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Politics of Water Nov 17 THE UNIVERSITY OF CHICAGO THE POLITICS OF WATER: PRIVATIZING WATER AND SANITATION UTILITIES IN ARGENTINA AND CHILE A DISSERTATION SUBMITTED TO THE FACULTY OF THE DIVISION OF THE SOCIAL SCIENCES IN CANDIDACY FOR THE DEGREE OF DOCTOR OF PHILOSOPHY DEPARTMENT OF SOCIOLOGY BY MARIA AKCHURIN CHICAGO, ILLINOIS DECEMBER 2015 Dissertation Abstract Over the past thirty years, Latin America has been the site of substantial efforts to privatize urban water and sanitation services. As a consequence of these privatization experiments, the state shifted from running water utilities to a regulatory role while multinational private firms came to occupy service provider roles that had traditionally been in the public sector. In this dissertation, I compare this process in Chile and Argentina, focusing on the Santiago Metropolitan Region and Greater Buenos Aires since the late 1980s to the present. I show that in Chile, state-run water utilities achieved relatively high performance with respect to extending access to running water and sewerage connections before full-scale privatization went forward. The fact that they were high performing made them not only more attractive to private investors but also more likely to be interpreted as proof of privatization success later on. By contrast, in Argentina, where connections to running water and sewerage services were low and the waterworks system faced many problems, especially in the informal settlements and marginalized communities of Greater Buenos Aires, the experiment failed and private companies could not step in to fill gaps created by weak state capacity despite the expectations set up by the narrative of pro-market supporters. Still, the years of failed privatization inadvertently led the government to eventually pay attention to water and sanitation again, pouring funding into new public works alongside the creation of a new public sector company. I locate this narrower water and sanitation privatization story in the political and economic transformations unfolding in the two countries, considering social responses to water privatization, and showing that whereas both the efforts to deepen privatization, as in Chile, or return water to the public sector, as in ! ii ! Argentina, were mainly state-led, the shifts created new ways for civil society groups to engage with the state and private multinational actors when making claims about the provision of basic services and articulating socioeconomic rights. The research is based on more than twelve months of fieldwork in Chile and Argentina to gather primary and secondary historical sources as well as to carry out sixty-five semi-structured interviews with knowledgeable respondents involved on various sides of the water privatization process, including government officials, representatives from the private sector, and activists. ! iii ! Table of Contents Abstract ........................................................................................................................................... ii Abbreviations .................................................................................................................................. v List of Figures ............................................................................................................................... vii List of Tables ............................................................................................................................... viii List of Images ................................................................................................................................. x PREFACE Water in the City ....................................................................................................... xii CHAPTER 1 Introduction: From State-Led Development to the Transformation of Public Services ........................................................................................................................................... 1 CHAPTER 2 Discovering Water and Sanitation as a Global Problem and a Global Market: International Organizations, Multinational Companies, and the Rise of Water Privatization ...... 35 CHAPTER 3 Embracing Market Logic in Chile: The Radical Transformation of Public Water Utilities and the Delayed Emergence of a Movement for the Defense of Water ......................... 59 CHAPTER 4 A Failed Experiment in Argentina: Private Service Providers, Local Activists, and the Return of the State ................................................................................................................. 115 CHAPTER 5 Conclusion ........................................................................................................... 170 Bibliography ............................................................................................................................... 181 Appendix 1. A Note on Historical Research in the Field ........................................................... 191 Appendix 2. Selected Images ...................................................................................................... 193 ! iv ! Abbreviations AASA Aguas Argentinas S.A. (Privatization-era utility serving Greater Buenos Aires) AGBAR Sociedad General de Aguas de Barcelona S.A. (Consortium member of Aguas Argentinas) AIDIS Asociación Interamericana de Ingeniería Sanitaria y Ambiental (Inter-American Association of Sanitary and Environmental Engineering) APLA Agencia de Planificación (Argentina) AySA Aguas y Saneamientos Argentinos (New public sector utility serving Greater Buenos Aires) BIT Bilateral investment treaty CEER Centro de Estudios de Economía de la Regulación CGT Confederación General del Trabajo de la República Argentina CORFO Corporación de Fomento de la Producción (Chile) CTA Central de Trabajadores de la Argentina DGA Dirección General de Aguas (Chile) ECLAC Economic Commission for Latin America and the Caribbean EMOS Empresa Metropolitana de Obras Sanitarias (Old public sector utility serving Santiago metropolitan region) ERAS Ente Regulador de Agua y Saneamiento (Current regulatory agency in Argentina) ETOSS Ente Tripartito de Obras y Servicios Sanitarios (Privatization-era regulatory agency in Argentina) FARN Fundación Ambiente y Recursos Naturales (Argentina) FENATRAOS Federación Nacional de Trabajadores de Obras Sanitarias (Chile) IAM Inversiones Aguas Metropolitanas IBRD International Bank for Reconstruction and Development ICSID International Center for Settlement of Investment Disputes IDA International Development Association IMF International Monetary Fund ISI Import substitution industrialization MERCOSUR Mercado Común del Sur (Southern Common Market) ! v ! ! MODATIMA Movimiento Defensa por el Derecho al Agua y Protección del Medio Ambiente (Chile) NAFTA North American Free Trade Agreement OSN Obras Sanitarias de la Nación (Old public sector utility serving Argentina and later, Greater Buenos Aires) PAHO Pan American Health Organization PSP Private sector participation SENDOS Servicio Nacional de Obras Sanitarias (Chile) SISS Superintendencia de Servicios Sanitarios (Regulatory agency in Chile) UNDP United Nations Development Programme UNIREN Unidad de Renegociación y Análisis de Contratos de Servicios Públicos (Argentina) WHO World Health Organization ! vi ! List of Figures Figure 0.1 Santiago Metropolitan Area Population, 1835-2012 ................................................. xvii ! Figure 0.2 Buenos Aires Metropolitan Area Population, 1869-2010 ......................................... xvii Figure 2.1 Total Official Development Assistance in the Water and Sanitation Sector Worldwide, 1968-2012 (current prices USD millions) ..................................................................................... 45 Figure 2.2. Water and Sewerage Projects with Private Sector Participation in Latin America, Funded by the World Bank, 1985-2011 ........................................................................................ 49 Figure 3.1. Drinking Water and Sanitation Coverage in Urban Areas in Chile, 1965-1995 ........ 90 Figure 4.1. Poverty in Buenos Aires and Greater Buenos Aires, 1988-2003 ............................. 142 ! vii ! List of Tables ! Table 1.1 Comparing the Cases: Water and Sanitation Privatization in Santiago and Buenos Aires .............................................................................................................................................. 18 ! Table 1.2. Sector-Specific Institutional Conditions Affecting Privatization Outcomes ............... 31! Table 1.3. Political Conditions Affecting Privatization Outcomes ............................................... 31! Table 1.4. Civil Society Conditions Affecting Privatization Outcomes ....................................... 31 ! Table 1.5. Economic Conditions Affecting Privatization Outcomes ............................................ 32! Table 2.1. UN International Conferences on Water and the Environment ................................... 46! Table 2.2. Countries Attempting Private Sector Participation in the Water and Sanitation Sector in Latin America ........................................................................................................................... 50! Table 3.1. Chilean Laws Leading to Transformation of the Water and Sanitation Sector, passed in 1988-1989 ................................................................................................................................. 82! Table 3.2. Investment requirements for infrastructure projects,
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