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.
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
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).
Prices and Deteriorating Water Quality
- 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
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
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.
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
CBC News: Walkerton report highlights
Corpwatch: Argentina Water Privatization Scheme Runs Dry
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.
Paying for privatization: higher prices, lower employment
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."
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.
Bolivia: The Bolivian Water Revolt
Bolivia’s Water War Victory
Bechtel's Water Wars
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.
Water War Victory
Bechtel vs. Bolivia: The Bolivian Water Revolt http://www.democracyctr.org/bechtel/
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.
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.
Strikes Back at Bolivia
URGENT ACTION: supports demands that Bechtel drop suit against Bolivia
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
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
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.”