On Tap at the WTO:- Private Water

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http:/. /www.alternet.org/story/29639/

 

 

On Tap at the WTO: Private Water

By Joshua Holland, AlterNet

 

 

Posted on December 15, 2005, Printed on December 16, 2005

http://www.alternet.org/story/29639/

 

 

Hong Kong -- Activists gathered here say that no issue highlights the

tension between the human values they advocate and the economic logic

of the legion of corporate globalizers that have descended on this

city more clearly than water.

 

Water is viewed as one of the last " profit centers " by the

international financial institutions and trade can impact whether it

becomes a commodity or stays in public hands -- 90 percent of the

world's water supplies remain in the public trust. Most notably

water's on the table with the privatization of municipal water systems

being aggressively pushed under the General Agreement on Trade in

Services (GATS), a wide-ranging treaty that covers a host of services,

both public and private.

 

Vandana Shiva, the scientist and global justice activist, argued this

week that " we need to recognize that 90 percent of humanity lives on

water as commons today. " She lambasted a recent World Bank report

urging poor countries to privatize their water systems, saying, " It

actually talks about one major threat to water markets being community

rights to water, and says these must be dismantled. As if there's

something wrong with the commons, as if it's a primitive stage of

human existence. "

 

According to the United Nations, 1.3 billion people in the world lack

access to clean water and worldwide demand is doubling every 20 years

-- twice the rate of population growth. By the year 2025, demand for

fresh water is expected to outstrip global supply by 56 percent. The

issue gets scant attention, but analysts say that while the advanced

nations are likely to wean themselves of their addiction to oil, water

is the finite resource that will drive this century's wars just as

fossil fuels did the last century's.

 

Maude Barlowe is the Director of the Council of Canadians, an NGO deep

in the fight. She told me the water privatizers are driven not only by

profit, but also by a deeper ideology. " There are those of us who

believe that water is a public good and should be protected in

legislation at all levels as something that must be kept out of the

market system. And there are those who've gone to the other side, and

that would include the World Bank, the regional development banks, the

International Monetary Fund, the WTO and most of the big first world

countries. And they say that the only way to avoid the global shortage

of water that's already here for some places but coming for the whole

world is to privatize water, commodify it, put it on the open market

for sale to the highest bidder and have it guided by the same rules

that govern the trade in running shoes. "

 

Pushing the agenda here in Hong Kong are a small number of

multinationals that dominate the growing water market. Two French

titans, Vivendi Universal and Suez, dominate the group. According to a

report by the Canadian NGO Polaris Institute in conjunction with

Barlowe's Council of Canadians, the two -- often called the General

Motors and Ford of the global water industry -- control over 70

percent of the existing world market in water services.

 

RWE, a German electricity and waste management company, may soon

challenge their market share. After purchasing two key water

companies, RWE has positioned itself to expand. The U.S. construction

giant Bechtel, now notorious for its no-bid reconstruction contracts

in Iraq, is also a growing player.

 

Under the GATS treaty being pushed in Hong Kong, any government in the

WTO would be required to give foreign investors like these mammoth

water corporations equal treatment with domestic investors like local

government-owned utilities. Governments would have to prove that any

legislation or regulation related to public water service is

" necessary " and " the least trade restrictive of all possible measures. "

 

According to the NGOs, " in effect, government regulations requiring

high water quality standards for safety, accessible rates for poor

communities, or specific improvements in pipe infrastructure could be

declared " unnecessary " by a WTO tribunal. "

 

Through the WTO's " coherence agreement " with the World Bank and

International Monetary Fund, the water behemoths get an additional

wedge: they're able to secure loans and grants to finance much of

their operations in the developing world. These institutions use water

privatization as a " conditionality " for development aid. A 2000 review

of IMF loans in 40 countries found that 12 had loan conditions

requiring some form of water privatization. The NGOs point out that

" in general, it is African countries -- the smallest, poorest, and

most debt ridden countries -- that experience these conditions.

Tragically, more than five million people die each year in Africa from

poor water access. "

 

The big water corporations are active supporters of networks of water

policy think tanks and " lobby groups that prime the pump for

privatization. " The network includes the Global Water Partnership, the

World Water Council and the World Commission on Water. All three have

working relationships with international finance institutions, the

major corporate players in the water industry and the governments of

the big service economies.

