whose water?

9 Apr

It is appalling hearing the movement to prevent the selling of the unprofitable French water companies to foreign buyers. Afterall, French itself is one of the active advocates privatisation worldwide and has been setting up subsidiaries overseas. Two of the world biggest private water companies are French, Suez and Veolia.

They used the reason of nationalism that water is important industry and should not fall into foreign hands. So much of the preach of globalisation.

In the developing countries, the governments are strongly encouraged to open their water sector. Usually the water companies are run inefficiently, a monopoly, on subsidy and lack the incentive to improve. Pro-privatisation group argue that privatisation will be able to pump in new capital into improving the industry and improve the efficiency (one of the methods is by laying the workers). However, as the developing countries’ business people are usually not rich and capable enough to take up such a big project, the multinational corporations would come in to invest. So far so good.

However, the term of the contracts can be dodgy and advantageous to the corporations. In Indonesia’s jakarta water case, the companies can increase the price automatically every 6 months to ‘cover the cost’. As the corporations claimed that they lost money, government must subsidize the citizen if they want to keep the price low. Back to square one. 

The companies have not put in as much investment as they promised and have given the profit back to the shareholders, most of whom I guess are foreigners, as such exporting the country’s money overseas. The locals who benefit at the end are only the workers, who can be laid off any time with little compensation. But, there is no way the government to terminate the 25-year contract because there is a term that the contract terminated, they have to pay half of the predicted earnings for the remaining years.

Why such as dodgy clauses, we may question. Well, ask the corruption behaviour of the the government officials and the money the corporations may have offered to them. World Bank and IMF have also put a lot of pressure on the countries to open their markets.

One by one, the possible benefits of privatisation goes down the drain, yet I heard this kind of claim written in many newspapers “corporations changed their mind to invest in developing countries because the political mood is not helpful”. It is portrayed as if the countries’ people refused to have the change to have better life.

Few weeks ago, I heard in BBC radio an interview with Suez corporation’s CEO said something like this: “There is no shortage of water, only the shortage of will to extract them.” He is refering to the governments’ willingness to let them into the countries. With such a high price they must pay, by the people in term of money and their way of living and by the government in term of political unrest caused by dissatisfaction with the water provision, I wonder if they should. Even the French does not want foreign ownership.

However, a Chinese friend’s remark keeps coming back to me, “Why the prosperous countries are the ones that embrace capitalism?” Is our current standard meaning of prosperous is right anyway?

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