WORLD BANK IN THE LEAD The story in the non-industrial world is far worse because international financial institutions such as the World Bank and the International Monetary Fund are aggressively promoting the privatization of water. As Public Services International explains, the policies of these institutions distort nations choices by imposing water privatization as a condition of loans and debt relief, financing water transnationals in preference to efficient public enterprises, and selling water utilities to reduce national debt. World Bank-sponsored water privatization projects promote monopolies and protect rampant corruption and bribery and are often negotiated entirely in secret. The agreements are considered intellectual property and the public has no access to their terms. Collusion with dictators such as Indonesias Suharto are too frequent. The Bank often puts up the lions share of the investment while the company takes home the profits. Suez promised to invest $1 billion to privatize the water system of Buenos Aires, but only put up $30 million; the rest came from a World Bank agency. When water is privatized, prices are set on the open market. Says Suez Director During, We are here to make money. Sooner or later the company that invests recoups its investment, which means the customer has to pay for it. The result in the Third World is that millions of poor people are paying exorbitant prices for water, while others have been cut off. Because the companies are motivated by profit and not public service, they have no incentive to supply the poor with affordable water. For example, in India, some households pay a staggering 25 percent of their income on water. The water system of Manila, in the Philippines, was divided by the World Bank into two zones in 1997, each run by a separate consortium. One consortium included Bechtel, the other, Suez Lyonnaise des Eaux. Only months into the new arrangement, these consortiums sharply raised customer rates, contrary to their proclaimed intention to keep rates low, to compensate for revenues lost due to the regional currency crisis. A year later, Biwater Plc. corporation increased water rates in Subic Bay in the Philippines by 400 percent. Labor activists in South Africa have been threatened with legal action by British transnational Biwater for criticizing the company on the Internet. The activists charge the company with poor water management practices and with being involved in the British arms-for-aid scandal in the 1 980s, a fact documented by the British House of Commons Foreign Affairs Committee. The South African Municipal Workers Union says that Biwater is trying to stave off public criticism in the hopes of gaining the first private water contract in South Africas history. The unions position is firm Water privatization is a crucial issue for public debate. Human lives depend on the equitable distribution of water resources; the public should be given a voice in deciding whether an overseas-based transnational corporation whose primary interest is profit maximization, should control those critical resources...Water is a life-giving scarce resource which therefore must remain in the hands of the community through public sector delivery. Water must not be provided for profit, but to meet needs. The privatization of water is wrong on many counts. It ensures that decisions regarding the allocation of water center almost exclusively on commercial considerations. Corporate shareholders are seeking maximum profit, not sustainability or equal access. Privatization means that the management of water resources is based on the principles of scarcity and profit maximization rather than long-term sustainability. Corporations are dependent on increased consumption to generate profits and are therefore much more likely to invest in desalination, diversion or export of water than in conservation. Further, the global trend to commodify what has been a public service reduces the involvement of citizens in water management decisions. Private water projects brokered by the World Bank, for example, have minimal disclosure requirements. A water corporation executive at the March 2000 World Water Forum in The Hague, said publicly that as long as water was coming out of the tap, the public had no right to any information as to how it got there. The concentration of power in the hands of a single corporation and the inability of governments to reclaim management of water services allows corporations to impose their interests on government, reducing the democratic power of citizens. Pro-privatization advocates argue that they are seeking private-public partnerships, and give assurances that governments will still be able to establish regulations. However, because the provision of water services itself does not provide sufficient return, water corporations are increasingly seeking exclusive control over water service provision through acquisitions of infrastructure and water licenses and closing the loop around public involvement. In early 1999, when the government of Ontario announced the break up of the public utility, Ontario Hydro, into three new private companies, it also made public its intention to eliminate access to information laws. In their support for large-scale project financing, the World Bank and others give preference to large multi-utility infrastructure projects that favor the biggest corporations, leading to monopolies against which local suppliers cannot compete. To add insult to injury, the World Bank is underwriting these giant corporations with public money, and often incurs the risk, yet the private company reaps the profit. And often governments, supposedly representing their people, have to assure a return to the shareholder. For example, Chile had to guarantee a profit margin of 33 percent to Suez Lyonnaise des Eaux as a World Bank loan condition-regardless of performance. Most disturbing, the close alliance between governments, the World Bank and the water companies gives these corporations undue influence over government policies, such as deregulation and free trade, and preferred access to upcoming water contracts that favor their interests. The stated goal of the World Bank water loan to Budapest was to ease political resistance to private sector involvement. In the Philippines, the water corporations can appeal government decisions and actions against them to an international arbitration panel appointed by the International Chamber of Commerce. These World Bank-backed contracts gone so far that they now actually contain a form of democracy insurance. A recent contract between this Azurix corporation and the Argentine government guarantees cash payment for expropriation if a future government changes its mind and wants to bring water services back under public control.
Posted on: Sat, 08 Nov 2014 23:32:16 +0000
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