20 April 2003
The Global Water Business
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Privatisation was supposed to bring cheap, clean water to poor people in developing countries. Now the water multinationals want out - unless their profitability is assured.
Transcript
This transcript was typed from a recording of the program. The ABC cannot guarantee its complete accuracy because of the possibility of mishearing and occasional difficulty in identifying speakers.
Water sounds, music
Richard Franceys: Water is special. It is crucial for life. We can live for 30 days without food, but three days without water. But everywhere that I go, it’s government which has failed to get water to the people, and it’s governments’ failure to get the price right which has meant there’s not enough money to extend water services to the poor.
| "People will fight with everything they have to protect their right to their water." |
Maude Barlow: Water, because you can’t live without it, because there’s no alternative to it, because we’re running out of it, because there’s nowhere to go to get more of it, water is becoming the stand, we call it the last, the final frontier, this is the stand. And you are going to hear more and more and more about this water fight. Expect water wars to increase around the world, expect a tougher civil society movement, expect more local resistance because people will fight with everything they have to protect their right to their water.
Stephen Turner: I think when you go back and try to be rational about whether the international private sector was ever going to be the salvation, the panacea for the world’s poorest, we must have been blind to even consider this as an option. The basic premise that the international companies will be providing water for the world’s poorest is just off the wall.
Tom Morton: Life on earth began in water. It’s perhaps more basic than any other human need, yet more than a billion people on earth have no access to clean, fresh water.
Water is also becoming a valuable commodity traded in the global marketplace. It’s a multi-billion dollar business, and that business is our story today on Background Briefing.
Hallo there, I’m Tom Morton.
Over the last ten years, the number of people worldwide who get their water from private companies has jumped from 50-million to 250-million. If you live in Adelaide, every time you turn on the tap, the cash registers are ringing in Paris, London and Houston, Texas. Adelaide’s water supply is owned by United Water, a joint venture between three water multinationals based in France, Britain and the US. And 75% of the world water business is now controlled by just three companies.
Over the last decade, those companies have been seeking out new markets in the developing world, and they’ve found an enthusiastic supporter in the World Bank. The bank has argued that bringing in the private sector would slake the thirst of millions of the world’s poor.
There have been successes, and some spectacular failures. But now the tide seems to be turning against privatisation.
The water companies themselves are bailing out of the Third World, saying that bringing water to the poor just isn’t a viable business, without soft loans and hefty subsidies. And inside international institutions like the World Bank and the United Nations, the political agenda is shifting.
Two weeks ago in New York, a senior UN development official, Oscar de Rojas, declared that the decade of privatisation is over. And if you think water privatisation is an arid topic, think again. In Cochabamba, Bolivia, it was a matter of life and death. Here to begin the story is Maude Barlow.
Maude Barlow: Cochabamba, Bolivia, became the kind of poster child, if you will, for our concerns, although there are many others. Basically the World Bank convinced the government of Cochabamba to replace its corrupt (and it was corrupt) water company with a private sector company, and they brought in Bechtel, and Bechtel, the big engineering company from the US, set up a water subsidiary, Aguas del Tunari, and the company immediately raised the price of water and so people were suddenly, even the middle class were suddenly absolutely unable to pay their water bills, and so there was a revolt and the army was brought in and people were killed, and there was a real water war.
Tom Morton: Maude Barlow. She’s Chair of the Council of Canadians, a citizens’ watchdog group based in Ottawa.
For NGOs like the Council of Canadians, Cochabamba is a symbol of everything that’s wrong with privatisation. And for activists in developing countries, it’s a stirring story of resistance against the multinational control of water. But it was resistance which came at a bloody cost.
Oscar Olivera was in the frontline of the protests in Cochabamba. He was arrested, along with other activists, during huge demonstrations which brought the whole city to a standstill.
Oscar Olivera spoke to us on his mobile phone from the streets of Cochabamba.
