Globalization, Privatization, & Water – An Introduction to the Issue
by Jonathan Leavitt
Twenty years from now (if not already) wars will be fought somewhere
in this world over the issue of water. This is how important this
issue is on the world stage and this is why we must begin putting the
issue of globalization and control of water on the front burner for
both social justice and good government activists all over the
Many of us believe that "water is a basic human need, and therefore a
right, and should not be treated as a commodity." Corporations and
those who believe in the corporate model deny this and will do
whatever it takes to move the issue of control over water into the
market forces that worship one basic principle that those who have
money will always be making decisions for those without.
What oil is in today's geopolitical framework, water will soon become.
The World Bank has predicted that by 2025, 2/3 of the world's
population will run short of fresh drinking water. The bottom line is
that corporations want a piece of the $82 billion dollar U.S. market
(9.3 billion is the bottled water industry) ($400 billion dollar
market worldwide, including the $35 billion dollar bottled water
If there is any doubt the issue of who controls the world's water
should be a priority issue for social justice and good government
activists, we should look at three points:
The first point is that a mere 12% of the world's population uses
85% of the world's water and this 12% of course comes from
industrialized nations. This mirrors the relationship between the
current "power" commodity of oil and its usage on a global scale.
The second important and telling point is the recent War In Iraq.
First our government spends hundreds of billions of dollars of
taxpayer money on the destruction of a country over a twelve-year
period. Now they are handing our rebuilding contracts of hundreds of
millions of dollars to multinationals like Bechtel. A significant part
of this rebuilding will be geared towards the repair of the Iraqi
infrastructure including the water delivery system in Iraq. Much of
this was destroyed at the end of the first Gulf War (for no military
reason) and resulted in over 5,000 Iraqi children dying every month
from water related illnesses. This means that nearly ¾ million
children died as a result. In other words what these brilliant minds
have devised is the "perfect closed circle" for corporate economics.
Taxpayer's money, which comes disproportionately from working family's
is used to create opportunities through the military industrial
construct and then US corporations reap the benefits through
enormously lucrative contracts. They will receive all the financial
benefits with none of the risk. Massive corporate welfare backed by
the most powerful armed forces in the history of the world. (See
"CALLING THE SHOTS: Bechtel and U.S. Policy in the Middle East"
available at www.stopcorporatecontrol.org)
When privatization and/or globalization occurs' we lose massive
levels of accountability and local control.
Background on the privatization of water and related trade treaties
Over the last decade we have seen a significant rise in attempts by
corporations both national and international to get control over one
of the last great sources of available public funds. These of course
are local municipal budgets and the public spending that goes in
support of everything from public education to trash pickup to water
delivery systems. Almost every community has begun the slow devolution
from the public sector model to the corporate model. The process of
globalization has accelerated this push for privatization.
With promises of greater efficiency and cost savings for strapped
communities, these corporations have begun making in-roads into what
has always been a relative safe haven for local control and autonomy
from the growing influence of the corporate model. Not content with
simply calling all the shots in the world of International politics
and economics through the IMF and World Bank and the spider web of
international finance, not content to call all the shots via their
powerful federal government lobbyists working out of Washington, not
content to call the shots at Statehouses across the country, they now
want to finish their assault on government by the people by bringing
their failed model in to our backyards. As is so often the case the
first wave of this new corporate assault was aimed at disenfranchised
communities; whose economic distress was seen as the perfect weakness
It's important to understand that there is a history of privatization
of water delivery systems that date back hundreds of years. In fact,
many of the first contracted water delivery systems were done by
private companies. But the circumstances of the country were much
different then. There was very little public infrastructure or
municipal revenue sources that could support municipal building
projects of this scale.
The nature of corporations was different as well. Multi-national trade
treaties did not exist in the format we are familiar with today. And
corporate charters were reviewed every year to see if the corporation
had served the public good. Thankfully by the time corporations
received their "personhood" (with all the rights of a US citizen, but
none of the responsibilities) through a number of bad Supreme Court
rulings, most of these private water efforts had moved into public
hands. So as we speak today in the United States, we have roughly 85%
(about 60,000 cities or towns) of our water delivery systems in the
hands and control of public municipalities.
Now however it is a new age, and corporate America has spent the last
thirty years trying to figure out how it could escape the basic
concepts of democracy through the creation of international trade
treaties where local decision making (still accessible to regular
citizens and responsive to citizen outcry) could be overruled.
