The privatization of water

Keywords: water, blue gold, management, multinational, globalization, privatized, geostrategy, geopolitics.

According to Riccardo Petrella “the current logic of relations between States and Multinationals reduce the former to a vast system of legal, bureaucratic and financial engineering placed at the service of the commercial performance of the company. The state is no longer the political expression of the collective public interest; it becomes one actor among others, responsible for creating conditions favorable to the competitiveness of companies. The general interest is in the process of being reduced to that of the giant firms competing for the world markets. And water becomes a commodity like any other ”

It is becoming more and more interesting for companies to invest large sums in the trade of water, that which one buys in bottle already sells for more than oil, in equivalent quantity; extraction costs are minimal and refining costs are zero.

A few transnationals and their subsidiaries share the pie for the private distribution of drinking water; in the “countries of the South”, they go hand in hand to organize the water market and replace the public sphere. Their interests are totally common. Their income has kept pace with their growth. These multinationals are among the 100 richest companies in the world, with a combined income of almost $ 160 billion in 2002 and an annual growth rate of 10%, faster than that of the economies of many of the countries in which they operate. .

But the liberalization of water has caused serious problems in many countries, where the intervention of foreign multinationals has notably led to water being billed well below what the poor can pay.

Africa is chic

In Zimbabwe, Biwater eventually withdrew from a water privatization project because local people could not afford the tariffs that would have ensured a sufficient profit. Almost everywhere, the policy of full cost recovery has driven up consumer prices.

In South Africa, the situation has become very worrying: since 1994, nearly 10 million households have had their water cut off, unable to pay their bills, and there has been a return of cholera.

Ghana has seen the price of water increase by 300% in three years. Faucets are “disconnected” because more and more families can no longer pay their skyrocketing water bills.

In Kenya, water billing has been privatized by the Nairobi City Council without competitive bidding, leaving 3 workers unemployed. These people were replaced by 500 overpaid executives. Consumers have borne the costs of a new billing system. The people of Nairobi pay five times more for a liter of water than a North American citizen.

While in Botswana, the Public Water Company is recognized for increasing the number of users, which rose from 30 in 000 to 1970 in 330. Its equalization policy protects access to water. water for low-income households.

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In Brazil (20% of the world's freshwater reserves), Nestlé has carried out real rampant privatizations by buying land where there are springs and groundwater; Nestlé, interested only in table water, pumped 30 liters of water per day which it hastened to demineralize, a practice that Brazilian law prohibits, however, because it prevents treating anemia at a lower cost. With the support of Coca-Cola the company also tried, before the 000 elections, to change the Brazilian law that prevents the demineralization of water. Two sources have dried up and the ecosystem is completely upset. Nestlé having also infiltrated all universities in Brazil, research on the question of water is truncated.

In the Uruguayan province of Maldonaldo, water tariffs rose dramatically and supplies were contaminated when Uruqua, a subsidiary of the Aguas de Bilboa water company, obtained the right to distribute water on a lucrative basis. “Full cost recovery. The World Bank has declared the privatization of Buenos Aires a success. But an ICIJ investigation shows that the privatization of Buenos Aires' water was stymied by greed, deception and failed promises. Its success turned out to be mostly a mirage. The privatization of water has enriched a group of union leaders, buddy capitalists and government officials under former President Carlos Menem. Several officials are the subject of corruption investigations.

In Mexican maquiladoras, water is sometimes so scarce that babies and children are reduced to drinking Coke and Pepsi. In addition to unjustified billing rates, residents who cannot pay their bills are often cut off from water, and officials often make them wait a long time to consider their claims. Floods are much more frequent, the result of a lack of maintenance of the piping and pipes. Large water distributors have shown little willingness to invest in improving infrastructure. On the other hand, the idea of ​​increasingly indebting municipalities seems to inspire them.

The Bolivian government has granted its water for 40 years to Aguas del Tunari, a subsidiary of Bechtel. A year later, thousands of families had to pay up to 20% of their income to obtain their daily water. The general strike broke out and the army had to intervene violently, killing 5 people, according to Amnesty International. The population demanded the end of the contract with the private company and the government gave in.