Oscar Olivera (translated): Cochabamba is a town of about a million people in the centre of Bolivia. For 50 years we’ve had water shortages. In 1999, the government tried to solve this problem. Pushed by the World Bank, they gave a 40-year contract to the private company, Bechtel, to run the water utility. Within two weeks the prices went up by 300%. This meant that someone on average income was paying about a quarter of their income for water. People said, ‘We don’t accept this’.
They mobilised a movement of city people and farmers, the campasinos. From January 2000 there was a complete blockade of all the roads into Cochabamba. On 5th February, the government brought in the armed forces to break up the protests. In late March there was another big demonstration. Again the farmers blocked all the roads and almost 600,000 people took over the city. Eight days of protests followed.
On 7th April, martial law was declared and troops were sent in again. Two young men were killed and more than 30 people received bullet wounds.
But finally, by popular pressure, we were able to break this contract and return water to collective ownership.
Tom Morton: Oscar Olivera, from the Coalition for the Defence of Water and Life.
As a result of the massive protests, Bechtel withdrew from Cochabamba, and it’s currently suing the Bolivian government for $35-million for loss of earnings.
The water utility has been taken back into public ownership.
And the spirit of Cochabamba was haunting the recent World Water Forum in Kyoto, in Japan.
Applause
Oscar Olivera: They want to take advantage of our water, they want to take advantage of our life. Water is the patrimony of people, water is the patrimony of everybody and nobody can be the owner of water.
And this document says nothing about the voices that are being heard from communities around the world that are speaking out against this type of system.
And in this way, civil society is clearly saying there is not an agreement here, there is no consensus here.
Tom Morton: Oscar Olivera, tearing up a report on Financing Water for All, a report presented to the World Water Forum by Michel Camdessus, former head of the IMF.
We’ll have more on that controversial report a little later.
Oscar Olivera was part of a delegation of activists from Bolivia, Ghana, India and other developing countries who were protesting at the World Water Forum. But elsewhere in the developing world, the World Bank and its cousins like the Asian Development Bank argue that privatisation has been a success.
Richard Franceys: Everywhere that I go, it’s government which has failed to get water to the people and it’s government’s failure to get the price right which has meant there’s never enough money to extend water services to the poor.
Tom Morton: Richard Franceys, who’s an academic and consultant to the Asian Development Bank. He’s studied water privatisation around the world.
In Manila, the metropolitan waterworks was privatised in 1997. Up until then, 3-1/2-million people living in and around Manila had no running water, that’s about a third of the city’s population. When privatisation came, Manila was divided into two zones, and multinational water companies were brought in to run them.
Over the next five years, they connected 2-million more people to the network; half of them were from poor households.
According to Richard Franceys, putting water supply on a commercial basis has meant more money to connect the very poorest people in the slums and shanty towns.
| "People end up buying water from vendors, people who carry water in on handcarts or donkey carts, who are often managed by Mafia gangs or criminal gangs who extort money from the poorest" |
Tom Morton: Richard Franceys says that private companies have brought a fresh approach to working with the poorest and most disenfranchised people in developing countries, the people that he says the public water utilities don’t want to know about.
Richard Franceys: I’ve seen evidence in Buenos Aires, in Manila, in Jakarta, of these big multinational corporations partnering NGOs in the slums to do participatory development, that is, sitting with people in the slums, talking with them, finding out their needs, and then experimenting with different ways of getting clean water to the people at a way they can afford. And I’ve got in my mind a picture of one particular slum area I was taken to visit, where in an earlier attempt to get water in, the criminal gangs had apparently murdered somebody who tried to break their control over water supply.
With a new private operator helping to get pipes available and involving women, because for some reason the criminal gangs wouldn’t attack the women, (good news), they got pipes around the slum. Now it wasn’t high technology, it didn’t look very wonderful, they had these galvanised iron pipes running across the surface of the paths round this little slum. And also in the focus groups we had, of getting a group of women together and discussing how things had improved, people talked about these 90% reductions, or 80% reductions in their water bills, and they said that now there was much more time available to them, which they could use for other household chores; they didn’t have to queue up for water, as they had to in the old days. They were now responsible for paying the water bill, but because of the reduction in price, they were very happy to do that, and they could now take a shower. All of expect and get used to having a shower as a normal thing; for these women it was a major step forward.
