Water: Promoting Privitization

[Tracey]

Promoting Privatization

WASHINGTON, February 3, 2003 — Despite World Bank contentions that it does not force privatization on the poor, research by ICIJ and the bank itself showed that privatization is playing an ever-increasing role in bank lending policies.

Using data available from the World Bank Web site, ICIJ analyzed 276 loans labeled "water supply" awarded by the bank between 1990 and November 2002. In about one third of the projects, the World Bank required the country to privatize its water operations in some form before it received funds.

The ICIJ analysis also showed that the number of loans with privatization as a condition tripled between the first and last half of that time period. Between 1990 and 1995, there were 21 loans with privatization as a condition. From 1996 to 2002, they increased in number to 61. Two are pending.

Privatization is an umbrella term that includes selling assets to a private company, tendering a water concession to a private company, or awarding management contracts to a private company. These projects received loans either from the World Bank or from its investment arm, the International Finance Corporation. The bank lends only to governments, but it can require government leaders to privatize state-owned assets, such as water utilities, before granting loans. The IFC can lend to businesses.

Because the World Bank often combines several of a country's projects under one omnibus loan, it is impossible to determine how many drinking water programs the bank supports around the world. Instead, the ICIJ investigation examined only those 276 projects from 1990 to 2002 which the bank itself identified as "water supply" loans. The bank has many other "combo" projects that include drinking water delivery but are not labeled as "water supply" loans.

Of the bank's 276 "water supply" loans, at least 84 were conditioned on privatization, the ICIJ investigation showed. The World Bank's public information on loans is often not specific, and the bank acknowledges that it does not keep track of all information about private contractors on water privatization loans. Bank spokesman Richard Uku said the bank had neither the time, personnel nor money to do that.

The bank offers two categories of loans. Investment loans are long term, five to 10 years, and are used to finance specific projects involving goods, services and works. Structural adjustment loans are short term, one to three years, and help finance institutional reform. The loans ICIJ studied came from both categories.

A 2001 World Bank study of adjustment loans supports the ICIJ analysis that over the last decade, privatization has been an increasingly important aspect of bank loan conditions. The report does not break out loans specifically for water supply, but it does show that privatization is a major condition of public utility loans.

Of the 193 adjustment loans approved from 1996 to 1999, 112 – or 58 percent – had privatization as a condition, the report showed.

The bank's adjustment loans increased substantially in the 1990s. During the 1980s, it made 191 loans to 64 countries totaling $27.1 billion. In the 1990s, there were 346 loans totaling $71.7 billion in 98 countries.

The report noted that beginning in the 1980s, "one of the Bank's broad aims was to establish incentives for private sector development..." These incentives increasingly became requirements and by 1999, 70 percent of the adjustment loans had a private sector condition.

The bank said it created structural adjustment loans in the 1980s to help poor countries reform their public sector institutions.

The success or failure of the bank's privatization policy is not evident from the data. However, bank officials claimed that internal records show that water projects with private sector participation perform better than those run by local governments, especially when the country has a strong rule of law and an honest, effective administration.

At the same time, the report notes that external studies done by organizations such as the British aid group Oxfam are highly critical of the bank. These reports have found that privatization creates social hardships by reducing income and increasing unemployment.

The World Bank does not force countries to privatize their waterworks in return for loans, and "it never has," spokesman Uku said.

"The issue," he added, "is not privatization. It is more about reform. Reform is the magnet for investment, and creating the conditions for reform is our first priority."

http://www.icij.org/water/report.aspx?sID=ch&rID=44&aID=45

[Tracey]

Cholera and the Age of the Water Barons

By Bill Marsden

February 3, 2003 — When cholera appeared on South Africa's Dolphin Coast in August 2000, officials first assumed it was just another of the sporadic outbreaks that have long stricken the country's eastern seaboard. But as the epidemic spread, it turned out to be a chronicle of death foretold by blind ideology.


In 1998, local councils had begun taking steps to commercialize their waterworks by forcing residents to pay the full cost of drinking water. But many of the millions of people living in the tin-roof slums of the region couldn't afford the rates. Cut off at the tap, they were forced to find water in streams, ponds and lakes polluted with manure and human waste. By January 2002, when the worst cholera epidemic in South Africa's history ended, it had infected more than 250,000 people and killed almost 300, spreading as far as Johannesburg, 300 miles away.

Making people pay the full cost of their water "was the direct cause of the cholera epidemic," David Hemson, a social scientist sent by the government to investigate the outbreak, said in an interview. "There is no doubt about that." [Listen to David Hemson]

The seeds of the epidemic had been sown long before South Africa decided to take its deadly road to privatization. They were largely planted by an aggressive group of utility companies, primarily European, that are attempting to privatize the world's drinking water with the help of the World Bank and other international financial institutions.

The days of a free glass of water are over, in the view of these companies, which have a public relations campaign to accompany their sales pitch. On a global scale, and in many developing nations, water is a scarce and valuable and clearly marketable commodity. "People who don't pay don't treat water as a very precious resource," one executive said. "Of course, it is."

A yearlong investigation by the International Consortium of Investigative Journalists (ICIJ), a project of the Center for Public Integrity, showed that world's three largest water companies — France's Suez and Vivendi Environnement, and British-based Thames Water, owned by Germany's RWE AG — have since 1990 expanded into every region of the world. Three other companies, Saur of France, and United Utilities of England working in conjunction with Bechtel of the United States, have also successfully secured major international drinking water contracts. But their size pales in comparison to that of the big three.

