Cholera and the age of the water barons

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http://www.enn.com/news/2003-02-03/s_2479.asp

 

Cholera and the age of the water barons

 

Tuesday, February 04, 2003

By the International Consortium of Investigative Journalists

 

This is the first segment in a 10-part series.

 

When cholera appeared on South Africa's Dolphin Coast in August 2000, officials

first assumed it was just another of the sporadic outbreaks that have long

stricken the country's eastern seaboard. But as the epidemic spread, it turned

out to be a chronicle of death foretold by blind ideology.

 

In 1998, local councils had begun taking steps to commercialize their waterworks

by forcing residents to pay the full cost of drinking water. But many of the

millions of people living in the tin-roof slums of the region couldn’t afford

the rates.

 

Cut off at the tap, they were forced to find water in streams, ponds, and lakes

polluted with manure and human waste. By January 2002, when the worst cholera

epidemic in South Africa’s history ended, it had infected more than 250,000

people and killed almost 300, spreading as far as Johannesburg, 300 miles away.

 

Making people pay the full cost of their water " was the direct cause of the

cholera epidemic, " David Hemson, a social scientist sent by the government to

investigate the outbreak, said in an interview. " There is no doubt about that. "

 

The seeds of the epidemic had been sown long before South Africa decided to take

its deadly road to privatization. They were largely planted by an aggressive

group of utility companies, primarily European, that are attempting to privatize

the world’s drinking water with the help of the World Bank and other

international financial institutions.

 

The days of a free glass of water are over, in the view of these companies,

which have a public relations campaign to accompany their sales pitch. On a

global scale, and in many developing nations, water is a scarce and valuable and

clearly marketable commodity. " People who don’t pay don’t treat water as a

very precious resource, " one executive said. " Of course, it is. "

 

A yearlong investigation by the International Consortium of Investigative

Journalists (ICIJ), a project of the Center for Public Integrity, showed that

world’s three largest water companies — France’s Suez and Vivendi

Environnement and British-based Thames Water, owned by Germany’s RWE AG —

have since 1990 expanded into every region of the world. Three other companies,

Saur of France and United Utilities of England working in conjunction with

Bechtel of the United States, have also successfully secured major international

drinking water contracts. But their size pales in comparison to that of the big

three.

 

The investigation shows that these companies have often worked closely with the

World Bank, lobbying governments and international trade and standards

organizations for changes in legislation and trade agreements to force the

privatization of public waterworks.

 

While private companies still run only about 5 percent of the world’s

waterworks, their growth over the last 12 years has been enormous. In 1990,

about 51 million people got their water from private companies, according to

water analysts. That figure is now more than 300 million. The ICIJ

investigation, which tracked the operations of the six most globally active

water companies over a 12-year period, showed that by 2002, they ran drinking

water distribution networks in at least 56 countries and two territories. In

1990, they had been active in only about a dozen countries.

 

Revenue growth, according to corporate annual reports reviewed by ICIJ, has

tracked with the companies’ overseas expansion. Vivendi Universal, the parent

of Vivendi Environnement, reported earning more than $5 billion in water-related

revenue in 1990; by 2002 that had increased to more than $12 billion. RWE, which

moved into the world water market with its acquisition of Britain’s Thames

Water, increased its water revenue a whopping 9,786 percent: from $25 million in

1990 to $2.5 billion in fiscal 2002.

 

This explosive growth rate has raised concerns that a handful of private

companies could soon control a large chunk of the world’s most vital resource.

While the companies portray the expansion of private water as the natural

response to a growing water shortage crisis, thoughtful observers point out the

self-serving pitfalls of this approach.

 

" We must be extremely careful not to impose market forces on water because there

are many more decisions that go into managing water; there are environmental

decisions, social-culture decisions, " said David Boys of the U.K.-based Public

Services International. " If you commodify water and bring in market forces which

will control it and sideline any other concern other than profit, you are going

to lose the ability to control it. "

 

So far, privatization has been concentrated in poorer countries where the World

Bank has used its financial leverage to force governments to privatize their

water utilities in exchange for loans.

 

In Africa, the ICIJ examination of water company records showed that they have

expanded into at least 10 countries from three in 1990. They are also active in

at least 10 Asian countries and eight Latin American ones, three in North

America, two in the Caribbean plus Puerto Rico, three in the Middle East plus

the Gaza Strip, Australia/New Zealand, and 18 European nations, with most of the

expansion in Eastern Europe. There, the European Bank for Reconstruction and

Development has played a key role in encouraging countries to privatize in

exchange for loans.

