water, Their Profits
July 08, 2003
Twenty years from now, there
will be a war somewhere in this world that is propelled forward by our
countries economic interests. Call it a hunch. As a result of this war,
many of us who have somehow remained out of jail under the Bush/Cheney/Ashcroft
administrations and their successors, will take to the streets to march
in protest. But the signs this time wont say No Blood for
Oil, instead they will say No Blood for Water. Instead
of Whose Streets, Our Streets! it will be Whose Water,
Our Water! This is how important this issue is on the world stage
and this is why we must begin putting the issue of globalization and
control of water on the front burner for social justice activists all
over the country.
Many of us believe that water
is a basic human need, and therefore a right, and should not be treated
as a commodity. Corporations and those who believe in the corporate
model deny this and will do whatever it takes to move the issue of control
over water into the market forces that have given us war upon war, the
corporate model that gave us Enron and WorldCom, the corporate model
that gave us the disaster in Bophal, India, and the Exxon Valdez, the
corporate model that has given us 42 million African citizens with an
HIV death sentence hanging over them, the corporate model that has given
us CIA sponsored coups of democratically elected leaders, and the corporate
model that has given us the worship of one basic principle, that those
who have money will always be making decisions for those without.
What oil is in todays
geopolitical framework, water will soon become. The World Bank has predicted
that by 2025, 2/3 of the worlds population will run short of fresh
drinking water. The bottom line is that corporations want a piece of
the $82 billion dollar U.S. market (9.3 billion is the bottled water
industry) ($400 billion dollar market worldwide, including the $35 billion
dollar bottled water industry)
If there is any doubt the
issue of who controls the worlds water should be a priority issue for
social justice activists, we need only look at two points: The first
point is that a mere 12% of the worlds population uses 85% of
the worlds water. And of course this 12% does not live in the
under industrialized (3rd world). This mirrors the relationship
between the current power commodity of oil and its usage
on a global scale. The second important and telling point is the recent
War In Iraq.
First our government spends
hundreds of billions of dollars of taxpayer money on the destruction
of a country over a twelve-year period. Now they are handing our rebuilding
contracts of hundreds of millions of dollars to multinationals like
Bechtel. A significant part of this rebuilding will be geared towards
the repair of the Iraqi infrastructure including the water delivery
system in Iraq. Much of this was destroyed at the end of the first Gulf
War (for no military reason) and resulted in over 5,000 Iraqi children
dying every month from water related illnesses. This means that nearly
¾ million children died as a result. This is a war crime in no
So will this new Iraqi water
system be operated for profit and at the expense of Iraqs poor?
Of course it will. Just look at how advancing U.S. troops tried to make
the people of Basra pay for water from Kuwait before the British took
over the city. And given the ideological bents of both Bechtel and the
Bush administration we can expect a push to fully privatize Iraqs
rebuilt infrastructure and most certainly their water delivery system.
In other words what these
brilliant minds have devised is the perfect closed circle
for corporate economics. Taxpayers money, which comes disproportionately
from working familys is used to create opportunities through the
military industrial construct and then US corporations reap the benefits
through enormously lucrative contracts. They will receive all the financial
benefits with none of the risk. Massive corporate welfare backed by
the most powerful armed forces in the history of the world.
(See CALLING THE SHOTS: Bechtel and U.S. Policy in the Middle
East available at
Background on the privatization
and related trade treaties
Over the last decade we have
seen a significant rise in attempts by corporations both national and
international to get control over one of the last great sources of available
public funds. These of course are local municipal budgets and the public
spending that goes in support of everything from public education to
trash pickup to water delivery systems. Almost every community has begun
the slow devolution from the public sector model to the corporate model.
The process of globalization has accelerated this push for privatization.
With promises of greater
efficiency and cost savings for strapped communities, these corporations
have begun making in-roads into what has always been a relative safe
haven for local control and autonomy from the growing influence of the
corporate model. Not content with simply calling all the shots in the
world of International politics and economics through the IMF and World
Bank and the spider web of international finance, not content to call
all the shots via their powerful federal government lobbyists working
out of Washington, not content to call the shots at Statehouses across
the country, they now want to finish their assault on government by
the people by bringing their failed model in to our backyards. As is
so often the case, the first wave of this new corporate assault was
aimed at disenfranchised communities whose economic distress was seen
as the perfect weakness to exploit.
Its important to understand
that there is a history of privatization of water delivery systems that
date back hundreds of years. In fact, many of the first contracted water
delivery systems were done by private companies. But the circumstances
of the country were much different then. There was very little public
infrastructure or municipal revenue sources that could support municipal
building projects of this scale.
