The 4th World Water Forum is taking place in Mexico in March of this year. The event has received minimal or no coverage across the main global media outlets. It is unfortunate, as water is quickly becoming a resource that currently and will continue to drive political and economic interests across the globe.
More concerning, the finite sources of freshwater (less than one half of one per cent of the world's total water stock) are being depleted at a fast rate – it is projected by the year 2025, two-thirds of the world's population will be living in a state of serious water deprivation. The issue of water management and conservation has received special attention this month as the South-East of England is experiencing one of its worst droughts since the 1920s. After 15 months of below average rainfall some parts of the country will be suffering water supply controls during the summer - which raises the question of who manages water supplies.
The market of water management is dominated by French trans-national Suez (formerly Suez Lyonnaise des Eaux) and German conglomerate RWE. Ranked 79th and 78th among Fortune's Global 100 List, these two water companies capture nearly 40 percent of the existing water market share. These multinationals are now gaining a foothold in the United States, where they operate through a number of subsidiaries. Suez operates in 130 countries and Vivendi in over 100; their combined annual revenues are close to $70 billion. RWE revenues are currently over $50 billion (energy included), having acquired water company Thames Water in the United Kingdom.
The companies have worked closely with the World Bank and other international financial institutions and lobby aggressively for legislation and trade laws to require countries to privatise their water (as a condition for receiving major loans and aid). Across major cities around the world—such as Buenos Aires— the World Bank has flexed its financial muscle to persuade local governments to sign long-term contracts with the major private water companies.
A perfect example of this situation is the privatisation of the Buenos Aires water utility by the Argentinean government in 1993. The Argentinean government at that time experiencing a serious economic crisis, characterised by hyperinflation, granted a 30-year concession to run the water system to Aguas Argentinas, a consortium controlled by two French water giants, Compagnie Générale des Eaux (now Vivendi) and Lyonnaise des Eaux (now Suez). The consortium did not pay any money for the concession, promising to reduce water bills for local citizens. At the time, it said that private firms would do better at bringing water and sewage connections to poor areas of the city. The sell-off of the water company was part of a wholesale auction of state assets to foreign and Argentine businesses. This was the perfect example of how, in some cases, privatisation deals, while making fast cash for the government – money usually used to pay debts to the IMF, World Bank and other foreign creditors – are generally a bad deal for the public and full of secrecy and corruption.
Soon thereafter, the World Bank declared the Buenos Aires privatisation an overwhelming success and made it a model for privatisations of water that followed in the Philippines, Indonesia, and Australia. and South Africa. In the spring of 2002, the company defaulted on about $700 million in loans and threatened to reduce water services unless the government guaranteed the loans in U.S. dollars. The government refused, instead suggesting that Aguas Argentinas could save $6.3 million a year by reducing its executive salaries. The International Monetary Fund then insisted that President Eduardo Duhalde authorise a rate hike as a condition for renegotiating Argentina's foreign debt. President Duhalde had no choice in the summer of 2002 but to grant Aguas Argentinas a 10 percent increase.
Back in France, Suez have come under scrutiny in a host of criminal and civil cases, with accusations that include bribery of public officials, illegal political contributions, kickbacks, price fixing, operating cartels and fraudulent accounting. Suez have close ties to the French government; the water companies are claimed to be strong sources of income for the political parties, particularly Chirac's RPR. In 2000, Jérôme Monod, CEO of Suez from 1987 to 2000 left the company becoming a senior adviser to Chirac. Interestingly enough, the French government has taken a protectionist approach to the water business - no foreign companies have water concessions in France.
There is no doubt large water companies including Suez, Vivendi and RWE have a responsibility to their shareholders to generate returns, however their biggest corporate responsibility should be on the fair and equitable management of their host countries waters. Unfortunately, these companies have demonstrated a ruthless approach to the management of waters in foreign counties being plagued by corruption and price increase scandals. Government organisations are equally at fault for issues of corruption and misappropriation of resources in their countries. The perfect example of weak government controls, is the role the Argentinean Water Management Agency, ETOSS played in the disastrous privatisation of Buenos Aires waters. ETOSS subordinated to corporate and government pressures and constantly altered the contracts between the government, municipalities and the water conglomerates.
Thankfully, alternative sources of water management and collection are being developed. As with the Namib fog beetle (in Africa) which collects moisture for sustenance of its body, fog collection is a growing program for the development of affordable water supplies. Fog collection is fairly simple and affordable - large vertical shade nets are erected in high-lying areas close to water-short communities. As fog passes through these shades, water droplets are deposited onto the net. As the droplets become larger, they run down the net into gutters attached at floor level. From there, water is channelled into reservoirs, and then to individual homes. Lets hope the distribution and development of fog collector technology, unlike water concessions, is done in an equitable and transparent manner.
Many governments, including the United States, Austria and Spain are becoming increasingly protectionist about their resources including steel, manufacturing and ports – it is only a matter of time until protectionism extends to water supplies. However it might be already to late. The issue of water management and concession is a serious matter of Dark Matter Politics that not only involves corporate interests but government and world financial institutions that are supposed to be spreading economic development across the world.