 

 

Having firmly established themselves in Europe, Africa, Latin America, and Asia,

the water companies are expanding into the far more lucrative market of the

United States. In recent years, the three large European companies have gone on

a buying spree of America’s largest private water utility companies, including

USFilter and American Water Works Co. Inc. Peter Spillett, a senior executive

with RWE’s water unit Thames, said his company projects that within 10 years

it will double its market to 150 million customers primarily because of

expansion into the United States.

 

So far, the Europeans have privatized waterworks in several mid-sized U.S.

cities, including Indianapolis and Camden, N.J., and are trying to secure

contracts in New Orleans. However, their expansion recently ran aground in

Atlanta, where the city canceled its 20-year contract — the largest of its

kind in the United States — with a Suez subsidiary after only four years and

returned control to the public utility.

 

The water companies have also dramatically increased their lobbying and federal

election campaign spending. In Washington, they have already secured beneficial

tax law changes and are now trying to persuade Congress to pass laws that would

force cash-strapped municipal governments to consider privatization of their

waterworks in exchange for federal grants and loans. Government and industry

studies have estimated that U.S. cities will need between $150 billion and $1

trillion over the next three decades to upgrade their aging waterworks.

 

Worldwide, the ICIJ investigation showed that the enormous expansion of these

companies could not have been possible without the World Bank and other

international financial institutions, such as the International Monetary Fund,

the Inter-American Development Bank, the Asian Development, and the European

Bank for Reconstruction. In countries such as South Africa, Argentina,

Philippines, and Indonesia, the World Bank has been advising the leaders to

" commercialize " their utilities as part of an overall bank policy of

privatization and free-market economics.

 

In South Africa, heavy lobbying by private multinational water companies such as

Suez together with advice from the World Bank helped persuade local councils to

privatize their waterworks. Some communities began turning their utilities into

commercial enterprises as a preparatory step to outright privatization. Others

immediately contracted out to private water. Urged by the World Bank to

introduce a " credible threat of cutting service, " the local councils began

cutting off people who couldn’t pay. An estimated 10 million people have had

their water cut off for various periods of time since 1998. The result has been

cholera and other gastrointestinal outbreaks.

 

The ICIJ investigation focused on the activities of these companies in South

Africa, Australia, Colombia, Asia, Europe, the United States, and Canada.

 

The investigation showed that while these companies claim to be " passionate,

caring, and reliable, " as one company states, they can be ruthless players who

constantly push for higher rate increases, frequently fail to meet their

commitments, and abandon a waterworks if they are not making enough money. As in

South Africa, the water companies are pillars of a user-pay policy that imposes

high rates with little concern over people’s ability to pay. These rates are

then enforced by water cutoffs despite the serious dangers to people’s health

that these actions create.

 

The water companies are chasing a business with potential annual revenue

estimated at anywhere from US$400 billion to $3 trillion, depending on how you

do the math. Water is the basis of life and, if they have to, people will pay

just about anything to get it.

 

" These companies want to crack open this oyster and go get the pearl inside.

It’s big money, " said Boys of Public Services International.

 

About 1.5 billion people do not have access to safe drinking water. The United

Nations predicts that by 2025 two-thirds of the world’s population will

experience shortages of clean water. Experts claim enormous financial resources

will have to be expended to meet this need.

 

Water companies, seeing profit in the crisis, are using current fears over the

scarcity of clean water to advance their financial interests, said Ricardo

Petrella, professor at the Catholic University of Louvain in France and an

advisor to the European Union on Science and Technology.

 

" Water has become important for capital because water is increasingly

characterized by a crisis of scarcity, " he said. " And scarcity is the basis of

modern capitalism. They enter into the water sector in the developing countries

because they start from the principle that even the poor are ready to pay for

water, " he said. " They say, 'water for free is not possible; even the poor

understand this.' "

 

Financial fund managers are taking note of the expanding water market.

Switzerland’s second oldest bank, the Pictet Bank, last year started its

Global Water Fund in the United States after starting a similar one in Europe

two years earlier. They offer a basket of water companies and predict that by

2015, 75 percent of European and 65 percent of U.S. water utilities will be

privatized.

 

As Thames’ executive Peter Spillett said, " You have such a steady market,

there is huge growth potential. "

 

He noted that " water stocks actually do better than other utilities " because of

the long-term contracts that stretch for 10 to 30 years, offering a reliable and

predictable return on investment. " That is why a lot of pension funds as well as

private individuals are willing to put money into it, " he said.

