[3] The tensions erupted when a new firm, Aguas del Tunari (a joint venture involving Bechtel), was required to invest in construction of a long-envisioned dam (a priority of mayor Manfred Reyes Villa), so they had drastically raised water rates.

[citation needed] The restoration of civilian rule to Bolivia in 1982 ended decades of military dictatorships, but did not bring economic stability.

The World Bank project that began in 1990 had covered three cities, leading to sharply diverging outcomes: Access increased and service quality improved in Santa Cruz de la Sierra where a successful cooperative provided services, which enjoyed, according to the World Bank, "the reputation as one of the best-managed utilities in Latin America."

At that time the bidding process for the concession had been declared void by the Supreme Court in response to a legal challenge by the municipality of Cochabamba.

[9] Without regard for its weak bargaining position, the Bolivian government under President Hugo Banzer agreed to the terms of its sole bidder Aguas del Tunari and signed a $2.5 billion, 40-year concession "to provide water and sanitation services to the residents of Cochabamba, as well as generate electricity and irrigation for agriculture.

[4] The implementation of Aguas del Tunari's program was set to correlate with a government plan to present a $63 million rural development package to peasants with funds for crop diversification, and extending electric and telephone services to remote areas.

[11] The first to raise concerns over the scope of the law was the new Federación Departamental Cochabambina de Regantes (FEDECOR) and its leader Omar Fernandez.

"[4] On top of this, in order to secure the contract, Aguas del Tunari had to promise the Bolivian government to fund the completion of the stalled Misicuni dam project.

While the consortium had no interest in building the dam, it was a condition of their contract, as it was backed by an influential member of Banzer's mega-coalition, the mayor of Cochabamba, Manfred Reyes Villa.

"[4] The poor were joined in their protest by January 2000, when middle-class homeowners and large business owners stripped of their subsidies saw their own water bills increase.

[4] Starting in early January 2000 massive protests in Cochabamba began with Oscar Olivera among the most outspoken leaders against the rate hikes and subsequent water cut-offs.

[16] The demonstrators consisted of regantes (peasant irrigators) who entered the city either under village banners, or carrying the wiphala; they were joined by jubilados (retired unionized factory workers) under the direction of Olivera,[4] and by Bolivian citizens.

In the meantime, the Coordinadora made their own referendum and declared that out of fifty thousand votes, 96% demanded the contract with Aguas del Tunari be cancelled.

More demonstration leaders were arrested, with some being transferred to a jungle prison in San Joaquin, a remote town in the Amazon rainforest on the border with Brazil.

[4] The protest even inspired officers in four La Paz police units to refuse to leave their barracks or obey superiors until a wage dispute was settled.

[17] The Bolivian Constitution allows the President (with the support of his Cabinet) to declare a 90-day state of siege in one or more districts of the nation as an emergency measure to maintain public order in "cases of serious danger resulting from an internal civil disturbance".

"[17] The decree suspended "some constitutional guarantees, allowing police to detain protest leaders without a warrant, restrict travel and political activity and establish a curfew.

[17] On April 9, 2000, near the city of Achacachi, soldiers met resistance to removing a roadblock and opened fire, killing two people (including a teenage boy) and wounding several others.

[4] Ronald MacLean Abaroa, the Minister of Information, told reporters the demonstrations were the work of drug traffickers trying to stop the government program to eradicate coca fields and replace them with cotton, pineapples, and bananas.

"[16] Felix Santos, a leader of the farmers rejected such claims, saying "We are protesting because of higher gasoline and transportation prices and a law that will charge us for the use of water.

Demonstrators put up roadblocks of stones, bricks and barrels near Achacachi and Batallas, and violence broke out there as well (one army officer and two farmers were killed and dozens injured).

[16] After a televised recording of a Bolivian Army captain, Robinson Iriarte de la Fuente, firing a rifle into a crowd of demonstrators, wounding many and hitting high school student Víctor Hugo Daza in the face, killing him, intense anger erupted.

[4] After coming out of four days of hiding, Oscar Olivera signed a concord with the government guarantee the removal of Aguas del Tunari and turning Cochabamba's water works over to La Coordinadora.

[5] The Banzer government then told Aguas del Tunari that by leaving Cochabamba they had "abandoned" the concession and declared the $200 million contract revoked.

"[11] On the day following Víctor Hugo Daza's funeral, Óscar Olivera climbed to his union office's balcony and proclaimed victory to the exhausted crowd.

"[5] On 23 April 2002 Oscar Olivera led 125 protesters to the San Francisco headquarters of Bechtel, the only member of Aguas del Tunari located in the Americas.

[4][5] In the end, water prices in Cochabamba returned to their pre-2000 levels with a group of community leaders running the restored state utility company SEMAPA.

[24] The New Yorker reports "in Cochabamba, those who are not on the network and who have no well, pay ten times as much for their water as the relatively wealthy residents who are hooked up", and with no new capital the situation can not be improved.

"[25] Franz Taquichiri, a veteran of the Water War and an SEMAPA director elected by the community, said "I don't think you'll find people in Cochabamba who will say they're happy with service.

According to the Bolivian ambassador Pablo Solón Romero, the International Finance Corporation (IFC), part of the World Bank Group, was a share-holder of Aguas de Illimani.