Robert Seeberger wrote: > http://ap.tbo.com/ap/breaking/MGASBSOGWBD.html > > The influence of foreign business can be seen across America, with consumers > cheerfully buying Japanese cars, Korean TVs and clothing made in China. > But many Americans aren't so happy about foreigners controlling their water > supply. > <Big snip>
This is not just a worry for the US! Regards, Ray. http://enewsletters.f2network.com.au/cgi-bin16/flo/y/eMok0Q8nG0Bnf0btb0AU The water barons February 3 2003 The growth of three private water utility companies in the past 10 years raises fears that mankind may be losing control of its most vital resource to a handful of monopolistic corporations. William Marsden reports. 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 commercialise 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 could not 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, 500 kilometres 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 privatisation. They were largely planted by an aggressive group of utility companies, primarily European, that are trying to privatise 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 year-long investigation by the International Consortium of Investigative Journalists (ICIJ), a project of the Centre for Public Integrity in Washington, showed that world's three largest water companies, Frances 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 international drinking water contracts. But their size pales in comparison with 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 organisations for changes in legislation and trade agreements to force the privatisation of public waterworks. While private companies still run only about 5 per cent of the world's waterworks, their growth over the past 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 Environment, reported earning over $8.5 billion in water-related revenue in 1990; by 2002 that had increased to more than $20.4 billion. RWE, which moved into the world water market with its acquisition of Britain's Thames Water, increased its water revenue a whopping 9786 per cent from $42.6 million in 1990 to $4.2 billion in 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 British-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, privatisation has been concentrated in poorer countries where the World Bank has used its financial leverage to force governments to privatise 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 in 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 privatise 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, told ICIJ his company projects that within 10 years it will double its market to 150 million customers primarily because of expansion into the United States. 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 Bank and the European Bank for Reconstruction. In countries such as South Africa, Argentina, the Philippines and Indonesia, the World Bank has been advising the leaders to "commercialise" their utilities as part of an overall bank policy of privatisation 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 privatise their waterworks. Some communities began turning their utilities into commercial enterprises as a preparatory step to outright privatisation. 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 could not pay. An estimated 10 million people have had their water cut off for various periods 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 enforced by water cut-offs, despite the dangers to people's health these actions create. The water companies are chasing a business with potential annual revenue estimated at anywhere from $681 billion to $5 trillion, depending on how you do the maths. 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 fears over the scarcity of clean water to advance their financial interests, says Ricardo Petrella, professor at the Catholic University of Louvain, in France, and an adviser to the European Union on Science and Technology. "Water has become important for capital because water is increasingly characterised by a crisis of scarcity," he told ICIJ. "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." 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 privatisation 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 per cent. Manager Geoffrey Thorpe threatened to cut off people's water if they did not pay. The contract gave the company control over groundwater 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 privatise 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 cancelling the concession. Although the World Bank's external affairs officer for Latin America, Christopher Neal, told ICIJ the bank is not ideological about privatisation, the investigation showed that privatisation is a hallmark of many loan projects. Lending about $34 billion to water supply projects over the past 12 years, the World Bank has not only been a principal financer of privatisation, it also has also increasingly made its loans conditional on local governments privatising their waterworks. The ICIJ study of 276 World Bank water supply loans from 1990 to 2002 showed that 30 per cent required privatisation - the majority in the past five years. In major water privatisations 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 privatise their waterworks and often helped finance the privatisation process. Working with the EU trade officials, the water companies are also trying to persuade the World Trade Organisation 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 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 $267 billion, and continue to grow at a rate of about 10 per cent a year, outpacing the economies of some of the countries in which they operate. The gross domestic product of Bolivia, for example, is $36.4 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 past 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 Jerome Monod, who is now chief adviser to French President Jacques Chirac. Monod has never been charged and has denied any wrongdoing. Finally, the private water companies make promises they often cannot keep - a tactic one World Bank water official called over-selling. Essentially, they promise to deliver a better service at a lower price. The ICIJ investigation found, however, that governments often drive up water prices just before privatisation 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. Even in developed countries, such as Australia and Canada, which generally have stronger regulatory bodies than poorer countries, privatisation has weakened public accountability. In Sydney and Adelaide major sewage treatment and water-quality problems were kept secret from the public as regulatory authorities and the private companies argued over responsibility. Having established firm footholds on six continents, the big three water companies say they now intend to concentrate mostly on the potentially lucrative markets of North America, China and Eastern Europe. All three told ICIJ they hope to more than double their revenue and client base in the next 10 years. 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 organisations. The fact that people are increasingly accustomed to buying bottled water can only be encouraging for the big water utilities. For critics of privatisation, 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. A full version of this article and other stories in the series are available at the ICIJ web site. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
