Colombia: Fighting Development Banks for the Human Right to Water

This week five hundred people representing over a hundred social movement groups from across the Americas gathered in Medellín for a People’s Development Alternatives Assembly coinciding with the 50th anniversary meeting of the Inter-American Development Bank.

ImageThis week five hundred people representing over a hundred social movement groups from across the Americas gathered in Medellín for a People’s Development Alternatives Assembly coinciding with the 50th anniversary meeting of the Inter-American Development Bank.  

With the slogan “IADB: 50 Years Funding Inequality. Enough!,” the assembly organizers put forward a program of workshops and spaces for social movement dialogue, combined with public marches and visible denouncements of what they call US neoliberal policies writ large on Latin America. 

Organizers like Diego Rodríguez from the Argentinian non-profit, M´Biguá, Citizenship & Environmental Justice, were critical of what they called the unsuccessful development model promoted by the bank, the promotion of privatization policies at the expense of local interests, and the bank’s populist rhetoric, which they say belies the exclusion of women, indigenous communities, people of African descent and other populations in bank programs. 

Participants critique the fact that, in 1960, the region had an external debt of US $237 million, which today is above $42 billion. The Colombian IADB debt alone would require $2,500 from every Colombian to pay off. The bank is responsible for 41% of the country’s external multilateral debt, and 9.5% of total public debt. Activists point to bank investments in the privatization of public infrastructure and programs promoting export dependence resulting in the country importing 90% of wheat and corn supplies.  

"Considering that the primary objective for the creation of the Inter-American Development Bank was to speed up the process of both individual and collective sustainable economic and social development in its member countries," says Diego Rodríguez. "It’s reasonable to ask: How is it that after 50 years of work by the so-called experts do we still have alarming levels of poverty, destitution and inequality across the region?"  

The assembly comes at a time when the bank’s role in the country’s water privatization in particular is being questioned, as a broad coalition of social movements in Colombia push for an official referendum on the human right to water. From 1993 to 2005, Latin American countries took on $5.3 billion in debt related to water projects. Most of these loans, according to Food & Water Watch, required countries to change laws and public institutions to allow private ownership and to raise overall rates.  

Organizers are demanding that the bank lift loan requirements obligating private sector participation in water management, halt all loans to these companies and loan agreements which threaten the environment, and are calling for the IADB to give priority to public health and water access projects targeted to low-income communities. 

Groups like Gender Action have also criticized the bank’s effects on women. They say less than 1% of funds distributed between 2003 and 2006 went to reproductive health projects and HIV/AIDS prevention. They’re calling on the bank to make public information in its Gender and Diversity Unit funding, and to increase funding of programs promoting gender equality.  

The bank has also been under fire recently from unlikely enemies, like Senator Richard Lugar (R-IN), who has criticized the bank for over a billion dollars in losses connected to investments in toxic assets. Two financing alternatives critical of the bank’s history in the region have also emerged, the Venezuela-led Bank of the South and the ALBA (Bolivarian Alternative for Latin America), a partnership of Bolivia, Cuba, the Dominican Republic, Honduras, Nicaragua and Venezuela. 

The IADB is run by 49 member states, 21 of which are not in the Americas. The US holds 30% of voting shares, while Latin American countries hold 50%. In 2007, The bank gave $2.9 billion to private enterprises, nearly half the total, and plans to approve loans totaling $18 billion at the meeting this weekend. Between 1996 and 2002, the bank gave $523.7 million to transnational water companies after they were awarded concessions in Argentina, Bolivia and Honduras. But Colombia might be the country most impacted by IADB privatization policies – in 15 years, nearly 50% of the country’s water services have been privatized. 

Bank-Led Water Privatization  

ImageWith Law 142 of 1993, Colombia’s Congress made way for private companies to run public utilities, and also began the process of lowering subsidies to poor residents. Cartagena was the first to privatize, with the help of the World Bank, giving Spanish company Aguas de Barcelona, a subsidiary of French conglomerate Suez, a 20-year contract and 45% of the new company, Aguacar. In the next few years, cities including Barranquilla, Santa Marta, Palmira, Tunja, Cartago and Monteria all signed concessions with multinational companies. As of 2004, there were 125 private and 48 mixed public-private water companies in the country.  

