smaller municipal water companies and open
them to public-private concessions. So far, 19 municipalities,
representing 18,000 household water connections, are voluntarily
experimenting with a variety of concession formats, which contract out
water line maintenance and distribution to private companies.

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% 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
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 decentralization of national water administrations, such as ANDA,
and the implementation of concessions to private corporations are
common under such structural adjustments.

The IDB in El Salvador
In August 2005, SETA, as part of a larger activist coalition, prevented
the introduction of a Bill which would have mandated concessions in 152
(out of 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 (CAFTA) goes into effect for
March 1, 2006. CAFTA creates a new legal framework for the sale of
water and other public services, although CAFTA allows countries can
“opt-out” of water if they choose to. (Nicaragua and Honduras did.)

In El Salvador, President Tony Saca chose no service exemptions, and
thus opened water to competition by international corporations. Under
CAFTA, multi-national water companies must be given “national
treatment,” though there is no obligation for corporations to sell
water in-country. 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. CAFTA also contains NAFTA’s
“investor rights’” provisions, which gives corporations the right to
sue national and local governments if a company feels that it’s “right
to profit” has been infringed. Under NAFTA, the threat of corporate
lawsuits has been enough to deter or overturn more than a few consumer
or environmental defense initiatives.

Castillo says, “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. CAFTA multiplies those effects, since it brings in the
international heavy hitters and the rules they play by.

Privatization Polemics
El Salvador’s recent past is peppered with privatization attempts that
led to increased 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 America Mobil. The sale and
re-sale led to the layoff of 5000 workers, the loss of seniority,
salary cuts and the dissolution of ASTEL, the ANTEL workers’ union.
Three years passed before workers could overcome government obstacles
and legally re-constitute a union, now known as SUTTEL.

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. Resisting jail and constant
repression, healthcare workers and supporters 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 1980s. But the resistance in Cochabamba, Bolivia in
2000 raised eyebrows because of its mass character 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 a 100% rate hike. The
increase meant that many families who could afford it were spending
one-fifth of their monthly incomes on potable water. In January 2000, a
four day strike against the Aguas de Tunari contract froze the city.

Facing off against government repression, further marches 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. 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.

Movements in Honduras, Nicaragua, and Costa Rica have stalled or
stopped water privatization plans. All three countries, however, have
initiated “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.

At a Nov. 2005 forum 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 are planning a kinder,
gentler privatization; and they’re hoping no one notices.

Meanwhile, residents like Azucena in San Martín continue to suffer the
effects of an underfunded 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. We will be.”