Turning the Taps Back to the States

Privatization of Utilities Falls Out of Favor in Latin America

LOMAS DE ZAMORA, Argentina -- Carina Grossi turned on the tap in her kitchen sink and raised a glass of water to the light, her eyes narrowing in disgust.

"Look at that," said Grossi, 32. "Look how cloudy the water is, how dirty."

"It's a disaster," said her father, Eduardo, a 65-year-old grocer. "That's what is making your mother so sick."

Like many of their neighbors in this working-class suburb of Buenos Aires, the Grossis are convinced that their water is contaminated -- and they now use bottled water to make soup and tea. They blame the problem on the French company that has provided water and sewer service since the federal government privatized the utility in 1993.

Across Latin America, a growing number of people say the privatization of public services, a movement that swept the region in the 1980s and 1990s, has failed. Protests have erupted over the issue in several countries, and some governments are beginning to reverse these policies. Last week Argentina announced it was rescinding its 30-year contract with the French company Suez and reinstating government control of the water supply.

The Grossis, among many others, have welcomed the about-face.

"The trains, the water, the electricity -- I say it all needs to come back to national control," Carina Grossi said. In her suburb, authorities estimate about 30 percent of homes lack water and the majority are without sewage service. "We pay money out to these foreign companies and get nothing in return," she said. "This is our country. We should stop selling it out to others."

The backlash against the private sector has been building for several years in many pockets of the region. In some cases, such as Bolivia and Mexico, it has been actively promoted by grass-roots leaders in tandem with their demands for limiting the influence of foreign interests.

In 2000, street protests in the Bolivian city of Cochabamba prompted the state to annul a water contract with Bechtel Corp.; last year more demonstrations in El Alto, a city adjacent to the capital, La Paz, led to the suspension of a contract with a subsidiary of Suez.

In the past year, protests against the privatization of other sectors, including electricity and energy, have broken out in Peru, Ecuador, Guatemala and Mexico. Last week, several thousand demonstrators marched through Managua, the capital of Nicaragua, to demand the government improve water services without privatizing them.

Last week, representatives from 148 countries gathered in Mexico for the World Water Forum, held every three years to discuss global water supplies. The forum voted to issue a decree stating that governments -- not private companies -- should hold primary responsibility for providing safe drinking water. Bolivia, Cuba, Venezuela and Uruguay attached a separate statement noting their "profound concern" about the possible negative impacts of international investment agreements and free trade.

Some officials and experts who promote the role of the private sector in development of basic services said the swing toward nationalization seems like a case of collective amnesia: People are forgetting that many state-run utilities were a mess, they say, wracked with debt and in need of bailouts.