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Privatise the Rivers, Damn the Ecology

Nations are losing control of their own vital resources to remote transnational corporations, says Geoff Davies

The Canberra Times, 3 September, 2002

Something like eighty percent of the accessible fresh water on Earth is being diverted to human use. Much of that water is rapidly coming under the control of a few large transnational corporations. These will be key issues at the World Summit on Sustainable Development, popularly known as Earth Summit 2, now under way in Johannesburg. These issues also throw into high relief the tensions that threaten to derail the conference.

Such a high rate of diversion of fresh water, essential to all life forms on land, is having an increasingly serious effect on continental ecologies. If we merely used the water and returned it to its natural courses there need not be a serious problem, but we divert large amounts of water away from its natural courses and cycles and we pollute it as well.

The results of this massive human interference are most obvious in river systems, many of which are seriously disrupted. In Australia the effects of our misuse of water are evident in the growing problem of salinity and in our fragile river systems, many of which are suffering low flow rates, pollution, proliferation of pest species and diminution or extinction of native species.

Daunting as these problems are, we must also be concerned that the effects of such major human interference will resonate further through ecological systems and trigger even more serious ecological collapses.

This is the natural-world context in which a rapid, pivotal but little-noted shift in control and use of fresh water has been taking place. Both agricultural and urban water use are involved.

The spread of mechanically and chemically intensive industrial agribusiness is disrupting water cycles and increasing pollution levels in many places, especially in the Third World. Soil degradation, loss of pollinating insects and falling water tables are becoming major problems in northern India, for example. The livelihoods of millions of traditional farmers are threatened.

Globalisation is a prime driver of these changes, both because it makes it easier for agribusiness corporations to move across national borders and because the Internation Monetary Fund presses many countries to grow cash crops for export.

The IMF is also a prime driver of the rapid take-over of urban water supplies by transnational corporations. The IMF imposes an unvarying regime on nations as they fall under its sway, and two key ingredients of its regime are trade and privatisation. The doctrine of the IMF is that the private sector will always perform better than government, even when operating natural monopolies like municipal water and electricity supplies.

Unfortunately the evidence of actual performance does not support the IMF claim, as is being pointed out by a growing and increasingly influential chorus of critics, including Joseph Stiglitz, Nobel prize-winning former chief economist at the World Bank.

A particularly stark example is provided by Bolivia. Under pressure from the IMF, the municipal water system of the city of Cochabamba was sold to International Waters Limited of London, a subsidiary of the giant U.S. construction firm Bechtel.

Rather than providing the greater efficiency, improved service and lower prices predicted by the IMF doctrine, IWL raised water prices in Cochabamba by 35%. The price hikes triggered protests which spread nationally, until in April 2000 protesters in Cochabamba were attacked by the Bolivian military, leaving two dead and 175 injured. The panicked government declared a state of siege, imposing curfews and suspending civil liberties.

Why did IWL raise water prices? To pay for a big dam project, the Misicuni Dam, which IWL is part owner of. However this is contrary good capitalist and accounting practices. Capital projects are supposed to be funded by investors, not customers. If the investment is a good one, the investors should recover their investment and dividends at prevailing prices, or lower prices.

Evidently the Misicuni Dam is not a good investment, because in 1997 World Bank hydrologists and engineers had proposed a scheme that would cost about one sixth of the Misicuni project and could be paid off without raising prices.

So why was the big dam being built? According to a local newspaper editor, IWL had been wise enough to take on a former Bolivian president as a partner. It gets worse: the dam hasnÕt actually been built, and investigators have been unable even to establish that any investment money has been transferred to Bolivia.

Basically, in other words, Bolivians seem to have been the victims of a giant ripoff. As one country after another has suffered financial collapse and social disruption in recent years, the IMF has facilely dismissed criticism by attributing such problems to local corruption and lack of financial sophistication. It has had little to say about its na•ve policies, which promote huge flows of money with little regulation or oversight, providing a virtual invitation to corruption and exploitative practices.

Such problems are not confined to Bolivia. In Buenos Aires, privatisation of water eliminated 7500 jobs, prices jumped and the sytem bled for lack of maintenance. Similar stories abound, from the Philippines to Britain.

In South Africa, according to Paul Kingsnorth, writing for TomPaine.com, price rises resulting from privatisation have led to 10 million South Africans having their water supply cut off, 10 million having their electricity cut off and 2 million being evicted completely from their homes. This is in a country where half the population has to get by on about $2 a day.

When the African National Congress came to power in 1994 it had grand plans for raising the living standards of its poor. However within two years it capitulated to financial and political pressure to follow IMF-style extreme neoliberal policies. The result, according to a Johannesburg academic, has been the loss of a million jobs, as well as the loss of services to the poor.

Most countries, rich and poor, are now under the sway of neoliberal regimes. Regions and nations are losing control of their own vital resources to remote and anonymous transnational corporations. Environmentally unsustainable practices are proliferating. Corruption and exploitation make these policies politically unsustainable as well.

Globalisation is not solely responsible for these problems, but it severely aggravates them. It is often the enemy of sustainability, and its version of "development" benefits mainly a tiny rich minority. The U.S. is the principal promoter of globalisation, so it is no great mystery why U.S. President Bush is planning to snub the World Summit on Sustainable Development.