Here's how these trade treaties and globalization of our local economy
work using three distinct examples. The first is taking place in
Nottingham, NH where USA Springs, plans to build a water bottling
plant. It has applied for a permit to pump hundreds of thousands of
gallons of water a day from an aquifer that underlies Nottingham,
Barrington, and other towns in 3 watersheds. This could mean pumping
310,000 gallons per day, enough to fill one million 20 oz. bottles
every 24 hours. USA Springs has said it plans to sell the bottled
water in Europe
In a letter to US Representative (now Senator) John E. Sununu, US
Trade Representative Robert Zoellick said that "nothing in the WTO
agreement requires local authorities to permit bulk extractions of
water that would be contrary to sound resource management and
conservation or that would create hazards to human health. Of course,
once local authorities decide to permit bulk water to be extracted
from an aquifer, bottled, and sold as an article of commerce, WTO
rules would likely apply to the sale of that article of commerce."
The State of New Hampshire claims the right to determine whether a
large groundwater withdrawal such as the USA Springs proposal would
harm other groundwater users. If the State grants a permit to
withdraw a certain amount, it believes it reserves the right to change
the amount at a later date. And under the GATT, General Agreement on
Tariffs and Trade, quantitative restrictions affecting exports are
prohibited, but exceptions can be made for natural resource
conservation. Unfortunately the GATT trade agreement that dealt
primarily with goods is no longer the main agreement of trade issues
and has now been both updated and overtaken by the WTO and more severe
trade agreements such as GATS which sets up privatization of services
and TRIPS which governs and pushes forward Intellectual Property
Rights which corporations use to make profits out of GMO seeds, or to
prevent developing countries like Brazil from providing cheap HIV
medicine for its poor.
Under the soon to be enacted GATS, General Agreement on Trade in
Services, there are no exemptions for natural resource conservation.
Under the GATS section on domestic regulations, any regulations
considered "more burdensome than necessary to assure quality of
service" are considered unfair barriers to trade. A trade tribunal
would resolve the determination of whether or not regulations are
considered fair or unfair. In other words, if the state of New
Hampshire opens this door up even a crack, then the tentacles of these
trade treaties will have enough maneuvering room to work their poison.
As another important example of how trade issues relate to the issue
of water is the example of when Sun Belt Water of California sought to
suck up tankers of bulk water from lakes in British Columbia. In
response to public pressure the Canadian government denied the request
and passed a law prohibiting bulk water exports in the future. However
as a foreign investor under which NAFTA grants new rights and
privileges, Sun Belt Water took its case to NAFTA for arbitration.
Under NAFTA, foreign investors can directly sue if they believe
government action has taken place which is "tantamount to
expropriation" of their property, i.e. if government regulation or law
harms its ability to profit from its investment. If it wins, the
government must compensate it for its losses. Similar provisions are
likely to be in FTAA.
If Canada loses they will either have to change the law or pay
billions to compensate the corporation for "future expected profits".
The same principle might eventually apply to the state of New
Hampshire under soon to be enacted trade treaties and its battle with
The other scenario is taking place in many more cities and towns
across the country and the world, including my hometown of Lawrence,
MA that was faced with the possibility of their water works being
turned over to United Water / French Suez back in 2002.
This is how the corporations work in this particular scenario. First,
they identify communities whose finances are shaky (Tax base weak
resulting in a small budget, no room for capital improvements, bonding
capacity already reached) and whose water delivery system needs
significant replacement work or a complete overhaul. Then they connect
with local "players" to serve as ambassadors of the privatization
concept. (i.e. former councilors)
Keep the process as "closed" as possible. For example, make no effort
for citizen input on the process. Meet in private. Avoid any and all
publicity about the process. (This allows all the "players" in this
kind of process (law firms, engineering firms, firms that handle
municipal finance questions) to benefit richly off the process alone.
For instance Lawrence has paid out nearly $4,000,000 for Wall St.
Consultants already. These are names you will hear over and over
again…. Hawkins, Delafield and Woods, Malcolm Pirnie, Advest, Inc when
you look into water privatization all over the country.
Then they begin to circulate carefully designed public relations
materials to both elected officials and the residents of the
community. In these public relations pieces they list the glowing
recommendations that come from citizens in communities that have
relationships with the multi-national, clients of the company, and of
course both employees and representatives of organized labor.
This multi-national will also begun making promises about what it will
bring to the city. It lists its "Community Initiatives" like a "Buy
Lawrence First" policy, scholarships to the Boys and Girls Club, Adopt
a School Program, Urban Outreach Program, and support for Minority and
Women Owned Small Businesses.
