SENTIENT TIMES December 2002/January 2003

The Blue Gold Rush

By Kayla M. Starr

What substance is formless yet is powerful enough to reshape a mountain? What element transforms itself repeatedly from solid to liquid to gas and back again? What liquid flows through our bodies, fulfills the basic thirst for life and—unhampered— naturally, eternally, recycles itself?

As I write this morning, water gushes from the sky, the cedars glisten with long awaited, sumptuous moisture; the creek swells with fresh, pure water flowing freely toward the sea. Before coming to the computer, I heat water for tea, flush the toilet, brush my teeth, fill my kitten’s water dish. Today, using this precious fluid bears new significance.

We all know that water is essential to life on this planet; it is the main component of our bodies; where water flows, life and society grows. Although 3/4 of the planet is composed of water, it has become more precious than diamonds and gold. Less than 3% of the Earth’s water is fresh and most of it is in the form of polar ice or too deep underground to reach. The amount of fresh water that is accessible in lakes, rivers and reservoirs is less than a quarter of 1% of the total. The amount of fresh water available for human use is less than .08% of all the water on the planet.

The world’s most fundamental and indispensable resource—potable water—is fast disappearing. In fact, a global shortage of water is looming as the most threatening ecological, economic, and political crisis of the twenty-first century. The United Nations issued a report this year stating that two in three people will face water shortages by 2025. It reports that more than 2.7 billion people are facing severe water shortages if the world continues consuming water at the same rate. This report, released to mark World Water Day in March 2002, warns that fierce national competition over water resources contain the seeds of violent conflict. The looming crisis is being blamed on mismanagement of existing water resources, population growth and changing weather patterns.

According to a report by the Inter-national Atomic Energy Agency (IAEA), an estimated 1.1 billion people now have no access to safe drinking water, 2.5 billion lack proper sanitation and more than five million people die from waterborne diseases each year—10 times the number of casualties killed in wars. Globally, water use has tripled between l950 and l990. In many places, those who can afford it, now regularly buy bottled water to drink. Given such a grim outlook, it’s little surprise that Fortune magazine recently defined water as “the oil of the 21st century.”

We are acutely aware of the importance of oil in shaping foreign policy. At this moment, the US government is threatening and starving people in the Middle East in its quest for world domination and control of oil reserves. The intrigue of governments and corporations over control of oil is small potatoes compared to what is brewing over water. Around the world there is a growing social movement to protect water as a common resource. U.N Secretary General, Kofi Annan is calling for the launch of a “blue revolution” to conserve water supplies and develop new ones.

Privatization

Because multinational corporations now realize that water scarcity and pollution are going to define the next century, a huge movement is taking place to commodify and privatize ownership of water. Poised to capitalize on this crisis are giant “corporate water bandits,” multinationals who are searching the planet for opportunities to turn the misery of water-starved regions into profits for their executives and stockholders. As Bob Dylan sang, “The pump don’t work cause the vandals took the handle.” The results are higher bills, bad water, poor service, non-functioning fire hydrants—and no control over the corporate owners. The very survival of untold millions of people could rest on decisions being made today behind closed doors in corporate boardrooms and government offices throughout the world. With each drop of water that falls into the hands of private interests, any sustainable solution to the global water crisis moves further and further from the public’s grasp.

It goes without saying that those who control water supplies will exercise economic and political power at almost unimaginable degrees. Bulk water exports—transporting water from water-rich countries to water-poor countries—could have disastrous consequences. Massive extraction of water from its natural sources results in ecological imbalance and destruction. Groundwater is being over-extracted as it is, and once aquifers are emptied or polluted, they are almost impossible to restore.

There is a false perception that when water services are privatized, the financial burden will shift from the public to the private sector, which will save taxpayer money by assuming the costs of repairing, upgrading and maintaining infrastructure. In reality, taxpayers simply wind up paying for these projects through their monthly bills. Tax-free public financing translates into lower-cost projects, while taxable private financing results in higher interest rates. As a result, consumers are also forced to make higher payments on company loans.

