In the past ten years, three giant global corporations have assumed control over the water supplied to almost 3 million people in every continent of the world. A twelve month investigation by journalists in Canada, the US, Europe, Asia, and Latin America shows that the results range from questionable to disastrous. And it shows how well-meaning municipal governments in the US and Canada can become vulnerable to the persuasive techniques of these huge high-powered corporate giants.
In the past few years, trans-national conglomerates already have privatized all or parts of the water systems of Atlanta, Berlin, Buenos Aires, Bolivia, Casablanca, Chattanooga, Ghana, Houston, Jacksonville, Jersey City, Lexington, New Orleans, Peoria, Ontario, San Francisco, Brazil, Argentina, Philippines, France, Britain, and Africa.
In 1993 the government privatized the Buenos Aires water utility under pressure from the World Bank, the International Monetary Fund (IMF) and the US government. At the time it said that private firms would do better at bringing water and sewage connections to poor areas.
The sell off of the water company was part of a wholesale auction of state assets to foreign and Argentine businesses. Privatization was seen as a "magic bullet" that would save Argentina from an economic crisis that had produced hyperinflation of almost 5000 percent in 1989.
The government granted a thirty year concession to run the water concession to Aguas Argentina, a consortium controlled by two French corporate giants, VIVENDI and SUEZ. The consortium didn't pay a cent for the concession, but promised to reduce water rates and improve and expand water and sewage services.
Within a year of winning its concession, Aguas Argentina wanted to renegotiate its contract. Over the next eight years initial contractual commitments, including promises to extend water and sewage to millions living in poor districts, vanished like water into the sand. Even as the company increased rates and charged large connection fees to customers who could ill afford them; the government did away with its regulatory oversight of the company. The failure of government to meet the responsibilities that privatization demanded has been the theme of Argentina's new water regime. And this is the water solution held up as a solution for the rest of the world!
In the spring of 2002, the Aguas Argentina defaulted on about $700 million in loans and threatened to reduce water services if the government didn't guarantee the loans in US dollars. The government refused, but the International Monetary Fund (IMF) insisted the government pay or the IMF would not renegotiate Argentina's Foreign Debt. The government was forced to grant Aguas Argentina a 10% increase. The rate hikes didn't help the poor who still waited to be hooked up to water and sewer mains. Because there are no sewers, the rains flood the houses and septic tanks which then overflow into wells. Boiling water is the only form of water treatment and not everyone can afford the gas to boil the water. Nitrate levels are often dangerously high, so too are waterborne diseases and intestinal bugs cause 20% of infant deaths.
Privatization was first opposed by the unions, but the unions were offered 10% in the company. While the union leaders were enriched, about half of the 7200 workers lost their jobs. Capitol was needed to bring connections to the poor neighborhoods around Buenos Aires, but the World Bank refused capitol for expansion and upgrade unless Argentina privatized.
Investigation revealed that a World Bank employee went to work for Arguas Argentina under a bank exchange program and helped negotiate higher water rates for the company. When he returned to World Bank he headed a team that gave Aguas Argentina a $300 million loan.
The success of the profitable privatization made a model to be followed in the Philippines, Indonesia, Australia, and South Africa, but the success has been a mirage as all have been plagued by greed, deceit, and false promises.
A UN Development Program department head said, "Governance and Politics are about who gets what, by what means." The lack of safe water affects primarily the poor, and the poor have a soft voice. They speak, but they are not heard.
In Brazil, while millions of people are still waiting for the benefits of privatization, the move enriched a group of union leaders, crony capitalists, and officials in government. The private gains of privatization have been spectacular. Investors have raked huge dividends and in some cases earned windfall profits from the timely sales of their shares. Some officials are being investigated on corruption charges.
In France, companies have been providing polluted water that is unfit to drink; corruption is rampant with water-bribery schemes. Company board members are under investigation. French cities with private water charge 30% more than cities with public water. German, Czech Republic, and French municipalities must guarantee payments to companies if consumption or prices are not sufficient to ensure a profit.
In Britain during the Thatcher Government, prices skyrocketed up to 450% and thousands that were unable to pay their bills had water service cut; as a result dysentery increased six-fold.
These same British and French companies are vying with American firms to control American and Canadian water service. Dominated by a few massive corporations, operating on a global scale, they meet each year in a Water Summit. A recent one in Japan, discussed how to overcome the political obstacles to privatize water.
Most Americans and Canadians take for granted an assured supply of safe drinking water and we don't see water as a commodity to be bought and sold like barley; yet that is what is happening to an increasing number of countries around the world. There are growing pressures in Canada and the US to privatize all our water services and treat water resources as an export commodity. We have the largest fresh water source in the world and greedy eyes are on it, and see it as a PROFIT. Investment advisors are calling water the world's number one opportunity for profit.
Water privatization, however, means increasing unemployment, water prices skyrocketing out of reach for many people, increased service cut-offs, decreased quality leading to disease, water being cut off to farm products so as to give to developments, hard choices as to who gets the water, drought conditions leading to uncontrollable fires.
Headlines of August 27, 2003: "British company running Guyana's water company to cut supplies for unpaid bills." Thousands of the poor are unable to pay the new rates.
The Water Investment Act of 2002 before Congress now appears to increase money spent on water treatment facilities on Indian Reservations. This will get support from some who would be in favor of what would help them, but there is a little provision in the act, it would require local water providers to "consider" selling their facilities to private corporations before they are able to receive federal aid for improvement or maintenance of their water supply systems.
In Toronto an American firm, EMA, has been conducting a pilot program to reduce costs at the Highland Creek Treatment Plant. Their recommendation, "A cut in the quality of waste water in the city dumps in Lake Ontario as a prerequisite to cutting jobs. To reduce staff to 68 from 140, reduce the city's water quality standard." However, if the city's standards are cut to their recommendation, in the event of a system failure, there could be serious contamination in the lake; as maintenance is cut, the risk of failure increases.
The water multinationals know that big bucks are required to upgrade wastewater treatment and they know the public is more interested in water that enters their houses rather than water that flows from them, so, they use wastewater treatment as a point of entry with eventual ownership and delivery of all water services.
A quote from the World Bank chief water and sanitation engineer: "False promises are simply part of the game when it comes to such huge public contracts, sometimes it is a game to get in the business and the companies have leverage when they are in."
Sources:
Thomas Legislative Guide: Water Wars South End Press 2002.
CMC Newswire: US Water Privatization Moves Ahead.
WWW.Cascadiamedia.org/news.
CBC News- Indepth: Water Privatization.
Alternet: Stop the Corporation Takeover of our Water.
ENN News story: British Co. Running Guyana's Water.
WWW.Senate.gov/Graham/PR021502.
ICIJ: Hardwater Campaign to Pr. Canada's Waterworks.