Tom Morton: Richard Franceys, of Cranfield University in the UK.
The Manila water privatisation hasn’t been an unmitigated success. One of the private companies, a subsidiary of the water multinational, Suez, recently closed down its operations after losing $US300-million when the Philippines currency was devalued. And that part of the network has been taken back into public ownership.
Water rates have risen by up to 500% in some parts of Manila, and more increases are on the way.
Here’s Antonio Tujan, Chairman of Reality of Aid, a Manila-based NGO.
Antonio Tujan: They contracted to keep the price below a certain level, but at the same time, they have pressured government to say that 'wewill just throw this back at you if you don’t allow us to increase the price by 300%.' So even as we speak, there is now a big debate in the Philippines about raising the price of water and that means in the end, the displacement of many people. For people, water for now costs something like 300 Pesos, and in the end it will come out to 1,000 Pesos per month. People are earning only 2,000-5,000 Pesos per month. You cannot be spending one-third of your salary on water alone.
Tom Morton: Privatisation has pushed up the price of water in a numberof developing countries. But according to Richard Franceys, this can often bea good thing.
Richard Franceys: Water is special; we all seem to have this sense of the heartfeltness of water, but it is crucial for life. We can live for 30 days without food, but three days without water. I have heard it said, and volunteered in rich countries and poor countries, that water is a gift of God. But to get it out of balance is when we start then subsidising the convenience benefits of water for the rich. And why on earth should we be subsidising a richer person to fill up a swimming pool with cheap water or to wash their car or to water their garden? How much water do we need to live by each day? Well, maybe 10 litres per person. How much do we subsidise water? Well we seem to be subsidising 110 litres per person per day for the rich. And why is it right to subsidise the rich to have long showers or to have this very water-intensive means of sanitation, which is sewerage? Having a flush toilet? A lovely convenience, but why should we be subsidising the rich to have spare water to flush shit down a sewer?
Flushing sounds
Maude Barlow: It sounds great, and when he speaks you think, ‘Oh, I wouldn’t mind that guy running my water service.’ The problem is that when you see where the private sector is coming in to communities like South Africa, is they’re not touching those subsidies for the rich. You go into South Africa and you still see people’s swimming pools in the rich white suburbs, they have their swimming pools and they’re washing their cars, and they have all the water they need. The people who are being forced to pay are the poor, for whom water has now been promised in the Constitution, whereas Suez brings the water through a pipe, right up to these very poor township homes, but between that water, a pipe and that tap to turn that precious water on, is a state-of-the-art water meter that’s ticking away every single drop that comes out, and people can’t afford it. The rich have the money, the rich have the subsidies, he’s absolutely right, but water privatisation isn’t going to change that, water privatisation is exacerbating that. What we need is a combination of good solid public policy, pricing of water so that people stop wasting it, good tax systems so that the rich are paying their fair share of taxes, that’s being redistributed to the poor in the form of water and other services that they need, and for water to be delivered as a fundamental human right to every person on this earth.
Tom Morton: And at the recent World Water Forum in Kyoto, the South African Minister for Water and Forests made an impassioned speech in favour of giving water to the poor for free.
Water privatisation in South Africa has been directly linked to a cholera epidemic after thousands of poor people who could no longer pay for water were forced to get it from polluted rivers and lakes. You can find links to detailed case studies of what happened in South Africa, and in Manila and Cochabamba at our website.
Chanting crowd: Water for people, not for profit...
Tom Morton: Protesters at the recent Third World Water Forum in Kyoto.
The forum was attended by 10,000 people over 7 days. The BBC’s Environment Correspondent called it a ‘giant talking hypermarket’.
Maude Barlow: The World Water Forum was put on by the World Water Council, which is basically made up of the World Bank, the other banks, the International Monetary Fund and the big corporations. They want to ask as if they’re a United Nations arm, but they’re not.
