Watch Out: The World
Bank Is Quietly Funding a Massive Corporate Water Grab
By Scott Thill,
AlterNet
Posted on November 2, 2010, Printed on November 3, 2010
Billions have been
spent allowing corporations to profit from public water sources even
though water privatization has been an epic failure in Latin America,
Southeast Asia, North America, Africa and everywhere else it's been
tried. But don't tell that to controversial loan-sharks at the World Bank. Last month, its
private-sector funding arm International Finance Corporation
(IFC) quietly dropped a cool 100 million euros ($139 million US) on Veolia Voda, the Eastern European
subsidiary of Veolia, the world's largest private
water corporation. Its latest target? Privatization of Eastern Europe's
water resources.
"Veolia has made it clear that their business model
is based on maximizing profits, not long-term investment," Joby
Gelbspan, senior program coordinator for private-sector watchdog Corporate Accountability
International, told AlterNet. "Both the World
Bank and the transnational water companies like Veolia have clearly
acknowledged they don't want to invest in the infrastructure necessary
to improve water access in Eastern Europe. That's why this 100 million
euro investment in Veolia Voda by the World Bank's private investment
arm over the summer is so alarming. It's further evidence that the
World Bank remains committed to water privatization, despite all
evidence that this approach will not solve the world's water crisis."
All the evidence Veolia needs that water grabs are
doomed exercises can be found in its birthplace of France, more
popularly known as the heartland
of water privatization. In June, the
municipal administration of Paris reclaimed the City of Light's water
services from both of its homegrown multinationals Veolia and Suez, after a torrent of
controversy. That's just one of 40 re-municipilazations in France
alone, which can be added to those in Africa, Asia, Latin America,
North America and more in hopes of painting a not-so-pretty picture: Water privatization is ultimately
both a horrific concept and a failed project.
"It's outrageous that the World Bank's IFC would
continue to invest in corporate water privatizations when they are
failing all over the world," Maude Barlow, chairwoman of Food and Water Watch and the author
of Blue Covenant: The Global Water Crisis and the Fight for the
Right to Water, told AlterNet. "A
similar IFC investment in the Philippines is an unmitigated disaster.
Local communities and their governments around the world are canceling
their contracts with companies like Veolia because of cost overruns,
worker layoffs and substandard service."
The Philippines is an excellent example of water
privatization's broken model. After passing the Water Crisis Act in 1995, the Philippines landed a $283 million privatization plan
managed partially by multinational giants like Suez and Bechtel. After
some success, everything fell apart after 2000, and it wasn't long
before tariff prices repeatedly increased, water service and quality
worsened, and public opposition skyrocketed.
Today, some Filipinos
still don't have water connections, tariffs
have increased from 300 to 700 percent in some regions, and outbreaks
of cholera and gastroenteritis have cost lives and sickened hundreds.
"The World Bank has learned nothing from these
disasters and continues to be blinded by an outdated ideology that only
the unregulated market will solve the world's problems," added Barlow.
But asking the World Bank to learn from disaster
would be akin to annihilating its overall mission, which is to
capitalize on disaster in the developing world in pursuit of profit.
Its nasty history of economic and environmental shock therapy sessions
have severely wounded more than one country, and has been sharply
criticized by brainiacs like Joseph Stiglitz, who was once the Bank's
chief economist, and Naomi Klein, whose indispensable history The Shock Doctrine is a horrorshow of privatization nightmares. From its
cultural imperialism and insensitivity to regional differences to its
domination by a handful of economic elites drunk on deregulation, whose
utter failure needs no further example than our continuing global
economic crisis, the World Bank's good intentions have been compromised
by an unending string of terrible press and crappier deals.
"In the past, the World Bank pushed privatization as
the way to increase investment in basic infrastructure for water
systems," said Gelbspan. "But since then bank officials have admitted
that the transnational corporations don't want to invest in
infrastructure, and instead want only to pare down operations and skim
profits. The World Bank has lowered the bar, satisfied with so-called
'operational efficiency,' that cuts utility workforce, tightens up bill
collections and shuts off people who can't pay."
