As benign as Lucifer: The privatization of water

By Richard Raznikov / The Rag Blog / February 9, 2012

Beginning about 20 years ago, it dawned on the bankers and some major corporations that if oil was a lucrative commodity water would be even more so... The trick was how to take it away from the people and sell it back to them.

SAN RAFAEL, California -- There hasn’t been much rain this season where I live. Personally, I don’t mind much. I like sunny days, summer weather, dry fairways at San Geronimo. The deer are not very happy, having to spend more time on my street than they’d prefer but they’ve had to come down from the hills a bit looking for food.

Where I live the reservoirs are still mostly full from the last winter’s rain and we will not experience any delays or service interruptions. I pay for water every month, the local water district sends a bill, costs maybe 30 bucks if everybody showers a lot and there are loads of clothes.

Drinking water, all I have to do is open the tap.

I take water for granted, did even during drought years when we recycled water for the garden and to flush toilets. Shower with a friend, the saying went, and we did, although that didn’t really seem to save much water.

Every year about 2 million people, most of them children, die from lack of water, either directly or indirectly through lack of sanitation; that’s twice as many people as the United States killed in Iraq. Estimates of international agencies put the number at 1.1 billion who do not have access to enough water to drink, cook with, or properly bathe.

Water in Marin County is a public utility. There’s a water board elected by the voters and various projects from time to time. For most of my life I was not even aware that water might be a problem for some people, blissfully wrapped in the Bay Area cocoon. What I’d heard seemed to be passing news bulletins. Droughts somewhere, I wasn’t sure. Relief efforts.

I’ve also been ignorant about nearly everything else in the world. I don’t think I really got how deeply evil some corporations were. I didn’t understand how money worked, nor what the World Bank was about, nor the International Monetary Fund. They sounded benign. They are about as benign as Lucifer.

I certainly didn’t understand how the World Bank and some huge corporations were, in concert, working to kill millions of people by depriving them of access to water. I do now.

Of course, their public relations departments would go berzerko at such a charge. For my opinion on public relations departments, see Bill Hicks on YouTube.

We’re helping all of those people, the World Bank would say. We’re sponsoring important developments and laying pipe all over the place. Without us, hell, that water would just lay there underground not doing anybody any good. That’s not only what they would say, it’s what they do say.

If you were naive, like I was, you might think that water, being the one single necessity of life without which you’re flat-out dead, and being a substance which comprises 70% of the surface of the planet, and which falls from the sky and runs in rivers above and below ground, you might think that water is a common property, owned by the human race. That’s pretty much been true for a couple of thousand years.

It has long been accepted throughout the world that, according to Indian author Vandana Shiva, “water must be free for sustenance needs. Since nature gives water to us free of cost, buying and selling it for profit violates our inherent right to nature’s gift and denies the poor of their human rights,” and “water is a commons... it cannot be owned as private property and sold as a commodity.” Water is the basis of all life. It is preposterous that it might be owned and that some may be thereby deprived of it.

Thanks, however, to the World Bank, which is actually just the operative arm of the largest U.S. banks and whose policies can bring down governments -- c.f. Italy and Greece in the past few months alone -- the commons argument is quickly dying. Most Americans, being inhabitants of a nation which does not generally have these worries, are unaware of this.

Beginning about 20 years ago, it dawned on the bankers and some major corporations that if oil was a lucrative commodity water would be even more so. Everyone had to have water, even if they rode bicycles to work or took public transit. The trick was how to take it away from the people and sell it back to them.

But with the help of the World Bank and friendly governments such as the U.S. under Bill Clinton, stipulations could be included in trade agreements and in loan conditions to developing countries.

Programs grew quickly in India, Bolivia, Chile, Argentina, Nigeria, Mexico, Malaysia, Australia, and the Philippines. They’ve now spread to Canada, England, Turkey, Colombia, Guatemala, Morocco, New Zealand, South Africa, El Salvador, and even China.

The impact has been to dramatically, and fatally, increase the cost of water, especially to the poor and for small agriculture, while simultaneously degrading its quality. Corporations such as Coca-Cola, Bechtel, Nestle, Pepsi-Cola, and the French company, Suez Lyonnaise des Eaux, have bought off local governments, imposed horrendous conditions, and in some cases murdered people who have tried to stop them.

Maybe you’re thinking, Coca-Cola? How can that be? Things go better with Coke! But no, they actually don’t. And Bechtel? Why, that’s a Bay Area company, voted near the top of employers people like working for. I mean, it’s not as though we’re talking about Halliburton here.