Tom Morton: This was the first time that critical NGOs like the Council of Canadians were invited inside the tent at the World Water Forum. The Council of Canadians even chaired a session on public-private partnerships.
The only real controversy came during a session chaired by Michel Camdessus, former head of the IMF. Camdessus was presenting a report of the World Panel on Financing Water Infrastructure. As he spoke, the polite ritual of the international conference gave way to the theatre of protest.
Australian academic Phillip Hirsch was there.
Phillip Hirsch: The demonstration itself was kind of interesting; it was quite cleverly done, in that throughout this meeting hall, which holds close to 2,000 people, as the report was being launched first by Michel Camdessus himself, and then by a number of speakers from countries around the world, those in the audience who came from the NGOs critical of the reports had produced what they call these ‘lie meters’. They were large bits of cardboard on which they’d drawn a meter, and they’d attached little bells to it. They didn’t want to get thrown out of the room, but they attached little bells to these ‘lie meters’ just to so they could draw attention to themselves without being too disruptive, and so every time one of the whoppers was told, as they saw it, they’d hold up these lie meters, start tinkling the bells and people would look and they’d see either a massive great lie in the red zone or a minor lie in the medium zone, or a little white lie in the yellow zone of their lie meter. So this is how it started.
Gradually things became a little bit more heated, slogans were shouted and ultimately close to 100 people took to the stage with banners unfurled and totally obliterated the view of the panel.
Tom Morton: Phillip Hirsch, Associate Professor of Geography at Sydney University.
Protester: (translated) How is it that we could possibly not fight a report like this? This is about increasing poverty, it’s about taking away access from poor people and especially women, and increasing the situation at their end already.
So we are absolutely not going to accept this report. Thank you.
Tom Morton: After taking over the stage, the protesters left the auditorium and held a press conference outside, at which they tore up the Camdessus Report, declaring it anti-poor.
Back in the auditorium, Michel Camdessus was busy defending himself against his critics.
Michel Camdessus: Do we say enough about financing the poorest? This has been our obsession. This being said …privatisation. Here also I am a little bit surprised to see so much noise about privatisation and I hope that all of you will read now carefully line by line, this white book, will see that the word ‘privatisation’ is nowhere. Nowhere. It’s the no word of this book. Why? Because we believe that the question is not to, and the urgency now is not to change ownership of the water services in the world, but to improve the service, to make the service more effective, more efficient in serving the people, and in particular the poorest.
Tom Morton: Well when Michel Camdessus says that the word ‘privatisation’ doesn’t show up once in his Report, he’s being a little disingenuous. Large sections of the report are given over to private sector participation, private investment, and private international water companies.
But nevertheless, according to Philip Hirsch, there is a noticeable shift in the rhetoric coming from both the World Bank and the World Water Council.
Philip Hirsch: At the second World Water Forum, the summit in the year 2000 in The Hague, the World Bank was very closely aligned with the World Water Council in saying that the only way we’re going to be able to provide water is through privatisation. And there are still a lot of people at the Bank who push that agenda. One of the most effective ways they’ve pushed that agenda is by setting conditionalities, that is, loans that are provided in the agricultural sector for the structural adjustment programs are conditional on countries opening up their public sector services to international private sector involvement on the basis that public sector provision is inefficient, anti-competitive and so on. The Asian Development Bank even more so, has been very closely tied to this so-called privatisation agenda.
Now what’s interesting here is that both of these organisations have somewhat backtracked and are now in almost full denial mode about setting absolute firm conditionalities especially in this area of water. So for example, one of the statements that almost became a mantra for the World Water Council for the industry people, for the World Bank people, for the Asian Development Bank people, was ‘water is a public good.’ They’d start all of their speeches with this ‘water is a public good’, emphasising they were not privatisating, not in favour of privatising this common resource. What they wanted to do was to privatise the services and make money from privatising the services.
Music – Song of the River, Karamoja, (Uganda, 1969)
Tom Morton: The World Summit on Sustainable Development in Johannesburg last year put water and sanitation on centre stage of the development agenda. They set ambitious targets to halve the number of people without drinking water and sanitation by 2015.
