Brussels` Golden taps leave Europeans Thirsty
Water is the driving force of all nature, Leonardo da Vinci used to say. Without it, life would be extinct. Humans need water to drink, shower, grow crops, make fabric for their clothes and hundreds of other things. The United Nations has declared water a human right. So, how powerful and dangerous would a handful of humans be if they were to decide on the amount, management, quality and price of water the rest of the human population would drink and use?
Water is considered a monopoly, since there is only one water supply network. Still, from France to the Philippines, privatisation is on the move. In Bolivia, a contract forbid children from collecting rainwater into their little buckets since even the clouds were declared private property.
In Europe, the first privatization of water began in the UK under the government of Margaret Thatcher. In the following years, tariffs increased by 67% while in Paris tariffs increased by 260% when private companies Suez and Iolia took over the network management.
Today, mass protests arose over allegations that Greece and Portugal’s creditors - the EU, the European Central Bank and the IMF (also known as Troika) - are pushing both countries to sell their water supplier. A response issued by the European Commission last year to a letter from Food & Water Europe and the European Federation of Public Service Unions, seemed to indicate that it favours water privatisation. “The Commission believes that the privatisation of public utilities, including water supply firms, can deliver benefits to the society when carefully made,” the response said – acknowledging that “at the same time, public access to basic goods must be ensured”.
One municipality in the North of Portugal, Paços de Ferreira, began with the privatisation of water against their citizens’ will. A German public TV video (as a part of the program 'Monitor'), has shown that since privatisation began in Portugal, the water bills have increased by 400%, with many citizens having difficulty paying the bills.
In Greece, the latest economic agreement signed between the country and Troika lenders (also known as Troika memorandum 3) stipulates that the great waterworks of Athens and Thessaloniki are already up for sale to powerful private companies. Environmentalist and river expert Yiorgos Chatzinikolaou says there is neither an economic nor an operational need to privatise water in Greece. “Since it is a public water supplier, EYDAP is not the one that puts the state in the red. In Greece and especially in Athens there are some objective obstacles e.g. the transportation of water is done with the help of large containers through central pipelines,” he says. So, Chatzinikolaou raised the question whether the company that will privatise Public Water Company EYDAP will also buy the containers and the pipelines or only the right to the water management? If the latter is the case, it is of no use for the government to decide on such a move.
Signs of resistance
The initiative ‘136’, born in the summer of 2011, is a citizens’ initiative that opposes the privatization of the Water and Sanitation Company in Thessaloniki, in Northern Greece, and proposes its social management through local-level cooperatives. If one divides the estimated value of public water company EYATH by the number of water meters (namely the number of users), the result is the symbolic number of 136 euros per person. This way, each citizen can pay 136 euros to buy the water company off and alltogether manage it the way they like.
Kostas Marioglou, member of the citizens' movement ‘136’ says it’s wrong for public services such as health, education and water sanitation to show profit. “If all social goods we enjoy through state services, we pay them in order for them to make profit, what’s the point of paying taxes then?”
But why is the EU so interested in privatising the water against the citizens’ will?
Heide Ruhle, a German EU deputy and Member of the European Greens says that the EU Concession Directive is not a directive about the privatisation of water:
“There is no legislation to privatise something. The problem is that legislation is very complex in issues where a public corporation is involved and in many EU countries municipalities cannot deliver the water alone but need other municipalities to have an effective water delivery system. And there the directive comes in to say that a genuine cooperation between them is required but does not define what genuine means. That cooperation has to have joint obligations and joint responsibilities. In the case of water, a bigger municipality delivers the water and the smaller municipalities buy it, but this is not with joint obligations and joint responsibilities. So, there we have a lack of legal clarity. Another problem is that municipalties have founded public entreprises, which are responsible not only for the delivery of water but also for energy as well. And the problem is that the energy market is liberalised. If it comes to water, the directive says that 80% of the average turnover of this entreprise has to be delivered to the municipalities who own it. For energy, the margin cannot be fulfilled by a totally public owned entreprise. Private companies have to come in as well.
Ruhle further says that the public was against this directive but when it first arrives on the table of a European deputy he is hesitating to make a motion of rejection because then he is responsible for the directive. He thinks he can improve it and thus show he is competent and therefore there is no majority to reject it. “It is always the same game”, she says.
In 1999 in Berlin, the public water company was partially privatized. After mass protests, the city began to pay more than the price they sold the water for in order to buy back shares, and this initiative marked a first success story for citizens to get water back.
In Germany, water belongs to the cities and municipalities. But the new plan tabled by the European Commission could oppose this idea. Michel Barnier, European Commissioner for the Internal Market says that each German municipality will continue to decide on their water, but now the European Commission gives it the opportunity to hand the water over to a private partner, which then will be also regulated for the benefit of the consumer.
“Yes, each German municipality can decide on their own”, Ruhle says, “if they deliver the water directly but if they do it through a public corporation or if they do it with an affiliated entreprise which is totally publicly owned, then the directive engrains legal uncertainties and problems. Plus, the European tender creates costs for EU taxpayers. EU citizens have to pay administrative costs, legal advice, which only large expensive law firms can give”.
Heide Ruhle stipulates that water privatisation is expensive for the average EU citizen. “We have looked at different EU member states and have found that private water companies are more expensive than the public delivery of water. Private companies have a guarantee for surplus from the state. In Spain, if you have to privatise and you don’t have the time to negotiate properly, in the end, you get nothing. All in all, our experience shows that the price of water will increase. In Berlin, after the privatisation in 1999, prices went up 35%. Private companies have to deliver money for their stakeholders.”, she says.
Pia Klee, head of Rethink Water, a network of over sixty Danish private companies, organisations and institutions specialised in water efficiency, thinks that the privatisation of water is a good thing as it will help improve efficiency and strengthen the Danish water industry. “It is the right of every citizen to own the water but the supplier should be private. The benefits would be that the service would be more standardised and then it would be much cheaper for the consumers to buy water,” and she adds:
“Water in Denmark is not privatised yet but there is a municipality where they have done it because they have proved savings to do it. It is important to know that the price of water does not reflect the actual cost. In Denmark we have the highest prices compared to any other country because the price reflects all the costs of water supply and waste water treatment. It is very important to have competition in this field.” - Pia Klee
In Greece, where waste water treatment is not there yet, Yiorgos Chatzinikolaou thinks the services that the Greek public water company, EYDAP, provides are not bad enough to sell the water to private hands. “Obviously the services are not that great but not so that the duty fee citizens pay to cover for the water supply and services makes EYDAP unprofitable. On the contrary, if e.g. we now pay 15 euros every two months, when we privatise the water, we will pay more, but the services will not get better because in market competition terms, for a private company to keep its expenses low and make profit, they will have to minimise quality checks to the pipes and the network, so the water that will arrive to our taps will be of worse quality than before. So, the health of Greek citizens will be at stake too”, he says.
Also residents in the area of Paços de Ferreira in Portugal have already complained that water is not as fresh as it used to be. They say that ever since the private company bought their water, the quality is not as good as before.
So, is water now a human right or a million dollar business? “We are negotiating but I am afraid the majority in Brussels will go in the direction of the last point,” Heide Ruhle says.