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by Preethi Sirimanne - von den Driesh

While 1.5 billion people in the world are desperately in need of fresh water, multinational water giants are bent on capitalizing this humanity's common resource treating the scarcity of water as a hot business prospect. Rejoicing over their profits, the global water conglomerates are boasting that their yearly earnings are over 400 billion in US dollars, more than the earnings of the pharmaceutical industry.

Scrambling for a precious resource - water

Having discovered a new market, water giants are adamant in their approach to treat water as a tradable commodity - a private asset for personal gains. In a wave of rush, global water conglomerates are attempting to spread their tentacles in the developing countries trying to establish their water kingdoms. To have monopoly rights on the water system of a country is like having a cash cow. Once they get hold of it, they will ferociously cling to it.

On entering contracts with developing countries, water lords recite the mantra of professionalism and efficiency. Their concepts announce accessibility, quality, affordable services, poverty reduction, and improvement in economic and social well-being of people.

However, contrary to what they promise, their performances have shown that their service is connected with high tariffs, large-scale disconnections to customers who cannot pay, job redundancy, plus bribery and corruption.

The model of water privatisation has proved to be an anti-poor policy which has increased poverty and has brought social instability as it serves only those who can afford it marginalising the poor.

Water lords are not keen to serve the poor, whom they see as non-profitable customers. Their priorities lie in satisfying their executives and stockholders, not the public.

Those private investors, who are quick to undermine the public services and label governments as corrupted and inefficient, have yet to prove that their services are efficient and commendable. A look at the examples in African and South American countries illustrate how water lords have acted insatiable and implacable causing irreparable damages to these countries.

One of the most horrendous experiences of water privatisation took place in South Africa. Edward Cottle of the Johannesburg-based Rural Development Services Network wrote in his study on water privatisation: Since 1994 over 10 million South Africans have had their water cut, 2 Million South Africans have been evicted from their homes for not paying their water bills.

The black township in Fort Beaufort had seen an increase in service charges by 600 percent between the years 1994-1996, the time of privatisation. Residents who had paid SA Rand 70 before privatisation were forced to pay R 400-500. Unable to pay such high prices many people used the polluted water from rivers which resulted severe health problems. Over 120,000 people got infected with choleras and 290 died during the outbreak.

Emotions ran high in Ghana, a country where more than 60 percent of the people earn less than 1 US dollar a day, when water prices were increased by 95 percent following the privatisation. Britain's Department of International Development (DFID) had been heavily sponsoring water privatisation in Ghana.

Christian Aid says: 10 million UK pounds had been supplied by the DFID to persuade Ghana to lease parts of its urban water supplies to foreign countries. This, despite the fact that there had been a broad section of people - women's groups, trade unions, teachers, public health workers, students - who were against privatisation.

The majority of people could not afford to buy water. The price increase was so dramatic that the price of a bucket of water was more expensive than in the UK. Many who were unable to pay had their water connections cut off.

Kenya had to witness not only a price increase in water but also corruption among the foreign operators. Immediately after a French water company privatised Nairobi's water system, the water price went up by 40 percent. This is not all.

The newspaper Swetan reported that 3,500 municipal workers were fired when foreign company took over the management. The salaries of the 45 foreign staff in the second year ran to R 13.6 million, increasing the amount to R 31.2 million at the end of the contract.

In Bolivia water privatisation polarised the inhabitants of the city Cochabamba. During the revolt, World Bank's Director Wolfensohn said that public services inevitably lead to waste and countries like Bolivia need a proper system of charging for water.

The privatisation of Cochabamba's water system was by no means directed against the poor. The reason for the social explosion was that, when the water system was taken over by the London-based International Water Ltd, (IWL), which was managed by the Bechtel Company, the company entered into a contract which guaranteed 16 percent return of capital.

Automatically, the water prices went up, Bolivians having to pay a quarter of their incomes to buy water. After 4 month long protest Bechtel was kicked off. The Earth Island Journal reported that Bechtel left behind emptied bank accounts and more than US $ 150,000 unpaid bills.

In spite of all this, Bechtel is now suing Bolivia for compensation of US $ 12 million. Luis Bredow, a newspaper publisher, who made investigations stated in the Observer: No money was shelled out by anybody for Cochabamba's water system.

The operators grabbed the entire system for nothing. Bredow says that it is the good relations between the water company and the former President Zamora that such favourable conditions were given to IWL.

The bottle-water industry is another sector dominated by the water giants expanding globally at a rate of 20 percent a year. Its annual sales of US $35 billion are a phenomenal success. In this bottle-water marketing process, ecological commons, natural resources quickly come into the hands of private companies or investors, who then exploit these resources.

Once the water conglomerates and gain access to the resources of a country plunder and exploitation begins. Investors are claiming the right to buy, sell, extract and move water from one place to another. With the help of lobbyists, lawyers, politicians, and through bribery, these corporations are buying farm and indigenous land, aquifers and wilderness tracts in their constant search for water resources.