There are now international NGOs which focus exclusively on water. One of them is WaterAid, a high-profile British organisation which gets some of its funding from Thames Water, one of the big three multinational water corporations.
In the past, WaterAid has tended to be much more sympathetic to the private sector than groups like, say the Council of Canadians.
But Stephen Turner, Policy Director for WaterAid, says that their view too, is changing.
| "The basic premise that the international companies will be providing water for the world’s poorest is just off the wall." |
Tom Morton: So you’re saying here that in a sense the whole notion which has been pushed I think very strongly by the World Bank and the other multilateral banks, during the 1990s, which was that privatisation in some way would provide the answer to the very real lack of proper clean water and sanitation for the world’s poor, that this in fact was a chimera.
Stephen Turner: Yes. I think people are saying, ‘Well perhaps we’ve oversold that argument’, and those are people, I’m not sure that the banks at the moment want to say that publicly, but they’re certainly saying that privately. I think they are saying that the likely role of the international private sector is much more modest than they’ve previously assumed, that there will be roles for domestic private sector, but that we need to find out how we can achieve strengthened public utilities and I think that is a clear message that the World Bank are looking out and debating on how they progress on these discussions.
Tom Morton: Well if World Bank officials are saying privately that the multinational water companies won’t be the salvation of the world’s poor, what are they saying publicly?
Jamal Saghir is Director of Water and Energy at the World Bank. He’s the man who controls the purse strings; he’s directly responsible for handing out hundreds of millions of dollars a year n loans and other funding.
Jamal Saghir says it’s time for an end to dogma, and for the beginning of a more flexible, pragmatic approach to meeting the water needs of the poor. He’s on the line from World Bank headquarters in New York.
Jamal Saghir: I was in Kyoto, and I was in all these debates, I can tell you. There is much more realism in my view about what the private sector can deliver or cannot deliver. There has been good privatisation, and there has been bad privatisation. I think the first question from the World Bank perspective is not: is it public or private? it’s who can deliver efficient water services and quality water to the poor at the lowest cost. Is it the private sector who can do it, or the public sector? If the public sector can do it, I have no problem with that. If I have right now a utility in a country like Tunisia which is a good public utility, which has very low losses, has a good balance sheet and doesn’t want to be privatised, and they ask the World Bank for financing to expand, I would be more than happy to finance it. I’m not going to put the condition of privatisation. This is not the issue, I think there is no dogma here. There is more flexibility on the way we look at this public and private, and it’s not one side or the other.
Tom Morton: As Jamal Saghir was saying, there’s now much more realism about what the private sector can and can’t deliver in the developing world. And that realism is coming from an unlikely source: the private water companies themselves.
In a remarkably frank speech to a World Bank seminar last year, the CEO of SAUR International, one of the multinational water companies, said that bringing water to the world’s poor just isn’t a viable business proposition.
The water companies see the growth area for them in the established water markets of the First World, not in laying pipes for slum dwellers in Africa and South East Asia.
Here’s Stephen Turner from British NGO WaterAid.
Stephen Turner: Some of the international companies are saying, ‘Look, we just don’t see ourselves expanding the way that this policy was broadcast as.’ At Thames Water (and Thames Water is one of the supporters of WaterAid in the UK), they consider that their customer base will grow from maybe 70-million people currently, to 100-million people in the next five years. Now if you think about it, Thames Water is going to go into large network systems where they think that through management processes they can achieve improved efficiency in those systems, and through that improved efficiency, gain their profits. Those are not the systems that are needed or even applied to the 1.1-billion currently without services. So it’s not at all clear that Thames Water will play a role in connecting the world’s poorest as has been assumed as the previous privatisation issues have looked at.
Ladies and gentlemen, hallo, thank you for having come to participate in this traditional presentation of results of the year 2002. You know Gerard Mestrallet, General Director of Suez …
Tom Morton: The biggest water company in the world is Suez. Suez is a French-based corporation with operations in 130 countries. Suez’ water subsidiary, Ondeo, turns over more than $US8-billion a year. It’s got 110-million customers.