Everywhere water privatization has gone there are stories of widespread misery. Quite literally, every country listed above is a horror story, with the exception of Argentina because the government there, and the people, kicked Suez’ sorry ass out (along with the World Bank). But we’ll focus on just two or three. Whatever I don’t get to in this column -- I’ve got more than 50 pages of notes and printouts -- you can find by typing in the name of a country, water, and the World Bank. That ought to do it.

The first water privatization story I ever heard was out of Bolivia. It seemed that Bechtel, somehow, had gotten hold of the country’s water supply. I didn’t understand how that was possible, plus I’d never associated Bechtel, which is mostly a construction outfit once run by Reagan’s pal (and Secretary of State) George Schultz, with water. What could that possibly be about? As it happens, Bechtel is involved in over 200 water and wastewater projects in more than 100 countries around the world.


If you were naive, like I was, you might think that water, being the one single necessity of life without which you’re flat-out dead, and being a substance which comprises 70% of the surface of the planet... is a common property, owned by the human race.

Cochabamba, Bolivia, is a semi-desert region. Water is a scarce precious resource. In 1999, the World Bank told Bolivia that in order to obtain a much-needed $600 million in international debt relief, it would have to privatize Cochabamba’s public water system, giving the concession to a Bechtel subsidiary, International Water.

The Bolivian Congress caved in, passing the ‘Drinking Water and Sanitation Law’ in October of 1999, ending government subsidies to municipal utilities and authorizing privatization. International Water took over in Cochabamba. The minimum wage is less than $100 a month, but IW raised the price of water to an average of $20 per household. The impact was immediate: many poor families had to choose between food and water.

The people rebelled. In January 2000, peasants formed the Coalition in Defense of Water and Life and through mass mobilization shut down the city for four days. Within a month a million Bolivians marched to Cochabamba and stopped all transportation in the city.

The Bolivian government pretended to give in, promising to roll back water prices; it never did. In February, the Coalition organized a peaceful march demanding that the October 1999, law be repealed, the water contract terminated, the inclusion of ordinary people in drafting a resources law, and the cancellation of ordinances permitting privatization. The government responded by imposing martial law.

The media was censored, activists were arrested, and several protesters, including a 17-year-old boy shot in the head by soldiers, were killed.

But the people would not bend. Finally, after demonstrations which rocked the country, the government was forced to revoke the privatization legislation. The water company (and its debts) was surrendered to the people, and the Coalition held public hearings to start democratic management and planning.

Bechtel, and its allies inside the government, refused to quit. They harassed and threatened activists and leaders of the Coalition. In November 2001, Bechtel filed a lawsuit before the International Center for the Settlement of Investment Disputes, which happens to be located on the grounds of the World Bank in Washington, D.C. The ICSID holds its sessions in private. The public and the media are barred from the proceedings.


I’ve written before about how the world’s largest banks control nations by forcing them into positions of debt from which they can’t escape. It’s a simple but elegant mechanism. Simply loan money to a government which desires to -- choose one or more of the following –– steal it, give it to their friends, buy weapons, build infrastructure, and then enjoy the leverage you’ve got when they can’t quite service the debt.

It’s how Spain was able to crush Haiti forever on the imposition of a debt for Haitian independence. It’s how nearly all Latin American countries have been controlled for decades, making deals to stave off bankruptcy by borrowing ever greater sums and, for the dubious privilege, sacrificing the public welfare and in many cases democracy.

It’s how the World Bank and the IMF were able to impose on Italy and Greece so-called "austerity measures" which screw the poor, privatize public resources, and install as President in each country a recent big shot from Goldman Sachs by way of the IMF.

That’s why the Kirchners sent such shock waves through the world’s banking giants when they got themselves elected in Argentina and promptly told the World Bank to go fuck itself.

But for the most part, in most places on earth, regardless of the people living there, the unholy alliance between multinational corporations, the World Bank, and governments with flexible ethics has produced vast profits for the principals and increasing misery for the people.

India is another classic example, although there it is Coca-Cola, which has essentially appropriated the water needed for agriculture, which is despoiling large portions of the country.

Although its public relations whores have recently described the corporation as “a leader when it comes to environmental issues,” the facts are quite different. One classic example would be in the Plachimada community in the state of Kerala. Coke opened a bottling plant there in 2000; the community immediately suffered from chronic drought and polluted water. The reasons are hardly in dispute. As Indian journalist Arjun Sen wrote in 2003,

Three years ago, the little patch of land in the green, picturesque rolling hills of Palakkad yielded 50 sacks of rice and 1,500 coconuts a year. It provided work for dozens of labourers. Then Coke arrived and built a 4-acre bottling plant nearby. In his last harvest, Shahul Hameed, owner of the small holding, could manage only five sacks of rice and just 200 coconuts. His irrigation wells have run dry because Coke draws up to 1.5 million litres of water daily through its deep wells...

