A Travellerspoint blog

Why - what - how?

What I'm doing, and why.... the how is the question, as ever!

This year, my remarkably good fortune finds me heading back to South America, although with some degree of purpose. This year I'm taking a year out of my medicine studies (because y'know, 5 years isn't really long enough) to do a BSc in International Health. A rather attractive part of the course is the opportunity to design your own research project.. and to go and do it. So here I am, a week before departure, frantically piecing it all together - something of a challenge for my first ever research project.

Anyway, just so that you have an idea of what exactly I should be doing there, and why, I figured I should explain a little background to my project...

Argentina emerged from military dictatorship with an atrocious economy, and the new democratic government had the unenviable challenge of restoring some sort of functionality to a country brutalised by a junta of incompetence. President Carlos Menem, following 'advice' from the IMF and various other pro-Washington-Consensus organisations, followed an aggressive programme of privatisations, market liberalisations and all of the other neo-con economic activities that go with that. Many water systems were privatised, in line with other countries in Latin America at the time. The Obras Sociales de la Nación, a state-owned water utility was included in the privatisation programme. In fairness, OSN was really quite rubbish - although, at the time most things were under the military regime, OSN hadn't had the chance to function under a democracy. All the same, privatised it was, and this was to be completed rapidly in a 2-step process - bidding according to technical expertise, and bidding on a financial basis.

Privatisation, and neo-liberal economic policies are supposed to work on the basis that competition improves efficiency and quality, and that the market will always solve problems, rather than relying on 'inefficient' state sectors to find solutions - to things like providing water, for example. This is all very well, and certainly some types of activities are better in private hands - for example non-essential consumables. All privatisations, however, only work if that element of competition exists - hence the many anti-monopoly laws throughout the western world. I am, of course, explaining this in simple language because I have a very simplistic understanding of these issues, but even to me, the privatisation of water in Buenos Aires did not meet the neo-conservative ideals it was supposed to embody. The competition element ended with the bidding process - a consortium of foreign (and some Argentine) companies led by French firm Suez - won the bid on the basis of their promise to cut water tariffs by 27%. The consortium formed a company called Aguas Argentinas S.A., and in 1993 were awarded a 30 year concession (where the water network was owned by the government, but the financing and profits were with AASA) to supply water to the city of Buenos Aires, and a number of outlying districts.

Needless to say, the monopolistic mechanisms were in action probably before most citizens understood that their water had been leased to private hands. The promised cut in water tariffs took place, but the bidding process hadn't included connection charges as a competitive element - therefore, at the beginning of the concession, connections to water and sanitation cost $600 and $1000 respectively. Only very rich BA residents could even possibly contemplate such a cost, and as a result, many portenos were connected but didn't cough up... so the company renegotiated the contract after about 6 months. This continued to occur, with AASA citing the extra risk of extending the network to the poorer barrios (or neighbourhoods) as a reason to up their tariffs. By 2006, the water tariffs had risen 87%.

AASA were also abysmally regulated. The regulator, known as ETOSS, had barely any teeth to implement fines, and even if it did they were minute compared to the AASA budget. In fact, to AASA it was often cheaper to incur a fine than to improve a service - a far cry from the improved efficiency promised by privatisation.

Matters came to a head somewhat when the Argentine peso, which President Menem had 'pegged' to the dollar in the 1990s, was dramatically unpegged. Where the pegging had meant an exchange rate of US$1=Ar$1, the unpegging process in a bid to tame the increasingly wild economy sent the value of the peso into free fall. The crisis forced many Argentines into poverty - even more were now unable to pay for their water tariffs, or connection charges. For the foreign water companies, their situation was even worse, given the massive investments they had made, and the dwindling returns they were now faced with. The obvious route from the point of AASA was to ask the government again for a rise in water tariffs, but the government stood its ground on the basis of pure practicality - people could not pay already, and the population were on the street banging pots and pans screaming for solutions. After rapid turnover of presidents (3 in under a month), Néstor Kirchner's government finally brought things under control, but water quality continued to be eroded, and in 2006 high nitrate levels finally allowed the government to terminate the concession contract, and the water utiilities found themselves in the hands of publicly-owned Aguas y Saneamientos Argentinas.

Given the turbulent recent past, and the questionable access issues related to the bonaerense privatisation project, an obvious question is - what effect did this have on health...

Hopefully, my project will do something to find an answer...

I'm just not *quite* sure how yet!

Posted by fuzzbuzz85 09:31 Comments (0)

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