From: Subject: Water - essential of life or blue gold? | The Socialist 10 December 2008 Date: Tue, 9 Dec 2008 21:11:47 -0800 MIME-Version: 1.0 Content-Type: multipart/related; type="text/html"; boundary="----=_NextPart_000_0000_01C95A42.BEF776C0" X-MimeOLE: Produced By Microsoft MimeOLE V6.00.2900.5579 This is a multi-part message in MIME format. ------=_NextPart_000_0000_01C95A42.BEF776C0 Content-Type: text/html; charset="Windows-1252" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.socialistparty.org.uk/articles/6703 Water - essential of life or blue gold? | The = Socialist 10 December 2008

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Water - essential of life or blue gold?

FRESH WATER IS now talked of in some business circles as 'blue = gold',=20 just as oil is called 'black gold'. But while wealthy investors = enrich=20 themselves from this natural resource, lack of clean drinking = water and=20 sanitation is killing many of the 11 million children under five = who die=20 every year from disease and malnutrition. In these three articles, = ROGER=20 SHRIVES draws attention to some of the issues arising from the = scandalous=20 private exploitation of water, and calls for water supplies and = sewerage=20 to be taken out of the hands of profit-making multinationals. =

T BOONE Pickens, a US billionaire who made his fortune by = aggressively=20 taking over oil and gas companies, is now into water in a big way. = He has=20 bought land in Texas that includes an enormous and ancient = underwater=20 aquifer that he hopes will soon be gushing water for sale. Pickens = justified his move by saying: "There are people who will buy the = water=20 when they need it. And the people who have the water want to sell = it.=20 That's the blood, guts and feathers of the thing".

But local people are afraid that this reckless profit-seeking = approach=20 may be over-tapping the aquifer that takes many years to = replenish. And=20 there is the problem of cost. Already, before Pickens has sold any = of his=20 water, the price of water has doubled in some areas. That may not = at=20 present worry those who can afford it, but those who cannot will = lose out.=20 All these problems are in the USA, the richest country on = earth.

In the world's poorer regions things can get far worse. In = Bangladesh's=20 capital Dhaka, for example, water supplies for the shanty towns = are=20 contaminated by raw sewage, exacerbated by the recent cyclone and = frequent=20 flooding. Contaminated water supplies kill 200 people every hour = in the=20 ex-colonial world. Cholera, a virulent water-borne disease, is now = seen=20 again in countries like Zimbabwe and DR Congo. Private water = companies=20 have no interest in meeting the water needs of such areas.

Fresh water is essential to life - our bodies and our survival = depend=20 on it. In theory, water is available freely in nature though 97% = of all=20 water is salt water and less than 1% of all water is accessible = for=20 consumption.

There is enough water for all the world's people but its supply = needs=20 to be planned if enough free, clean and safe, water is to be made=20 available.

The United Nations (UN) calculates that each person needs five = litres=20 of water each day to survive and another 50 litres for cooking, = bathing=20 and sanitation. However, 1.1 billion people worldwide cannot get = access to=20 adequate, safe water supplies, 2.6 billion people have inadequate=20 sanitation and 80% of illnesses suffered are water-related. The = poor=20 suffer the most; two-thirds of the people who lack water live on = $2 or=20 less a day.

Meanwhile water consumption in homes, industry and agriculture = is=20 rising rapidly, practically doubling in ten years. Population = growth and=20 economic development raised human water demand by six times in the = last 50=20 years.

Where does the water go? Only 10% of water is used for = drinking.=20 Industry uses 20%. The remaining 70% is used for irrigating crops, = so most=20 money is invested there, even though some agriculture has an = enormously=20 negative impact. Farms and industry pollute the water of 100 = million=20 people.

One similarity with oil is that access to water is one of the = major=20 causes of conflict. Water reserves are shrinking in the Middle = East, north=20 China, Mexico, California and many countries in Africa, increasing = the=20 potential for conflict. The UN predicts that by 2025, two-thirds = of the=20 world's population will experience water shortages, with severe = lack of=20 water potentially hitting the lives and livelihoods of 1.8 billion = people.=20 Climate change will worsen things by making patterns of rainfall = and=20 drought far less predictable.

