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The Privatization of Water in Latin America

The Privatization of Water in Latin America

By Carmelo Ruiz Marrero

The privatization of water is gaining momentum in Latin America. Despite the defeats they have suffered in places like Puerto Rico, Bolivia and Uruguay, the transnational water companies are preparing to appropriate the region's water resources, using the concepts of "decentralization", "participation of society" in their skillful discourse. civil "and" sustainable development ".

The privatization of water is gaining momentum in Latin America. Despite the setbacks and defeats they have suffered in places like Puerto Rico, Bolivia and Uruguay, the water transnational companies are preparing to appropriate the region's water resources - rivers, aquifers, wells and aqueduct systems -, employing in their skillful discourse the concepts of "decentralization", "participation of civil society" and "sustainable development".

In April 2005, the First Popular Workshop in Defense of Water was held in Mexico City, an activity organized by the Center for Social Analysis, Information and Popular Training of Mexico (CASIFOP) and the Polaris Institute of Canada. More than 400 people from all over Mexico and various countries of the American hemisphere gathered there. The participants, which included peasants, Indian peoples, trade unionists, members of urban movements, researchers, students, and civil society organizations, compared notes and shared experiences of their respective struggles against the privatization of water. In addition, they contemplated possible paths towards the consolidation and advancement of the defense of the liquid as a human right for all, managed in a sustainable, democratic and responsible manner.


The Workshop identified the various modalities of water privatization in the Americas:

• Privatization of municipal water services in urban areas. In this modality, which is the most obvious but not the only one, transnational corporations take over the distribution networks and purification plants with the endorsement of new laws on water.

• Privatization of territories and bioregions. To quote a CASIFOP document: "Companies that trade and / or need bodies of water for their activities are going for the privatization of entire territories and bioregions to guarantee the monopoly use of the resource, protected by changes in legislation."

• Privatization due to water diversion. Through channels that divert entire rivers out of their natural channels and the construction of mega infrastructure projects such as waterways and dams, abundant water is provided for industrial users and agribusiness at the expense of the basic needs of millions of indigenous people and peasants.

• Privatization due to contamination. When large corporate users pollute the resource through its use and abuse (for example, mining, oil, paper, electrical industries and agro-industrial monocultures intensive in the use of pesticides), they make it impossible for less wealthy sectors to use it.

• Privatization due to water bottling. Four transnationals control a large part of this thriving business (Coca-Cola, Pepsico, Nestlé and Danone). These companies and their affiliates get water through astonishingly generous and favorable state subsidies and sell it in plastic bottles for 1,000 to 10,000 times what it cost them to get it.

• Monopoly of technologies. And on top of the large industries wasting and polluting the water that belongs to everyone, they also control the technologies for its extraction and purification. "Through monopoly control of markets and technology patents, the destroyers of the resource are presented as the saviors, to whom we all have to pay," said Silvia Ribeiro, from the Action Group on Erosion, Technology and Concentration, one of the participants of the Workshop in Defense of Water.

The ideological-advertising offensive in favor of privatization is based on three questionable premises:

• Population growth: "More and more people must have access to increasingly scarce and overexploited water resources, which causes tensions and social conflicts." This argument tends to grossly simplify the complex social problems surrounding natural resources. It presumes that there are no extreme economic inequalities, or that if they do exist they are of no consequence.

• Fair economic value: "Water is wasted because people get it for free or at artificially low prices. Therefore, if its price reflected its true ecological and economic cost, people would avoid its abuse and excessive use." Executives of water privatization companies say that the prices they charge are high because water is an expensive and risky business and their companies must remain profitable in order to compete. But the high prices that these firms charge are not based on market rationality or ecological sustainability criteria. The apparently independent companies that operate municipal aqueducts are almost all subsidiaries of a half-dozen transnational companies that coordinate with each other and divide global markets. The money they raise from their subscribers is not invested in maintenance and expansion of existing networks but in their global expansion plans and in hefty dividends and executive salaries.

• The failure of the State: “As a manager of the resource, the State has failed, not only because of its corruption, incapacity and lack of investment in infrastructure but also through its promotion of a paternalistic culture of 'cheap water for all', which has resulted in waste and overexploitation. " However, in the countries of the South, the apparent failure of the State is due to a multiplicity of external factors, including the weight of the unaffordable external debt and the structural adjustment policies imposed by the multilateral banks that require the state to be practically dismantled.