In the U.S., the National Association of Water Companies is lobbying hard to push the Water Investment Act through Congress. It contains a provision that requires cities to “consider” privatizing their water systems before receiving any federal support for upgrading or expanding municipal water systems. This boondoggle would spend your local taxes to offer your water for sale to private corporations, or else the city could be sued.

Once a government agency hands over its water system to a private company, withdrawing from the agreement borders on the impossible. Proving breach of contract is a difficult and costly ordeal. And multinational trade agreements, such as NAFTA and the pending FTAA, provide corporations with powerful legal recourse. A private company, for example, can use the North American Free Trade Agreement secretive tribunals to contest challenges to privatization. And in World Bank loan deals, which often makes water privatization a condition for loans to poor nations, companies are usually guaranteed cash payments if a government agency returns its water system to public control.

Both the World Bank and the International Monetary Fund strongly encourage the governments of developing countries to sell to private, multi-national companies the rights to deliver essential services, such as water, to the population. This is part of their controversial policy of “structural adjustment” for debt repayment.

As Marq De Villiers tells us in his well-researched book, “Water: The Fate of Our Most Precious Resource,” the trouble with water “is that they’re not making any more of it.” Maude Barlow and Tony Clarke, in their recent book, Blue Gold: The Fight to Stop the Theft of the World’s Water, echo his sentiment, writing that groundwater depletion is “one of the great unseen but looming crises facing our planet.” According to Barlow’s research “Aquifers cannot be cleaned once polluted and they’re shrinking rapidly. Global warming trends are rapidly destroying wetlands. Desertifi-cation is spreading and suppressing rainfall. There’s hardly a river flowing that’s not choked with human runoff. As the world’s population rapidly expands, these devel-opments are gradually intensifying into a ticking time bomb under the industrialized world’s complacent assumption that the water supply is endless. The world’s water supply is fast falling prey to corporate desire for the bottom line. Indeed, the human race has taken water for granted and massively misjudged the capacity of the earth’s water systems to recover from our carelessness.”

Vivid evidence mounts that corporate profits are increasingly drinking up scarce water resources. In some cities and countries, water has already been privatized, leading to higher rates of consumption and depleted resources. And in other places, poorer residents actually pay more for water than their richer neighbors, while Perrier, Pepsi and Coke’s sales of bottled water are taking water away from municipal supplies. Experience has been that the foreign company immediately raises prices so that many vulnerable members of the population are no longer able to afford the service they once had. This translates to disease and death for the helpless poor. As the population becomes resentful, riots and killings create a negative environment and the company may leave the area with losses and a bad reputation.

The Costs of Privatization

In places like Cochabamba, Bolivia the results of water privatization are resound-ingly negative for the population, the local governments and the multi-national company. The Cochambamba water com-pany was privatized in 1999, to a consor-tium including the Bechtel corporation, which engaged in an engineering scheme to drill a 19km tunnel in the hills to channel water to the city. To help finance this, water bills went up as much as 200%. Residents were enraged. Some people had to literally choose between buying food or water. Finally, tens of thousands of people protested, blocking roads out of Coch-abamba for several days. Police responded with violence, killing several people. Bechtel ultimately canceled the contract, but filed a demand of $25 million from Bolivia to recoup its investment and to recover a portion of their anticipated profits (see sidebar).

With the privatization of water in Manila, capital of the Philippines, both consumers and workers shared the cost of creating enterprises profitable enough for the multinationals. Although the winning consortia had bid at certain price levels, within two years one company—led by International water, a UK/US consortium—was demanding a doubling of prices. Employees were reduced by a succession of measures. Workers were then effectively forced to apply for their own jobs. The net result? 7,370 employees were reduced to 4,580.

