Water Privatization Conflicts
 
Dustin VanOverbeke vanovedr@uwec.edu
 
Part of Water is Life, a class website on water privatization and commodification, produced by students of Geography 378 (International Environmental Problems & Policy) at the University of Wisconsin-Eau Claire, USA, Spring 2004.

     

    In her book Water Wars, the Indian author Vandana Shiva lists nine principles underpinning water democracy. At least two of these principles are directly compromised by the privatization of water. Point number four states that “Water must be free for sustenance needs. Since nature gives water to us free of cost, buying and selling it for profit violates our inherent right to nature's gift and denies the poor of their human rights.” When private companies try to make large profits through high water prices, it denies the poor the inalienable right to the most necessary substance for life. Inaccordance with this fact, point number seven states, “Water is a commons. . . It cannot be owned as private property and sold as a commodity.” How can one justify claiming water as their own through contractual agreement while letting another human being go thirsty? Water is a commons because it is the basis of all life. Water rights are natural rights and thus are usufructuary rights, meaning that water can be used, but not owned. As far fetched as water ownership may seem, it is happening at an increasing rate around the globe.

    http://www.asahi.com/english/asianet/hatsu/eng_hatsu030222b.html

     


    Currently there is a rush to privatize water services around the world. The World Bank and International Monetary Fund (IMF) are pushing for the privatization of water services by European and U.S.-based companies. They are pushing privatization through stipulations in trade agreements and loan conditions to developing countries. These privatization programs started in the early 1990’s and have since emerged in India, Bolivia, Chile, Argentina, Nigeria, Mexico, Malaysia, Australia, and the Philippines, to name a few. In Chile, the World Bank imposed a loan condition to guarantee a 33 percent profit margin to the French company Suez Lyonnaise des Eaux while the company insisted on a margin of 35 percent.


    This privatization of services is only the first step toward the privatization of all aspects of water. Through this new globalization and privatization of water resources, there is an effort to replace collective ownership of water sources with corporate control. This effort is being met with increasing opposition. Supporters of privatization say that it has a great track record of success, increasing the efficiency, quality, reliability and affordability of services to the population.

    www.rppi.org/ privatizingwatersaves.html

    Yet the industry has a track record of hazards and failures. For example, private companies most often violate standards of operation, and engage in price fixing without many consequences. This leads to water stress among the poor populations of these areas, causing people to drink water that is often very contaminated and hazardous to their health (even though case studies have shown that privatized water can be very contaminated as well).

    Rising Prices and Deteriorating Water Quality

    Australia - In 1998, the water in Sydney, was contaminated with high levels of giardia and cryptosporidium shortly after its water was overtaken by Suez Lyonnaise des Eaux.
    Canada - At least seven people died as a result of E. coli bacteria in Walkerton, Ontario, after water testing had been privatized by A&L Labs. The company treated the test results as "confidential intellectual property" and did not make them public.
    Morocco - Consumers saw the price of water increase threefold after the water service was privatized in Casablanca.
    Argentina - When a Suez Lyonnaise des Eaux subsidiary purchased the state-run water company Obras Sanitarias de la Nacion, water rates doubled but water quality deteriorated. The company was forced to leave the country when residents refused to pay their bills.
    Britain - Water and sewage bills increased 67 percent between 1989 and 1995. The rate at which people's services were disconnected rose by 177 percent.
    New Zealand - Citizens took to the streets to protest the commercialization of water.
    South Africa - Water became inaccessible, unaffordable, and unsafe after the water supply was privatized by Suez Lyonnaise des Eaux in Johannesburg. Cholera infections became widespread and thousands of people were disconnected from their supply of water.

    Sydney Water Scare Leads To Accusations, Suggestions http://www.clo2.com/reading/waternews/sydney_report.html
    Water Privatization: Will You Trust the Water That comes From Your Taps?
    www.socialjustice.org/subsites/privatization/pdf/waterprivate.pdf
    Water Wars
    http://www.thirdworldtraveler.com/Vandana_Shiva/Water_Wars_VShiva.html
    CBC News: Walkerton report highlights
    http://www.cbc.ca/news/features/walkerton_report.html
    Corpwatch: Argentina Water Privatization Scheme Runs Dry
    http://www.globalpolicy.org/socecon/bwi-wto/wbank/2004/0226argwater.htm



