Post by Bozur on Feb 28, 2005 17:27:48 GMT -5
NYTimes.com > International > Americas
Latin America Fails to Deliver on Basic Needs
By JUAN FORERO
Published: February 22, 2005
David Rochkind/Polaris, for The New York Times
Remedios Cuyuña of El Alto doing the family laundry in frigid well water. She could not afford the piped water offered by a French company.
David Rochkind/Polaris, for The New York Times
The Bolivian government canceled the contract of Aguas del Illimani, which provided water for El Alto, after people protested they could not afford the $450 hookup fees.
EL ALTO, Bolivia - Piped water, like the runoff from the glaciers above this city, runs tantalizingly close to Remedios Cuyuña's home. But with no way to pay the $450 hookup fee charged by the French-run waterworks, she washes her clothes and bathes her three children in frigid well water beside a fetid creek.
So in January, when legions of angry residents rose up against the company, she eagerly joined in. The fragile government of President Carlos Mesa, hoping to avert the same kind of uprising that toppled his predecessor in 2003, then took a step that proved popular but shook foreign investors to their core. It canceled the contract of Aguas del Illimani, a subsidiary of the $53 billion French giant Suez, effectively tossing it out of the country and leaving the state responsible.
"For us, this is good," Ms. Cuyuña said, voicing the sentiment in much of El Alto. "Maybe now, they will charge us less."
That is far from certain. Even less certain is how she and 130 million other Latin Americans will get clean water anytime soon in a region where providing basic services remains among the most pressing public health and political issues.
Governments like Bolivia's tried the task themselves before, abandoned it as too costly, and turned to private companies in the 1990's. Today as privatization is rejected, foreign investment is plummeting across the region and the challenge is being returned to states perhaps less equipped than a decade ago.
The trend is not unique to Bolivia, where a lack of clean water contributes to the death of every tenth child before the age of 5, and it has presented Latin American leaders with a nettlesome question: what now?
"The decisions that have to be made are stark and difficult," said Riordan Roett, director of Latin American studies at Johns Hopkins University. "They're going to have to make some sort of compromise, and that compromise often means buying back and taking over those services - and then, of course, making them efficient in the hands of the state. Their track record doing this in the past was miserable."
Indeed, the heated backlash against free-market changes - fueled by the sense that they promised more than they delivered while offering overpriced, often flawed services - has at once left governments vulnerable to volatile protests and forced foreign companies to retreat.
No companies have been more buffeted than those running public utilities offering water, electrical and telephone services, or those that extract minerals and hydrocarbons, which, like water, are seen as part of a nation's patrimony.
In Peru, despite major economic growth, foreign investment fell to $1.3 billion last year from $2.1 billion in 2002. Ecuador has also seen investments sag, as oil companies that once saw the country as a rosy destination have faced the increasingly determined opposition of Indian tribes and environmental groups.
Argentina, which has taken a decidedly leftist path in the economic recovery following its 2001 collapse, has recouped only a fraction of the investments it attracted just a few years ago.
Across the region, companies are more than ever weighing political risks when considering expansion plans. Political leaders, meanwhile, are having to weigh the need for foreign investment against the demands of citizens who are increasingly quick to hit the streets.
"In the last decade, non-economic factors have become even more important in affecting investments," said César Gaviria, former secretary general of the Organization of American States.
"Political risks have grown to a great degree," added Mr. Gaviria, now chairman of Hemispheric Partners, a firm based in the United States that provides political and economic risk analysis to investors. "There's no doubt about it."
The fall in foreign investment is perhaps most pronounced in Bolivia, where in 1999 it totaled $1 billion as gas companies flocked here to mine newly discovered fields. Last year, it fell to $134 million, as companies proved skittish after President Gonzalo Sánchez de Lozada was ousted in uprisings set off by his plans to permit multinational companies to export Bolivia's natural gas.
Those who resist the trends of globalization have been emboldened by what they see as the success of local people in asserting their control over resources.
"It has been phenomenal to see a movement largely made up of the indigenous and peasant farmers fight and win," said Deborah James, who directs campaigns against American-led globalization efforts at Global Exchange, a San Francisco group. "What you see is a massive popular rejection of transnational companies owning essential services."