 

A track record from hell

 

Wenonah Hauter, who heads the NGO Food and Water watch, says,

" Privatization is being touted as the most efficient, it's supposed to

lead to much better services than public water. " But the track record

of the private water companies is " really terrible around the world,

in the developing countries and in the developed world. "

 

The largest privatization in the U.S. was in Atlanta and Hauter

describes it as " a complete failure. The way that the company achieved

its efficiency -- and this is true whether its Atlanta or Jakarta --

is that they fire staff. Roughly half in Atlanta. At that point they

are no longer able to really maintain the pipes and provide potable

water, so you had a relatively wealthy city like Atlanta having brown

water days -- people having to boil their water and not being able to

do laundry. "

 

Maude Barlowe explains: " They pollute, they don't conserve water --

you cannot make money conserving the product you sell, obviously, so

it's not in their interest to reclaim water, to set up good

infrastructure. In the end companies have to cut corners somewhere in

order to make enough money for investors -- there's just no other way.

The public sector doesn't have to turn a profit and the private sector

does. So in the end, somewhere, something's got to give, either the

quality of the product or the safety of the water coming into people's

homes or the ability of poor people to access it or all three. "

 

According to the NGOs' report, the big three -- Suez, Vivendi and RWE

-- and their subsidiaries have been charged and fined for dozens of

environmental violations. A few examples they give:

 

* In 1999, the Suez subsidiary Northumbrian Water was declared by

the Drinking Water Inspectorate in the U.K. to be the second worst

company in terms of operational performance in England and Wales. The

main reason was poor water quality: high levels of iron and manganese

were found in the water Northumbrian was delivering. Elsewhere, in

Potsdam, Germany, city officials terminated a contract with Suez when,

after discovering that water consumption levels were lower than

predicted, the company demanded that higher water rates be levied.

Apparently, water revenues were more important than water conservation.

 

* In 1994, Vivendi's main water subsidiary, Générale des Eaux, was

prosecuted for supplying poor quality water to the inhabitants of

Tregeux, France. Due to excessive use of nitrates and pesticides,

Générale was charged with supplying water unfit for consumption on 476

days between 1990 and 1993. In Puerto Rico, the EPA fined Vivendi's

subsidiary, Compañía de Aguas, $6.2 million dollars for environmental

violations between 1995 and 2000.

 

* In the U.K., water corporations have been among the country's

worst environmental violators. Between 1989 and 1997, five water

companies were successfully prosecuted 128 times. In 1998, the U.K.

environmental agency ranked Wessex Water Co. the country's fourth

worst polluter, while Anglian Water was ranked the sixth worst

polluter in 1999.

 

In Durban, South Africa, one privatization project turned deadly.

South Africa initiated one of five water privatization programs in

1999. According to the Center for Public Integrity (CPI), the plan was

" the brainchild of private water companies and World Bank economists. "

 

As many as 10 million South Africans had their water cut off at one

time or another since 1994, forcing thousands of poor Africans to seek

water from polluted rivers and lakes. Drinking contaminated water led

to South Africa's worst outbreak of cholera. Thousands of people got

the disease and 300 died.

 

David Hemson of South Africa's Human Sciences Research Council told

CPI the privatization plan " was the direct cause of the cholera

epidemic, there is no doubt about that. "

 

In Bolivia, in perhaps the most infamous of the ongoing " water wars, "

Aquas del Tunari, a consortium of multinationals including Bechtel,

was awarded a $200 million dollar water project with an initial direct

investment of $15,635. The 40-year concession gave them a monopoly on

all water in the poverty-stricken community of Cochabamba. In order to

achieve its guaranteed 15 percent return on investment, the company

insisted that privately drilled wells -- in the poorest part of the

poorest country in the Americas -- be metered and the community

cooperatives that relied on them be charged.

 

The new water company dismissed concerns about rising costs,

estimating that fees would be hiked by no more than 40 percent. But

prices for many rose 300 percent. When struggling Cochabambans

received water bills equaling 30 percent of their salaries, they

rioted. During the fighting that ensued, the government cut power to

local media outlets and used live ammunition against the protesters,

killing five.

 

The militarized response, instead of quelling the disturbance, brought

even more Bolivians into the mobilization. After weeks of intense

protests, Aguas del Tunari announced it would pull out of Bolivia,

leaving its water system (and $35 million in debt) to the government.

Bechtel then turned around and sued Bolivia for $25 million dollars in

" lost profits " under the International Center for the Settlement of

Investment Disputes, a closed-door tribunal run by the World Bank.

