The Water Barons: A Handful of Corporations Seek to Privatize the World’s Water

(WASHINGTON, Feb. 3, 2003)—The privatization of public water systems around the world, driven by a handful of European corporations and the World Bank, is dramatically increasing despite sometimes tragic results, according to a new study by the Center for Public Integrity.

The report, by the Center’s International Consortium of Investigative Journalists, shows that the world’s three largest private water utility companies have since 1990 expanded into nearly every region of the world, raising concerns that a handful of private companies could soon control a large chunk of the world’s most vital resource.

While private companies still run only about 5 percent of the world’s waterworks, their growth over the last 12 years has been enormous. The report tracked the operations of the six most globally active water companies and found that operations had grown nearly five-fold.

Key findings include:

• France’s Suez and Vivendi Environnement, and Thames Water, owned by Germany’s RWE AG, dominate the private water market globally. They are joined, to a lesser extent, by Saur of France and United Utilities of England, working with Bechtel of the United States.
• In 1990, private water companies were active in about a dozen countries. By 2002, they were operating in at least 56 countries and two territories.
• The companies have worked closely with the World Bank and other international financial institutions and lobby aggressively for legislation and trade laws to require cities to privatize their water.
• In major cities around the world—such as Buenos Aires, Manila and Jakarta—the World Bank flexed financial muscle to persuade governments to sign long-term contracts with the major private water companies. Of the 193 short-term loans the bank approved from 1996 to 1999, 58 percent had privatization as a condition.
• In the United States, the European water giants have gone on a buying spree of America’s largest private water utility companies, including USFilter and American Water Works Co. Inc. Of the seven major private water companies in the United States today, only one is still U.S.-owned.
• The companies have tripled their political contributions in the United States and are trying to persuade Congress to require cash-strapped municipal governments to consider privatizing their waterworks in exchange for federal dollars.

Revenue trends reflect the companies’ global expansion. Vivendi Universal, the parent of Vivendi Environnement, reported earning more than $5 billion in water-related revenue in 1990; by 2002 that had increased to over $12 billion. RWE, which moved into the world water market with its acquisition of Britain’s Thames Water, increased its water revenue a whopping 9,786 percent—from $25 million in 1990 to $2.5 billion in fiscal 2002.

Though successful in their expansion efforts, the companies’ on-the-ground performance has been highly criticized. In the United States, the city of Atlanta recently canceled its private water contract with a Suez subsidiary after widespread complaints about poor service and dirty water.

The report also examines the problems many developing countries encounter in privatizing their waterworks. For example, in South Africa, where one township transformed its utility into a profit-driven enterprise, poor who could not afford huge increases in water rates were forced to get drinking water from disease-ridden lakes and streams, resulting in the country’s worst cholera outbreak.

The report, titled “The Water Barons: A Handful of Corporations Seek to Privatize the World’s Water” will be released in 10 parts from Feb. 3 through Feb. 14.

Today—Cholera and the Age of the Water Barons. The explosive growth of three private water utility companies in the last 10 years has raised fears that mankind may be losing control of its most vital resource to a handful of monopolistic corporations. Analysts predict that within the next 15 years in Europe and North America, these companies will control of 65 percent to 75 percent of what are now public waterworks.

Tomorrow—Water and Power: The French Connection and Defending the Internal Water Empire. France is the birthplace of modern water privatization, but its leading companies have been rocked by scandals and allegations of influence-peddling.

Wednesday—Metered to Death: How a Water Experiment Caused Riots and a Cholera Epidemic. The biggest problem in this country ravaged by AIDS, tuberculosis and malnourishment, is water. Few can afford it. But with World Bank blessing, the government is trying to end water subsidies, forcing millions of South Africans to seek their water from polluted rivers and lakes. The result: one of the largest outbreaks of cholera.

Thursday—The ‘Aguas’ Tango: Cashing in on Buenos Aires’ Privatization. Global water giants partnered to run a water system in the Argentine capital that the World Bank touted as a model of privatization. Investors extracted millions in profits. But now the model is crumbling under the weight of mounting costs.

Friday—Loaves, Fishes and Dirty Dishes: Manila’s Privatized Water Can’t Handle the Pressure. In the Philippines, politically connected families and private companies split Manila in two to share turf. At first, the two companies brought miracles by bringing running water to thousands of poor people who never had it. Now the miracle has faded as one company bails out, leaving behind enormous debts.

Feb. 10—Water and Politics in the Fall of Suharto. In Indonesia, two powerful multinationals deftly used the World Bank and a compliant dictatorship to split control of a major city’s waterworks.

Feb. 11—Colombia: A Tale of Two Cities. Coastal Cartagena was the first of about 50 cities and towns to privatize its water in Colombia. The capital Bogotá bucked the privatization trend, refused World Bank money and transformed its public utility into the most successful in Colombia.

Feb. 12—Low Rates, Needed Repairs Draw Big Water to Uncle Sam’s Plumbing. Foreign private companies are gearing up to control a multibillion-dollar market to upgrade the nation’s aging water system, after spending millions of dollars over the last six years to sway Congressional votes on privatization laws. Americans have the safest and cheapest public water systems in the world. But, as foreign companies flex their financial muscle, America’s drinking water may not be so cheap or public for long.

Feb. 13—Hard Water: The Uphill Campaign to Privatize Canada’s Waterworks. Hamilton was the first privatized large water utility in Canada, a country where waterworks have been overwhelmingly a public affair—and where most people like it that way. The Hamilton experience was supposed to demonstrate an alternative, free market model, supposed to change public opinion. It has. But not as expected.

Feb. 14—The Big Pong Down Under. For two months in 1998, more than 3 million residents of Sydney, Australia, were forced to boil their drinking water to kill parasites. While blame for the contamination was never established, a government-commissioned probe showed that a private water company’s operational practices had risked the safety of the water supply.

The investigation was supported by grants from the Park Foundation, Inc. and the Fund for Constitutional Government.

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