USA: Private Firms Belly-flop in the H2O Biz

Multinational corporations vie for a share of the American water
market, and if they are given the opportunity, affordable drinking
water may soon be a thing of the past. From Stockton, to Atlanta, to
Cochabamba, Bolivia, privatization has proven a risky business with
far-reaching consequences.

As budgets everywhere are slashed, there is increasing pressure to hand
over public utilities to private firms. Politicians want a quick fix
and are buying into the hype of giant water firms offering the capital to
invest in needed upgrades. These corporations claim to be the solution
to the growing global water crisis. In truth, the consumer is the one
who pays.

The City Council in Stockton approved a $600 million, 20-year contract
with OMI-Thames, a multinational partnership that's British-based and
German-owned, but citizens are battling to protect their water and to
have a say in its management. When they learned that Mayor Gary Podesto
was pushing privatization, they gathered 18,000 signatures calling for
a public ballot on the privatization issue.

Local water experts were highly critical of the bid, and the former
director of Stockton's Municipal Utilities Department (MUD), Morris
Allen, charged that city officials ordered him to shred important
documents related to the deal. These papers reportedly showed that it
would be cheaper for Stockton to continue managing its own water
system. Allen says he also was asked to inflate MUD's operating costs to make a
bid by OMI-Thames look better.

To pre-empt the forthcoming ballot measure, the mayor fast-tracked City
Council approval of the OMI-Thames contract, saying the issue was too
complex for voters. The council, 4-3, approved the contract on Feb. 19.
But in a special election on March 4, Stockton citizens disagreed,
voting to maintain control of their water system. However, because the
election came after the council's quick vote the contract, activists
have gathered another 12,000 signatures to qualify a referendum that
would allow voters to overturn the City Council's vote.

In Atlanta, officials thought they could save money on repairs by
contracting with United Water, a French-owned firm, to buy and run
Atlanta's system. In the first four years of a 20-year contract,
residents complained of rate hikes, brown water and poor service.
Operating fees and complaints cost the city tens of millions of
dollars, even while United Water was billing the city for work it didn't do. In
January, Atlanta pulled the plug on that deal.

Water shakedowns are especially risky now that global corporations can
use far-reaching international trade agreements to their advantage.
When San Francisco-based Bechtel took over water management in Bolivia in
1999, bills soared so high that farmers could no longer irrigate their
fields and citizens staged massive protests. Many were injured and one
demonstrator was killed. The government canceled its contract. Bechtel
is now suing the poorest country in South America at a secret World
Bank tribunal to recoup "lost profits." The press, the public and
citizens of Bolivia have been denied admittance to proceedings.

This is what happens when water is a commodity for sale to the highest
bidder. The people lose their voice -- not only in developing
countries, but also in Stockton, California.

A corporation's chief goal is to make a profit, which is often invested
into new projects oceans apart from the community where the corporation
operates -- or simply pocketed. In Stockton's case, Thames Water likely
will use profits to solve its German parent company's financial woes.
If Stockton retains public control of its water system, those same profits
could have been invested in the community. If and when consumers pay
their first water bill to OMI-Thames, they should question what they're
paying for.

Jane Kelly is the director of the West Coast office of Public Citizen,
a national, nonprofit consumer advocacy organization. She can be
reached at (510) 663-0888, or jkelly@citizen.org. Web site:
www.citizen.org/california.

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