    http://www.corpwatch.org/issues/PID.jsp?articleid=10088


    As is already evident, once these private water giants take over water services, prices skyrocket. After privatization, customer fees in France increased 150 percent while the water quality declined. In a French government report, it was revealed that over 5.2 million people had received “bacterially unacceptable water”. In Subic Bay, a former U.S. naval base in the Philippines, Biwater increased water rates by 400 percent. Water rates in England increased by 450 percent while company profits soared by 692 percent. CEO salaries for the private corporations behind the water supply increased by an astonishing 708 percent. As one can expect with such high price fixing, service disconnection increased by 50 percent. Meanwhile, the British Medical Association condemned water privatization for its health effects because dysentery increased six-fold. Many of these examples of the failures of water privatization are occurring in developed countries, but the most severe effects have been on the developing world. The high rises in pricing along with deteriorating water quality because of water privatization has led to much public scrutiny and uprisings by affected communities around the world.

    Water Wars
    http://www.thirdworldtraveler.com/Vandana_Shiva/Water_Wars_VShiva.html
    Paying for privatization: higher prices, lower employment
    www.psiru.org/reports/2000-03-W-Hprice.doc

    Bechtel in Cochabamba, Bolivia

    Probably the most well known example of the global conflict over water privatization is the case of Cochabamba, Bolivia. It is a shining example of the conflict over the privatization of water services, a victory for the people opposing privatization, and the persistence of the water giants to make money any way they can. Cochabamba lies in a semidesert region of Bolivia, making water a scarce and precious resource. However, in 1999 the World Bank recommended privatization of Cochabamba's municipal water supply company, Servicio Municipal del Agua Potable y Alcantarillado (SENIAPA). "Bank officials directly threatened to withhold $600 million in international debt relief if Bolivia didn't privatize Cochabamba's public water system." http://www.alternet.org/story.html?StoryID=14525 This was to be done through a concession to one of Bechtel’s subsidiaries - International Water. Bechtel is a U.S. corporation based in San Francisco. This corporate giant is not even welcome in its hometown of San Francisco. In June, 2002 the Board of Supervisors in San Francisco voted to cancel a $45 million program management contract awarded to Bechtel for the reconstruction of the Hetch Hetchy public water system. This vote took place after an investigation by the San Francisco Bay Guardian, a local alternative weekly newspaper, exposed that at least $5 million dollars of nearly $8 million payed out to Bechtel for its first year of service was a complete waste of money. In one case, Bechtel took a city database of projects, resorted the information, changed the data into a different format, and sold it back to the city for almost $500,000.

    Bechtel vs. Bolivia: The Bolivian Water Revolt
    http://www.democracyctr.org/bechtel/
    Bolivia’s Water War Victory
    http://www.thirdworldtraveler.com/South_America/Bolivia_WaterWarVictory.html
    Bechtel's Water Wars
    http://www.corpwatch.org/issues/PID.jsp?articleid=6670

    http://www.oilempire.us/water.html


    In response to the World Bank recommendation, the Bolivian Congress passed the Drinking Water and Sanitation Law in October 1999, allowing privatization and ending government subsidies to municipal utilities. Soon after International Water took over the water services in Cochabamba, the monthly water bill reached $20 in a city where the minimum wage is less than $100 a month. These increases forced some of the poorest families in to literally choose between food and water ($20 is nearly the cost of feeding a family of five for two weeks). For more information on the these price hikes, see
    http://www.democracyctr.org/bechtel/waterbills/index.htm In response to these price increases, an alliance of the citizens of Cochabamba called La Coordinadora de Defensa del Agua y de la Vida (The Coalition in Defense of Water and Life) was formed in January 2000. Through mass mobilization, the alliance shut down the cityfor four days. Within a month of this, millions of Bolivians marched to Cochabamba and held a held a general strike, stopping all transportation. The protesters then issued the Cochabamba Declaration, which called for the protection of universal water rights for all citizens.