Water is bottled, traded, and transported at the highest speed to earn the maximum results. Coca Cola has bought the river system Bhavani in Tamil Nadu and is pumping huge quantities of water to sell it as a luxury product.

Nestle's Pure-Life plant in Brazil, which was established in an area where the water is described as unique and rare due to its high percent of minerals, extracted such massive quantities of water that the water aquifer dried out and effected the water quality of the other wells in the surrounding area.

Who sponsors water privatisation and who benefits from it? The World Bank and the International Monetary Fund (IMF), which are termed as the shadowy arm of the US Treasury that acts as debt collection agency of the Wall Street banks, are making water privatisation a compulsory factor for receiving loans.

The so-called Washington Consensus, a model for neo-liberal economies, advocates a solution for the water crisis. It is: commodification and privatisation of the prevailing water system.

The motto is: Put water for sale and let the market determine its future. This is their neo-liberal policy. Now they have found a market in water and want to make the best out of the situation even at the cost of the poor.

Developing countries have witnessed how corporations gain profits out of AIDS medicaments insisting on patent rights at a time when millions were dying due to their inability to afford the necessary drugs. It is the excessive greed and the passion for plunder that drives corporations to make profit out of the sick and the poor.

Naturally, they deny being selfish and insist that their modern neo-liberal policies are implemented to eradicate poverty. Incidentally, the water lords have faithful allies - the World Bank, the IMF and donor countries.

Leaked information exposed that the EU had asked 72 countries to privatize their water utilities through foreign companies. Rather than providing funds for public water services the World Bank, the IMF and donor countries take measures to strengthen the position of the corporations in the West.

Countries which give aid use a tactic called tied aid in their policies. Britain for instance provided aid to Ghana on the condition of water privatisation. This is only one example out of many.

Before private firms invest in projects they make sure that the risk potential is minimized. Lower risks for private firms mean high risks for governments.

As the burden of risk is mainly laid on the governments, they are compelled to bring the water system into a standard that investors find it attractive to engage themselves. In other words, consumers have to pay increased prices so that the water utility is lucrative enough to attract private bidders.

For example, in a region of Ghana the World Bank water and sanitation project required unaffordable capital contribution from local communities as a precondition for installing standpipes and bore-holes. Public Citizen a non-profit public interest organisation reports: Private sectors are not providing investment desperately needed on restructuring, rehabilitation and expansion of water utilities.

In general, they prefer leases, management and service contracts that enable them to intersect with rate-paying consumers without providing such investment. In most cases, service involves installing meters, tightening billing systems, reducing leakages and disconnecting non-payers.

The paradox of the privatisation of water is that consumers have to pay for the infrastructure that determines the market value for private firms, yet they do not have a guarantee of benefiting from it.

Risk minimizing is not the only condition. The positions of the private investors are secured by clauses such as cost recovery and automatic tariff adjustments formulae.

Cost recovery means governments must remove subsidies for water and the customers pay operation costs, maintenance and capital expenditure necessary before the privatisation begins. With the automatic tariff adjustments formulae governments are forced to pay the contract holder in dollar-denominations terms. That is, when the domestic currency depreciates, the price of water increases automatically.

These policies can lead to the decadence of a country. The automatic tariff adjustment formula is regarded by many as a deadly poison which can paralyse a country's economy.

The ones who realize later that they have made a mistake cannot reverse their decisions easily. The possibility of proving that a private company has violated the contract is extremely difficult since there is no transparency.

In addition, privatisation can make a country depend on foreign companies remaining forever a peripheral economy, never becoming industrialized.

How can the corporations, who in their nature are anti-democratic help to solve the water crisis? Their transactions are usually made behind closed doors without the consent of the public at large.

So, there is virtually no transparency. As invoices and details of the contracts are not open to scrutiny, there are no means to prevent corruption.

Unlike public owned water services, which are less expensive because they do not have to pay dividends for shareholders, private companies on the other hand make consumers pay not only for their services but also for their lobbyists, lawyers, advertisements, extra pay packages for their executives and for their shareholders.

Issues that are important to societies - human rights, ecological concerns and sustainability - are irrelevant to them because these are the very stumbling blocks to corporate mandate.

Beneficiaries of water privatisation depend very much on the level of efficiency.

The business as usual approach will not serve the customers. The key factor is how well the services are provided. Various schools of thought have expressed private companies are not able to demonstrate high efficiency as promised by them because there is no transparency in their dealings, and their projects are not designed to serve the public.

Therefore, they are less likely to address water as a vital, social, cultural and ecological essentiality. It is questionable if they deal with complaints put forward by communities. In many cases there had been no dialogue between private firms and the citizens.

Commodification of water speaks against ethical, environmental and social values as the survival of the people depends heavily on this public resource. It is important that we realize the catastrophic dangers of privatisation.

Otherwise we will let the water conglomerates decide the fate of millions who are desperately in need of fresh water. Water is indispensable and is the pristine source that helps us to survive. We cannot allow the insatiable water giants to take away what belongs to you and me.

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