	Privatise the Rivers, Damn the Ecology Nations are losing control of their own vital resources to remote transnational corporations, says Geoff Davies The Canberra Times, 3 September, 2002 Something like eighty percent of the accessible fresh water on Earth is being diverted to human use. Much of that water is rapidly coming under the control of a few large transnational corporations. These will be key issues at the World Summit on Sustainable Development, popularly known as Earth Summit 2, now under way in Johannesburg. These issues also throw into high relief the tensions that threaten to derail the conference. Such a high rate of diversion of fresh water, essential to all life forms on land, is having an increasingly serious effect on continental ecologies. If we merely used the water and returned it to its natural courses there need not be a serious problem, but we divert large amounts of water away from its natural courses and cycles and we pollute it as well. The results of this massive human interference are most obvious in river systems, many of which are seriously disrupted. In Australia the effects of our misuse of water are evident in the growing problem of salinity and in our fragile river systems, many of which are suffering low flow rates, pollution, proliferation of pest species and diminution or extinction of native species. Daunting as these problems are, we must also be concerned that the effects of such major human interference will resonate further through ecological systems and trigger even more serious ecological collapses. This is the natural-world context in which a rapid, pivotal but little-noted shift in control and use of fresh water has been taking place. Both agricultural and urban water use are involved. The spread of mechanically and chemically intensive industrial agribusiness is disrupting water cycles and increasing pollution levels in many places, especially in the Third World. Soil degradation, loss of pollinating insects and falling water tables are becoming major problems in northern India, for example. The livelihoods of millions of traditional farmers are threatened. Globalisation is a prime driver of these changes, both because it makes it easier for agribusiness corporations to move across national borders and because the Internation Monetary Fund presses many countries to grow cash crops for export. The IMF is also a prime driver of the rapid take-over of urban water supplies by transnational corporations. The IMF imposes an unvarying regime on nations as they fall under its sway, and two key ingredients of its regime are trade and privatisation. The doctrine of the IMF is that the private sector will always perform better than government, even when operating natural monopolies like municipal water and electricity supplies. Unfortunately the evidence of actual performance does not support the IMF claim, as is being pointed out by a growing and increasingly influential chorus of critics, including Joseph Stiglitz, Nobel prize-winning former chief economist at the World Bank. A particularly stark example is provided by Bolivia. Under pressure from the IMF, the municipal water system of the city of Cochabamba was sold to International Waters Limited of London, a subsidiary of the giant U.S. construction firm Bechtel. Rather than providing the greater efficiency, improved service and lower prices predicted by the IMF doctrine, IWL raised water prices in Cochabamba by 35%. The price hikes triggered protests which spread nationally, until in April 2000 protesters in Cochabamba were attacked by the Bolivian military, leaving two dead and 175 injured. The panicked government declared a state of siege, imposing curfews and suspending civil liberties. Why did IWL raise water prices? To pay for a big dam project, the Misicuni Dam, which IWL is part owner of. However this is contrary good capitalist and accounting practices. Capital projects are supposed to be funded by investors, not customers. If the investment is a good one, the investors should recover their investment and dividends at prevailing prices, or lower prices. Evidently the Misicuni Dam is not a good investment, because in 1997 World Bank hydrologists and engineers had proposed a scheme that would cost about one sixth of the Misicuni project and could be paid off without raising prices. So why was the big dam being built? According to a local newspaper editor, IWL had been wise enough to take on a former Bolivian president as a partner. It gets worse: the dam hasnÕt actually been built, and investigators have been unable even to establish that any investment money has been transferred to Bolivia. Basically, in other words, Bolivians seem to have been the victims of a giant ripoff. As one country after another has suffered financial collapse and social disruption in recent years, the IMF has facilely dismissed criticism by attributing such problems to local corruption and lack of financial sophistication. It has had little to say about its na•ve policies, which promote huge flows of money with little regulation or oversight, providing a virtual invitation to corruption and exploitative practices. Such problems are not confined to Bolivia. In Buenos Aires, privatisation of water eliminated 7500 jobs, prices jumped and the sytem bled for lack of maintenance. Similar stories abound, from the Philippines to Britain. In South Africa, according to Paul Kingsnorth, writing for TomPaine.com, price rises resulting from privatisation have led to 10 million South Africans having their water supply cut off, 10 million having their electricity cut off and 2 million being evicted completely from their homes. This is in a country where half the population has to get by on about $2 a day. When the African National Congress came to power in 1994 it had grand plans for raising the living standards of its poor. However within two years it capitulated to financial and political pressure to follow IMF-style extreme neoliberal policies. The result, according to a Johannesburg academic, has been the loss of a million jobs, as well as the loss of services to the poor. Most countries, rich and poor, are now under the sway of neoliberal regimes. Regions and nations are losing control of their own vital resources to remote and anonymous transnational corporations. Environmentally unsustainable practices are proliferating. Corruption and exploitation make these policies politically unsustainable as well. Globalisation is not solely responsible for these problems, but it severely aggravates them. It is often the enemy of sustainability, and its version of "development" benefits mainly a tiny rich minority. The U.S. is the principal promoter of globalisation, so it is no great mystery why U.S. President Bush is planning to snub the World Summit on Sustainable Development.