To make matters worse, the bottling plant was producing thousands of gallons of toxic sludge and, as the BBC reported, disposed of it by selling the carcinogenic material to local farmers as "fertilizer."
That’s a “leader when it comes to environmental issues”? Christ, who finished second?

Needless to say, many people in India have fought against the Coca-Cola operations but they’ve been unable to overcome money and vast political resources of the corporation. The company is able to extract groundwater free of charge, except for a small fee for discharging wastewater. It makes exploiting India too valuable to give up. About a dozen years ago, the cost of industrial water in the United States was roughly $5 per 10,000 litres. In India, the price was three cents.

By several reliable estimates, there have been in excess of 25,000 suicides by farmers over the last decade, a majority of these in the western and southern states, no longer able to feed their families because Coca-Cola has destroyed their farms.

Popular protest finally forced the closing of the Kerala plant, at least temporarily, but the corporation simply shifted its operations to other areas of Southern India. Other companies besides Coca-Cola have begun to grab a piece of the action, all of this facilitated by the World Bank, which is promoting the privatization of water in India and all over the world.

The northern territories are also at risk. Another bottling plant, which opened in 2000, is located in Mehdiganj, where company extraction has caused water levels to fall more than 6 meters. Crops have failed and livelihoods have been destroyed. Local activists throughout the country, trying to rally opposition, have discovered that Coca-Cola, in league with the wealthier segments of the polity, have simply rerouted pipelines to bypass villages entirely.

“What we see happening with Coca-Cola has been happening all over the country,” says Tom Palakudiyil of Water Aid. “The rich (are) able to acquire powerful pumps and extract more and more water with no limits.”

It is not only Coca-Cola sucking up the Indian water. In partnership with Enron -- yes, that Enron -- it operated the Dabhol plant and is involved in water privatization in Coimbatore/Tirrupur as part of a consortium with others.

As internet journalist Tom Levitt reported two years ago,
Sitting at the bottom of the pile are the small-scale farmers. Without adequate water supplies, the 70 percent of Indians who make their living from agriculture have nothing. The Bundelkhand region in northern India is a typical example of what happens when the water runs dry. Although never a lush region, the area has now completely lost the ability to sustain small-scale agriculture.
Many thousands of villages have been unable to get water even from tankers and have been abandoned completely. The entire society is being violently altered by what amounts to wholesale theft of the nation’s water. And, of course, larger forces are prepared to “help” those most in need.


One of the powerful forces driving the growing problem worldwide has been the World Bank which, in late 2009, had the astonishing temerity to say that “under current practices” one-third of the world’s population would have access to only half the water they need by the year 2030. The report then recommended that $50 billion be invested annually by governments and business in water management projects.

Coca-Cola, which uses enough water each day to meet the entire world’s water requirements for 10 days, enthusiastically endorsed the World Bank report.

To fully appreciate how powerful the World Bank is and how significant its "recommendations," consider that it is able to wave large sums of money in front of political leaders in any country, offering not only cash which may or may not be diverted into personal bank accounts but financing for massive projects which both enrich major contractors and, for a while, please a lot of people.

The debt incurred, as you know from periodic references on the generally useless mainstream U.S. media, cannot be paid back. Many governments don’t much care at the time of the original loan, of course, because by the time the interest becomes onerous those politicos will be retired on their estates.

Any country faced with a large debt, and there are many, is forced by the IMF and the World Bank to privatize water. It is a common demand of these entities as one of the conditions of a loan. They also insist on creation of policies which guarantee “full cost recovery” and the elimination of internal government subsidies. In Ghana, for example, thanks to the World Bank, the forced sale of water at "market rates" required the poor to spend up to half of their earnings on water.

This is worldwide, it is growing, and it is killing people.

Add to this equation what happens when nations do not wish to borrow themselves into a hole. They mysteriously find themselves in wars. Ask Libya. And in the aftermath of wars, there is enormous wealth to be made.

Consider again our friends at Bechtel. Being run out of Bolivia has not daunted them, no indeed. Within a month of the 2003 U.S. invasion of Iraq, Bechtel acquired a $680 million contract for "rebuilding" the country we were about to destroy.

As described by Vandana Shiva in her article, "Bechtel And Blood For Water: War As An Excuse For Enlarging Corporate Rule," "The U.S. led war first bombed out Iraq’s hospitals, bridges, water works, and now U.S. corporations are harvesting profits from ‘reconstructing’ a society after its deliberate destruction. Blood was not just shed for oil, but for control over water and other vital services."

