Global Policy Forum

By Marty Logan

The six multinational companies that lead in the privatization of public water supplies around the world have extended their reach almost five-fold in the past dozen years as they pursue potential revenues estimated as high as US$3 trillion, according to a report released Monday.

Aided by international financial bodies like the World Bank, which pressure developing nations to privatize utilities such as water and energy, the European firms have expanded their operations from 12 national bases 12 years ago to 56 countries and two territories today, says the study released by the Washington-based Center for Public Integrity.

France's Suez and Vivendi Environnement are the two largest players, followed by Thames Water, owned by Germany's RWE AG. Saur of France and United Utilities of England, which works with United States firm Bechtel, round out the companies the report describes as the "most globally active."

"While these companies claim to be 'passionate, caring and reliable', as one company states, they can be ruthless players who constantly push for higher rate increases, frequently fail to meet their commitments and abandon a waterworks if they are not making enough money," says the report.

The report, which is being released in 10 parts between now and February 14, follows a year-long investigation by the Center's International Consortium of Investigative Journalists, which focused on corporate activities in the U.S., Canada, South Africa, Australia, Colombia, Asia, and Europe.

It documents how privatization has cut off millions of people from safe water supplies, resulting, for example, in South Africa's worst ever cholera outbreak, which killed nearly 300 people and infected more than 250,000.

The water cuts by local councils, affecting people who failed to pay their bills after 1998, were part of an attempt to "commercialize" South Africa's supplies, an intermediate step in the privatization process that was driven by a group of companies working with the World Bank.

"There's...evidence that if the World Bank applied the same energy and money to improving local utilities, while allowing them to maintain control of their water systems, the local utility would actually perform better than private companies," according to the report.

Citing a recent study by a people's movement that is opposing planned privatization of Ghana's public water system, Sameer Dossani of Washington-based Citizens' Network on Essential Services said, "The facts don't bear out that [privatization] is the best model for the way things should be working. What we see is that the World Bank has played a very ideological role."

But one of the Bank's external affairs officers, Christopher Neal, denies that. "The Bank is not ideological about [privatization] one way or the other," he says in an interview on the Center's website. "It's not all the way, one way. There are a range of different options and models that have been used. There's cooperatives, there is support for public utilities; there is also support for private utilities."

During the 12 years studied, the World Bank loaned about $20 billion to water-supply projects, stipulating that privatization take place in about one-third of them, adds the report. In that period, Vivendi's parent company, Vivendi Universal, reported that its water-related revenue more than doubled, from $5 billion to more than $12 billion.

Now, says the report, the firms have their eyes set on developed countries like the United States, where they have bought the three largest private water utility firms and privatized waterworks in several mid-sized cities.

They are also lobbying Congress "to pass laws that would force cash-strapped municipal governments to consider privatization of their waterworks in exchange for federal grants and loans," notes the study.

Their expansion plans might be made easier if nations agree to include their water services under a set of globally enforceable rules, the General Agreement on Trade and Services (GATS), that would require countries to drop any barriers to investment in a range of public services and utilities, also including schools and hospitals.

In the run-up to March 31--by which time World Trade Organization members must decide how GATS will operate in relation to their service sectors--protestors are planning to mount demonstrations to raise awareness about the impacts of privatization.

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