Privatization of water- One of the major issues Barlow discusses in Blue Covenant: privatization, or the corporate control of water.
- Barlow opens her analysis with the following explanation:
“Water, of course, has traditionally been viewed as a public resource. Increasingly, however, freshwater supplies are being privatized in a whole range of ways as a powerful water industry moves to create a cartel resembling the one that now controls every facet of energy, from exploration and production to distribution.”
- It is important to recognize that water has traditionally been viewed as a public resource, and that it wasn’t until about 30 years ago that freshwater supplies began to be privatized and water became viewed as a commodity.
- Barlow stresses that the private sector understands that, in a world running out of clean water, whoever controls that water will be both wealthy and powerful.
- Private, for-profit organizations in countries around the world provide various services and have a multitude of functions, including:
- Municipal services
- Put massive amounts of freshwater in bottles for sale
- Control water used for industrial farming, mining, energy production, computers, cars and other water intensive industries
- Own and operated dams, pipelines, nanotechnology
- Water purification systems and desalination plants
- Overall technological infrastructure
- Control water trade and buy water rights (groundwater and watersheds)- Other than France, which, since the late 1800s has encouraged the existence of a private water industry, the “Global North” (that’s Europe, North America, Australia, and Japan) has adopted universal public water and sanitation services to protect public health and to promote national economic development.
- With foundations built on a colonial legacy, the “Global South” (consisting of Africa, Asia, and South and Central America) mainly has urban water services only for the elite, with millions of poor urban dwellers having no access to water or sanitation, an issue that has been exacerbated in the past 30 years.
This begs the question…
Q: Why is privatization occurring in so many 3rd world countries?
A: The answer is three-fold:
1) Residents of third-world countries are moving from rural areas to megacities.
2) As population density increases, pollution in surface water also increases.
3) Third-world governments, which are plagued by poverty and consistently increasing debt, cannot meet demands for fresh water.- By the end of the 1980s, a public model (like that of the “Global North”) for developing nations had been abandoned in favor of a private model that would benefit the private water companies of Europe.
- Barlow says that this was not at all coincidental, but was rather planned and intentionally carried out by some of the most powerful forces in the world.
- She traces this shift from a public to a private model of water services to ideology manifested under Margaret Thatcher and Ronald Reagan, in which liberal market economics constituted the one and only choice for the whole world, including the developing world.
- Soon, this Washington Consensus became the guiding mantra for the elite running the global institutions involved in water development, including the World Bank, the International Monetary Fund, and even the United Nations.
- Although privatization had failed in England under Thatcher, this model (and not the far more successful model of public delivery) was exported to the developing countries of the “Global South.”The World Bank
-The World Bank Group is a family of five international organizations that makes leveraged loans, generally to poor countries. First world countries control the World Bank and have voting power proportional to the amount they invest in it.
- The World Bank uses its power to open markets in the “Global South” for northern corporations.
- Although it had been promoting water privatization as one option several years prior to 1993, in that year, the World Bank adopted the Water Resources Management policy paper, which noted the “unwillingness” of the poor to pay for water services and stated that water should be treated as an economic commodity, with an emphasis on efficiency, financial discipline, and full-cost recovery – a principle that says that corporations can set water prices high enough to not only recover the cost of their investment, but to make profits for their investors.
- Increasingly, loans for public projects were rejected in favor of a private model, and between 1990 and 1996, the World Bank to funded more than 300 private water projects in the developing world.
- There are three basic types of water utility privatization:
1. Concession contracts give a private company a license to run the water system and charge customers to make a profit. The private company is responsible for all investments, including building new pipes and sewers to connect households.
India practices a form of extreme concession whereby whole river systems are leased to the companies who run them for profit without government interference.
2. Leases are contracts under which the company is responsible for running the distribution system and for making the investments necessary to repair and renew the existing assets, but the local government remains responsible for new investment.
3. Management contracts make the private company responsible only for managing the water service but not for any investments.- Most of the World Bank’s current projects are leases or management contracts.
- Even though the notion of a partnership has the ring of democracy and shared responsibility, these contracts should all be considered privatizations because they all involve profits for the private companies and cutoffs to people who cannot pay for their “product.” What’s more, while those who live in third world communities have no alternative if the so-called partnership fails, the corporate partner will (and does) leave the partnership if the profits “dry up.”
- Using a “carrot and stick” approach, in which the carrot is both debt relief and the actual funds themselves, and the stick is the unspoken threat of the withdrawal of aid, countries are encouraged to adopt a private water services model.
The World Bank Manufactures Global Consensus on Privatization- It is important that we examine how the World Bank and other global financial institutions came to impose this new model of water delivery on the “Global South”
- Sociologist Michael Goldman of the University of Minnesota has analyzed how the World Bank was able to promote a shift in water policy over a relatively short time, finding that it actively sought the buy-in of non-governmental organizations, think tanks, state agencies, the media and the private sector across the Global North and South.
- Through its Water Policy Capacity Building Program, the World Bank has put thousands of parliamentarians, policymakers, technical specialists, journalists, teachers, students, civil society leaders, and Third World elites through intensive programs on private water management so that they could then return to their respective third-world countries and promote a private model of water delivery to their governments.
- Their consensus is that debt and poverty are not the problem, but rather that the main problem with degraded water services in the Third World is inefficient and corrupt governments whose failure to protect water has led to a culture of wastefulness among the masses. Basically, the World Bank and its private sector colleagues maintain that the poor lack access to water because of their irresponsible governments, and that they are merely on an ethical mission of poverty alleviation.
Cochabamba Protests- Known as the "Cochabamba Water Wars," these were a series of protests that took place in Cochabamba, Bolivia's third largest city, between January and April 2000 because of the privatization of the municipal water supply.
- In 2000, the World Bank declared it would not "renew" a $25 million loan to Bolivia unless it privatized its water services. According to Jim Shultz, executive director of the Democracy Center in Cochabamba, the World Bank believed that “poor governments are often too plagued by local corruption and too ill equipped to run public water systems efficiently. …[and that the use of private corporations] opens the door to needed investment and skilled management."
- A corporation called “Aguas del Tunari” took control of the water works of Cochabamba, and the government then passed Law 2029 which appeared to give Aguas del Tunari a monopoly over all water services.
- Demonstrations erupted when Aguas del Tunari imposed a large rate increase, reportedly to finance the Misicuni Dam project, a week after taking control of the Cochabamba water supply system. In a country where the minimum wage was less than US$70 per month, most residents were suddenly receiving monthly water bills of $20 or more.
- Protests ensued, with Oscar Olivera leading the Cochabamba people. After months of sometimes-violent protests, the Bolivian government conceded and Olivera signed a concord with the government guaranteeing the removal of Aguas del Tunari and turning Cochabamba’s water works over to La Coordinadora. Detained demonstrators were to be released and eventually Law 2029 was repealed.
Water Privatization Failure- The only way for this to work is for the private sector to receive public subsidies, which they are meant to relieve. They depend on degrading water quality around the world.
