Corporations and the World Water Crisis

“If the wars of the 21st century were fought over oil,
the wars of the next century will be fought over water.”
Ismail Serageldin, former Vice President, World Bank.
Newsweek, 1995.

It would be foolish and somewhat erroneous to pinpoint a particular event or time that heralded the steady erosion of water’s sovereignty as a public good but some critics see the 1992 Rio “Earth Summit” and the prioritisation given there to the provision of clean water and proper sanitation as an economic goal as opposed to a human right as the moment when corporate encroachment began in this hitherto public domain. Through intensive lobbying of the international financial institutions (IFI’s) corporations managed to depict themselves as the white knights who would help achieve the Millenium Development Goals by spearheading a revolution in water utilities management. They told the major international lenders (World Bank, the Inter-American Development Bank and the Asian Development Bank) who, evidently, required little inducement, that privitisation was the only route to follow if they wished to beef up the ailing infrastructures of municipal water utilities, expand coverage and increase those connection rates to safe and secure sources that were so vital in reducing incidences of water-borne diseases such as cholera and diarrhea. The plan seemed good on paper and matched the ideological bent of these institutions at the time since, for the policy planners and economic advisors in the IFI’s it was only an extension of the Washington Consensus model of development; privitisation, deregulation and public sector retrenchment.

The most grevious charge that can be laid at the door of the multinationals is that they have piggybacked on the goodwill expressed in the MDG’s to acquire and consolidate their ownership of key freshwater resources at a time when climate change and corporate usage itself (Nestle pumping Lake Michigan, Cut flower exporters draining Lake Naivasha in Kenya, Coca-Cola’s bottling plants in India) is creating ever more water-stressed regions. Today, every one of Africa’s 677 freshwater lakes is officially listed in dangerous decline.

In less than a decade, and in tandem with these resource pressures, water is undergoing a silent transformation from public good to privately-held (and traded) commodity. Big water companies such as Suez and Vivendi are now double-listed on the major stock exchanges and we seldom think nothing of buying bottled water, even in restaurants. Reports of excessive fluoridation and other hazards associated with the public management of water utilities now seem commonplace. Yet, unreported is the fact that even by the Food and Drug Administration’s own admission the bottled water industry is the most unregulated sector on their books. We have been habitually groomed into accepting as natural the idea of water as just another commodity. Hadji Guiss, special rapporteur on water rights for the UN Subcommission on the Protection and Promotion of Human Rights laments that water in his own Senegal and most everywhere else in the developing world has become a commodity that is “sold to the highest bidder”.

By 2003, Maude Barlow, veteran water campaigner and author of two devastating critiques of corporate involvement in the water crisis (“Blue Gold” and “Blue Covenant”) could comment darkly in the UK’s Guardian that: “the private sector was the first to notice: the planet is running out of fresh water at such a rate that soon it will be the most valuable commodity on earth.” (Feb 26th).

The pattern of IFI lending has become all too familiar offering a one -track solution to a multi-dimensional problem. Neoliberal programmes of privitisation and deregulation suited to the conditions that prevailed in the Western economies have been assumed appropriate to the completely different circumstances of emerging economies. The charge made by Joseph Stiglitz, former World Bank chief economist, of a rigidly inflexible template for economic reform been grafted wholesale and without consideration of regional peculiarities seems doubly appropriate in the case of the water industry. For privitisation in the developing world, far from being the promised panacea has too often led to opportunistic monopolising with exclusionary pricing structures, price gouging and the cherry-picking of profitable management sectors.

For example, in 2006, after years of water service cut-offs, flooding due to lack of proper drainage, huge rate increases and multiple broken promises, the Argentine government unilaterally annulled its 30-year contract with Aguas Argentinas, a Suez subsidiary, to provide water to the 10 million residents of Buenos Aires. So vexed were the Argentine authorities that the courts have been asked to prevent top corporate executives from leaving the country, pending possible criminal charges for allowing high levels of nitrates in the capital city’s drinking water. The World Bank had helped Suez secure the contract in 1993 in what was then the world’s largest transfer of a public water system into private hands. Suez’ neglect of the unprofitable sewage treatment wing of its operation has meant that today the Rio de la Plata is one of the few rivers in which industrial pollution can be seen from space.

In Ghana, where the UK’s Department for International Development (DFID) made its aid payments conditional on part-privitisation, rate increases have shot up 50-70% in some areas. Priced out of the market many have no option but to resort to drinking water from contaminated sources. In Tanzania, Biwater brought the cash-strapped government to court for breach of contract despite their record of higher rates, water shortages and erratic supplies. Despite winning the case the govt. of Tanzania still owes the World Bank the original $140 million loan.

In Johannesburg, the pro-corporate iGoli 2002 privitisation drive has been renamed “E-Coli 2002” by frustrated locals. In KwaZulu-Natal province the installation of pre-paid meters led directly to a cholera outbreak that claimed 200 lives in August 2002. Despite instances where municipal workers would come back at night and show locals how to break into water meters many were still left with no option but to drink from rivers with cholera warning signs. This incident, among others led a Johannesburg High Court judge on 30th April 2008 to declare the use of pre-paid meters to be “illegal and unconstitutional”. It is a ruling that was made possible by such initiatives as the non legally binding General Comment by the United Nations Committee on Economic, Cultural and Social Rights in November 2002 that “access to water is a human right” and that it is a “social and cultural good, not merely an economic commodity”. At the time, WHO director-general Gro Harlem Brundtland called the declaration of water as a human right ” a major boost in efforts to achieve the UN ‘s Millennium Development Goals” – deeply ironic given IFI/corporate assurances over the desirability of water commodification.


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