The nature of corporations
was different as well. Multi-national trade treaties did not exist in
the format we are familiar with today. And corporate charters were reviewed
every year to see if the corporation had served the public good. Thankfully
by the time corporations received their personhood (with
all the rights of a US citizen, but none of the responsibilities) through
a number of bad Supreme Court rulings, most of these private water efforts
had moved into public hands. So as we speak today in the United States,
we have roughly 85% (about 60,000 cities or towns) of our water delivery
systems in the hands and control of public municipalities.
Now however it is a new age,
and corporate America has spent the last thirty years trying to figure
out how it could escape the basic concepts of democracy through the
creation of international trade treaties where local decision making
(still accessible to regular citizens and responsive to citizen outcry)
could be overruled.
Heres how these trade
treaties and globalization of our local economy work using three distinct
examples. The first is taking place in Nottingham, NH where USA Springs,
plans to build a water bottling plant. It has applied for a permit to
pump hundreds of thousands of gallons of water a day from an aquifer
that underlies Nottingham, Barrington, and other towns in 3 watersheds.
This could mean pumping 310,000 gallons per day, enough to fill one
million 20 oz. bottles every 24 hours. USA Springs has said it plans
to sell the bottled water in Europe
In a letter to US Representative
(now Senator) John E. Sununu, US Trade Representative Robert Zoellick
said that nothing in the WTO agreement requires local authorities
to permit bulk extractions of water that would be contrary to sound
resource management and conservation or that would create hazards to
human health. Of course, once local authorities decide to permit bulk
water to be extracted from an aquifer, bottled, and sold as an article
of commerce, WTO rules would likely apply to the sale of that article
The State of New Hampshire
claims the right to determine whether a large groundwater withdrawal
such as the USA Springs proposal would harm other groundwater users.
If the State grants a permit to withdraw a certain amount, it believes
it reserves the right to change the amount at a later date. And under
the GATT, General Agreement on Tariffs and Trade, quantitative restrictions
affecting exports are prohibited, but exceptions can be made for natural
resource conservation. Unfortunately the GATT trade agreement that dealt
primarily with goods is no longer the main agreement of trade issues
and has now been both updated and overtaken by the WTO and more severe
trade agreements such as GATS which sets up privatization of services
and TRIPS which governs and pushes forward Intellectual Property Rights
which corporations use to make profits out of GMO seeds, or to prevent
developing countries like Brazil from providing cheap HIV medicine for
Under the soon to be enacted
GATS, General Agreement on Trade in Services, there are no exemptions
for natural resource conservation. Under the GATS section on domestic
regulations, any regulations considered more burdensome than necessary
to assure quality of service are considered unfair barriers to
trade. A trade tribunal would resolve the determination of whether or
not regulations are considered fair or unfair. In other words, if the
state of New Hampshire opens this door up even a crack, then the tentacles
of these trade treaties will have enough maneuvering room to work their
As another important example
of how trade issues relate to the issue of water is the example of when
Sun Belt Water of California sought to suck up tankers of bulk water
from lakes in British Columbia. In response to public pressure the Canadian
government denied the request and passed a law prohibiting bulk water
exports in the future. However as a foreign investor under which NAFTA
grants new rights and privileges, Sun Belt Water took its case to NAFTA
for arbitration. Under NAFTA, foreign investors can directly sue if
they believe government action has taken place which is tantamount
to expropriation of their property, i.e. if government regulation
or law harms its ability to profit from its investment. If it wins,
the government must compensate it for its losses. Similar provisions
are likely to be in FTAA.
If Canada loses they will
either have to change the law or pay billions to compensate the corporation
for future expected profits. The same principle might eventually
apply to the state of New Hampshire under soon to be enacted trade treaties
and its battle with USA Springs.
The other scenario is taking
place in many more cities and towns across the country and the world,
including my hometown of Lawrence, MA currently faced with the possibility
of their water works being turned over to United Water / French Suez.
This is how the corporations
work in this particular scenario. First, they identify communities whose
finances are shaky (Tax base weak resulting in a small budget, no room
for capital improvements, bonding capacity already reached) and whose
water delivery system needs significant replacement work or a complete
overhaul. Then they connect with local players to serve
as ambassadors of the privatization concept. (i.e. former councilors)
Keep the process as closed
as possible. For example, make no effort for citizen input on the process.