That's been a recipe for failure and protest,
especially in the very region that IFC and Veolia hope to pump for all
its water worth. In 1998, World Bank loans were secured to upgrade the
crumbling post-Soviet water system in Yerevan, a city in the Eastern
European nation of Armenia. With a caveat: It had to be managed by a
private contractor. The Italian transnational ACEA landed the job, but
quickly failed to extend water access, partially thanks to company
corruption. It also failed to properly maintain water pressure,
allowing sewage to seep into the city's drinking water and sicken
hundreds. Despite the travesty, the World Bank issued another contract
in 2006 to Veolia, which hired ACEA's top executive. Two years later,
only one in three Yerevan residents were lucky enough to score 24-hour
water service, while contamination problems continued. Veolia's
contract with the city is up for renewal in 2015.
The same goes for the Turkish city of Alacati, which
landed a $13 million loan in the late '90s, as well as Veolia's
incompetence. The city's water bills skyrocketed to 12 times the price
of service in other parts of the country. Multiply that times most
every nation or city that has privatized its water service, and you've
got a good idea of why the World Bank's IFC is under fire for rapacious
resource-snatching. And why the developing world is right to be wary of
its good graces, although the World Bank can do good when it so chooses.
"The World Bank does not at all speak with one voice
on their pro-privatization stance," Darcey O'Callaghan, Food and Water
Watch's international policy director, explained to AlterNet. "One
staff member referred to it as a bad experiment that has been proven
wrong, while higher staffers try to take a more nuanced position,
claiming that the Bank is neither for or against privatization but
simply promotes the most appropriate model for specific communities.
Unfortunately, our own statistics have shown that regardless of their
statements, 52 percent of their projects between 2004 and 2008 promoted
some form of privatization."
But rather than repair privatization's failed project
at its source, the World Bank is simply spinning off its compromised
philosophy to the IFC. So while the World Bank may be torn in its
endorsement of water privatization, the IFC has no such reservations,
in hopes of dodging the slings and arrows of public outcry, and perhaps
legal liability.
"What's really scary," O'Callaghan added, "is that we
are increasingly seeing the International Finance Corporation pick up
where the Bank has left off in water privatization. The IFC is a
Bank-sponsored institution whose goal is to promote the private sector,
and because their financing also comes from the private sector, they
can be more difficult to hold accountable. Worse yet, according to our
2000-2008 stats, 80 percent of IFC loans had gone to the four largest
multinational water companies, further concentrating the global water
industry."
It's not just water that's at the center of Earth's
mounting resource wars. In late October, Britain's government announced
it was looking to sell
off its state-owned forests to counteract a
yawning deficit. Today, natural gas companies are preparing to drill in America's national parks.
Indeed, America and Britain's bungled occupation of Iraq is a
protracted resource war for control of the embattled nation's oil
reserves. Water is just one more natural resource, albeit the most
important one, worth a killing to those seeking to callously leverage
limited funds for innocent lives.
"Droughts and deserts are spreading in over 100
countries," Barlow said. "It is now clear that our world is running out
of clean water, as the demand gallops ahead of supply. These water
corporations, backed still by the World Bank, seek to take advantage of
this crisis by taking more control over dwindling water supplies."
Which is another way of saying that, regardless of
the refreshing trend toward re-municipalization, no one should expect
the World Bank or its IFC untouchables to give up the privatization and
deregulation ghost anytime soon. That means that every city, and
citizen, is due for a day of reckoning of some sort, and should fight
back against the bankrupt privatization paradigm with everything in its
arsenal.
"Get involved at the local level," O'Callaghan said.
"Know where your water comes from. Fight against privatization schemes.
Promote conservation. Don't drink bottled water."
And Barlow adds, "The only path to a water-secure
future is water conservation, source water protection, watershed
restoration and the just and equitable sharing of the water resources
of the planet. Water is a commons, a public trust and a human right and
no one has the right to appropriate for profit when others are dying
from lack of access."
Scott Thill runs the online mag Morphizm.com. His writing has
appeared on Salon, XLR8R, All Music Guide, Wired and others.