"The transnationals manipulate the data of the crisis to justify the dispossession and increase in privatization, blaming the common people, the peasants and public services for misuse and administration," says Ribeiro. "For all this, it is essential to build our own maps of the crisis and the ways to face it."

Mexico, paradigm for privatization

More than 400 representatives of indigenous communities, organizations of the popular urban movement and workers from the National Water Commission attended the Workshop. One of the undisputed conclusions was that Mexico is the bridgehead of the regional privatization offensive. While in other Latin American countries great popular struggles have been fought in defense of water and even achieved some victories –such as in the Bolivian city of Cochabamba–, in Mexico "the privatization of water occurs daily and in more and more parts of the country, while that resistance or manifestations of rejection of it occur in a scattered way and are perceived in most cases as local problems, "according to Karina Atayde and Thais Vega, researchers at CASIFOP.

In Mexico, sophisticated mechanisms and arguments in favor of private ownership of water are used to soften and fragment the opposition and to make it difficult for critical sectors to perceive the broad picture and the true designs of the privatizers. The water transnationals want to present Mexico as a showcase to show the world the virtues of privatization.

The trend towards the privatization of water in Mexico dates back to 1983, when President Miguel de la Madrid promoted changes to Article 115 of the Constitution that placed the responsibility for water supply on municipal governments.

These legal changes seem at first glance to be a move for genuine decentralization and local and democratic control over the resource. But according to CASIFOP, "having transferred responsibility for the supply to the municipal authorities, the federal government not only handed over the infrastructure networks, but also inherited all the management problems, accumulated over decades: leaks, obsolete and bad networks. conditions, corrupt and irregular administration, among others, in a context of unbridled urbanization. "

In 1992, the privatization process was consolidated with the approval of a new National Water Law, after which numerous municipalities concessioned the management of their water to subsidiaries of transnational companies such as the French company Vivendi, including Aguascalientes, Saltillo and Mexico City.

In his initial speech at the Forum in Defense of Water, Professor Andrés Barreda, from the National Autonomous University of Mexico, described the reality of the false decentralism of the government's water policy:

“The way of compartmentalization distinguishes the three main types of water use (urban, rural and industrial), pulverizes the privatization of urban uses through a strategy of municipalization of water management, contracts and markets (…) Atomizes the privatization of rural uses by locating them either in the various irrigation systems or in the mountains and jungles of Mexico.

”The process of privatization of water thus shows a varied strategy of spatial advancement: an atomizing strategy of the areas of conflict and negotiation of water, according to which the management of urban water remains in the hands of the municipalities while rural water remains in the hands of the dispersed irrigation systems that exist in the country. This allows large transnational water capitals to negotiate with small-scale political entities.

"As the resulting companies are supposedly small-scale municipal, people think that in their municipalities they deal with local, smaller-scale companies, without realizing that they are actually one of the thousand faces of some gigantic multiservice transnational company, a company that he uses outsourcing with enviable skill, to duly disregard the moment social problems begin due to the habitual delivery of bad services. "

The reality of the privatization of water services in Mexico


The cases of the cities of Cancun, Saltillo and Aguascalientes are illustrative. In the city of Cancun, a tourist paradise on the Caribbean coast, the first private company to manage the water system was Azurix, a subsidiary of the famous and unfortunate American company Enron. After its spectacular bankruptcy, Ondeo arrived, a subsidiary of the French company Suez, which financed the purchase with a loan from the National Bank of Public Works and Services (Banobras). According to the US non-governmental organization Public Citizen, "the committed investments have yet to be made and therefore the wastewater is discharged into the Caribbean Sea."

In Saltillo, in the state of Coahuila, the system was concessioned to a company owned by the municipality and the Spanish corporation Aguas de Barcelona. During the first two years of the concession, rates rose to 68% from 32%, contrary to agreed terms, which state that the increases should not exceed inflation. Public Citizen reports that the members of the board of directors who work for the municipality have not been able to impose themselves on the decisions made by the Spanish members of the council.

In Aguascalientes, whose water system was concessioned to a subsidiary of the French transnational Vivendi, the rates are among the highest in Mexico. But these high rates have not resulted in a sustainable management of the resource; the aquifer the city depends on is near depletion. Although the authorities do not recognize it, says Public Citizen, the region will be one of the first in the country to suffer a water supply crisis that forces a drastic reduction in economic expansion plans.

These three cases contrast with the water system of the city of Monterrey, which is controlled by a public agency. "Like some others in the north of the country, this public entity has been successful in ensuring wide availability of the service while reducing water losses through its clients' networks and collectors," according to the newspaper La Jornada.

