Monopoly Privatization versus Human Freedom
Turbulence in the "global water market"! Water is essential to human life, and is limited in supply. Sounds like an important economic topic, but to some it just sounds like a good way to gain power over others.
Should natural resources be turned into a private monopoly? Here are some excerpts from an article that recently appeared in Le Monde Diplomatique.
by Franck PoupeauIncreasing criticism of market globalisation has not prevented multinationals from controlling such essentials as water, where there are vast potential profits. The market is dominated by two big French multinationals, Vivendi-Generale des eaux and Suez-Lyonnaise des eaux. They now control nearly 40% of the world market, each serving, and billing, more than 110m people, Vivendi in 100 countries, Lyonnaise in 130.
They owe their profits to the deregulation of trade and the complicity of international institutions and national governments. The market is all the more lucrative because the water services in nearly 85% of the world's cities are run by public or state companies.
The two French giants and their subsidiaries have been signing highly remunerative privatisation contracts on the water market for 15 years. The successes of Suez-Lyonnaise des eaux in China, Malaysia, Italy, Thailand, the Czech Republic, Slovakia, Australia and the United States cannot beat those of Generale des eaux (now Vivendi), sometimes in association with Suez-Lyonnaise, as in Buenos Aires in 1993. Over the last 10 years, Vivendi has entered Germany (Leipzig, Berlin), the Czech Republic (Pilsen), Korea (Daesan complex), the Philippines (Manila) and Kazakhstan (Almaty). It is also represented in the US by its subsidiaries Air and Water Technologies and US Filter.
But the water multinationals have had setbacks. They have been forced to withdraw from some South American countries and to seek "compensation" from international authorities. In Tucuman, Argentina, in 1997 the population started a civil disobedience campaign against a Vivendi subsidiary, refusing to pay their bills in protest at deteriorating water quality and doubled charges. Generale des eaux had acquired the province's privatised water and sewerage concessions in 1993. But its immediate increase in the price of those services (averaging 104%) brought protests from the consumers. "The first to organise themselves were the towns in the interior, in the region of sugar cane production where there was a long experience of struggle. At first, seven small cities formed a committee and later established the national association in defence of the consumers of Tucuman".
The provincial government then called for penalties on the company after finding tap water contaminated. Faced with the payment boycott, Generale des eaux first threatened to cut off supplies. Then it tried to renegotiate the contract before finally withdrawing and refusing to fulfill its obligations. It brought an action against the Tucuman consumers before the International Centre for the Settlement of Investment Disputes (ICSID), which found in the province's favour. (The ICSID is part of the World Bank.) Since then, a change in provincial government has removed legal protection for the payment boycott.
SOCIAL EFFECTS OVERLOOKED
Local loss of control over water charges goes hand in hand with price increases that deny the poor access not only to the water service but also to clear information about minimum health standards.
Water privatisation in La Paz, Bolivia, is an example. In Alto Lima, the oldest and poorest quarter of La Paz, in February rain formed muddy streams that overflowed the sewers and flooded the roadway. The unpaved streets are rutted and potholed, piles of refuse testifying to the absence of public cleaning; they have not been lit at night since that service was also privatised. The monopolies are a total failure. The most basic services are now provided by nongovernment nonprofit organizations.
Antonio has lived in Alto Lima since he was a child. It is a working-class district nearly 4000m above sea level; the richer folk live lower, at 3,200 m. Alto Lima overlooks the rest of the capital, but it takes over an hour to reach the city centre. That is why Antonio goes to the centre so rarely: it is too far and too expensive. Antonio cannot understand why water, which is flowing so freely here, is no longer available for him to wash or drink. Since the supply was taken over by the French Aguas del Illimani consortium (which belongs to Lyonnaise des eaux), its price has risen from 2 to 12 bolivianos (Bs). Most of the population cannot afford that and have replaced showers by communal washing facilities, for which they also have to pay.
The private concession has seen a deterioration in service as a result of cost-cutting job losses. The team of 18 technicians who used to check nearly 80,000 water meters in the northern district every month has been cut in half and given other maintenance tasks. It is rare that any house's consumption is recorded accurately and they are billed without regard to the amount used.
Lack of maintenance is making interruptions in supply increasingly common, and they take longer to be repaired. Businesses sometimes have to resort to old wells.
"Water is now a luxury in Alto Lima," according to a worker. A luxury he can no longer afford.
Aguas del Illimani has already been prosecuted for cutting off municipal water authorities for several weeks; that included all the schools. But in general, the supply is cut with impunity.
Some try to blame the citizens, not the monopolists. Alvaro Larrea Alarcon, an engineer with the National Regional Development Fund, says the concession could be profitable if the population changed its habits and consumed more. "The population has to be taught that it must get used to paying water bills. They grow up without water and use public facilities or the river. They are used to not having water in the home. It's a question of culture. They have to be taught to take a bath, to water their plants, wash their cars."
Why do the people put up with such lack of consideration?
Cochabamba in Bolivia is the only town where the local people, together with peasants from the surrounding area, have found the strength and resources to respond and reverse the privatisation of the water supply. But then the Aguas del Tunari group (controlled by the US multinational Bechtel), which was trying to get a foothold there, did not put as much energy into "public relations" and lobbying as the French groups did.
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