Threat to the environment

WATER PRIVATISATION is a prime example of how capitalism = threatens ruin=20 to the economy and the environment. Maintaining water supplies = needs=20 planning. Water should not depend on financial gain. Over many = centuries=20 in the older countries of capitalism, the workers' movement and = social=20 reformers have fought and laid the basis for largely public-owned=20 systems.

In Britain, capitalist industrialisation created horrific = poverty,=20 exploitation and squalid conditions for the working class, = particularly in=20 the city slums. In the hot summer of 1858, parliament and the = residences=20 of the rich in London were hit by the 'big stink', nauseous fumes = caused=20 by bacteria living in faeces-infected water that was causing = outbreaks of=20 cholera in the slums. To replace London's overflowing cesspits, = immense=20 public works were started such as the capital's incredible = sewerage=20 system, built at public expense and at considerable cost of = workers'=20 lives.

Even in the heyday of laissez-faire capitalism, when the = markets were=20 supposed to solve everything, politicians, municipal authorities = etc, knew=20 they would wait for ever for the market's 'hidden hand' to invest = in water=20 services when profits could not be made. Water and sewerage became = a=20 responsibility of government.

In systems under a degree of public control, the priorities = were=20 keeping water clean, free from contaminants from industry and = agriculture=20 and free from disease. The aim was to prevent the possibly = poisonous=20 effects of drought and flooding, to stop wastage and leaks, to = encourage=20 industry and individuals to use water more efficiently; and where = needed,=20 to expand the sources of water available.

New problems have arisen or grown since then such as = contamination by=20 salt, or by fertiliser and pesticide residues, percolating down = into=20 aquifers. But other toxic waste, from human pathogens to arsenic, = has been=20 found in US water supplies.

About 20 million Americans have perchlorates, an ingredient of = rocket=20 fuel, as a contaminant in their water supply. This chemical can = disrupt=20 the working of the thyroid gland and cause cancers.

This year around 250,000 people in Northamptonshire and 45,000 = in=20 Gwynedd and Anglesey were told to boil tap water for drinking, = after tests=20 found the bacterium Cryptosporidium.

The priorities for maintaining pure water have never been more = vital. A=20 planned, international approach is urgently needed. However, other = priorities have been reintroduced into the equation by water = privatisation=20 - those of private profit, which charges higher and higher prices = for this=20 basic necessity of life.

Capitalism is based on production for profit. Competition, = which drives=20 all companies to try to pay lower wages, also tends to lead to=20 environmental degradation out of fear that other companies will = disregard=20 the environment and reap higher profits. This is particularly true = when=20 booms turn into slumps. What is more, as clean drinking water gets = scarcer, its value as a commodity rises.

At the turn of the millennium Fortune magazine said that water = is the=20 best 'investment sector' of the century. Water has again become a=20 capitalist commodity to be bought and sold for profit. As water = problems=20 increase, and desperate authorities have to drill a kilometre into = the=20 ground to get to water, a socialist planned approach to water, = involving=20 the ordinary people of the world, is needed more and more.

End water privatisation

IN 1989 the Thatcher government privatised water and sewerage = in=20 England and Wales, almost uniquely, transferring the whole system=20 completely into the private sector. Before 1973 water and = sanitation=20 services in England and Wales were provided by water undertakings = and=20 sewage disposal authorities. The Water Act 1973 established ten = regional=20 bodies to regulate and maintain water utilities.

The 1988 Water Act turned these bodies into private companies = owning=20 the entire water system, including reservoirs, water and sewage = treatment=20 works etc. The Act gave them exclusive 25-year concessions for = sanitation=20 and water supply and 700,000 kilometres of mains and sewers, = enough to=20 reach to the moon and back.

These firms became, in effect, private monopolies. The water = companies'=20 debts of over =A35 billion were written off before privatisation = and they=20 were given a 'green dowry' of =A31.6 billion. Thatcher's = government offered=20 the companies for sale at 22% below their market value and, as an = extra=20 gift, gave special exemption from paying taxes on profits.

