thirst for profits: are major
corporations fit to deliver water to the
world
foe united
states/foe england, wales & northern
ireland
Graffiti in
Johannesburg. South Africa Water protests
during Johannesburg Earth Summit in Sept
2002
An astonishing one billion people
worldwide lack access to clean water, while
global consumption of water is doubling
every 20 years - more than twice the rate
of human population growth. In short, the
world faces a major water crisis.
Increasingly, multinational water
corporations are asserting that they can
provide the answer to the world’s water
needs by delivering new investment to
extend services and networks, and to
improve quality. Yet in recent years, the
rapidly rising level of private investment
in water services in both developing and
developed countries has been accompanied by
an alarming number of incidents involving
corporate malfeasance and irresponsibility.
Worse, it has often led to rising charges
that effectively exclude the poor, even
where water and sewerage networks have been
extended. Rarely have markets been
regulated tightly enough to promote public
needs. And the water companies have lobbied
hard, often through powerful lobby groups,
to open up the water market and to have
international rules adjusted
accordingly.
International financial institutions -
including the World Bank and IMF - have
supported the expansion of these companies’
operations globally by pressing countries
to privatize their water service systems as
a condition for loans and debt
restructuring. The World Trade Organization
has also recently begun negotiations to
liberalize water services under the General
Agreement on Trade in Services (GATS).
Meanwhile, investment treaties are being
used by water corporations to try to force
governments to compensate them for failed
water privatization schemes, and similar
investor rights rules are being written
into new trade agreements such as the Free
Trade Area of the Americas (FTAA). Services
and investment negotiations could cement
privatization in those countries that have
been forced to privatize their water and
also require countries to deregulate their
water sectors.
The world of privatized water is
overwhelmingly dominated by two French
multinationals: Suez (formerly Suez
Lyonnaise des Eaux), with US$9 billion of
water revenue in 2001, and Vivendi
Universal, with $12.2 billion of water
revenue in 2001. Both are ranked among the
100 largest corporations in the world by
the Global Fortune 500, and between them
they own, or have controlling interests in,
water companies in over 100 countries and
distribute water to more than 100 million
people around the world. Other major
corporate actors include German water giant
RWE and its British subsidiary Thames
Water, and US-based Bechtel, which is
promoting privatization plans in South
America. Another major player, Enron, has
recently withdrawn from the scene.
bribery, high prices and pollution
The major water companies are being
given increased access to and control over
water markets, yet their record has been
troubling on many fronts. Bribery has been
endemic to the industry. For most of the
past decade, French magistrates have been
investigating allegations of corruption
against executives of Suez and Vivendi. On
three occasions, water executives have been
convicted of paying bribes to obtain water
contracts in France. The ability of such
firms to serve the public interest, rather
than being driven to maximize short-term
returns to shareholders, is highly
questionable.
Major controversies have erupted over
high prices charged by water corporations.
Before privatization, poor households
without connections often pay high rates
for small amounts of water from tankered or
carted supplies. But privatization often
dramatically increases the charges faced by
those with main water.
In Cochabamba, Bolivia, rates reached as
high as 25 percent of household income for
some poor residents (see pages 15-16).
Since 1993, Suez has been the major partner
in the privatized utility supplying water
to Buenos Aires’ 10 million inhabitants,
one of the largest water concessions in the
world. According to the first independent
study of the utility, prices were raised by
more than 20 percent after privatization.
The study reported that many poorer
families could no longer afford to pay
their water bill. Privatization contracts
also tend to exclude alternative suppliers,
such as informal aguateros, who could
otherwise offer a competitive service
sensitive to local needs as seen in Santa
Cruz and in parts of Paraguay.
Major water multinationals have also
committed serious environmental violations
and have failed to provide adequate or
sanitary water supplies: Suez, Vivendi,
Thames Water (RWE) and Wessex Water (Enron)
all were ranked among the top five
polluters by the UK Environment Agency in
1999, 2000 and 2001. In Buenos Aires, where
Suez operates the major water concession,
95% of the city’s sewage is dumped into the
Rio del Plata River, causing environmental
damage that must in turn be paid for with
public funds.
Multinational water companies are being
handed increasing control of the world’s
water. International financial institutions
continue to promote these companies’
expansion internationally, and
international trade agreements will enable
the companies to have even greater
influence over the water sector. Yet the
major water companies have thus far placed
private profits before public need, and the
international financial and trade
institutions have failed to ensure that
water privatization schemes will not harm
people ad the planet. A significant shift
in water policy is needed to protect the
poor and the environment.