… with regard to risk exposures in emerging countries, emerging economies, we have exited some businesses in such countries. The level of investment has been reduced ever since 2002 …
(Suez manager)
Tom Morton: In its Vision Statement for 2003-2004, Suez said that it would seek to reduce its investments in the developing world by up to 30%. And at the World Water Forum, Suez was being even more upfront.
Paying close attention was David Hall, Director of the Public Sector International Research Unit at the University of Greenwich.
| "They were saying that unless they got guaranteed protection against currency risk in particular, they were very doubtful they would be interested in extending their business at all. " |
Tom Morton: So why are the multinational water companies turning their backs on the developing world? Well, Suez for one, has had its fingers badly burned by currency devaluations. Suez was forced to write off half a billion US dollars on its operations in Argentina when the Argentinean currency went down the gurgler.
And Suez lost another $300-million on its Manila operation when the Philippine currency was devalued.
Companies like Suez and SAUR International are saying that they won’t sign up to any new contracts in the developing world unless they can get guarantees against foreign currency losses.
The word here is ‘risk’. The water multinationals want to see a ‘rebalancing of risk’ between the private and the public sector. In other words, the public sector, in the shape of the World Bank and other development banks, would take more of the risk, and the private sector would take less.
What this amounts to, at least potentially, is a subsidy for business in the order of hundreds of millions of dollars. And at the World Water Forum, they might just have found what they were looking for.
When Michel Camdessus presented his controversial report, he had something in his back pocket for the global water industry.
Maudee Barlow, from the Council of Canadians.
Maudee Barlow: The Camdessus Report was kind of the centrepiece, the epicentre of what we considered wrong with that whole thing. They brought in this report on financing all cloaked in the language of helping the poor, but in effect what was really going on behind the scenes was a refinancing package for the big corporations like Vivendi and Suez and RWE Thames in the Third World, because they’re saying they now want absolute guarantees of profit, upfront, from the local governments, from the IMF and the World Bank or the Asian Development Bank, and they don’t want to have to worry about local protests or changes of government, changes of government minds, or of currency fluctuations. So really what was going on there was the opposite of what it appeared; it really wasn’t about helping the poor, it was really about refinancing these corporations so that they won’t leave the Third World in a tantrum.
Tom Morton: That refinancing package which Maudee Barlow was talking about is hidden away in an annexe to the Camdessus Report. It’s called the Devaluation Liquidity Backstopping Facility. Put into English, this means something like ‘Corporate welfare on a grand scale’. It works like this.
Bolivian sounding music
Tom Morton: A multinational water company, let’s call it Global Gush, buys up a waterworks, in say, Buenos Aires. Global Bush has borrowed money in a hard currency like dollars, to buy the waterworks.
The citizens of Buenos Aires pay their water bills to the waterworks in pesos, the local currency, and Global Gush can use that cash flow to service their debt.
But if the Argentinean currency is devalued, as happened a year ago, suddenly that cash flow in pesos from the waterworks is worth a lot less. So somehow Global Gush has to find the money to keep paying its hard currency debt.
Well they can put up the water rates in Buenos Aires, but as the experience in Cochabamba has shown, that’s unlikely to be popular with the locals. Or, Global Gush can get on the phone and call up Mr Camdessus and his Devaluation Liquidity Backstopping Facility. The facility will guarantee their foreign loans, and make up whatever’s needed to service their debt. Problem solved.
Stephen Turner from WaterAid says that rescue packages of this kind can be a good idea, but in the past they’ve been given to the private sector exclusively.
Stephen Turner: I believe that these have to be equal-handed, and this is the problem, in that the whole set of instruments that have been put in place have been exclusively available to the private sector, whereas the World Bank and others should have also been looking at similar mechanisms for the public sector. So yes, I think the problem is that the debate just remains around the instruments necessary for big international private financing. That is a very small part of the equation; there have got to be equally dynamic schemes to facilitate public borrowing for those schemes that we also need to recognise that the small-scale, the self-help, and the community initiative will be a significant step for the world’s poorest.
