The Privatization of Water and the World Bank

The Privatization of Water and the World Bank

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By Raúl A. Wiener

The World Bank has permanently defended the thesis that the way to increase the availability of water is by treating it as another product of the soil and subsoil, which, like copper, gold and oil, must be explored and developed by private capital. that they have the incentive of profit to be encouraged to invest.

In a commercial that is shown on cable, the World Bank takes the faces and voices of some children, who innocently announce that the dream of this institution is a world without poverty. But when they are awake, those of the World Bank, who are always much older and traveled than those of the propaganda, promote privatizations, all over the world.

Another propaganda dream of the World Bank is that all the inhabitants of the Earth have access to clean water, to improve their quality of life. But when they are awake, those of the World Bank are more concerned with the transnationals that are going to buy in the auctions of national water services, than with helping to change the global imbalance in the distribution of this vital resource and promoting public policies and participation from the private sector to reach those who are not served.

Currently, an inhabitant of the South consumes an average of 20 liters of water per day. An American exceeds 600 liters. At the current rate of consumption, the end of the next 20 years will be reached with more than 3 billion human beings without access to drinking water. And with a perspective of global conflict for the control of supply sources, which could be the most terrifying war that has ever been known.

All of this could be avoided in two ways: (a) reducing overconsumption in the North to a reasonable level, which would slow down the trend of depletion of reserves and better share with the poor in the South; (b) expanding new sources of water for its planned use, avoiding its predation.

What does the World Bank do and what does it propose, which concentrates a huge capital for loans and grants contributed globally, and which has an undeniable power of conviction over governments that know that any fight with them is equivalent to colliding with international banking and investment Faced with this disaster scenario that is announced on the horizon? It promotes privatizations.

The World Bank has permanently defended the thesis that the way to increase the availability of water is by treating it as another product of the soil and subsoil, which, like copper, gold and oil, must be explored and developed by private capital. that they have the incentive of profit to be encouraged to invest.

But, as the condition for capital to invest in new exploitations is that it does not have obstacles to also take over the old ones, the World Bank also advocates the privatization of operating water service companies. In the end, by the way, this ends up being the key issue and not new investments.

In terms of capital, the terms are not dictated by the speed in which stocks can run out of drink, but in which they can make the highest profits, for the longest time and with the lowest investment cost and capital risk possible.

That is why we talk about the need to have more water and the answer is that the water companies have to be sold, as if one thing had to do with the other. As if some of the experiences of privatization of public services, the objective of the buyers had been to take the service to the one that is lacking, if they have so much ceiling to exploit those that are already connected.

The World Bank, however, has its own answer. Privatization leads to bringing the sale price of water to end users to a real level.

What is the real price? Not the one that costs to extract and distribute it. Rather, the market is willing and able to pay in a scenario of growing scarcity, of the inability to replace it with a substitute and of monopoly supply. The World Bank also says that in the long term a world market for water will function, just as there is with oil. So the real price will be, all of the above, but under conditions of competition in demand:

- much higher consumption in the north with much higher purchasing power than in the south, what could be the result?

In the future, for a company or family in the United States, Europe or Japan to continue consuming the volumes of water that they maintain today, they will have to pay for it. Very well. But that will make market prices prohibitive for a very large part of the world's population. They will surely distribute bags from time to time with rationed water. The dream of the World Bank will then be looking like a nightmare.

For all this, in addition, there is no way to take seriously the formula used by the governments of countries like ours to justify privatization and submission to the World Bank:

- As there is no money in the fiscal box that prioritizes the payment of the foreign debt and the purchase of arms from the northern countries, the option that remains is to privatize. If there are a million people without water in Lima and more than double in the rest of the country, we can only ask private capital to provide the silver and holy solution.

Hundreds, maybe thousands, of studies have been done at all costs, to always reach the same conclusion: if we wanted to serve all those who do not have, have reserves for the long term, modernize the service, change the obsolete pipe and reduce leakage, etc., so much money is needed that states will never be able to do it.

Curiously, when the balance is made country by country, it is verified that what was spent on studies that normally reach the conclusion that we already know, and that raise technical proposals that will surely not be taken into account either by the States that want to privatize or by the buyers. After privatization, it reaches extraordinary figures that would have allowed it to pay an important part of the investments necessary to improve the service.