    Bolivia’s Water War Victory
    http://www.thirdworldtraveler.com/South_America/Bolivia_WaterWarVictory.html
    Bechtel vs. Bolivia: The Bolivian Water Revolt http://www.democracyctr.org/bechtel/


    www.americas.org/.../ WaterCartel2.htm

    In response to this, the Bolivian government promised to reverse the price hike. They never did. So, in February 2000, La Coordinadora organized a peaceful march demanding the retraction of the Drinking Water and Sanitation Law, the termination of the water contract, the participation of citizens in creating a water resource law, and the cancellation of ordinances allowing privatization. Slogans such as "Water Is God's Gift and Not A Merchandise" and "Water Is Life" were used by the protesters. These demands were strongly rejected by the government. The following April, the government declared martial law to try and silence the water protests. Activists were arrested, protesters were killed, and the media was censored. After only a day of martial law, three protesters had been killed, including a 17-year old boy who was shot in the head by soldiers in Cochabamba. Over 30 people had been injured through conflicts with the military and the leaders had been jailed (some were flown to a remote location in the jungle of Bolivia).


    The people finally won on April 10, 2000 when Aguas del Tunari and Bechtel left Bolivia and the government was forced to revoke its water privatization legislation. The water company Servico Municipal del Aqua Potable y Alcantarillado (SEMAPO) along with the debts, was handed over to the workers and the people. In the summer of 2000, La Coordinadora held public hearings to start democratic planning and management. However, the Bolivian government and Bechtel continued to harass and threaten activists of La Coordinadora, trying their best to undermine the process. In November 2001, Bechtel filed a lawsuit against Bolivia, demanding $25 million in compensation for its lost opportunity for future profits.

    Currently, this lawsuit is being heard by the International Center for the Settlement of Investment Disputes (ICSID), an international tribunal housed at the World Bank in Washington DC, that holds all of its meetings in private. Bechtel was able to file the case with ICSD under a Bilateral Investment Treaty (BIT) between the Netherlands and Bolivia. Even though Bechtel is a U.S. corporation, its subsidiary founded a presence in the Netherlands in order to exploit this treaty. Because of the secrecy of the hearings, the Center for International Environmental Law and Earthjustice filed a request in August 2002 to open these proceedings to the public of Bolivia. However, in February 2003 the ICSD sided with Bechtel, announcing that it would not allow the media or public to have any part in or even witness the meetings. Not only is the World Bank forcing its programs and ideas on the people of Bolivia, but it is also preventing the affected people from participating in a matter that directly affects their lives. As of May 2004, there has been no verdict on the lawsuit.

    Bechtel Strikes Back at Bolivia
    http://www.alternet.org/story.html?StoryID=14525
    URGENT ACTION: supports demands that Bechtel drop suit against Bolivia
    http://www.nadir.org/nadir/initiativ/agp/free/imf/bolivia/txt/2002/0420bechtel.htm
    Bechtel vs. Bolivia: Bechtel’s legal action against Bolivia http://www.democracyctr.org/bechtel/bechtellegalaction.htm


    Bechtel in the new Iraq

    Today, Bechtel is spreading its water privatization elsewhere, aided by war. Within a month after the 2003 invasion of Iraq, Bechtel acquired a $680 million contract for “rebuilding” Iraq. As Vandana Shiva writes in her article Bechtel And Blood For Water: War As An Excuse For Enlarging Corporate Rule, “The U.S. led war first bombed out Iraq's hospitals, bridges, water works, and now U.S. corporations are harvesting profits from 'reconstructing' a society after its deliberate destruction. Blood was not just shed for oil, but also for control over water and other vital services. . . war has become a convenient excuse for enlarging corporate rule. If W.T.O. is not enough, use war.”

    George Shultz was Secretary of State under Ronald Reagan and previously was the president of Bechtel. He is now a board member and senior counselor for the corporation. He was chairman of the pro-war Committee for the Liberation of Iraq and wrote in a op-ed article in the Washington Post September 2002 that “A strong foundation exists for immediate military action against Hussein and for a multilateral effort to rebuild Iraq after he is gone."

    Because Bechtel is a privately held company, without public stock trading, it does not have to reveal many of its operations. Bechtel is responsible for over 19,000 projects in 140 countries on all continents, and is involved in over 200 water and wastewater treatment plants around the world. It was involved in the Dabhol plant in India with Enron, and is now involved in water privatization of Coimbatore/Tirrupur as part of a consortium with Mahindra and Mahindra, United International North West Water. The contract has not yet been made public, as is the case with other privatization contracts.