Let's start with a "Buy Lawrence First" policy. Exactly what kinds of
materials and services will a water treatment plant need from the
small businesses of Lawrence? Probably none. But it sure sounds good
and looks great in print. Next, there is the promise of scholarships
to local youth. Well this will be useful since by going with United
Water / French Suez, many local fathers and mothers will lose their
water Department jobs. Jobs that would have helped pay for college for
Then there is the "Adopt a School" program that will probably entail
sending corporate speakers into 5th and 6th grade classes to tell them
how great corporate economics are and that many of them should look
into the exciting career opportunities in the world of water delivery
systems. "Urban Outreach" for these multi-nationals means learning how
to say, "Your water rates have gone up again" in both English and
And as for the last promise of support for "Minority and Women Owned
Small Businesses"…These corporations know that it is these groups that
are most likely to oppose this corporate takeover. These are the
groups that best understand who corporate economics works for (and who
it doesn't work for). So they want to appease them with false promises
and token pledges of support.
Much of this scenario was recently repeated in Lee, MA. as well, where
Veolia (another French multi-national corporation, formerly Vivendi)
hired former Democratic Party State Rep. Christopher Hogkins as a
regional VP, and then proceeded to have him use his influence to push
through a privatization scheme in his home-town. After the community
was woken up to the reality of what this would entail, a group called
Concerned Citizens of Lee was formed and they successfully organized
to stop the takeover attempt. (See www.boston.indymedia.org for more
Ramifications for the Community
The ramifications for the community begin on the economic level. Most
communities are overextended in terms of revenue for public services.
In Lawrence our community's water revenue goes directly into an
"enterprise fund" that is used solely for water related issues. It's
criminal that during difficult fiscal times, communities are being
misled into handing over one of the few sources of revenue they have
under their full control and a public service that pays its own way.
There is also the fact that money normally circulated back into the
community via a public workforce (and almost guaranteed to be spent
locally) is now shipped out to distant foreign shareholders. And
lastly is the reality that privatization and globalization of our
local economy leads to rate increases. Corporations must seek to
maximize their profits. Once the workforce has been slashed at the
beginning of the privatization, the only remaining way to maximize
profit is to increase water rates.
In Cochabamba, Bolivia, Bechtel (who also just received almost a
billion dollars worth of infrastructure re-building contracts for
Iraq) oversaw a water privatization project that drove household water
rates up to $20 a month in a city where most families earned $67 a
month, and imposed draconian financial restrictions on water use.
When the people rose up to protest they were brutally repressed and
seven died. (Eventually the people succeeded in taking back the water
system and Bechtel is still trying to force the city to pay $40
million for "expropriation".)
In Manilla in the Philippines, a Bechtel water privatization scheme
led to a 400% increase in water rates.
In Pekin, Illinois water rates increased 204 percent over eighteen
years of privatization by American Water Works.
In Nelspruit, South Africa, water rates rose by more then 400%
between 1995-2000 after the system was privatized.
We also need to consider the history of privatization and
globalization that fosters corruption. For example
Suez and Vivendi have been convicted of bribing government officials
to obtain contracts.
French Suez officials had to flea Indonesia after the government was
overthrown, because of their collaborations with the dictatorship
resulting in the water delivery system being thrown into complete
And only four months ago the mayor of Atlanta pulled out of the
biggest contract in the nation, with United Water – Suez. The city
found evidence that the company failed to perform maintenance, billed
the city for work it didn't do, ignored customers cries for service,
cut staff to dangerously low levels and occasionally delivered filthy,
And finally on the economic front is that privatization and
globalization in our local economy leads to job losses.
In Atlanta the work forces was slashed from nearly 700 jobs to nearly
Following privatization in England, over 10,000 workers were let go.
Following privatization in the Philippines half of the original
workforce was let go.
Following privatization in Indianapolis nearly 200 workers were laid
The issue of local control is also vitally important to understand.
Companies are accountable to shareholders, not consumers. If CEO's and
corporate boards don't seek to maximize their profit, then they are
subject to lawsuits on behalf of these shareholders. This means that
rather then being held accountable by the residents of a city or town,
multinationals will conduct business by the terms of what will
increase their bottom line for the short term.
We need to keep in mind that Privatization and globalization isn't
simply a matter of signing off on a local company to do some
contracting for a city/town. Instead we are dealing with an almost
irreversible process. The fact is that once the infrastructure of a
system has been turned over to privatization all the "institutional
memory" is lost from the city. When it comes time to renegotiate a
contract, the corporations hold all the cards because it would require
a huge capital investment from cash starved cities to re-claim. Cities
and towns are then at the mercy of these corporations.
