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In her book Water Wars, the Indian author Vandana Shiva lists nine principles underpinning water democracy. At least two of these principles are directly compromised by the privatization of water.
Point number four states that,
When private companies try to make large profits through high water prices, it denies the poor the inalienable right to the most necessary substance for life. In accordance with this fact, point number seven states,
How can one justify claiming water as their own through contractual agreement while letting another human being go thirsty?
Water is a commons because it is the basis of all life.
Water rights are natural rights and thus are usufructuary rights, meaning
that water can be used, but not owned. As far fetched as water ownership may
seem, it is happening at an increasing rate around the globe.
They are pushing privatization through stipulations in trade agreements and loan conditions to developing countries.
These privatization programs started in the early 1990’s and have since emerged in India, Bolivia, Chile, Argentina, Nigeria, Mexico, Malaysia, Australia, and the Philippines, to name a few.
In Chile, the World Bank
imposed a loan condition to guarantee a 33 percent profit margin to the
French company Suez Lyonnaise des Eaux while the company insisted on
a margin of 35 percent.
Supporters of privatization say that it has a great track record of success, increasing the efficiency, quality, reliability and affordability of services to the population.
Yet the industry has a track record of hazards and failures. For example, private companies most often violate standards of operation, and engage in price fixing without many consequences.
This leads to water stress
among the poor populations of these areas, causing people to drink water
that is often very contaminated and hazardous to their health (even though
case studies have shown that privatized water can be very contaminated as
As is already evident, once these private water giants take over water services, prices skyrocket.
After privatization, customer fees in France increased 150 percent while the water quality declined. In a French government report, it was revealed that over 5.2 million people had received “bacterially unacceptable water”.
In Subic Bay, a former U.S. naval base in the Philippines, Biwater increased water rates by 400 percent. Water rates in England increased by 450 percent while company profits soared by 692 percent. CEO salaries for the private corporations behind the water supply increased by an astonishing 708 percent. As one can expect with such high price fixing, service disconnection increased by 50 percent.
Meanwhile, the British Medical Association condemned water privatization for its health effects because dysentery increased six-fold. Many of these examples of the failures of water privatization are occurring in developed countries, but the most severe effects have been on the developing world.
The high rises in pricing along with deteriorating water quality because of water privatization has led to much public scrutiny and uprisings by affected communities around the world.
It is a shining example of the conflict over the privatization of water services, a victory for the people opposing privatization, and the persistence of the water giants to make money any way they can. Cochabamba lies in a semidesert region of Bolivia, making water a scarce and precious resource.
However, in 1999 the World Bank recommended privatization of Cochabamba's municipal water supply company, Servicio Municipal del Agua Potable y Alcantarillado (SENIAPA).
This was to be done through a concession to one of Bechtel’s subsidiaries - International Water.
Bechtel is a U.S. corporation based in San Francisco. This corporate giant is not even welcome in its hometown of San Francisco. In June, 2002 the Board of Supervisors in San Francisco voted to cancel a $45 million program management contract awarded to Bechtel for the reconstruction of the Hetch Hetchy public water system.
This vote took place after an investigation by the San Francisco Bay Guardian, a local alternative weekly newspaper, exposed that at least $5 million dollars of nearly $8 million pay out to Bechtel for its first year of service was a complete waste of money.
In one case, Bechtel took a city database of projects, resorted the information, changed the data into a different format, and sold it back to the city for almost $500,000.
In response to the World Bank recommendation, the Bolivian Congress passed the Drinking Water and Sanitation Law in October 1999, allowing privatization and ending government subsidies to municipal utilities.
Soon after International Water took over the water services in Cochabamba, the monthly water bill reached $20 in a city where the minimum wage is less than $100 a month. These increases forced some of the poorest families in to literally choose between food and water ($20 is nearly the cost of feeding a family of five for two weeks).
For more information on the these price hikes, see HERE.
In response to these price increases, an alliance of the citizens of Cochabamba called La Coordinadora de Defensa del Agua y de la Vida (The Coalition in Defense of Water and Life) was formed in January 2000. Through mass mobilization, the alliance shut down the city for four days. Within a month of this, millions of Bolivians marched to Cochabamba and held a general strike, stopping all transportation.
The protesters then issued the Cochabamba Declaration, which called for the protection of universal water rights for all citizens.
In response to this, the Bolivian government promised to reverse the price hike. They never did.
So, in February 2000, La Coordinadora organized a peaceful march demanding the retraction of the Drinking Water and Sanitation Law, the termination of the water contract, the participation of citizens in creating a water resource law, and the cancellation of ordinances allowing privatization.
Slogans such as "Water Is God's Gift and Not A Merchandise" and "Water Is Life" were used by the protesters. These demands were strongly rejected by the government. The following April, the government declared martial law to try and silence the water protests. Activists were arrested, protesters were killed, and the media was censored.
After only a day of martial
law, three protesters had been killed, including a 17-year old boy who was
shot in the head by soldiers in Cochabamba. Over 30 people had been injured
through conflicts with the military and the leaders had been jailed (some
were flown to a remote location in the jungle of Bolivia).
In the summer of 2000, La Coordinadora held public hearings to start democratic planning and management. However, the Bolivian government and Bechtel continued to harass and threaten activists of La Coordinadora, trying their best to undermine the process.
In November 2001, Bechtel filed a lawsuit against Bolivia,
demanding $25 million in compensation for its lost opportunity for future
Even though Bechtel is a U.S. corporation, its subsidiary founded a presence in the Netherlands in order to exploit this treaty.
Because of the secrecy of the hearings, the Center for International Environmental Law and Earth justice filed a request in August 2002 to open these proceedings to the public of Bolivia. However, in February 2003 the ICSD sided with Bechtel, announcing that it would not allow the media or public to have any part in or even witness the meetings.
Not only is the World Bank forcing its programs and ideas on the people of Bolivia, but it is also preventing the affected people from participating in a matter that directly affects their lives.
As of May 2004, there has been no verdict on the lawsuit.
As Vandana Shiva writes in her article Bechtel And Blood For Water: War As An Excuse For Enlarging Corporate Rule,
George Shultz was Secretary of State under Ronald Reagan and previously was the president of Bechtel. He is now a board member and senior counselor for the corporation.
He was chairman of the pro-war Committee for the Liberation of Iraq and wrote in a op-ed article in the Washington Post September 2002 that,
Because Bechtel is a privately held company, without public stock trading, it does not have to reveal many of its operations.
Bechtel is responsible for over 19,000 projects in 140 countries on all continents, and is involved in over 200 water and wastewater treatment plants around the world. It was involved in the Dabhol plant in India with Enron, and is now involved in water privatization of Coimbatore/Tirrupur as part of a consortium with Mahindra and Mahindra, United International North West Water.
The contract has not yet been
made public, as is the case with other privatization contracts.
In 2000, out of 40 IMF loans distributed through the International Finance Corporation, 12 had requirements of partial or full privatization of water supplies. They also insisted on the creation of policies to stimulate “full cost recovery” and the elimination of subsidies.
African governments, such as Ghana, increasingly give in to pressures for water privatization. In Ghana, the World Bank and IMF policies forced the sale of water at market rate, requiring the poor to spend up to 50 percent of their earnings on water purchases.
As Vandana Shiva writes in Water Wars,