 

Suez told ICIJ it instructs all its companies to be profitable within three

years, and the rate of return has to be at least 3 percent over the cost of

capital.

 

But the private companies are increasingly running up against strong opposition

because of the vital nature of water itself and the politics that swirl around

it.

 

The most famous example of this is the privatization in Cochabamba, Bolivia.

After Aguas del Tunari, a consortium jointly owned by Bechtel and United

Utilities, took control of the city’s waterworks in 1999 without any contract

bidding, the company announced water rate increases of up to 150 percent.

Manager Geoffrey Thorpe threatened to cut off people’s water if they didn’t

pay.

 

 

The contract gave the company control over ground water and allowed it to close

down people’s private wells unless they paid Aguas del Tunari for the water.

Union leader Oscar Olivera said, " They wanted to privatize the rain. " When

protests erupted throughout the city of 450,000 in 2000, police and army troops

were called in. They killed two people.

 

The government reacted by canceling the concession. Aguas del Tunari is suing

the Bolivian government, claiming losses of a reported $25 million, although

Bechtel has stated that it has not put a number on its claim. The suit is before

the International Center for the Settlement of Investment Disputes, an

organization of the World Bank Group.

 

It was on the advice of the World Bank that Bolivia began privatizing its water

services in the mid-1990s. Discussions about Cochabamba’s water began in 1995,

said Christopher Neal, the World Bank’s external affairs officer for Latin

America. " The Bolivian government agreed, as a matter of policy, with the

Bank’s view that [privatization] was needed there, " Neal said.

 

However, according to Menahem Libhaber, the bank’s lead water engineer for

Latin America, the bank opposed the Cochabamba deal with Aguas del Tunari

because it believed it was not financially viable.

 

In an interview, Bechtel spokesman Jeff Berger blamed the Bolivian government

for the Cochabamba debacle. He claimed the government failed to explain the

long-term benefits of privatization to the people by delivering flyers and

taking out ads in newspapers.

 

The Free Marketers

 

Although Neal said the “bank is not ideological†about privatization, the

investigation showed that privatization is a hallmark of many of its loan

projects.

 

Lending about $20 billion to water supply projects over the last 12 years, the

World Bank has not only been a principal financer of privatization, it also has

also increasingly made its loans conditional on local governments privatizing

their waterworks. The ICIJ study of 276 World Bank water supply loans from 1990

to 2002 showed that 30 percent required privatization — the majority in the

last five years.

 

In major water privatizations around the world — such as Buenos Aires, Manila,

and Jakarta – the ICIJ investigation showed that the World Bank flexed its

financial muscle to persuade governments to tender long-term waterworks

concessions to the major private companies.

 

The investigation also showed that the bank advised the countries how to

privatize their waterworks and often helped finance the privatization process.

In the case of Buenos Aires, the World Bank not only helped finance the

privatization but also took, through one of its branches, a 7 percent stake in

the new company, Aguas Argentinas, which is controlled by Suez. The World Bank

loaned one of its own senior managers to negotiate large water rate increases

with the Argentine government. The manager then headed a World Bank team that

gave a $30 million loan to Argentina. This occurred at the same time that Aguas

Argentinas and its shareholders were making huge profits of as much as 25

percent. One shareholder, an important Argentine businessman, earned a profit of

$100 million on the privatization.

 

In Jakarta, Indonesia, World Bank officials not only encouraged privatization of

the city’s utility but also stood by as two multinationals secretly negotiated

with the Suharto regime for the transfer of the public waterworks into their

control. The two companies, Suez and Thames, entered into partnerships with a

business associate and a son of the former dictator Suharto to gain control over

the city’s waterworks. Both men then made significant profits on the deal.

 

The bank claims its policy of privatization alleviates poverty by bringing

management efficiency and private capital to developing countries whose

cash-starved water utilities are usually in a mess. The bank argues that private

companies succeed in bypassing the usual bureaucratic morass and political

cronyism and corruption that corrodes so many public utilities in poorer

countries. While it is clear that considerable improvements have been brought to

many waterworks as a result of privatization, in many cases, the companies put

in relatively little capital of their own, relying primarily on loans from the

World Bank and related international financial institutions to help cover costs

of repairing and expanding waterworks networks.

 

There’s also evidence that if the World Bank applied the same energy and money

to improving local utilities, while allowing them to maintain control of their

water systems, the local utility would actually perform better than private

companies.