For example the city of Chattanooga, tried to buy back its water
system from American Water Works, in response to exorbitant fire
hydrant rates. During the battle, American Water Works paid lawyers
and public relations firms more then $5 million. Unable to match this
campaign, the city had to abandon its buyback efforts. And under
closed trade tribunals (the highest law of our land), a private
corporation can challenge the reversal of privatization as being an
act of "expropriation" and win huge financial settlements from cities
The remaining issue for us to consider is the quality of Water.
Privatization and globalization of our local economy undermines water
quality. Corporations can reject local, state, and federal laws that
apply to water quality again as "barriers to free trade" and are
backed up by the lobbying group for private water companies, the
National Association of Water Companies (NAWC). NAWC intensively
lobbies both Congress and the EPA to prevent higher water quality
standards from being adopted.
A likely scenario to be repeated here in the United States is the
situation that took place in Walkertown, Ontario, seven people died
and 2300 others became ill as a result of E. Coli contamination in the
drinking water. The private company charged with testing the water
knew the water was contaminated. But under regulations designed to
encourage privatization, they were not required to report it.
Alternatives to H2O Privatization
Those advocating the corporate model want you to turn a blind eye to
this history of success (while simultaneously turning a blind eye to
the destructive history of corporate economics that has ruined our
environment, our sense of community, our democracy, and the lives of
hundreds of millions of the worlds citizens held hostage by this
"IF IT AIN'T BROKE, THEN DON'T FIX IT. We can't allow ourselves to be
fooled. This issue is simply not that complicated. For hundred of
years local cities and towns have been providing safe, clean and cheap
water to their residents. That's the history. We need to continue this
tradition of public control and community ownership by building public
water treatment plants through a cities own bonding capacity and an
increase in both state and federal funds for this purpose.
Estimates are that the US Water System would need $140 billion dollar
investment between now and 2016 in order to meet standards. This is
the equivalent of perhaps a dozen nuclear submarines. I guess if you
put the question to 100 people whether they wanted their tax dollars
invested in more nuclear madness or towards safe drinking water for
themselves and their families, they would choose the safe drinking
We also need to counter the myths that have corporations have hoisted
upon an unsuspecting public around the issue of the safe drinking
water, allowing them to create a very unnecessary commodity of bottle
water and a 10,000% price mark up that comes with it.
On a more global scale, we need to look at South Africa's recently
enacted constitution (generally seen as the most forward thinking in
the world, with the exception of the fact that they mistakenly granted
corporations "personhood" in their constitution) guarantees water
first for its people, second for nature, and third for the economy.
The deep ecologist in me might argue the ranking of the first two, but
it is important that this kind of legal protection gets codified into
laws that can be used to protect communities in the future
We also need to continue towards the cancellation of Third World debt,
increase non-military foreign aid budgets, tax speculation and
designate revenue for worldwide water system infrastructure, put
global financing under the control of grassroots organizations not the IMF and World Bank, and much more.
We also need to adhere to the 10 principles identified by the Blue
Planet Project when considering any
water-related issue. :
Water belongs to the earth and all its species
Water should be left where it is whenever possible
Water must be conserved for all time
Polluted water must be reclaimed
Water is best protected in natural watersheds
Water is a public trust and must be guarded at all levels of
An adequate supply of clean water is a basic human right
The best advocates for water are local communities and citizens
The public must participate as an equal partner with government to
Economic globalization policies are not water sustainable
About Jonathan Leavitt
Jonathan Leavitt is the former Executive Director of the Lawrence
Grassroots Initiative, was the founder and Statewide Coordinator of
the Massachusetts Green Party from 1996-2000, Campaign Director for
the Jill Stein for Governor Campaign in 2001, and the first Green
Party candidate to qualify as a Clean Elections candidate I when he
ran for State Representative in 2002.
Jonathan was also the Development Director for the Boston Social Forum
and is currently the Organizing Director for Massachusetts Global
617-338-9966 or 978-683-3967 <email@example.com>
Other great sources for information on the issue of water are:
Massachusetts Global Action www.massglobalaction.org
Water Allies Network www.waterallies.org
Public Citizen www.citizen.org
Alliance for Democracy www.alliancefordemocracy.org
Information for this workshop was compiled from numerous sources
including Public Citizen, published articles by Sean Donahue, Jonathan
Leavitt, David Westerling, Forbes Magazine, NACLA: Report on the
America's "Privatization and Its Discontents Jan/Feb 2003", Standards
and Poor's Corporate Ratings, Texas Center for Policy Studies,
Corporate Research E-Letter #23, Alliance for Democracy Dispatches,
Arnie Alpert at NH AFSC, and others.