Tue, 21 Jan 2003

Case studies of privatization: A backlash

The Jakarta Post, Jakarta

One of the strongest arguments in favor of water privatization is the widespread inability of public utilities in the developing world to provide clean water.

As pointed out by the World Bank's senior water adviser John Briscoe in The New York Times last August, public utilities are "heavily overstaffed, provide poor quality, are unwilling or unable to invest, with not enough money to serve everybody".

At present, some one billion people do not have access to clean water, two billion others are suffering from an inadequate supply of clean water, and every year three million people die of water-borne diseases.

In big cities, the clean water supply decreases 40 percent for a variety of different reasons.

By 2025, as the world's population grows to eight billion, the United Nations expects the number of people suffering from an inadequate supply of clean water to grow to five billion.

However, case studies in several countries show that private enterprise appears to be no panacea for this problem. Privatization, according to the studies, turns water into a profit-oriented business and hampers the poor's access to clean water.

Critics say that with their main responsibility to their shareholders, it is unrealistic to expect private companies to assume the financial risk of supplying water to portions of the world's population that may not be able to afford it in the first place.

The economics of water have become so highly charged that vast numbers of people have staged protests in Argentina, Bolivia, Ecuador, Panama and South Africa.

Residents of Tucuman province in Argentina have demanded that a French multinational company go home. They accuse the company of only raising the price of water without making any new investments.

"Any investments they made were with government money," said one resident.

Critics say the company, Vivendi Environnement, recklessly pursued the contract to break into the market and that most of the problems it has encountered were of its own making.

One Argentinean academic has accused Argentina's political leadership of cynically permitting the public utilities to deteriorate, so that voters would embrace privatization.

Daniel Azpiazu from the Latin American School of Social Sciences in Buenos Aires said that in a haste to privatize, regulatory bodies and oversight authorities were rarely installed.

In Bolivia, the price of clean water rose a whopping 300 percent when a California-based multinational company took over, forcing many families to spend a quarter of their total earnings just for clean water.

Research from the International Labor Resource and Information Group shows that the governments of African countries, through the New Partnerships for Africa's Development (Nepad), have violated the public's right to basic necessities, including clean water.

Ever since Nepad adopted the principle of privatization, international corporations have competed for water rights, resulting in reduced access to clean water for the poor.

Given all this, the natural question is should water, a substance so close to life, be a profit-oriented business?

"Water is a resource essential to life," Hannah Griffiths of the environmental group Friends of Earth said.

"Decisions about allocation and distribution should be democratic and based on everyone's fundamental right to a clean and healthy supply."