 

In Manila, Maynilad Water, of which Suez controls 40 percent, announced in

December 2002 it was pulling out of its 25-year contract, abandoning a

waterworks serving an area of 6.5 million people. The company was unable to

raise capital to meet contract demands and, as an independent study commissioned

by the local regulator indicates, contracted work to affiliate companies.

Maynilad is before an arbitration court seeking $337 million from the

Philippines government as reimbursement for what it claims is invested capital.

The government argues, however, that the company is owed only a fraction of

that amount. The company is also transferring to the government debts totaling

$530 million.

 

A Global Oligarchy

 

The investigation also showed that the water companies have joined forces with

the World Bank and the United Nations to create an array of international think

tanks, advisory commissions, and forums that have dominated the water debate and

established privatization as the dominant solution to the world’s water

problems.

 

" What we have seen during the 1990s has been the setting-up of a kind of global

high command for water, " Ricardo Petrella, a leading researcher on the politics

of water, wrote in the French daily Le Monde in 2000.

 

 

Global Goals for Water Access

The Water Supply and Sanitation Collaborative Council presented these global

targets, called Vision 21, at the Second World Water Forum in the Netherlands in

March 2000 to address water supply and sanitation issues facing the developing

world.

 

By 2015, the council proposed:

 

To halve the number of people without access to sanitation facilities.

 

To halve the number of people without access to adequate quantities of

affordable and safe water.

 

And by 2025:

 

To provide water, sanitation and hygiene for all.

 

Source: Water Supply and Sanitation Collaborative Council

 

 

The leading think tank on water issues and the principal adviser to the World

Bank and United Nations is the World Water Council, which was established in

1996 by the World Bank and the United Nations. It is headquartered in Marseille,

France, and one of its three founding members is René Coulomb, a former Suez

vice-president.

 

In 1998, the WWC created the World Water Commission to promote public awareness

of water issues and to help formulate global water policies. The commission

holds water conferences around the world and channels its policy statements

through international forums held every three years.

 

Men with strong privatization backgrounds run the commission. These include

former Suez CEO Jérôme Monod; Enrique Iglesias, president of the

Inter-American Development Bank; and Mohamed T. El-Ashry, CEO of the World

Bank/U.N. Global Environment Facility. Commission chairman is World Bank Vice

President Ismail Serageldin.

 

Both of these institutions strongly support privatization and a user-pay policy.

" Global experience shows that money is the medium of accountability, " the

commission said in a 2000 report.

 

The commission has held two international forums on water with a third planned

for Kyoto, Japan, in March 2003. At its forum at The Hague in March 2000, the

commission issued a policy statement that said water management was the main

problem facing humankind and the solution was to treat water like any other

commodity and open its management to free market competition.

 

Serageldin stated that water delivery should be in private hands but publicly

regulated, in the same way as private companies run the food industry.

 

The ties that bind the World Bank to the major water companies include shared

membership on the boards of various policy institutions as well as personal and

business relations.

 

Monod was special counselor to the International Monetary Fund’s director,

Michel Camdessus, when Monod was Suez’s CEO. After Camdessus retired in 2000,

he was named chair of the “International Panel for New Investments in

Water,†an initiative organized by the water companies. The panel’s

directors include William Alexander, group chief executive of RWE’s Thames

Water of London, and Suez Vice President Gerard Payen.

 

At its first meeting in Paris in February 2002, the panel focused on " how to

increase the rate of return on water projects and the related difficulty of

implementing the full cost recovery pricing of water. "

 

Another panel member is the Global Water Partnership (GWP). The chairwoman of

its steering committee is Margaret Catley-Carlson, a former Canadian deputy

health minister. She is also chairwoman of the Suez Water Resources Advisory

Committee. The GWP is a partnership of government, corporate, and professional

organizations examining water issues. It said, " The water crisis is a governance

crisis, characterized by a failure to value water properly and by a lack of

transparency and accountability in the management of water. Reform of the water

sector, where water tariffs and prices play essential parts, is expected to make

stakeholders recognize the true cost of water and to act thereafter. "

 

On another front, water companies are working closely with the European Union to

enforce trade barriers against any country that refuses to open its water

utilities to privatization.

 

Working with the E.U. trade officials, the water companies are also trying to

persuade the World Trade Organization to force countries to open their utilities

to free market forces. Documents obtained by ICIJ show that the European

Commission trade office works closely with Thames, Suez, Vivendi, and other

private water companies to push for a reduction in trade barriers with the WTO.

 

In a May 2002 letter, E.U. trade commissioner Ulrike Hauer wrote to Thames,

Suez, and Vivendi, thanking them for their contribution toward negotiations to

reduce trade barriers in " water and waste water services, " with a view to open

these markets to European companies.

