Something In The Water

Karl Mathiesen writes:

Greek activists are warning that the privatisation of state water companies would be a backward step for the country.

Under the terms of the bailout agreement approved by the Greek parliament today, Greece has pledged to support an existing programme of privatisation, which includes large chunks of the water utilities of Greece’s two largest cities – Athens and Thessaloniki.

There is ongoing debate about water privatisation and the role of business. Across Europe a wave of austerity-driven privatisation proposals has led to protests in Ireland, Italy, Greece and Spain.

At the same time, some of northern Europe’s largest cities, including Paris and Berlin, are buying back utilities they sold just last decade.

President of the Thessaloniki water company trade union George Argovtopoulos said a move to a for-profit model would raise prices for consumers and degrade services.

“It’s not any more a democracy or equality in the European Union. It’s a kind of business,” he said, adding that austerity measures that require water privatisation smacked of a “do as I say, but not as I do” approach from Germany.

“We know that in Berlin, just two years ago they remunicipalised the water there, although they paid just under €600m to Veolia [to buy back its stake]. It’s clear that the model of privatisation of water has failed all around the world,” he said.

The German finance ministry refused to comment ahead of a Eurogroup meeting in Brussels on Friday where the third bailout deal looked set to be signed.

But the deputy finance minister Jens Spahn told German breakfast television on Tuesday that sell offs of the electricity and rail sectors had benefited Germans.

“Privatisation isn’t just about raising money, it’s about changing parts of the economy,” he said. The new bailout requires Greece to sell off €50bn worth of public assets. 

Manuel Schiffler, a former project manager for the World Bank and author of the book Water, Politics and Money, said privatisation only made sense where there was a need to improve efficiency.

In the case of Thessaloniki in particular, he said, the water system was relatively efficient.

“I think it’s a privatisation for the wrong reasons. It’s only for fiscal reasons and not in order to improve the services provided by the utility,” he said.

Maude Barlow, the chair of Food & Water Watch, said that years of experimentation with privatisation in developing countries had shown: “The best answer to bad government is good government.

“Don’t hold out for privatisation. It’s not a perfect system and I know Greece has its problems, but privatising their water systems is not a good answer to the crisis there.”

Argovtopoulos’s complaint was backed by public water campaigners in Germany.

“There’s a wave of public repossession of this resource going on in Germany after it sunk in that pricing it can’t be left to profit-seeking boardroom managers,” managing director of the German Alliance of Public Water Management Christa Hecht told Greek newspaper Kathimerini.

“Water is a vital public asset and the Greeks are right to want to keep it that way.”

Germany rebels

In Berlin, 12 years of private ownership saw tariffs rise by nearly a quarter, according to Schiffler. But whether or not privatisation was to blame is disputed.

Schiffler said that the rise was only marginally higher than the German average and that privatisation in Berlin actually lead to positive consumer outcomes through improved efficiency and service.

Even so, a Berlin consortium of Veolia, RWE and Allianz bore the brunt of public price dissatisfaction.

The city bought back its shares in utility Berlinwasser in 2012 and 2013, despite being saddled with very high levels of debt.

The process has been repeated in eight other German cities, including Stuttgart. “[Now] they demand that they do in Greece, exactly what they are undoing in Germany,” said Barlow.

France’s Suez and Veolia, the world’s two largest water companies, will be among those interested in Greece’s utilities if the government’s shares are sold off.

Yet in France – another of Greece’s creditors – as many as 49 cities have bought back their water since 2000.

“It’s a financial colonisation,” said Argovtopoulos. “It’s an attempt for companies in the north of Europe, the rich countries, to own monopolies like water systems, electricity and gas, in the poor southern countries in Europe. It’s a game of power and money.”

Austerity-led changes to water supply have been fiercely resisted across Europe’s most indebted countries.

In Dublin this year, huge protests erupted over plans to directly charge water users who previously paid for water through their taxes. This was seen as a first step towards selling off Ireland’s water supply.

A water privatisation push by former Italian prime minister Silvio Berlusconi was crushed by a 95% referendum vote in 2011. A similar referendum in Thessaloniki last year delivered a 98% vote against.

A 2014 report by the Transnational Institute’s Satoko Kishimoto found that across the world 180 cities had bought back (or remunicipalised) their water supply.

She said this was a response to almost universally higher water prices and the loss of control over a fundamental resource.

“A public water company is much more tightly regulated and obliged to provide water services for all,” said Kishimoto.

Barlow said the austerity-driven privatisation of water supplies was a challenge to the recently enshrined UN right to water.

“Up to five years ago, when people were talking about the human right to water, they meant the global south. Now it’s come to the north,” she said.

In Greece, where the people voted overwhelmingly against a less severe bailout package than the one prime minister Alexis Tsipras is set to sign, there is great anxiety over where the axe will fall first.

In 2014, the pro-austerity Samaras government’s attempt to sell off the Athenian water supply was stymied when the country’s highest court ruled the sale was unconstitutional.

Argovtopoulos said any move by Tsipras to proceed against the will of the public and the ruling of the judiciary would be very poorly received in the frustrated community.

“We expect this government to respect this decision [from the court]. This is a check point for this government. If it passes this red line, it’s going to be like the former government,” said Argovtopoulos.