First posted 21 March 2006, Mexico City
Ironically, it almost rained. I have been here over a month and it has not rained once, but on the day thousands marched through the streets of Mexico City chanting “Water is life” and “Water is a right not a commodity”, I felt the first few drops of rain that I thought would turn into a short but intense tropical torrent. They didn’t, but it would have caused much amusement inside the 4th World Water Forum if they had.
The march (10-15,000 people) was a protest against the answers being given inside the Forum to the question ‘How do we make fresh water available to all in the 21st century?’ One of the strongest demands was an end to the series of water privatisations that have blighted many countries in Latin America in the last decade (most notably in Bolivia and Argentina).
The main reason countries have turned to the private sector in the last few years is heavy pressure from northern countries (exerted through loans conditions, trade agreements and other kinds of foreign policy). The other reasons are a lack of public money (tempting governments to conserve their scarce resources and let profit-making businesses stump up the much needed investment in water and sanitation) and the selective use of dominant economic theory, which argues with little evidence that the private sector is more “efficient” (depends what you mean by efficient) and less “corrupt” than the state (laughable).
The privatisation of the urban water sector has been heavily promoted by the World Bank and the Inter American Development Bank since the 1990s. As with so many conditionalities it is a classic example of self serving, self-interested arguments masquerading as solutions for the poor. Multinational water companies were well represented at the Forum. It is their desire to make money that is the real force behind the drive to privatise, not the supposed inability of the public sector to deliver results. Not to recognise this is unutterably and frustratingly naïve, annoying, stupid, blinkered, grrrrr, sound of plates smashing, about the way economics and politics work.
The evidence, emerging in waves, is that the private sector no more effective at achieving results in water than the public sector has been, and that the promised investment, perhaps the main selling point, has failed to materialise. The intellectual basis of the pro-privatisation argument has been reduced to its bare bones – the public sector has failed, let’s try something different. The political basis was far stronger – big water companies in the north want new sources of profit, and their governments are responding.
Of course, the reality is that a well run public sector works brilliantly. 85% of US water is provided by the public sector. I learnt on Sunday that in Porto Alegre the water system is run by a publicly owned not-for-profit company with decisions taken by a council of civil society representatives. Investment decisions are subject to public meetings allowing local people to have a say. 99.5% of people in Porto Alegre have access to clean water. Interestingly, the pricing structure turns conventional economics on its head. The price is lowest for the first number of units consumed, with usage above a basic level (say swimming pools) becoming relatively more expensive. The effects are obvious – the poorest are able to consume what they need, while large scale usage of water is discouraged (total water consumption in the city has decreased since this system began).
And ‘conventional economics’ needs to be turned on its head if we are going to progress as a global society. The conventional economic understanding of “welfare” fails to take into account distribution. Thus, if one person’s income is increased by $1000, while 500 people suffer a decrease of $2 each, the “welfare effects” are said to be “neutral”. This astonishing way of understanding the economy is one of the reasons why so many solutions proffered in the last few decades have been so heinous. Another is that schemes such as water privatisation have been assessed on the basis of their profitability, which is clearly an extremely limited way of judging the effectiveness this kind of investment.
“I cannot understand how the old administration privatised basic services, especially water. We are obliged to change those policies.” In 2003 Evo Morales went to the 3rd World Water Forum as a representative of indigenous people’s organisations. On 18 December 2005 he was elected President of Bolivia. The above quote appears in the new policy statement from Bolivia’s new Water Ministry, led by Abel Mamani, whose CV includes bringing the country to a halt in week after week of protest.
This is not a left wing government. I have always remembered a speech given by Caroline Lucas when she was first elected MEP for the Green Party, in which she said that nowadays policies that are simply common sense are considered radical. Evo Morales will be described as radical, left wing, populist and probably communist (others, inevitably, will say he is not radical enough). He is none of these things. He is attempting to challenge policies in his country that led to the pricing of water out of the reach of the poor. He believes that only the public sector can realistically ensure that all people have access to clean water.
Of course the problems he faces are the same as they have always been. Severe lack of cash for investment and subsidy, and the reality that seeking money abroad, from the IFIs, bilateral creditors, or private sources, will bring heavy conditionality. His first step is to bring to an end the IMF program in Bolivia, now a possibility by the IMF debt cancellation that many in the UK and elsewhere worked so hard to achieve in 2005 – it has made a real difference in Bolivia, as much politically as financially.
Then he has to find money, because someone has to pay for improved access to water and sanitation. There is hope that the Inter American Development Bank will cancel $1.4bn in debt which will help, although the USA, a 54% shareholder, has warned the Bolivian government to make a series of policy changes if it wants this money cancelled, changes that are unlikely to be made. Ultimately the money will come from the export of fossil fuels, and the higher taxes on extractive industries that are sure to be an important feature of the Morales administration.
My rule of thumb in politics has always been that if what some people claim is good for society/the world also just happens by pure chance to suit their own interests then it is time to be very sceptical (free trade being the most obvious global example). Never has there been a clearer case of this than the drive to privatise water. We have to urgently oppose this threat to the world’s health.