The Uruguayan government began to offer concessions in cities and wealthy neighborhoods. The price of water has been multiplied by 10, water has been cut off from those who do not pay, families or institutions. Lagoons and other areas where these companies drew water have dried up, all so that towns like Punta del Este (which uses as much water as the rest of the country) can water their private gardens. But the Uruguayans managed to schedule a national referendum, with legislative value: in October 2004, more than 60% of Uruguayan citizens forced to include in the constitution the inalienable belonging of water to the public domain and the prohibition of its water. privatization.

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In Puerto Rico, where Suez is mandated for 10 years to provide water services under a contract amounting to $ 4 billion, General Solicitor Carlos Lopez sharply criticized the French multinational, which has devoted much energy to improve billing and collection methods, but brought "no improvement" to the distribution of drinking water to consumers.

Great progress in the Philippines.

Low pressure at the tap, very few hours of the day when the water is flowing: families in Manila get up at midnight or at dawn to make reservations because the service is not provided continuously, especially in the lower-income neighborhoods . 10% of household income is now spent on paying the water bill. It is people without running water who suffer the most from privatization: they buy it at prices three or even five times higher than resellers. Cholera has even resurfaced in Manila, when no case had been reported for a hundred years.

India: the imbecility of private projects

In India, Suez tried to buy water from the Ganges in order to sell Delhi 635 million liters per day. Suez's argument was classic: “without their money, we would not be able to reorganize the water supply. But why did the pure water of the Ganges have to drink Delhi, which is hundreds of kilometers away, while the Yamuna River passes right by? Cleaning the Yamuna seems more economical and more rational. Each of the farmers who will be deprived of water - because it will be sold in Delhi - will lose huge amounts due to the drop in their harvest.

Another huge project to privatize Hindu rivers, aims to connect the rivers with each other, to make them flow in opposite directions, to direct them to the areas where there is money. It costs $ 200 billion; but a scientific evaluation has shown that it is totally unnecessary, that it will cause enormous damage to society, to the ecosystem, to forests, and that it will displace populations on an unimaginable historical scale.

These mega-projects represent golden opportunities for multinational water companies, for Western companies and for bureaucrats. All this, in a context where corruption is plaguing the political and legal world at all levels. But all of this privatization risks jeopardizing the collective future of water supply.

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Merde in France

Corruption, fraud, overbilling and so on are part of the file of the multinationals Suez and Vivendi. Cities that had privatized their water services saw prices increase by up to 400% as the quality fell to the point of lawsuits for poisoning. The only country in the world where water distribution is 80% privatized, France experiences considerable price differences. The CEOs of Bouygues, Lyonnaise and Générale des Eaux have in turn been indicted in corruption cases. Many senior executives have been accused of misuse of corporate assets. They are suspected of having paid hidden contributions to mayors, deputies, political parties in exchange for public contracts. Alain Carignon, former mayor of Grenoble, took 5 years.

Great Britain: over here the currency

British taxpayers found themselves spending $ 9.5 billion to sell off their state-owned water treatment and distribution companies. As a result of privatization, the price of water has increased substantially, in particular to cover the investments required to refurbish the networks. It was consumers, not businesses, who ultimately funded these investments. Privatization caused a transfer of wealth from users to holders of capital, the exceptional costs artificially reducing the profit and the repurchase of shares making it possible to conceal a profitability considered embarrassing by the administrators.

While profits increased $ 600 million or 35% from 1992 to 1996, employment has steadily declined over the past five years, employment has declined by 4 positions or 084%. If employees and users have paid the price for privatization, senior executives obviously had no complaints.

As it is the private company that takes care of the collection, the situation becomes untenable for many disadvantaged families, forced to pay excessive tariffs or face a ban on drinking water supply. In Great Britain, the big private companies did not hesitate to cut off the water to several thousand households because of non-payment.

Is this world serious?

By wanting to “reform the water distribution”, a reform presented as a technical one, the actors are in fact touching on a certain way of organizing the redistribution of income in the countries concerned, on a certain balance between civil society and the political, on lifestyles. Two-speed access to water according to household income, unsuitable water delivery, degradation of quality standards (private companies preferring to minimize costs), staggering price increases, cascading scandals and condemnations, activation of the North imbalance -South, net income for states negligible, even negative: public goods have been sold off at a low price, looting being disguised as a necessary reform supposed to make up for the shortcomings of public services, lynched in the media and decreed a priori incompetent and corrupt.

Frank Swalt

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