 

On a third front, the French government recently made a proposal to the

quasi-governmental International Organization for Standards (ISO), a regulatory

branch of the WTO, to set international standards for water utilities.

Effectively, the committee would develop rules on how to manage all aspects of

water service and delivery. Critics believe this will help the WTO forge trade

rules that would force countries to open their public utilities to

privatization.

 

" The companies have a clear strategy based on three things: the WTO, the WIPO

(World Intellectual Property Org), and the ISO, " said Petrella. " Through trade,

intellectual property, and standardization, they are going to conquer the water

world. "

 

Financial Titans, Bribery, and Fraud

 

In addition to their political connections, each of the three leading companies

has enormous financial resources. Each is among the top 100 corporations in the

world. Together they had revenue in 2001 of $156.7 billion and continue to grow

at a rate of about 10 percent a year, outpacing the economies of some of the

countries in which they operate. The gross domestic product of Bolivia, for

example, is $21.4 billion.

 

The companies also have more employees than most governments. Vivendi

Environnement, alone, employs 295,000 worldwide; Suez employs 173,000.

 

Both Suez and Vivendi have doubled their customer base in the last 10 years,

with Suez serving 125 million water customers and Vivendi 110 million. RWE’s

Thames Water is a distant third with 51 million, but its recent acquisition of

American Water Works Co. Inc. will increase it to 70 million.

 

In France, both Suez and Vivendi have close political ties with the national and

local governments. Executives of the two companies have been charged and, in

some cases, convicted of illegal campaign contributions to politicians and of

using bribery and fraud to obtain water and other municipal contracts. In one

case, witness testimony implicated former Suez CEO Monod, who is now chief

adviser to French President Jacques Chirac. Monod has never been charged and has

denied any wrongdoing.

 

Though competitors, the companies often form joint ventures to obtain water

concessions in foreign countries. For example, Thames and Vivendi formed a

business alliance in 1995 to capture the Asian market. Suez and Vivendi share

interest in Buenos Aires. And Thames and Suez, with the support of the former

Indonesian dictatorship, divided up Jakarta.

 

Finally, the private water companies make promises they often can't keep – a

tactic one World Bank water official called " over selling. " Essentially, they

promise to deliver a better service at a lower price. However, governments often

drive up water prices just prior to privatization to give water companies room

to immediately reduce prices and win popular approval. Once a company has won

the contract and lowered prices, it often quickly attempts to renegotiate for

higher rates and reduced performance targets. The fact that the companies now

control the city’s waterworks gives the company tremendous leverage in these

negotiations. In many cases, water prices soar and original targets for expanded

water and sanitation systems are not met.

 

In Buenos Aires, for instance, Suez-controlled Aguas Argentinas almost

immediately put pressure on the government to renegotiate the concession

contract for more favorable terms.

 

Thames Water executive Peter Spillet complained that his company has lost

contracts because of this tactic. " What we find a bit hard is that in many cases

our competitors seem to go in much lower, and then within a year or two of

having successfully gotten that contract, they seek to re-negotiate with the

government of the city. "

 

Since the companies prefer to be paid in American dollars, falling local

currencies usually lead to demands for rate increases. Despite earning

substantial profits, Aguas Argentinas recently canceled expansion plans and

threatened to curtail services unless the government agreed to higher rates to

compensate for foreign exchange losses.

 

The companies claim privatization is good because it brings the latest ideas and

technology to tired public utilities and clarifies the responsibilities and

mission of the water utility.

 

" In many cases, when only public servants are involved with delivering water

services or sanitation services, the goals which are expected by the political

decision-makers are not visible, they are not explained, " said Suez

vice-president Gérard Payen. " When you involve the private sector, the

community has more information and the situation is more transparent. "

 

But the ICIJ investigation showed that companies frequently insist that all or

part of their contracts remain secret. Regulatory authorities in Buenos Aires,

Manila, and Jakarta said they often feel powerless in the face of demands from

the water companies because they don’t have access to company figures.

 

When companies are fined for not achieving performance targets, they often

don’t pay, preferring to appeal rulings in lengthy and expensive arbitration

and court proceedings.

 

Even in developed countries, such as Australia and Canada, which generally have

stronger regulatory bodies than poorer countries, privatization has weakened

public accountability. In Sydney and Adelaide, Australia, major sewage treatment

and water quality problems were kept secret from the public as regulatory

authorities and the private companies argued over responsibility. In Hamilton,

Ontario, a private company took several years before it agreed to settle fines

after millions of gallons of sewage spilled into the streets and flooded

basements.