Do not believe, however, that this is a mere error due to a propensity for intellectualism. Nothing to see. Studies are an excellent business of the Bank, since the amount loaned with their respective interests is always returned, and instead the benefit of committing governments and especially governments, institutions and especially their technical teams, is achieved in the direction that the Bank encourages. Many privatizers have come out convinced from the World Bank studies, also from the IDB and other multilaterals, that privatization is the only alternative. But it is legitimate to wonder if it was the investigation or the salary paid for it that convinced them.

The same can be said of the press deal. The current fashion is for the World Bank and its surrogates to invest in the press. And what is the problem? That we have a press that appears to be a privatist sincerity, but that usually receives a significant payment for the exercise of that sincerity.

Another effect of the studies is that they suddenly convince us that the problem was ours and much bigger than how we were seeing it. We believed that the non-use of Japanese credit for the expansion of Lima's water reserves had been the cause of the delay in expansion plans towards the recently occupied areas in the city and that they must consume water in cylinders. We believed that this or that company was mismanaged, due to the interference of mayors, political and anti-technical management, corrupt administrations, etc.

We believed that there were solutions at hand.

But suddenly the figures from the World Bank studies burst on us and send us the message that there is no way the State, the regions and the municipalities can take charge of the problem.

Thus it seems that privatization is a blessing of other people's money that is out there and that it is a matter of holding on tight to it.

There is no global privatization plan; there are national companies that work badly and that cry out to be privatized. This is the story that the World Bank sells, believing that we too have ended up asleep in so many years as a neoliberal rocking chair.

Let's see some data:

- There are processes of privatization of drinking water services in developed (England) and underdeveloped countries, since the second half of the 1980s.

- Since 1994, the issue of the services market throughout the American hemisphere and the opening of large water sources: Canada, Amazonia, Patagonia, has been being discussed within the framework of the FTAA negotiations.

- In 1995 the General Agreement on Trade in Services GATS was signed, as part of the commitments promoted by the World Trade Organization WTO, which establishes a process of liberalization, deregulation and privatization of basic services, aiming at the creation of global markets water, energy, telecommunications, health, education, among others.

- Service agreements are especially tricky for international negotiation, which means that when their main promoters, which are developed countries, find it difficult to reach final decisions in the scenarios of many countries, they run into an agreement with a more restricted scope: from the WTO to the FTAA, for example, and if it is not easy there either, they move on to bilateral FTAs.

All free trade commitments have paid special attention to the issue of services and privatizations. How to affirm then that this is a problem of some company or some specific province of a country lost in the world like Peru?

What is clear is that in the specific case of water we are facing a phenomenon that has not yet exceeded the experimental character. The model is not ready yet. And it is that there is behind a too long tradition of conceiving the water service as an obligation of the State and not as a business factor.

Currently only 5% of the provision of water service is managed by private companies worldwide.

Furthermore, in the case of these privatizations, the number of failures and reversals is much higher than in any other sector: Cochabamba, Buenos Aires, Atlanta, Manila, which were model experiences of the World Bank and ended up in the return of companies after the The population did not accept the rate adjustment and the new service rules, which have led to the filing of complaints with large claims for compensation from transnationals.

Other water privatizations work very badly.

We have recently learned that the first case of delivery of a water management to a private company in the province of Pacasmayo in La Libertad, concluded in the return of the concession. The investments offered were not fulfilled. The coverage did not grow. Service time was reduced from four hours a day to one hour, etc. Recovered by the municipalities, the company has improved immediately. This case is requiring a thorough investigation.

One of the reasons why the privatization bet is deceitful and deceitful is that the private companies that invest in water around the world, are counted by the hand, mainly of European origin and to a lesser degree North American. As powerful as each one of them is, the sum of all its economic capacity could only cover a tiny fraction of the needs detected by studies by the World Bank and other similar organizations, and to face the water crisis for the next 20 years.

So, how can it be given as a solution to what it does not have the capacity to be?

There is only one explanation here, and that is that the World Bank is working objectively for these companies and that the global figures are only a way of dramatizing the situation to make way for very specific investors.

It seems that the dream of the World Bank when it assumes its adult face, is that these companies take over what they can make their own within the world's water market and that from there they can expand and with the profits of one place open new businesses in others , or convince investors from other sectors to enter this lawsuit.

Does that solve the coming crisis and current shortages?

Let each of your answer. For now, let's be clear about what the World Bank is looking for when promoting privatization in Peru.