In 2001, the Program for the Modernization of Water and Sanitation Service Providers (Promagua) was created to provide financing to municipalities to maintain their water systems. But Promagua's aid, which was financed with a World Bank loan, is conditional on municipalities facilitating the participation of private capital.

The private sector then imposes its own conditions. According to CASIFOP, "private companies refuse to establish any type of agreement with municipal authorities if they do not commit to resolve lags in infrastructure through state investment (that is, public debt), to increase rates before entering private capital, to absorb the costs to 'eliminate the uncertainty' regarding property rights, to guarantee the continuity of the concession and to assume the responsibility of expanding the infrastructure network, again through more external indebtedness. "

According to Luis Hernández Navarro, many of the World Bank's loans to Mexico have had the condition of privatization and the recovery of the full cost of water. "In their language, 'cost recovery' refers both to the elimination of government subsidies and to the increase in payments that consumers must make to access the service. This means that the operating companies in charge of providing drinking water they must cover all their operating and maintenance expenses by charging consumers, without receiving government subsidies. "

The most recent National Water Law, approved by the Congress of the Union in 2004, was a substantial step in the privatization of infrastructure and the supply of drinking water. According to the World Bank, the "new legal framework constitutes a unique opportunity to deepen the reform process" of the sector. "The new legislation refines the mechanisms to achieve the exclusion of the population from the decision-making process on policies and the actual management of the liquid, to transfer it to large companies," Hernández Navarro says.

Civil society alternatives

No one better than civil society organizations to articulate alternatives to the prevailing model of water privatization. "As an alternative to the privatizing tendencies, on the one hand, and centralist tendencies, on the other, in terms of water management, we propose a local and participatory management model in which the communities develop and execute, in coordination with the competent public authorities , policies related to the protection, conservation and equitable sustainable and sustainable use of the resource "declared the participants of the Central American Civil Society Water Forum, held in the summer of 2005.

The statement continues: "We demand that spaces be opened and the necessary resources be provided to social organizations to participate in the development and implementation of said policies, which must be embodied in laws and other regulatory bodies that make this management model effective, as the only way to guarantee respect for the human right of access to water. "

One of the main objectives of the Workshop in Defense of Water held in Mexico was to begin preparing civil society for the next World Water Forum, to be held in the capital city in March 2006. This Forum, which takes place every three years Since 1997, it has brought together the main decision-makers on water management at the national level, representatives of two thirds of the world's governments, companies that do business with water, non-governmental entities, members of the scientific community and UN agencies. The Forum is dedicated to diagnosing and advancing the processes of privatization of the liquid worldwide, and arises as an initiative of the World Water Council, an institution that was founded in 1996 together with the World Water Association. The mission of both groups is to consolidate the privatization processes at the planetary level. One of its main strategies is to actively involve civil society in the management of water management, with the dual purpose of displacing the state and creating crisis situations in which private companies appear as the only salvation.

When the Forum is held, popular and civil society organizations and indigenous peoples will be there to tell the delegates and the world that the privatization processes are not legitimate nor do they solve the problems of water supply, and that there are alternatives real to provide the liquid at a reasonable cost, without environmental destruction and without the interference of transnational corporations.

Maude Barlow, Canadian activist and co-author of the book "Oro Azul", participated in the Workshop and in an interview with Real World Radio gave a message to the governments of Latin America: “I understand that the states of Latin America are going through difficulties in financing the public water supply system and I know they also owe a great debt to the First World. But they make a big mistake in allowing these corporations to settle in their communities and manage the water system just for the profits that it generates. This causes even more poverty, more pollution. Corporations do not take any risk, but get all the benefits. It is local people who take the risk, and it is the World Bank that pays for corporations to be risk-free. It is very important that governments say 'no' to these corporations. Ultimately they are not there to bring water to the people, they are not there because they are concerned about people, or to help governments. They are there to make money. When they stop making money they will leave. My message to Suez is to get an honest job. " www.EcoPortal.net

* Ruiz Marrero is an independent journalist and Puerto Rican environmental educator. He is a professor at the Institute of Social Ecology (social-ecology.org) and a recipient of the Environmental Leadership Program (elpnet.org). He is also the founding director of the Puerto Rico Biosafety Project (bioseguridad.blogspot.com). Its bilingual website (carmeloruiz.blogspot.com) is dedicated to global environmental and development issues. / August 24, 2005 / Americas Program of the International Relations Center (IRC) www.ircamericas.org


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