Tom Morton: Mr Camdessus for his part, says that his backstopping facility will be there for the public sector too. He wants to help out municipal governments in developing countries who sometimes borrow in foreign currency because they can get lower interest rates.
NGOs like WaterAid support this part of the package, but there’s a basic question which many of them are asking: Why should public institutions like the World Bank subsidise the profits of private companies like Suez or Vivendi at all?
Jamal Saghir from the World Bank says that’s the wrong question to be asking. He doesn’t care who he subsidises, so long as the poor get the benefits.
Jamal Saghir: You are putting it in a way like I’m subsidising the private sector; that’s not the idea. I’m subsidising the poor. And who is the vehicle to do it? Who can deliver better? Can the public sector do it? That’s fine with me, I have no problem with that. I made it very clear to you as the bank policy: 80%, 90% of my lending right now is going to the public sector, let’s face it. Each year the World Bank finances around $1-billion, $800-million in the water sector. It goes to public utilities, most of it. We’re financing the poor, and the vehicles are the private sector, or the public sector. That’s the point I would like to make, it’s clear for you here. And I think that message has to be made clear, the starting point is the poor, and I think the media need to get it this way as well. It’s not public or private. You have to be flexible and pragmatic.
Tom Morton: I mean again, my question to you would be why should the multinational financial institutions, which are after all public sector institutions, why should they take the risk from the private sector, that’s what the private sector is there to do, that’s been the rhetoric of privatisation over the last ten years, that it was all about transferring risk from the public to the private, and now the private sector is saying ‘We want you to take the risk back.’
Jamal Saghir: No, what the private sector is telling you, ‘We want to share some of these risks that are not under our control’. If a government decided to do a devaluation like in the case of Argentina, what do you expect from the private sector to do?
Tom Morton: Well I might have expected for example, that they were a prudent company which hedged against foreign currency devaluations, which most large multinational companies do.
Jamal Saghir: Yes, they have done it, but when you see what’s happening in the market, it’s very clear in my mind that the private sector is not showing up anyway, and will not show up, and we will have to work to build confidence.
Tom Morton: But if the private sector just isn’t showing up for business any more in the developing world, should we really be giving them huge subsidies to lure them back?
| "It seems a very indirect way of subsidising the poor to subsidise some of the biggest multinational companies in the world. There are far more straightforward ways of doing this. " |
Tom Morton: At the World Water Forum in Kyoto, one of the new buzzwords was ‘public-public partnerships’. That means, say, bringing in public sector water utilities from the developed world to advise developing countries on how to make their waterworks more efficient. Now there’s a novel idea.
But in Karachi, in Pakistan, the local public sector has been managing fine by itself. Instead of raising finance internationally, it’s brought sewers into poor neighbourhoods with local funding.
Tony Allan: If a local problem is solved locally, it avoids all those foreign exchange and financial risks, so the solution in Karachi for 700,000, that’s a lot of people, was a local initiative. There were some people with vision and leadership, and they put in place a project which over 15 years or more, provided these sewage services for this very large number of people. And it was done incrementally, one lane as they say, one street at a time, or two streets at a time. People saw that it worked and then were prepared to put in their own money to have this done, and the cost overall was a fraction, perhaps 35%, 30% of what it would cost if it had been international money.
Tom Morton: Professor Tony Allan, Head of the Water Research Group at the School of Oriental and African Studies at London University.
Long before God created man, Water and Air were the first occupants of the world. They had an intimate friend called Fire, who paid them regular visits from the invisible world. By that time, at the dawn of creation, the whole world was flat, and water covered the whole surface.
Appearing before Mr Water in the form of a dragon who vomited fire, Mr Fire announced an ultimatum for Mr Water to relinquish power. He told Mr Water that in an energy emergency meeting, convened by his father on who to rule the new world to be created, it was resolved that he, Mr Water, should step down and give way to his father, who is the leader of the newly-formed left-wing party.
