EU "Water Mafia" Scheming To Privatize E Europe Utilities

by Julio Godoy

"We have evidence that European Commission (EC) officials work hand in hand with executives of private corporations to set up international rules at organizations such as the World Trade Organization to facilitate the privatization of public services," Oliver Hoedeman of the corporate watchdog European Corporate Observatory said at a meeting at the European Social Forum (ESF) Nov. 12.

Activists pointed particularly to the new dangers from privatization of water.

The ESF has brought together some 40,000 representatives from more than 1,000 non-governmental organizations. The meeting is taking place under the banner "For a new Europe of social rights and peace." The ESF is discussing a range of subjects such as global war, neo-liberalism, women's rights and immigrants' rights.

At a debate on privatization of public services Hoedeman quoted from recent confidential messages of officials of the European Commission (EC), the executive arm of the European Union, in which they ask executives of private companies what they should do at General Agreement on Trade and Services (GATS) meetings to push privatization of public services worldwide.

Activists condemned EU moves to push such privatization in Eastern Europe. "The EU is using the so-called accession criteria to force Eastern European governments to privatize public services," said Roman Havlicek, a campaigner for retaining water services in public hands in Slovakia. "Governments which don't give in risk not qualifying for accession to the EU."

The EU is offering state subsidies and credit to private companies for taking over water and other public utilities in Eastern European countries, Havlicek said. The EU is also intervening directly to promote privatization policies, he said.

These policies are scandalous because they support a system of private management of public services that has failed repeatedly in the EU, other analysts said.

France has been promoting so-called private-public partnership as a management model for the whole world, said Jean Luc Touly, president of the Association for World Water Contract, a European alliance supporting public management of water utilities. "This partnership is based on the so-called French school of water management which has given rise to numerous scandals of political corruption."

Touly condemned the "international water mafia in which private companies collude with international financial institutions to create apparently independent commissions to analyze the state of peoples' access to water."

This "water mafia" always promotes the privatization of water utilities, Touly said. The international water market is controlled by a handful of private corporations such as the French firms Suez Lyonnaise des Eaux and Vivendi, he said.

Jaroslava Colajacomo, an Italian member of the Campaign to Reform the World Bank said the most recent proposal of this "water mafia" is to extend state investment guarantees to multinationals managing public utilities in countries of the South.

This is the so-called full cost recovery proposal put forward in the Camdessus report early this year. The report was produced by an alliance controlled by companies profiting from water privatization. The paper is named after former president of the International Monetary Fund (IMF) Michel Camdessus who led the alliance debates.

"The full cost recovery proposal calls for the extension of state guarantees to assure a private multinational managing a water utility in, say, Argentina that it will get back its full investment even if the utility is losing money," Colajacomo said.

Activists from the Philippines, Senegal, Bolivia and other countries of the South said such privatization is increasing poverty without improving the quality of services.

Carla Montemayor from the Philippines said the price of water has skyrocketed since Suez took over water services in capital Manila. "Water services cannot be worse for citizens as in Manila under Suez."

Activists urged consumers to be alert to the dangers the privatization. "We in Europe are witnessing even the privatization of water sources in our mountains to benefit mineral water companies," Emilio Molinari from Italy said. "We have to tell politicians they are not managers of privatization but representatives of the people."

Molinari proposed the creation of a state fund financed by taxes on bottled mineral water to pay for the return of utilities to public hands.