Cutting off consumers from a water supply has become a common occurrence under privatization. In 1992 in the UK, where there were sharp price increases following the privatization of water, a massive 21,282 customers were discon-nected and there was widespread alarm at the health implications for poor families. The British Medical Association called for the disconnection of water supplies to be made illegal because of the vital role of water in health and disease prevention. New guidelines reduced the cutoffs, but the companies then introduced pre-payment meters, which effectively functioned as devices by which the consumers cut themselves off if they could not afford to pay. There continued to be bitter criticism from consumer groups, medical groups and the press. In 1998, after a court ruling, the new Labor government announced it would make it illegal for companies to cut off water supplies to homes, schools or hospitals for non-payment.

In the Czech Republic a multinational take over of water dramatically raised prices. VaK Jizníechy, a subsidiary of the UK-based Anglian Water, increased water rates to households by 100.7% from 1994 to 1997, nearly double the national average. In 1999, following the company’s acquisition of the majority of the equity shares, water rates to households increased by 39.8%, while sewage rates to households increased by 66.6%, far higher than any other increase in the price of water in the country.

Here in the United States

Mecosta County, Michigan sits at the center of the largest supply of fresh water on Earth. But when the Perrier Group of America was given permission to drill wells and extract up to 260 million gallons of water per year for free, bottle it, and sell it throughout the Upper Midwest, the people of Mecosta County grew very concerned. A group of residents formed the Michigan Citizens for Water Conservation, and sued to stop the company, pointing out that water, like air, is a public resource—not a commodity.

In the mid-nineties the municipal water utility in Atlanta, Georgia, was sold to United Water Resources. URW has since been taken over by French-based Suez Lyonnaise, the biggest water conglomerate in the world, which has reaped millions in profits. Their first step in Atlanta was to cut 400 of the 700 employees from the water works. Customers began to complain that brown water was flowing from their faucets, fire hydrants were going dry, pipes leaked, water bills increased, and they were unable to get the company to respond. The city government is demanding that these problems be addressed or they will find the company in default of their contract. However, the taxpayers must pay for the expensive legal battle to attempt to regain control of their own water. Similar events occurred when URW took over the water system in Jacksonville, Florida. The residents have finally bought back their water service in a $219 million buy-out. The citizens of Huber Heights, Ohio and Chattanooga, Tennessee are now engaged in similar legal battles to get their water back.

These are but a few examples of the disastrous effects of privatization and what consumers are doing to save their water supplies. As citizens become more edu-cated, they are finding ways to reclaim the rights to their own water.

Fighting Back

Water activists recommend a set of standards that should be included in any agreement of public-private partnerships in the water delivery sphere: The involvement of water users in the planning of the systems, local stewardship and watershed protection, water preservation and reclaiming of polluted water systems. Underlying all these standards is the recognition of water as an essential part of life and the right of all beings to clean water, whatever their social or economic status.

Barlow and Clarke lay the blame for the world’s water crisis squarely and unequivocally at the feet of global corporations. Blue Gold lavishes scorn on governments that “are abdicating their responsibility to protect and conserve water” while pointing fingers at oil, gas, rubber, paper, car, and commercial farming industries who use more than 25 percent of the world’s water and trash much of the rest. Governments, they argue, should eschew globalization and embrace “a set of principles and ethical considerations directly opposed to the predominant standpoint of the global economy.” Water must be “decommodified,” they explain, restored to its natural state, and turned over to local public control. Only then will access to water become a right rather than a privilege. Conservation projects must filter through political systems throughout the world and wash away once and for all the corporate scum that has so long treated water as an endlessly exploitable resource. We can all drink to that.

Resources: Public Citizen’s “Water for All Campaign” works with grassroots groups in the U.S. to oppose the privatization and bulk sale of water resources and to protect universal access to clean and affordable drinking water by keeping it in public hands. Public Citizen offers information on water privatization, networking and expertise for local groups fighting corporate water takeovers. You can learn more and get help by contacting Public Citizen at www.citizen.org/cmep/water; cmep@citizen.org; 215 Pennsylvania Ave., S.E., Washington, D.C., 20003, (202) 546-4996.

Kayla Starr has lived and worked as a massage therapist, health advocate/coach and political activist in Southern Oregon for 17 years. She is a frequent contributor to this journal and can be reached by e-mail: kayla@mind.net.

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