 

Nor is there any assurance that the private companies are financially reliable.

Since 1998, when Hamilton privatized its utility, the city has had five

different operators. Two of the companies, one of which was Enron Corp.,

collapsed under the weight of fraud scandals. In a period of just five years,

the concession has been owned by the city government, one local company, two

American companies, and was recently taken over by the German utility RWE.

 

" You don’t know who you are dealing with, " said Hamilton city councilor Sam

Merulla. " When you deal with the private sector on behalf of the public sector,

you need stability. In Hamilton, it has been a revolving door of international

corporate owners dealing with one of the most precious things we have —

water. "

 

Global Expansionists

 

Having established firm footholds on six continents, the big three water

companies say they now intend to concentrate most of their efforts on the

potentially lucrative markets of North America, China, and Eastern Europe. All

three said they hope to more than double their revenue and their client base in

the next 10 years.

 

Thames’ Spillet said China is opening up because the World Bank is ready to

spend money there, which makes it more attractive to private companies.

 

" China is a bit of a sleeping giant because, for people at the World Bank, there

has always been a bit of difficulty regarding financing issues, " said Spillet.

" They tend to have gotten a bit clearer just recently. "

 

Some countries are definitely not on the privatization agenda anymore. Yves

Picard, managing director of Vivendi in South Africa, said his company is not

interested in concessions in southern Africa unless the World Bank or other

institutions finance the capital costs. Otherwise, he said, there is no payback

for the company because people are too poor to pay the high water rates private

companies charge to cover their capital costs.

 

 

Dependence on the World Bank appears to be increasing. There is rising concern

among the companies that capital markets are not open to them because water is

such a volatile political issue and many poorer countries have unstable local

currencies.

 

In a presentation on private sector involvement in the water business before the

World Bank in February 2002, J.F.Talbot, chairman and CEO of France’s

third-largest water company, Saur, warned that without increased financing from

institutions like the World Bank major international water companies will " stay

at home. "

 

Much of their expansion plans depend on whether people ultimately accept the

idea of water as a commodity. In other words, the days of the free glass of

water are gone. Everyone must pay for water is the principal message sent out by

the World Water Council and its affiliate organizations. The fact that people

are increasingly accustomed to buying bottled water can only be encouraging for

the big water utilities.

 

Yet, concerned about the backlash from privatizations such as Cochabamba's, the

companies are beginning to couch their words in less mercantile terminology.

After all, what makes water different is that, like air, it’s irreplaceable.

There are no choices allowing customers to reject one for another. How can

anyone market something that is both vital to life and has no alternative? As

the cholera victims of South Africa know only too well, nothing can replace

clean water.

 

" Everybody who thought water was a commodity lost, " said Vivendi’s President

Olivier Barbaroux. " We do not sell water. You take the water and you give it

back. Exactly the same amount. What we are doing is bringing the water to your

home, making it clean for you to use, and then taking it back and putting it

back in nature clean. And that is the service we are bringing. "

 

Suez’s Payen flatly stated, " Water is not a commodity. It is a public good. It

is also a social good. It is essential for life. " So what does Suez sell? " We

provide the essentials of life, " he said.

 

Thames, however, is sticking to the commodity message. " Water is both a

commodity and a [public] service, " Spillett said. He then compared the water

business to a brewing company.

 

" Clearly people do not understand the value of water, and they expect it to fall

from the sky and not cost anything. But if we use an analogy with beer —

that’s 99 percent water — but breweries have added their hops and malt, and

it has gone through a lot of processing, and the end product has a lot of added

value, and people are prepared to pay a lot of money for it. In a sense

purifying water from the raw state, then treating it and bringing it to people

and taking it away again is almost the same industrial product. You have a lot

of value-added there and people, if they don’t realize it’s got a value and

don’t pay for it, don’t treat it as a very precious resource. Of course, it

is. "

 

The companies also claim that they are not really privatizing water but rather

managing utilities in partnership with governments. They call these " Public

Private Partnerships " or PPPs.

 

For critics of privatization, however, the essential issue is not water itself,

but access to water. And the key to access is control: who has their hands on

the tap.

 

The International Consortium of Investigative Journalists (ICIJ) is a gloal

network of journalists that produces cross-border reports on a variety of

topics. ICIJ is part of the Center for Public Integrity, a Washington,

D.C.-based investigative research and reporting organization.