War on Want advisor and public services expert David Hall * reports back from the third World Water Forum held in Kyoto during March 2003 with the shock news that even multinationals have given up on the privatization of water services for the poor.
Over 5000 people attended the third World Water Forum (WWF3) at Kyoto in March 2003 that brought together large NGOs and trade unionists from around the world of which nearly all are highly critical of privatization of water and its inclusion in the GATS negotiations.
Organised by the World Water Council (WWC) and the Global Water Partnership (GWP), the main event was scheduled to be a report from a panel committee led by Michel Camdessus, former managing director of the IMF, on financing water infrastructure in developing countries to achieve the 'Millennium Development Goals' of halving the world's population without water supply.
Less predictably, multinational after multinational stepped up to report problems of water privatization and cast doubt on its inclusion in GATS. Thames Water got the ball rolling by dissociating itself from GATS, while Vivendi rubbished World Bank projections and Suez said it had tried everything to turn the poor into profitable customers but to no avail. At one point, an exasperated World Bank official was heard complaining to the multinationals that they were not being supportive enough of privatization.
The forum organisers were also made to listen as their main papers on governance, poverty and finance were attacked that included a final torrent of criticism and a large demonstration against the Camdessus report.
Sheepish World Bank officials said they were open to suggestions and USAID advocated the use of bonds for municipalities in developing countries to raise finance themselves. By the end of the forum everyone was agreed that public sector water operators were central to extending water and sanitation services to the poor.
What on earth was going on? Well, WWF3 needs to be understood as part of a process stretching back a few years. In the 1990s the development banks, especially the World Bank, seized on water privatization as a way of solving a lot of problems. Privatization. In short, this meant reducing the role of the state in developing countries by commercialising the expensive business of supplying water and sanitation, and at the same time allow the banks to deal with reliable multinationals instead of difficult governments and public sector organisations. So the banks simply started telling countries that loans were conditional on privatization, and that they should choose which of the handful of (European) water multinationals should take over.
This was neo-liberal nirvana, delivering water companies dozens of long-term monopolies. Recipient governments had little choice in the matter as the water companies invested where they could be sure of profits, cut workforces, pushed up prices to 'full cost recovery' levels, and by-passed public authorities to deal directly with their customers. But a wave of opposition to water privatizations in both the North and South disrupted the plans. The uprising in Cochabamaba, Bolivia, is well known, but there have been many other examples of successful resistance ever since a 1994 mass campaign in the Polish city of Lodz that halted a privatization plan from Vivendi.
Opposition came from a cross section of labour activists, environmentalists, consumer groups, public water managers and elected politicians frustrated by conditionalities. These campaigns against privatization and the corporate hijacking of globalisation were based on the widespread belief that water supply as an essential service should be public and protected from private monopolies profiteer from a vital resource.
Even when privatizations went through as in the case of Argentina, the Philippines and Indonesia, companies have found themselves embroiled by a constant public resistance. Coupled with the collapse of currencies, in countries such as of Argentina, water companies found they were unable to extract the expected profits. Not surprisingly, these companies have begun to squeal. SAUR, one of the French multinationals, told the World Bank that it would need massive subsidies and guarantees from governments and the Bank itself to continue wok in developing countries. Suez announced that they were reducing their investments in developing countries, not extending them while Thames has tried to avoid political opposition by dissociating itself from GATS and not tendering for business with conditionalities.
And so when it came to WWF3 at Kyoto, the limitations of the privatization policies of the World Bank etc were suddenly exposed by the results of resistance.
Delegates renewed their interest in proposals advocated for years by supporters of the public sector such as public-public partnerships (PUPs) forged between established public sector water operators and other public sector operators needing help with reform without the threat of privatization. Other suggested that municipalities be allowed to raise capital investment finance themselves through municipal bonds as is happening in India. Some people even mentioned municipal socialism.
* David Hall is a leading UK specialist on the worldwide privatization of public services. He is director of the Public Services International Research Unit at the University of Greenwich and technical advisor to the charity War on Want.