Keep the profits flowing

Under a public system, even under bureaucratic control, the = main=20 priorities were keeping the water flowing. Most residential areas = had an=20 inspector on call to deal with even the smallest leak. Under=20 privatisation, the main concern was keeping the profits flowing. = Directors=20 were given huge salaries and told to treat water as a commodity = and their=20 business as maximising profit.

The privatised water companies hauled in colossal sums from = this=20 bargain basement deal; profits rose by 147% between 1990 and 1998. = In that=20 same period, consumers paid =A328 billion to the water companies - = =A310=20 million of it from increased water prices. Meanwhile =A39.5 = billion was=20 profit, with high dividends being distributed to shareholders. On = average,=20 prices rose by over 50% in the first four years and have continued = rising=20 ever since. The companies' operating profits accounted for almost = all of=20 this, pre-tax profits doubling in the first year of privatisation, = and=20 growing by 142% in real terms over the next eight years.

In 1994 12,500 households were disconnected from water supplies = as they=20 couldn't pay. However, a six-fold rise in cases of dysentery led = to new=20 laws in 1999 forbidding water cut-offs.

Privatisation led to job cuts of almost 25% and the bosses = tried to=20 deny their workers the pension rights won from the previous public = sector=20 employers. By 2005, Thames Water employed just 39 workers to look = after=20 all London's sewers compared to 900 in 1955. Heavy rains in 2004 = flushed=20 out 600,000 tonnes of raw sewage into the Thames, causing attacks = of=20 gastroenteritis. A profit-driven agenda is a cost-cutting agenda = and=20 fundamentally incompatible with delivering a safe affordable = service.

In 2001-2002 the private water sector outperformed the = Financial Times=20 All Share Index by 58%. Water profit margins are typically three = or four=20 times as great as the margins of water companies in France, Spain, = Sweden,=20 or Hungary.

Falling investment

BEFORE PRIVATISATION, the level of capital investment in the = water=20 industry had been accelerating, but the privatised companies' = capital=20 investment levelled off or fell. The 14 smaller water-only = companies=20 became owned by multinationals, attracted by the promise of = super-profits,=20 as did half the water and sewerage companies.

Between 1993 and 1998 water mains categorised as being in "poor = condition" increased from 9% to 11%. Water quality suffered, with=20 increased levels of contaminants. Drought and floods, increasing = due to=20 global warming, also showed the privatised system's serious = shortcomings.=20

The privatised water firms raise some of their own money but = also=20 borrow from the banks. Until the recent economic crisis, they kept = on=20 making healthy profits and dividends for their shareholders, = benefiting=20 from low interest rates and a very favourable regulatory = settlement with=20 Ofwat, the toothless water 'regulator'.

In this profit-flowing situation, and under pressure from irate = customers, some water companies boast that they have started doing = a=20 little of what they promised at privatisation - investing in = updating=20 Britain's ageing water infrastructure. But who is paying for it? = Midland=20 utility Severn Trent was fined after an investigation by Ofwat = showed that=20 its management had lied about how well it had tackled leakages and = then=20 used the information to support inflated bills. Customers may have = paid=20 out about =A342 million more than they should have done.

In 2006 Thames Water, the water monopolist for England's = capital city=20 was losing 200 million gallons of water each day, disappearing = into the=20 earth in huge leaks due to chronic lack of investment in the=20 infrastructure. That summer, it imposed a hosepipe ban after = increasing=20 profits by nearly a third and distributing a fortune in dividends. = Now=20 Thames Water's website boasts of working on repairs in 450 streets = a week=20 but again the customer is paying through higher tariffs.

The feverish takeover activity in 2007 showed the water = industry still=20 had attraction for investment funds, but deepening recession and = the=20 prospect of the next Ofwat pricing review will have reduced = that.

When they negotiate a prices deal with Ofwat early next year, = water=20 firms will be begging for a price that guarantees high profits. = There is=20 an increased likelihood of debt amongst water firms, that spent = large=20 amounts on acquisitions and mergers during the boom that went = bust.=20 Capital expenditure may now suffer and the firms may even go in = for=20 asset-stripping.

