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Conflict over water

Published : Apr 25, 2003 00:00 IST

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Two recent international meetings point to an intensifying struggle for water - between multinationals that regard water as a `commodity' and civil society groups that see access to water as a basic human right.

THE growing global crisis in the availability of fresh water was discussed at two different international fora recently. About 12,000 delegates from more than 170 countries gathered in Kyoto, Osaka and Shiga in Japan between March 16 and 23 for the third edition of the World Water Forum. There was a much smaller gathering, seeking to counter the "official" meet, in Florence, Italy, between March 20 and 23 the first People's World Water Forum. Although both meetings recognised the reality of a water-starved world, they differed fundamentally in their approaches.

The Government of Japan hosted the "official" Forum, organised by the World Water Council - a "think tank" involving some of the biggest water multinationals, backed and funded by the World Bank. In contrast, the Florence meeting was organised by a network of civil society organisations in line with the `alternative' fora that have come to be a part of the anti-globalisation movement.

At the heart of the debate is the manner in which they address the issue of the growing shortage of adequate quantities of clean water, particularly for drinking and sanitation. The overwhelming proportion of water on the earth is salt water; only 2.5 per cent is fresh water, but more than half of this is inaccessible as it occurs in ice caps or is otherwise unreachable. But, more than the physical shortage, what is striking is the inequality in access.

Although consumption has doubled during the past two decades, experts say there is enough for everybody, provided it is shared equitably. The `globalisation' of water resources, accompanied by the privatisation of water services, has added an edge to the question of equity, in a situation in which water is seen as another commodity. This lies at the heart of the difference in approaches at the fora. While the World Water Forum naturally emphasises - by virtue of it being initiated by the water companies - that the question is one of "efficiency", the alternative viewpoint rejects the idea of water as a commodity and regards water resources as belonging to communities and nations.

Despite pressure from various quarters, the Ministerial Declaration that was adopted at the end of the event refused to recognise access to water as a basic human right. Instead, it adopted the position that water was a human need. Yet, the difference is crucial. While a human need can be addressed in many ways, especially by leaving it to be fulfilled by the market, the concept of water as a basic human right would regard access to water as being non-negotiable or water as not necessarily a tradeable good. The Centre for Economic and Social Rights, a United Nations-affiliated organisation, has pointed out in a study that "access to adequate amounts of clean water is not only a need but also a fundamental human right". Critics cite the refusal of the `official' forum to recognise the right to water as a basic right as proof of its unwillingness to consider anything that will harm commercial interests. While the Ministerial Declaration advocated the building of public-private partnerships for water projects, the alternative meet called for "public-public partnerships", implying not only a bigger role for publicly owned companies but also greater accountability to the communities they serve.

THE big controversy at the Forum revolved around the report, "Financing Water For All", presented by the World Panel on Financing Water Infrastructure chaired by Michel Camdessus, former Managing Director of the International Monetary Fund and currently Governor of the Banque de France. It refers to the U.N. Millennium Declaration of 2001, through which member-countries adopted the Millennium Development Goals (MDG). Among the MDGs was the commitment by member-countries that they would halve, by 2015, the proportion of people without sustainable access to safe drinking water. The report noted that at the Earth Summit in Johannesburg in 2002, countries agreed to halve by 2015 the number of people without access to basic sanitation. The core proposals relate to the establishment of structures that will facilitate private investment in water projects - for drinking water, sanitation, water treatment and so on. A major part of the report is devoted to financing projects in urban situations which, critics argue, is more convenient and profitable for companies.

The Camdessus panel mandates aid under Overseas Development Assistance (ODA) for water projects owned by governments and managed by private operators. It suggests the formation of a devaluation liquidity backstopping facility to insulate water companies from losses that may arise as a result of devaluation of national currencies. Among other suggestions is that governments and multilateral financial institutions provide "guarantees and insurance" for private projects.

In its evaluation of the Camdessus proposals, Public Services International (PSI), a research network of trade unions in the United Kingdom, points out that they imply that "the public should pay to protect the private operators".

The Camdessus panel recommends that municipalities (referred to as "sub-sovereign" entities) "retain assets in public ownership, with continued public responsibility for investment finance, and with operators privately financed and managed". The PSI points out that while the public will pay for the water infrastructure, which may be built by private operators, water users will have to bear the burden of ensuring that the private operators' profitability is maintained. While it is scathing in its criticism of public sector water projects, the panel is oblivious to criticism across the world against the private companies for their "profit gouging" (Frontline, February 14).

Pointing to the fact that the Camdessus panel was biased towards the multinationals, the PSI has noted that it "was dominated by northern bankers, government financial experts and the multinational corporations". Referring to the absence in the panel of representatives from civil society, the PSI pointed out that it did not have a single municipal waste manager or financial officer, representatives of farmers or women.

THE profits of the global water business, according to Fortune, are almost one trillion dollars a year. It is estimated that only 5 per cent of the business is in the private sector, predominantly in the hands of about ten multinational companies. Among the giants are Vivendi and Suez, French companies that "serve" 250 million users in 150 countries. Among the others are Thames Water, which was taken over by the German company RWE, and Bechtel-United Utilities in the U.S. (Representatives of most of these companies were members of the Camdessus panel.) As water shortages developed across the world, these companies spotted opportunities for not only trading in water but in establishing and running projects worldwide. Meanwhile, the wave of privatisation in Europe, particularly in the U.K. following the "Thatcherite revolution", opened up possibilities for them. The establishment of the World Water Council in 1995 was the result of efforts by them to prise open markets hitherto served by public water utilities. In 1996, the Council organised the first World Water Forum, in Marrakesh. Recognising the need to establish a regulatory framework in anticipation of the privatisation of utilities worldwide, the Council initiated the Global Water Partnership in 1996, in collaboration with and with funding from the World Bank. The Council held the second Forum in The Hague in 2000. To critics of the World Water Council, the significance of the third edition of the Forum is the cooption of U.N. agencies into a framework of rules and regulation that will enable the companies to operate profitably in the water business.

The Camdessus panel's recommendation of "full cost recovery" for water projects, which will keep the poor out of water supply and sanitation projects, will defeat the very goals that countries have adopted under the auspices of the U.N. Critics allege that the proposals are aimed at reducing the risks for the water corporations, while imposing a heavy burden on users, especially the poor. Private water companies have been criticised in recent months for their "predatory pricing" practices in many developing countries.

A recent study conducted by the PSI of the operations of water companies across the world concludes that private companies demand such high levels of risk protection that "it undermines the very reason for having private sector participation or "partnerships", in the first place". It points out that companies such as Suez are scaling down their operations in the developing countries, particularly after the Argentine currency crisis. However, Suez is "adopting more restrictive investment criteria", particularly in the matter of "dollarising" water prices. The company prefers shorter tenures for water infrastructure contracts, implying higher profit margins. It aims to finance investments out of the cash flows of water projects, again implying a high cost for end-users. An examination of the Camdessus proposals indicates that they are tailor-made for such an investment strategy in the water business. In fact, the bias in favour of the private companies was so strong at the Forum in Japan that even the official version of the proceedings said that "several participants questioned the legitimacy of the Forum's water and governance process and demanded a more participatory dialogue".

While the official forum was organised by business interests, the alternative forum in Florence claimed that it has the support of citizens of the countries of Asia, Latin America and Africa, which have in recent times seen popular protests against the imposition of the neo-liberal agenda in the water sector. It said that the World Water Forum was "an expression of the new global water oligarchy established in the last few years."

(This story was published in the print edition of Frontline magazine dated Apr 25, 2003.)

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