Meet in private. Avoid any and all publicity about the process. (This
allows all the players in this kind of process (law firms,
engineering firms, firms that handle municipal finance questions) to
benefit richly off the process alone. For instance Lawrence has paid
out nearly $4,000,000 for Wall St. Consultants already. These are names
you will hear over and over again
. Hawkins, Delafield and Woods,
Malcolm Pirnie, Advest, Inc when you look into water privatization all
over the country.
Then they begin to circulate
carefully designed public relations materials to both elected officials
and the residents of the community. In these public relations pieces
they list the glowing recommendations that come from citizens in communities
that have relationships with the multi-national, clients of the company,
and of course both employees and representatives of organized labor.
This multi-national will
also begun making promises about what it will bring to the city. It
lists its Community Initiatives like a Buy Lawrence
First policy, scholarships to the Boys and Girls Club, Adopt a
School Program, Urban Outreach Program, and support for Minority and
Women Owned Small Businesses.
Lets start with a Buy
Lawrence First policy. Exactly what kinds of materials and services
will a water treatment plant need from the small businesses of Lawrence?
Probably none. But it sure sounds good and looks great in print. Next,
there is the promise of scholarships to local youth. Well this will
be useful since by going with United Water / French Suez, many local
fathers and mothers will lose their water Department jobs. Jobs that
would have helped pay for college for local residents.
Then there is the Adopt
a School program that will probably entail sending corporate speakers
into 5th and 6th grade classes to tell them how great corporate economics
are and that many of them should look into the exciting career opportunities
in the world of water delivery systems. Urban Outreach for
these multi-nationals means learning how to say, Your water rates
have gone up again in both English and Spanish.
And as for the last promise
of support for Minority and Women Owned Small Businesses
corporations know that it is these groups that are most likely to oppose
this corporate takeover. These are the groups that best understand who
corporate economics works for (and who it doesnt work for). So
they want to appease them with false promises and token pledges of support.
Ramifications for the
The ramifications for the
community begin on the economic level. Most communities are overextended
in terms of revenue for public services. In Lawrence our communitys
water revenue goes directly into an enterprise fund that
is used solely for water related issues. Its criminal that during
difficult fiscal times, communities are being misled into handing over
one of the few sources of revenue they have under their full control
and a public service that pays its own way.
There is also the fact that
money normally circulated back into the community via a public workforce
(and almost guaranteed to be spent locally) is now shipped out to distant
foreign shareholders. And lastly is the reality that privatization and
globalization of our local economy leads to rate increases. Corporations
must seek to maximize their profits. Once the workforce has been slashed
at the beginning of the privatization, the only remaining way to maximize
profit is to increase water rates.
· In Cochabamba, Bolivia,
Bechtel (who also just received almost a billion dollars worth of infrastructure
re-building contracts for Iraq) oversaw a water privatization project
that drove household water rates up to $20 a month in a city where most
families earned $67 a month, and imposed draconian financial restrictions
on water use. When the people rose up to protest they were brutally
repressed and seven died. (Eventually the people succeeded in taking
back the water system and Bechtel is still trying to force the city
to pay $40 million for expropriation.)
· In Manilla in the
Philippines, a Bechtel water privatization scheme led to a 400% increase
in water rates.
· In Pekin, Illinois
water rates increased 204 percent over eighteen years of privatization
by American Water Works.
· In Nelspruit, South
Africa, water rates rose by more then 400% between 1995-2000 after the
system was privatized.
We also need to consider the history of privatization and globalization
that fosters corruption. For example
· Suez and Vivendi
have been convicted of bribing government officials to obtain contracts.
· French Suez officials had to flea Indonesia after the government
was overthrown, because of their collaborations with the dictatorship
resulting in the water delivery system being thrown into complete disarray.
· And only four months ago the mayor of Atlanta pulled out of
the biggest contract in the nation, with United Water Suez. The
city found evidence that the company failed to perform maintenance,
billed the city for work it didnt do, ignored customers cries
for service, cut staff to dangerously low levels and occasionally delivered
filthy, brown water.
And finally on the economic
front is that privatization and globalization in our local economy leads
to job losses.
· In Atlanta the work
forces was slashed from nearly 700 jobs to nearly 300.
· Following privatization in England, over 10,000 workers were
· Following privatization in the Philippines half of the original
workforce was let go.
· Following privatization in Indianapolis nearly 200 workers
were laid off.
The issue of local control
is also vitally important to understand. Companies are accountable to
shareholders, not consumers. If CEOs and corporate boards dont
seek to maximize their profit, then they are subject to lawsuits on
behalf of these shareholders. This means that rather then being held
accountable by the residents of a city or town, multinationals will
conduct business by the terms of what will increase their bottom line
for the short term.