 

But free-market ideologues still to insist that the private firms can

do a better job than municipal governments. According to the World

bank's website: " Effective water management requires that water be

treated as an economic good ... private participation in water and

wastewater utilities has generally resulted in sharp efficiency gains,

improved service, and faster investment in expanding service. "

 

The companies have also been caught up in bribery scandals. According

to Food and Water Watch's Hauter, " These contracts are usually awarded

not through competition but through some kind of shady dealings. In

the case of Atlanta, Suez, through it's U.S. subsidiary, gave campaign

contributions to the mayor's brother in South Carolina, even though

they didn't have any operations there. It's legalized bribery. "

 

Battle lines in Hong Kong

 

In the background in Hong Kong a quid-pro-quo has developed -- wealthy

countries want access to services in exchange for reductions in

agricultural tariffs. The Council of Canadians' Barlowe told me, " The

Northern countries are saying that they'll make deep cuts in

agricultural subsidies, which I think is going to happen -- I think

they'll abandon their own farmers to get a deal, not maybe their big

corporations, but they'll abandon their family farmers in exchange for

services because that's what they did in my country. "

 

The major transition to the GATS being pushed here is the process by

which countries can leverage open others' services. But the powerful

countries are frustrated by how slowly the developing countries have

moved on the deal.

 

" Developing countries do not want this -- they've already had it with

the IMF's structural adjustment and they don't want it, " says Barlowe.

" So they're upping the ante and trying to cluster the areas together

-- they're trying to use the services negotiation as a peg for

agricultural subsidies. Now, they're going to bring countries into

this green room outside the WTO process where they'll be pushed to

accept privatization on a whole range of issues. Technically, of

course, they could say no. On paper, they're all equal. But of course

these poor countries are in terrible debt to the wealthy countries

that run the WTO, that run the World Bank, and if you say no you're

screwed. "

 

Lauter added, " The countries from the Global South have their arms

twisted around all aspects of these trade agreements but especially in

services. I think if people understood what's being negotiated here

with the GATS, they'd be up in arms. "

 

When it comes to " free trade, " the devil is in the details. When those

details include water -- and essential resources -- the trade debate

can quickly become a struggle between life and death.

 

AlterNet wants to give a very special thanks to all of the generous

people who contributed to make Joshua's WTO reporting possible.

Appearing alphabetically, here is a list of non-anonymous

contributors: William Allen, Teresa Alouf, Louise Auerhahn, Ralph

Benson, Elaine Booth, Jean Brooks, William Butler, Merrily Butler,

Barbara Carson, Rosemary Ciotti, Suzanne Clare, Sofia Close, Yolande

Cote, Rikk David, Kenneth Deed, Holojojo Ditto, Susan Dobra, Fred

Dryg, Anthony Durham, Dale East, Gabriel Fields, Lynne E. A. Forest,

Charles Francis, Morris Friedell, Isao Fujimoto, Jon Christopher

Geissmann, Culver Harrison, Daniel Hausman, Gisele Haven, Leigh Hill,

Diane Jones, Helen Kahn, Wynn Kapit, Sigurd Kihl, William Krumbien

Jr., John Kyper, Burt Lauderdale, Laura Lovelace-Guernsey, Linda

Lupowitz, Diane Martinez, Roy Mathews, Ron Mayes, Kathleen H. McKenna,

John Mendolusky, Leigh Miesse, Lisa Mitchell, Polly Lou Moore, D.M.

Mossman, Dimity Mueller, Alina Neacy, Ivan O'Neill, Jack Palmer,

Alison Park, Robert Parker, Lin Yu Peng, Julie Penny, William

Phillips, Sheridan Phillips, Rik Reynolds, Sophie Rogers-Gessert,

Donna Sabin, Dianne Sandau, Mark Shulman, Treva Silverman, Loerna

Simpson, John Smart, Kelly Stevenson, Erinrose Sullivan, T.L. Sutton,

Lawrence Takvorian, Marlowe Thorne, Nick Van Kleeck, Rama Vemulapalli,

Suzanne Vogel, Barbara Wallace, Adam Werbach, Alan Young, Tracey

Young, Gilbert Zicklin, Audrey Zimmer. We really appreciate your kindness.

 

Joshua Holland is an AlterNet staff writer.

© 2005 Independent Media Institute. All rights reserved.

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