Bills are expected to rise even faster than expected over the = next five=20 years as the credit crunch makes it harder and dearer for = companies to=20 raise the =A327 billion of investment they need to rectify the = creaking=20 water infrastructure and meet new directives on leaks from the = European=20 Union.

The danger we face is shown by the fact that Kelda, the company = that=20 owned Yorkshire Water, was bid for just over a year ago by a = consortium=20 that included Citigroup, the huge US bank which has since failed=20 abysmally.

Don't give the water companies yet more time to fail. = Privatisation of=20 this most vital of all utilities should be reversed. Water and = sewerage=20 provision should never have been privatised in the first place. It = is time=20 to bring these industries back into public ownership but this time = under=20 the democratic control and scrutiny of the working class.

Growing opposition around the globe

PRIVATISED WATER worldwide is dominated by two hugely = profitable French=20 multinationals, Suez and Veolia (formerly Vivendi), that have been = looking=20 for international investment possibilities. They control 80% of = the=20 private water market and have around 300 million customers.

But, as one of the largest companies in this $200 billion = industry,=20 Suez has faced opposition to its operations in South Africa, the=20 Philippines and Uruguay and had water contracts cancelled in = France, the=20 United States, Argentina and Bolivia. In 2004, Uruguay's = parliament voted=20 by a 62% majority against water privatisation. In the Netherlands = in 2003,=20 laws preventing any private company supplying water services to = the public=20 were passed. But the private water companies keep on trying.

The council in Paris is deciding whether to create a municipal = water=20 authority from 2010 to cover all water operations from production = to=20 distribution. Suez Environnement and Veolia Environnement (spun = off from=20 their massive parents) could lose as much as 89 million euros, = causing=20 jitters on the Paris stock exchange.

In South Africa, over ten million citizens have had their water = shut=20 off since the World Bank's "cost recovery programme" was imposed. = Water is=20 only provided if the water company can cover its cost and make a = profit.=20 After privatisation, in Kwazulu Natal people could no longer = afford to buy=20 water, sanitation services were shut off because of non-payment = and local=20 people drank from streams. The ensuing cholera outbreak hit over = 200,000=20 people, killing more than 250. Since then, there have been many = protests=20 against these attacks.

In 2000, at the order of the World Bank, Bolivia's government = leased=20 its water supply to the US multinational, Bechtel, which was = promised a=20 16% average annual return on investment. In the city of = Cochabamba, the=20 price of water rose rapidly to a third of the minimum wage.

After access to water was denied for many, a massive popular = uprising=20 to throw out Bechtel shut the city down for a week. Bolivia's = government=20 declared the contract with Bechtel void although this water = multinational=20 tried to sue, through the World Bank, for millions of dollars = compensation=20 for loss of "potential profits."

The anger shown by workers and the poor in these examples shows = that a=20 fight-back can be waged against the multinational water giants. = That fight=20 needs to be linked internationally, to create maximum pressure for = water=20 supply systems based on the needs of the majority of people = worldwide,=20 rather than on profit.

Also in The Socialist = 10 December=20 2008:

Stop job=20 cuts

Socialist Party NHS=20 campaign

Save our = NHS

International = socialist news and=20 analysis

Greece in = widespread=20 revolt

Socialist Party=20 editorial

Welfare = 'reform' -=20 fight these attacks

Crisis = loans

Workplace news and=20 analysis

PCS gains = steps=20 towards settlement

Chicago = workers=20 occupy factory

Militant = response=20 needed at ex-Visteon plant to save jobs

South = Wales job=20 losses

The = National Shop=20 Stewards Network is organising a meeting for car workers and those = in=20 ancillary industries:

Environment and=20 socialism

Water - = essential of=20 life or blue gold?