Continue experimentation until the efficient privatization model is reached.

Start from some provincial companies that could improve service with a simple program of rationalization and rate adjustment.

Prepare the conditions for the concession of Sedapal, which is the big business in sight due to the number of connections it represents, and of other service providers with greater coverage.

To incorporate Peru into perspective within the global water market.

We are in those.

Of course, for now we are discussing the solution to the crisis of national and local companies, and reading the crazy figures that would be required, according to World Bank studies, to overcome this tragic situation.

And we only suspect that what has happened elsewhere is going to happen to us, and that is the experience of privatization of service companies in Peru.

We suspect that the fees are going to be much higher. Because any company that is bad could quickly be well if it tripled its prices and forced to pay for its monopoly status. Only if the municipal companies or the Toledo government do it now, they hang them in a square. But they believe that it is more difficult to do so if it is a transnational company.

We suspect that instead of partnering, the ideas of selling water and environmental conservation will be more distant than ever. And if this happens, because the concessionaires argue that they are only in charge of distributing drinking water, we will surely be going to generate very serious damage to the natural environment that allows clean and healthy water. To the detriment of the population.

We suspect that the investments that they say justify privatization will be made with our money.

We suspect, that is we know, but we are not fully aware of what it means, that privatization will create strong monopolies. That privatized Sedapal will be like a second Telefónica, with great political power. And that the provincial ones will probably be the most important companies in each region.

We suspect that we will lose democracy, because the issue of water service will no longer be a debate with the authorities, but a cold reporting office of a private company.

We suspect that another batch of workers will lose their jobs for private operators to reduce their costs.

We suspect that if we get on this path, later it will be much more difficult to go back, since there will be all kinds of pressures, lawsuits, lawsuits and others, to punish the audacity of trying to disarm privatization.

We suspect that the issue of the poor without services will not be addressed by the concessionaires and they will say that if the State wants to increase coverage it will have to pay for the extension. If that happens, as has happened so many times, the justification that the State should no longer continue to spend and that the hope of the poor would be a transnational company, will fall to the ground.

We suspect that when one or more foreign companies manage our drinking water sources, it will be much easier to sell this resource to foreign buyers. It looks fantastic. The developed world has been preparing for this for some years, which already has a good part of the import infrastructure. It lacks reliable exporters.

Excessive suspicion on our part?

We do not believe. Thirty years of neoliberal recipes, the Washington consensus, adjustments, market liberalization, reforms and privatizations are more than enough for our current dreams to come true with eyes wide open.

The first principle that we have to underline as often as necessary is that our problems do not coincide with those of developed economies and in some cases they are contradictory. The south-north deal must be to change the rules of the game, so that they aim at conservation, protection, justice, equity, democracy, solidarity. Not to adapt to the waste, pollution, inequality, imposition, the short-term interest that dominates the richest and for whom the World Bank works.

If we have a dream, it is to change what exists. And if we have instruments to do it, those are our natural resources and the work of our people.

Water is a kind of border line in the process of canceling our States as factors of internal development and autonomous actors on the global stage.

Salvage and improvement measures can be discussed here, company by company, region by region. We have no conditions to do so. We are not called either to give all the answers.

It remains that if we have values ​​in the country we must use them in our favor.

If the strong has a weakness, improve our negotiating position.

If we require capital, do not sell dignity for it.

Inform, always tell the truth to the population.

Democratize, always make the opinion of society prevail in important matters.

In Argentina, some boys and girls appear in a spot and say:? Our dream is a world where the future and the thirst of the poor do not depend on the thirst for profit of the richest?

Our dream is a world without a World Bank.

* Exhibition at the Forum on Water and the Environment, Proposals from Civil Society to the Privatization Processes of Public Services, held in Trujillo on June 19, 2004. Organized by the National Federation of Drinking Water Workers and the Union of SEDALIB (Water Company of La Libertad). SERVINDI Newsletter

Video: Short documentary: Our Water, Our Right (June 2022).


  1. Ailean

    the ideal answer

  2. Bale

    It is the excellent idea. I keep him.

  3. Artair

    I very much would like to talk to you.

  4. Samuel

    complete nonsense

  5. Kenley

    Relevant. Can you tell me where I can find more information on this issue?

  6. Surur

    It's unlikely.

  7. Dichali

    which prop appears, which that one

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