page 20

issue 103
august 2003  

Water privatization protests in Cochabamba, Bolivia.

tidal wave in the wto

global water industry plans to submerge national interests

Water is big business. The giants that dominate the water industry – including the European companies Suez and Vivendi – are at the forefront of attempts to use the WTO’s GATS agreement to promote further private sector involvement in water industries and to ‘lock-in’ previous privatizations. For the water sector this will mean increased markets and profits, but the results for local communities and the environment are less crystal clear.

gats and water
The WTO’s General Agreement on Trade in Services (GATS) agreement is an importantmissing piece of the puzzle for Suez and other water giants, as it will put pressure on countries to open up significant portions of their water services to global water transnational corporations. Furthermore, GATS will likely make many of the current water privatization schemes effectively irreversible, regardless of any associated problems. Future governments will thus be restricted in their capacity to reintroduce water services aimed at meeting community needs.

Water corporations have a keen interest in locking governments into privatization deals, which do not prevent companies from jumping ship if profits decrease, but make it harder for governments to terminate agreements.

Nonetheless, in recent years, several governments have terminated privatized water contracts as the realities of higher prices and poor service have triggered widespread community protests. The most celebrated example took place in Cochabamba, Bolivia: following privatization, water rates increased by 150%, and the company, a subsidiary of Bechtel, threatened to cut off customers who could not afford to pay. The result was a public uprising with the government eventually cancelling the privatization contract in 2000. Similarly, in 2003, the City Council of Atlanta, Georgia in the United States terminated its 20-year contract with a Suez subsidiary “after widespread complaints about poor service and dirty water”. In fact, dissatisfaction with privatization schemes is bubbling up all over the world in countries including Argentina, South Africa, Australia and the Philippines.

linking tentacles
Suez’s extensive involvement in corporate lobby groups provides it with excellent access to key global decision makers. The company participates in all of the major trade lobbies, including the International Chamber of Commerce, the Transatlantic Business Dialogue, the World Business Council for Sustainable Development and the European Roundtable of Industrialists. It is also a member of the European Services Forum (ESF), a corporate lobby that focuses extensively on the GATS.

Corporate Europe Observatory has used official ‘access to information requests’ to study the privileged liaison structure that has sprouted up between the European Commission’s ‘GATS 2000’ team and the ESF. In October 2001, the Commission’s Directorate General of Trade solicited the ESF’s advice on GATS requests: “We would very much welcome industry’s input to this exercise, both in terms of finding out where the problems currently lie and in making specific requests. Without ESF input the exercise risks becoming a purely intellectual one.” Later, a Commission trade official thanked water giants Thames, Suez and Vivendi for their contribution to reducing trade barriers with a view to opening markets for European companies.

The ESF’s privileged relationship with the EU is no surprise given that the body was initiated by then EU Trade Commissioner Sir Leon Brittan. The strength of the relationship was highlighted in September 1999 by Robert Madelin, a high-level Commission trade official, when he told a UK business audience: “The European Commission is convinced of the need to work not only with the member states’experts but directly with European industry. We are going to rely heavily on the European Services Forum. […] We are going to rely on it just as heavily as on member state direct advice in trying to formulate our objectives.”

suez and global water lobbies
Suez is also centrally placed in the series of international think tanks, advisory commissions and forums that have dominated the water debate and established privatization as the dominant solution to the world’s water problems. Suez is an influential member of the World Water Council, a leading water think tank and advisor to the World Bank and WTO. A former Suez CEO, Jérôme Monod, is a member of the World Commission for Water in the 21st Century, an elite, high-level public awareness and global policy forming body.

private water in uruguay: a “dreadful” experience
A water concession in Maldonado, Uruguay operated by a Suez subsidiary, Aguas de la Costa, is an example of privatization gone bad. According to Maria Selva Ortiz from REDES/Friends of the Earth Uruguay:

“Aguas de la Costa’s privatization resulted in a steep increase in tariffs. The rate charged by the public utility in most of Uruguay is a fixed rate of US$3, but Suez charged $70 just to open the tap. By pressuring the municipal government, Suez managed to make connection to their services mandatory for all of the inhabitants of the area.”

Suez has also contributed to serious environmental damage in the area where it operates. According to Maria Selva Ortiz, “Water was historically taken from the Laguna Blanca to cover the needs of the local population, but shortly after Suez took over water and sewage services the lake dried up due to over-exploitation by the company.”

When a local public school was unable to pay the high rates established by Suez, it was cut off from the water supply. When a local inhabitant supplied water to the school from his own tap, the company cut off his supply as well. According to Selva Ortiz: “This contrasts sharply with what we were told at a European business panel at the Third World Water Forum in Kyoto, where we saw a video with beautiful images about the companies’commitment to education and the world’s children. These images are clearly PR, and companies like Suez are solely interested in reaping profits.”

Turning a blind eye to these problems, the World Bank, the IMF and the Inter-American Development Bank are now pressing hard for the privatization experience to be shared throughout the country. However, the National Committee in Defense of Water and Life, in which REDES/FoE Uruguay is active, is proposing a Constitutional Reform that would ensure water remains accessible to all people though public ownership and management and would specify that water resources must be managed sustainably.

more information: “The Water Barons”, International Consortium of Investigative Journalists: www.icij.org/dtaweb/water
“WTO and Water: The EU’s Crusade for Corporate Expansion”, Corporate Europe Observatory Water Info Brief: www.corporateeurope.org/water/infobrief3.htm