A quarrel broke out in which Mr Fire accused Mr Water of monopolising the world which God created.
So on the moment, (moment because day and night were not) of the First Primordial World International Court of Justice Session to settle the problem of who will rule the new world, Fire appeared as a dragon, Water as ice, and Gas as rising vapour. All of them took their places on the surface of Water, who as landlord, gave a place for the meeting. The spirit of God took the shape of a dove, and hovered over all the court members, to keep peace and order.
Tom Morton: That’s an excerpt from ‘The Creation Challenge’, a story by Cameroon writer, Nchanji Moisi N’For.
There’s something about water which does seem to touch a nerve with us. In many cultures, water is not just a necessity of life, it has a deep spiritual significance, too. Perhaps that’s why the idea that water should be a commodity like any other has proved so controversial.
It’s become almost commonplace to predict that water will be the oil of the 21st century, the source of new and dangerous conflicts between and within nations. Water for irrigation could become a flashpoint; only 10% of the water we need to live is for drinking, and 90% is for growing food.
But remarkably, in the Middle East, which has been running out of water since the mid-‘70s, there have been no major conflicts specifically over water. According to Tony Allan, the invisible hand of international trade has helped to preserve hydro-peace. Countries such as Israel and Jordan have solved their water shortages, by importing virtual water.
Tony Allan: I mean that the ton of grain which was imported into the Middle East from a humid part of the world, North America or Europe, if you could import a ton of grain you were in effect importing 1,000 tons of water, 1,000 cubic metres of water, as it requires about that volume of water to produce a ton of grain. It isn’t that you’re actually importing the water, so that’s why we gave it the term ‘virtual water’. Virtual water is the water embedded in the commodity and the country that imports the commodity doesn’t then have to find 1,000 tons of water. If you expand that to the Middle East region as a whole, certainly just grain, by the year 2000, was accounting an import equivalent of 50-billion cubic metres of water, that’s 50 cubic kilometres, that’s in fact the flow of the Nile into Egypt.
Tom Morton: Well as we heard, the countries of the Middle East are solving their water shortages by importing virtual water in the form of grain. But in a sense, all they’re doing is exporting the problem, shifting it offshore.
A lot of that grain comes from Australia, and in the last financial year Australia exported over 16-million tonnes of wheat, that’s 16-billion tonnes of virtual water.
We’re just beginning to count the true cost of that virtual water, in the stress that water-intensive agriculture puts on our soil, our river systems, and the environment as a whole.
Putting a price on water may encourage us to be more careful about how we use it, but it’s just as likely to make people fight for something that they instinctively feel is their right.
The globalisation of water now reaches deep into the lives of people in the developing world. In the Indian State of Kerala, for example, indigenous people and members of the Dalit, or Untouchable castes, have been staging sit-in protests at a local Coca Cola factory. They say that their wells are drying up because Coke has been extracting around 1-1/2-million litres of water a day from the local aquifers.
And Maude Barlow says we should expect more of these kinds of protests in the future.
| "You are going to hear more and more and more about this water fight. Expect water wars to increase around the world." |
Tom Morton: You’ve been listening to Background Briefing.
Special thanks today to Alexandra de Blas for interviews from the World Water Forum in Kyoto. Translations were by Jacqueline Arias, and original music by Stuart Brown.
Research was by Paul Bolger; our Co-ordinating Producer is Linda McGuinness; Technical Production was by Russell Stapleton and our Executive Producer is Kirsten Garrett. I’m Tom Morton.
Thanks also to Jean-Marie Volet of the University of Western Australia European Languages department and Doug Spencer, for extra music.
Further Information
WaterAid: UK
WaterAid is the UK's only major charity dedicated exclusively to the provision of safe domestic water, sanitation and hygiene education to the world's poorest people.
http://www.wateraid.org.uk/
The World Bank: Water
http://www.worldbank.org/html/extdr/hottopics/water.htm
The Centre for Public Integrity: The Water Barons
http://www.icij.org/dtaweb/water/
Beyond Boundaries
http://www.beyondboundaries.adb.org