The bank’s effects on water access are best illustrated by the example of Pereira, the capital of the department of Risaralda. According to a Public Services International (PSI) report, the city’s water utility, Public Companies of Pereira (EEPP) was an autonomous, multi-service enterprise that also supplied telephone, electricity and waste services. Like many Colombian utilities, the company used surplus revenues from phone service fees to subsidize the costs of water service to poor residents. The IADB accused EEPP of using this subsidy as a tactic to “hide financial deficits for water supply and sewerage.” The same report documents that in the three years following the IADB-mandated separation of the different service sectors of the original company, water rates for the poorest residents increased 238%, and a variety of measures were used to terminate union members.   Article 8 of the performance plan developed in compliance with IADB regulations obliges the company to convert to a mixed enterprise for public services, a change that ended protections of the acquired labor rights of SINTRAEMSDES members.

A study by NGO Misión Vida also found a reduction in water consumption in Pereira following the private conversion. Another 1996 study by researchers at the Universidad de los Andes also found consumption declines of 18% to 26% in Medellín and Barranquilla following rate increases in privately controlled utilities.  

But not all cities have caved in to privatization. The World Bank, an IADB relative, loaned Bogotá $145 million in 1996 to prop up the city’s water utility, and for many years encouraged the city to privatize, ultimately leading city officials to decline further World Bank funding. The Water and Sewerage Company of Bogotá (EAAB) has remained public, increasing access to 300,000 residents each year in neighborhoods across the sprawling metropolis at the base of the Andes.  

Menahem Libhaber, the World Bank’s chief water and sanitation engineer in Latin America, told the International Consortium of Investigative Journalists in 2003 that while EAAB is a "very good company, very highly respected," it needs to be privatized to reduce costs. "The salaries are huge, the employees get a lot of benefits — health and education — which is OK. I’m for socialism. But this is very expensive — people cannot pay the water bill," he said. "The company needs private sector involvement." According to the same ICIJ report, instead of paying out dividends to investors, the EAAB reinvests its income. In 2001, the EAAB spent about $180 million in public works, mostly in poor neighborhoods, 40% of all water-sector investment in Colombia. 

And in 2002, Cali water workers union SINTRAEMCALI won a battle against privatization of the city’s water utility. The campaign culminated in a 35-day occupation of the central administration building, and featured support from fellow Public Services International (PSI)  affiliates in the United Kingdom and the UK Colombia Solidarity Campaign.  

Water as a Human Right  


International Development Bank: 50 Years Financing Inequality

With privatization threatening to further erode basic access, subsidized water rates and union contracts, and at least 30% of the population without basic access to water according to the Colombian Red Cross, activists have decided to take coordinated action. They’re using a strategy made popular in Uruguay in 2004, when the country became the first in the world to declare access to clean water a fundamental human right through a public referendum. 

Led by Ecofondo and the Committee to Support the Referendum, a coalition of labor unions, environmentalists, consumer organizations, indigenous groups and student unions have been organizing since 2007 to win an official referendum to add the human right to water to those guaranteed by Colombia’s constitution.  In September of 2008, organizers submitted two million signatures in support of the effort; well more than the 5% of the population needed to put the issue on the ballot. 

The measure was submitted before Congress on March 16th. Two days later, a colorful, multigenerational gathering of over 5,000 people from nearly every department, as far as the remote district of Putumayo, assembled in the capital to march from the Planetarium to the Plaza Bolívar in front of Congress. 

The first days of debate failed to yield agreement in Congress. Interior Minister Fabio Valencia Cossio said the Uribe government opposes the referendum, because it is “unclear” and “inconvenient.”  News reports this week however indicate that the president will support the popular initiative in order to increase the chances that another referendum also be allowed to make its way through Congress: one changing the constitution to allow him to run for a third term. 

Many hope the general sentiment won’t be reflected in statements made by the chief of the Public Ministry,  Alejandro Ordóñez , who told one reporter that “it’s not possible to recognize water as a fundamental human right because the state has no way of complying.” Some activists point to comments such as these as evidence of opposition by private entities in Bogotá and Medellín benefiting from current policies. But one popular chant, “The water is ours, damnit!” and many signs and banners decrying the takeover of public resources for profit, belied the activists’ resolve. “We’ve always been here,” a representative of the Nasa indigenous people said from a stage in the plaza. “Just like the water that gives us life.” 

Andrew Willis Garcés is an organizer based in Washington, DC currently working with International Peace Observatory in Colombia, and writes the blog