The investigation shows that these companies have often worked closely with the World Bank, lobbying governments and international trade and standards organizations for changes in legislation and trade agreements to force the privatization of public waterworks.

more.....

http://www.icij.org/water/report.aspx?sID=ch&rID=44&aID=44

[Rootsie]

     Where the People Voted Against Fear
by Eduardo Galeano
November 18, 2004
 
A few days before the election of the President of the planet in North America, in South America elections and a plebiscite were held in a little-known, almost secret country called Uruguay. In these elections, for the first time in the country's history, the left won. And in the plebiscite, for the first time in world history, the privatization of water was rejected by popular vote, asserting that water is the right of all people.
* * *
The movement headed by President-elect Tabare Vazquez ended the monopoly of the two traditional parties--the Blanco and the Colorado parties--which governed Uruguay since the creation of the universe.

And after each election you would hear this exclamation: 'I thought that we Blancos won but it turns out we Colorados did"--or the other way around. Out of opportunism, yes, but also because after so many years of ruling together, the two parties had fused into one, disguised as two.

Tired of being cheated, this time the people made use of that little-used instrument, common sense. The people asked, Why do they promise change yet ask us to chose between the same and the same? Why didn't they make any of these changes in the eternity they have been in power?

Never had the abyss between the real country and electioneering rhetoric been so evident. In the real country, badly wounded, where the only growth is in the number of emigrants and beggars, the majority chose to cover their ears to block out the oratory of these Martians competing for the government of Jupiter with highfalutin words imported from the moon.
* * *
About thirty or so years ago, the Broad Front (Frente Amplio) sprouted on these southern plains. 'Brother, don't leave,' the new movement implored. 'There is hope.' But crisis moved faster than hope, and the hemorrhaging of the country's youth accelerated. The dream of a Switzerland of the Americas ended, and the nightmare of violence and poverty began, culminating in a military dictatorship that converted Uruguay into a vast torture chamber.

Afterward, when democracy was restored, the dominant politicians destroyed the little that remained of the system of production and converted Uruguay into a giant bank. And as is often the case when it is assaulted by bankers, the bank went bust and Uruguay found itself emptied of people and filled with debt.

In all these years of disaster after disaster, we lost a multitude. And as if in a bad joke, not content to just force its youth from the country, this sclerotic system also prohibits them from voting-one of a small number of countries that do so. It seems inexplicable, but there is an explanation: Who would these emigrants vote for? The owners of the country suspect the worst, and with good reason.

In the final act of his campaign, the vice presidential candidate for the Colorado Party announced that if the left won the elections, all Uruguayans would have to dress identically, like the Chinese under Mao.

He was one of the many involuntary publicity agents of the victorious left. Not even the most tireless electoral workers did as much for this victory as the tribunes of the homeland who alerted the population to the imminent danger if democracy were to fall to the tyrannical enemies of freedom and the terrorists, kidnappers, and assassins who oppose democracy. Their attacks were extremely efficient: The more they denounced the devils, the more people voted for hell.

Largely thanks to these heralds of the apocalypse, the left won by an absolute majority, without a runoff. The people voted against fear.
* * *
The plebiscite on water was also a victory against fear. Uruguayans were bombarded with extortion, threats, and lies: A vote against privatizing water will condemn you to a future of sewage-filled wells and putrid ponds.
As in the elections, in the plebiscite common sense triumphed. In their vote, the people asserted that water, a scarce and finite natural resource, must be a right of all people and not a privilege for those who can pay for it. The people also showed they know that sooner rather than later, in a thirsty world, the reserves of fresh water will be as, or more, coveted than oil reserves. Countries that are poor but rich in water must learn to defend themselves. More than five centuries have passed since Columbus. How long can we go on trading gold for glass beads?

Wouldn't it be worthwhile for other countries to put the issue of water to a popular vote? In a democracy, a true democracy, who should decide? The World Bank, or the citizens of each country? Do democratic rights exist for real, or are they just the icing on a poisoned cake?

In 1992, Uruguay was the only country in the world to put the privatization of public companies to a popular vote: 72 percent opposed. Wouldn't it be democratic to do the same in every country?
* * *
For centuries, Latin Americans have been trained in impotence. A pedagogy passed down from the colonial times, taught by violent soldiers, timorous teachers, and frail fatalists, has rooted in our souls the belief that reality is untouchable and that all we can do is swallow in silence the woes each day brings.

The Uruguay of other days was the exception. That Uruguay instituted free public education before England, women's suffrage before France, the eight-hour workday before the United States, and divorce before Spain-seventy years before Spain, to be exact.

Now we are trying to revive this creative energy and would do well to recall that the Uruguay of that sunny period was the child of audacity, and not fear.
* * *
It will not be easy. Implacable reality will promptly remind us of the inevitable distance between the desired and the possible. The left is coming to power in a shattered country, which, in the distant past, was at the vanguard of universal progress but today is one of the furthest behind, in debt up to its ears and subjected to the international financial dictatorship, which doesn't vote but simply vetoes.

Today, we have very little maneuvering room. But what is usually difficult, even impossible, can be imagined and even achieved if we join together with neighboring countries, just as we have joined together with our neighbors.
* * *
In the Broad Front's very first demonstration, which flooded the streets with people, someone shouted, half-joyous, half-scared, 'Let's dare to win.'

Thirty or so years later, it came true.

The country is unrecognizable. Uruguayans, so unbelieving that even nihilism was beyond them, have started to believe, and with fervor. And today this melancholic and subdued people, who at first glance might be Argentineans on valium, are dancing on air.

The winners have a tremendous burden of responsibility. This rebirth of faith and revival of happiness must be watched over carefully. We should recall every day how right Carlos Quijano was when he said that sins against hope are the only sins beyond forgiveness and redemption.

http://www.zmag.org/content/showarticle.cfm?SectionID=20&ItemID=6683