We need to keep in mind that
Privatization and globalization isnt simply a matter of signing
off on a local company to do some contracting for a city/town. Instead
we are dealing with an almost irreversible process. The fact is that
once the infrastructure of a system has been turned over to privatization
all the institutional memory is lost from the city. When
it comes time to renegotiate a contract, the corporations hold all the
cards because it would require a huge capital investment from cash starved
cities to re-claim. Cities and towns are then at the mercy of these
For example the city of Chattanooga,
tried to buy back its water system from American Water Works, in response
to exorbitant fire hydrant rates. During the battle, American Water
Works paid lawyers and public relations firms more then $5 million.
Unable to match this campaign, the city had to abandon its buyback efforts.
And under closed trade tribunals (the highest law of our land), a private
corporation can challenge the reversal of privatization as being an
act of expropriation and win huge financial settlements
from cities or towns.
The remaining issue for us
to consider is the quality of Water. Privatization and globalization
of our local economy undermines water quality. Corporations can reject
local, state, and federal laws that apply to water quality again as
barriers to free trade and are backed up by the lobbying
group for private water companies, the National Association of Water
Companies (NAWC). NAWC intensively lobbies both Congress and the EPA
to prevent higher water quality standards from being adopted.
A likely scenario to be repeated
here in the United States is the situation that took place in Walkertown,
Ontario, seven people died and 2300 others became ill as a result of
E. Coli contamination in the drinking water. The private company charged
with testing the water knew the water was contaminated. But under regulations
designed to encourage privatization, they were not required to report
Alternatives to H2O Privatization
Those advocating the corporate
model want you to turn a blind eye to this history of success (while
simultaneously turning a blind eye to the destructive history of corporate
economics that has ruined our environment, our sense of community, our
democracy, and the lives of hundreds of millions of the worlds citizens
held hostage by this beast.
IF IT AINT BROKE,
THEN DONT FIX IT. We cant allow ourselves to be fooled.
This issue is simply not that complicated. For hundred of years local
cities and towns have been providing safe, clean and cheap water to
their residents. Thats the history. We need to continue this tradition
of public control and community ownership by building public water treatment
plants through a cities own bonding capacity and an increase in both
state and federal funds for this purpose.
Estimates are that the US
Water System would need $140 billion dollar investment between now and
2016 in order to meet standards. This is the equivalent of perhaps a
dozen nuclear submarines. I guess if you put the question to 100 people
whether they wanted their tax dollars invested in more nuclear madness
or towards safe drinking water for themselves and their families, they
would choose the safe drinking water option.
On a more global scale, we
need to look at South Africas recently enacted constitution (generally
seen as the most forward thinking in the world, with the exception of
the fact that they mistakenly granted corporations personhood
in their constitution) guarantees water first for its people, second
for nature, and third for the economy. The deep ecologist in me might
argue the ranking of the first two, but it is important that this kind
of legal protection gets codified into laws that can be used to protect
communities in the future
We also need to continue
towards the Cancellation of 3rd world debt, increase non-military foreign
aid budgets, tax speculation and designate revenue for worldwide water
system infrastructure, put global financing under the control of grassroots
organizations not the IMF and World Bank, and much more.
We also need to adhere to
certain principles when considering any water related issue. (These
are taken from the Blue Planet Project):
1) Water belongs to the earth
and all its species
2) Water should be left where it is whenever possible
3) Water must be conserved for all time
4) Polluted water must be reclaimed
5) Water is best protected in natural watersheds
6) Water is a public trust and must be guarded at all levels of government
7) An adequate supply of clean water is a basic human right
8) The best advocates for water are local communities and citizens
9) The public must participate as an equal partner with government to
10) Economic globalization policies are not water sustainable
This article was written by Jonathan Leavitt. Jonathan was the founder
of the Massachusetts Green Party and is currently the Executive Director
of the Massachusetts Anti-Corporate Clearinghouse. (MACC) PO Box 1382
Lawrence, MA 01842 (978) 683-3967 firstname.lastname@example.org www.stopcorporatecontrol.org
Information for this workshop
was compiled from numerous sources including Public Citizen, published
articles by Sean Donahue, Jonathan Leavitt, David Westerling, Forbes
Magazine, NACLA: Report on the Americas Privatization and
Its Discontents Jan/Feb 2003, Standards and Poors Corporate
Ratings, Texas Center for Policy Studies, Corporate Research E-Letter
#23, Alliance for Democracy Dispatches, Arnie Alpert at NH AFSC, and