Home = | The Socialist = 10=20 December 2008 |=20 Join=20 the Socialist Party

Subscribe&nb= sp; =20 | Donate &nbs= p;=20 | Bookshop=

Related=20 links:

Water:

Cuts and=20 privatisation threaten new floods

Water = quality threat=20 to health

Sudan's = poor paying=20 the price for oil

Water = 'regulators'=20 hide real prices

News in=20 brief

Privatisation:

Crisis = loans

Coventry = fights post=20 office closure

Lewisham = housing:=20 Arguments against privatisation win

Children:

Social = workers=20 demand proper resources

In = brief

Profits:

BP - = swimming in oil=20 profits

What is=20 short-selling and will the ban have any effect?

Privatised:

The = privateers are=20 taking over

Overcrowded = prisons,=20 overworked staff

Water -=20 essential of life or blue gold?

India and=20 Pakistan conflict

Crisis-hit=20 capitalism fears prospect of revolution

Venezuela=20 elections: Ch=E1vez wins victory but opposition gains = ground

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World food=20 crisis: A systemic failure of capitalism

A = political=20 awakening propels Obama to victory

1918 = revolution: When German workers entered the stage of = history

Are = we heading=20 for a new Great Depression?

Keynesianism=20 now trumpeted

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Casino=20 capitalism's crisis continues

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MARGIN-BOTTOM: 6px; FONT-FAMILY: = Arial } .ul5 { MARGIN-TOP: 6px; FONT-SIZE: 10px; LIST-STYLE-IMAGE: = url(Images/furniture/triangle1.gif); MARGIN-BOTTOM: 6px; FONT-FAMILY: = Verdana, Arial, sans-serif } li5 { MARGIN-TOP: 6px; FONT-SIZE: 10px; LIST-STYLE-IMAGE: = url(Images/furniture/triangle1.gif); MARGIN-BOTTOM: 6px; FONT-FAMILY: = Verdana, Arial, sans-serif } .ul6 { LIST-STYLE-IMAGE: url(Images/furniture/smallstar5.gif) } li6 { LIST-STYLE-IMAGE: url(Images/furniture/smallstar5.gif) } .yellow { BORDER-RIGHT: white 5px solid; BORDER-TOP: white 0px solid; BACKGROUND: = #ffffcc; BORDER-LEFT: white 20px solid; BORDER-BOTTOM: white 5px solid } .hr1 { MARGIN-TOP: 12px; FONT-SIZE: 1px; MARGIN-BOTTOM: 12px; WIDTH: 80%; = COLOR: #ff0000; TEXT-ALIGN: center; noshade:=20 } .td1 { BORDER-LEFT: #c0c0c0 1px solid; BORDER-BOTTOM: #ffffff 3px solid; = HEIGHT: 5px; BACKGROUND-COLOR: #f1f4f8 } .td0 { BORDER-LEFT: #c0c0c0 1px solid; BACKGROUND-COLOR: #ffffff } .tdhd { BORDER-LEFT: #c0c0c0 1px solid; BORDER-BOTTOM: #ffffff 3px solid; = BACKGROUND-COLOR: gold } .left { FONT-SIZE: 11px; MARGIN: 4px 3px 4px 4px; COLOR: #202020; FONT-FAMILY: = Verdana, Arial, sans-serif; TEXT-DECORATION: none } A.left:visited { COLOR: #303030 } A.left:hover { COLOR: #000000; TEXT-DECORATION: underline } A.left:active { COLOR: #000000; TEXT-DECORATION: underline } .leftb { FONT-WEIGHT: bold; FONT-SIZE: 11px; MARGIN-LEFT: 3px; COLOR: #202020; = MARGIN-RIGHT: 3px; FONT-FAMILY: Verdana, Arial, sans-serif; = TEXT-DECORATION: none } A.leftb:hover { COLOR: #202020; TEXT-DECORATION: underline } .menulitewhite { FONT-WEIGHT: normal; FONT-SIZE: 11px; MARGIN: 0px; COLOR: #ffffff; = TEXT-INDENT: 0px; FONT-FAMILY: Verdana, Arial, Helvetica, Sans-serif; = TEXT-ALIGN: left } A.menulitewhite:hover { COLOR: #ffffff; TEXT-DECORATION: underline } ------=_NextPart_000_0000_01C95A42.BEF776C0--