David Cronin, January 7, 2008 (IPS) - Water supply could increasingly be managed by private firms once a new European Union treaty enters into force, experts warned Monday.
Delivery of drinking water from the tap is mostly controlled by public utilities in the EU, but fears are being voiced that new policies promoting competition are skewed in favour of giving a greater role to the private sector in this area.
Under the Lisbon treaty, exclusive power for setting competition rules would be entrusted in the EU as a whole, rather than in member governments. A clause stating that national and local authorities would continue to have "wide discretion" in providing "services of general interest" has been included in a protocol attached to the treaty, but not in the main body of its text.
The treaty, signed by EU leaders in December, is largely identical to a proposed EU constitution rejected by French and Dutch voters in 2005. Still described as a 'constitution' by many of its critics, the treaty will come into effect after ratification by all 27 countries in the Union. Ireland is the only country which has given a commitment to hold a referendum on the treaty.
Jan-Erik Gustaffson from the Royal Institute of Technology in Sweden says that there have been several waves of water privatisation in Stockholm. These have seen substantial job losses during 2007, when several divisions of the Stockholm Water Company, Sweden's biggest water utility, were sold off.
Further redundancies and a deterioration in services are feared this year because the company plans to reduce its core business costs by one-fifth.
"If the (EU) constitution goes through, it will be even more difficult to fight against privatisation of all public services, including water," says Gustaffson. "There are articles in this constitution that put pressure on everybody to apply competition rules."
Gustaffson was a speaker at a Jan. 7 seminar in Brussels, which addressed the extent of water privatisation in Europe and how to keep water in public ownership.
Emanuele Lobina from the University of Greenwich in Britain said that experiences in Amsterdam, Milan and Grenoble illustrated how water management can be more efficient when it is publicly, rather than privately managed.
Situated in the French Alps, Grenoble is often cited as a case study of how water privatisation can go wrong.
In 1989, responsibility for water and sewage in Grenoble was taken over by Lyonnaise des Eaux, part of the global water company Suez. Following revelations that the deal was tainted by illegal payments to elected representatives and company executives, the water service was eventually returned to the public sphere in 2000.
Over the past few years, Grenoble has been said to offer the cheapest water of all French cities with more than 100,000 inhabitants. Information campaigns aimed at cutting the amount of water wasted have proven successful, according to some campaigners.
Lobina argued that the public sector has played a key role in ensuring there is "virtually universal" access to water in the industrialised countries belonging to the Organisation for Economic Cooperation and Development (OECD).
Although he acknowledged that underinvestment and fiscal constraints can present headaches, he suggested that these are not insolvable. "Problems can be addressed and have been addressed," he told IPS.
He expressed concern, too, about how the EU's executive, the European Commission, is "pushing principles of competition in a way that public companies are restricted in scope and scale."
He applauded a recent proposal brought before Italy's national parliament to exempt water from competition rules. "This is too important to be left to competition," he said.
Margaret Cuthbert, a Scottish water analyst, said that when Margaret Thatcher, Britain's then prime minister, oversaw privatisation of England's water in the 1980s, predictions of major investment were made.
"There hasn't been any major investment of private capital," she said. "In England, private companies have time and time again been making huge profits. And customers have been paying over the odds for their supply of water."
Tommy Kane from the Public Interest Research Network at Strathclyde University in Scotland, said that EU law has been used as a pretext to give private firms a greater stake in his country's water services. Despite widespread public opposition to water privatisation in Scotland, the authorities have maintained that private funding is needed to provide sewage treatment facilities needed to meet EU standards.
Türkel Miniba, lecturer in Istanbul University, complained that gold mining companies are pushing for greater water privatisation in Turkey. New laws have been passed opening up water basins to mining firms, she added. Protection for ecologically sensitive areas has been overruled as a result.
Pippa Gallop, a representative of CEE (Central and Eastern European) Bankwatch, noted that in mid-2007 the Georgian government issued a tender for the total sale of the main water provider in capital Tbilisi. The eventual awarding of this contract to a Swiss company with no previous experience in water delivery may be illegal, she added, as the city's local authority had not been consulted.
While there has been some political opposition to the sale, this has been overshadowed by political upheaval in the former Soviet state.