Local Governments Employ Leaky Logic; U.S. Municipalities That Sell Their Water Utilities to Defray the Costs of Upgrading Infrastructure May Find Themselves at the Mercy of Multinational Corporations. (Nation: Water Monopolies)

Article excerpt

Multinational corporations that buy and sell water and water services are seeking public utilities in the industrialized world for what they hope will be guaranteed profits. In the United States, towns and cities are flirting with water privatization as a way to pass on the costs of upgrading their aging utility infrastructure. But water is unique. Unlike electricity, natural gas or tele-communications, everyone needs water to survive.

Nonetheless, local officials worldwide are negotiating deals in private with companies that view a government-guaranteed monopoly on water as the ultimate deal. In their zeal to embrace white knights, local water boards might do well to study a world of examples of what the future might be like if the monopoly on water and its infrastructure were turned over to rapacious multinational corporations accountable to no one -- and with the money and know-how to manipulate government whenever necessary.

Californians, always protective of water rights, already have their own "North/South" water battles afoot. Michael Mortensson, executive director of the California Ground-water Association, quotes Mark Twain's "Whiskey's for drinking, water's for fighting" which Mortensson says is "basically very true around the Golden State."

Officials in Mendocino County, Calif., are in the midst of a controversy that surfaced when a businessman with multinational backing proposed by-passing the usual pipeline and well-water delivery system in favor of one that begins by pumping Northern California coastal water into large plastic-bag reservoirs off the Pacific shore. The giant bags of freshwater then would be towed down to consumers in Southern California.

"This is a system that has been used in other parts of the world," according to Mortensson, whose trade association represents businesses that install wells and water systems. He admits to limited knowledge of the details, except that residents of Mendocino County tend to respond to the project by declaring: "This is my water being taken away for some other use." He explains that the population is in the south, but the water is in the north.

The World Bank knows about water controversies, too. It has been making loans to help developing countries provide potable water to their citizens for half a century. John Briscoe, a senior water adviser for the World Bank, takes INSIGHT into the mysterious -- some say secretive -- process of how billions in American taxes are turned into water in thirsting developing nations. The experience of the international lending agency also sheds light on why multi-national companies are so anxious to advance water privatization to the United States.

For the last 10 years, the World Bank has encouraged privatization of utility services such as water, electricity and telecommunications when granting development loans to countries seeking to build or upgrade public services. Because of the need for infrastructure such as pipes and dams, these are considered natural monopolies, Briscoe explains, and have tended to be publicly owned. "The interesting thing is that publicly owned monopolies are generally not regulated. They simply operate in some great act of faith. People say `Oh, well, they must be doing something in the public good' and therefore there is no regulation of public operators."

But, Briscoe charges, "We had many, many loans to poorly performing utilities owned by government, which regrettably are most of the utilities in the developing world." Nevertheless, the vulnerability of underserved citizens kept the funding coming.

So what have sales of water monopolies to multinational corporations produced? Citizens in Cochabamba, Bolivia, saw their government privatize the water supply to improve service. According to Sara Grusky, coordinator of the International Water Working Group of the Naderite organization Public Citizen, the 1999 agreement with the multinational Bechtel Corp. …