    Conclusion

    The rush to privatize water continues unencumbered, despite its unpopularity among residents worldwide who are affected by it. Countries faced with large debts are forced by the World Bank and IMF to privatize water . Water deregulation is a common demand of the World Bank and IMF as part of their loan conditions. In 2000, out of 40 IMF loans distributed through the International Finance Corporation, 12 had requirements of partial or full privatization of water supplies. They also insisted on the creation of policies to stimulate “full cost recovery” and the elimination of subsidies. African governments, such as Ghana, increasingly give in to pressures for water privatization. In Ghana, the World Bank and IMF policies forced the sale of water at market rate, requiring the poor to spend up to 50 percent of their earnings on water purchases. As Vandana Shiva writes in Water Wars, “The water crisis is the most pervasive, most severe, and most invisible dimension of the ecological devastation of the earth.”

http://www.icij.org/dtaweb/water/PrintReady.aspx?AID=2

Sources

For more information:

Overall Sources
Yellowtimes: Water privatization in Africa
http://www.yellowtimes.org/article.php?sid=369
Water Privatization: Issues & Debates
http://www.citizen.org/cmep/Water/articles.cfm?ID=10842
CBCnews: Water For Profit
http://www.cbc.ca/news/features/water/
Argentina Water Privatization Scheme Runs Dry
http://www.corpwatch.org/issues/PID.jsp?articleid=10088
Water Wars
http://www.thirdworldtraveler.com/Vandana_Shiva/Water_Wars_VShiva.html
Sydney Water Scare Leads To Accusations, Suggestions http://www.clo2.com/reading/waternews/sydney_report.html
Water Privatization: Will You Trust the Water That comes From Your Taps?
www.socialjustice.org/subsites/privatization/pdf/waterprivate.pdf
CBC News: Walkerton report highlights
http://www.cbc.ca/news/features/walkerton_report.html
Water for profit: contamination, riots, rate increases, scandals. From Atlanta to Manila, cities are confronting the true cost of water privatization - the price of water
http://articles.findarticles.com/p/articles/mi_m1329/is_6_27/ai_94129863
Workers' Educational Association http://www.swales.wea.org.uk/myweb4/private%20water.htm
Corpwatch: Argentina Water Privatization Scheme Runs Dry http://www.globalpolicy.org/socecon/bwi-wto/wbank/2004/0226argwater.htm
Paying for privatization: higher prices, lower employment
www.psiru.org/reports/2000-03-W-Hprice.doc
Water privatizers on the defensive
http://www.newint.org/features/kyoto/020603.htm

Minnesota Water Alliance (opposing corporate 99-year leases on public water utilities in multiple cities) http://www.mnwater.org

Bechtel and Bolivia
Bechtel vs. Bolivia: The Bolivian Water Revolt
http://www.democracyctr.org/bechtel/
Bolivia’s Water War Victory
http://www.thirdworldtraveler.com/South_America/Bolivia_WaterWarVictory.html
Bechtel Strikes Back at Bolivia
http://www.alternet.org/story.html?StoryID=14525
Bechtel Wins Iraq War Contracts
http://www.corpwatch.org/issues/PID.jsp?articleid=6532
URGENT ACTION: supports demands that Bechtel drop suit against Bolivia
http://www.nadir.org/nadir/initiativ/agp/free/imf/bolivia/txt/2002/0420bechtel.htm
Bechtel vs. Bolivia: Bechtel’s legal action against Bolivia http://www.democracyctr.org/bechtel/bechtellegalaction.htm
Bechtel's Water Wars
http://www.corpwatch.org/issues/PID.jsp?articleid=6670
Bechtel And Blood For Water: War As An Excuse For Enlarging Corporate Rule
http://www.globalpolicy.org/security/issues/iraq/after/2003/0512bechtelrule.htm

Water Privatization in India
Water Privatization in India by Dr. Vandana Shiva
http://www.citizen.org/cmep/Water/cmep_Water/reports/india/articles.cfm?ID=8109
CorpWatch India: French Firms Spearhead Water Privatization
http://www.waternunc.com/gb/CorpWatchIndia02_2002.htm
Communities Reject Coca-Cola in India
http://www.corpwatch.org/issues/PID.jsp?articleid=7508
India Resource Center
http://www.corpwatchindia.org/


The Dabhol Project in India
Enron's ghost haunts India
http://www.atimes.com/atimes/South_Asia/EK14Df01.html
Enron: History of Human Rights Abuse in India
http://www.hrw.org/press/2002/01/enron_012302.htm
The Enron Corporation: Corporate Complicity in Human Rights Violations
http://www.hrw.org/reports/1999/enron/

Shiva, Vandana. 2002. Water Wars: Privatization, Pollution, and Profit. South End Press. 158 pgs.