Our old friend George Schultz, board member and senior counsel to the company where he once served as president, wrote a September, 2002, newspaper OpEd in which he was a positively thrilled cheerleader for the destruction yet to come: “A strong foundation exists for immediate military action against Hussein and for a multilateral effort to rebuild Iraq after he’s gone.” How’s that for putting a price tag on human misery?

Now, let’s talk about Mexico.

The situation in Mexico is especially dire, and its impact is of course felt directly by the United States since it impacts the desire of people to cross the northern border illegally, and contributes, with NAFTA, at least indirectly, to the drug wars near the border.

Coca-Cola is big in Mexico, very big. It is the number one Coke consuming nation in the world. Its impact on the water supply has been catastrophic. The company spends more than $500 million annually on advertising. It also imposes quotas on small shop owners in exchange for promotional items such as tables, chairs, and refrigerators with the Coke logo.

“Water’s been a public resource under public domain for more than 2,000 years,” says attorney James Olson, who specializes in water rights. “Ceding it to private entities feels both morally wrong and dangerous."
At the same time, and not coincidentally, 12 million people have no access to piped water and 32 million have no access to proper sewage. Coca-Cola’s resource monopoly simultaneously creates a scarce water supply and an abundant supply of Coke. The country is also the second largest consumer of bottled water, much of it sold by guess who.

The process of making Coke requires at least two liters of water for each liter of the finished product; some estimates are as high as five-to-one. The business end is covered by dozens of water concessions from the Mexican government which handed the company the legal right to take water from, as of 2008, 19 aquifers and 15 rivers, many of these in indigenous territories. They have also picked up the right to dump toxic waste in at least eight different public water sources.

The process of privatization has nearly swallowed the entirety of the country’s water. Yet the country hasn’t received much in return from Coca-Cola. In 2003, the company paid $29,000 for water concessions in the entire nation; in 2004, their profits from the bottling plant in San Cristobal de las Casas, the largest in the country and second largest in the world, alone reached $40 million.

An internet article by journalist Monica Wooters in 2008 described the situation in Chiapas, which gets nearly half of Mexico’s total annual rainfall and contains a large percentage of its surface water.

The bottling plant is located at the foot of Huitepec, a mountain overlooking the city, protected in part by a Zapatista ecological preserve. Huitepec is on top of an enormous underground aquifer, which is the key source for Coca-Cola’s water for the plant. In 2004, the company used 107 million liters from this aquifer, enough to supply water to 200,000 homes -- more homes than currently exist in San Cristobal.

There’s no actual record of the size of the aquifer, and the company, if it has estimates, is not saying, however the company’s operative subsidiary, FEMSA, has begun looking for new water sources in Chiapas. In addition, the waste created by the plant is often toxic, containing lead, cadmium, and chromium. The city has not imposed controls on dumping, nor does the central government, and there is now a risk of contaminating the water table.

The central Mexican government does not recognize indigenous communities as having any rights to participate in the legal proceedings concerning water concessions. Coca-Cola, via FEMSA, has achieved what is essentially a monopoly over water rights. In 1996, the Zapatista rebellion, which roiled the country for a considerable time, succeeded in gaining a measure of local voice in water decisions, however in 2001 the legislature overturned the agreements which the central government had made.

The impact around the world of the privatization of water is calamitous.

In each of the countries cited earlier, there are similar stories about privatization: the destruction of agriculture, the escalating cost to the poor, the concomitant rise in associated diseases and infant mortality. In many places, the private corporations, in league with corrupt, venal governments, simply rob inhabitants of one of the necessities of life. In many places, corporations are assisted by extortionate lending practices of the World Bank and International Monetary Fund. In many of these, the United States and its State Department play significant roles.

Privatization of water is making inroads in the United States. In Sitka, Alaska, which is home to one of the world’s most spectacular lakes, the Blue Lake Reservoir holds trillions of gallons of water so pure it does not need any treatment.

Now, under the auspices of True Alaska Bottling and S2C Global, hundreds of millions of gallons are being siphoned into tankers and shipped to Mumbai, and from there to several cities in the Middle East. Water is being turned into a global commodity.

“Water’s been a public resource under public domain for more than 2,000 years,” says attorney James Olson, who specializes in water rights. “Ceding it to private entities feels both morally wrong and dangerous.” He may be right on both counts. Commodities are sold to the highest bidder for the biggest profit. They have nothing to do with human needs or even human survival.

A former vice president of the World Bank said, “The next world war will be fought over water.” If he’s right, he’d better be well-armed because most of the rest of the world will be looking for sons of bitches like him.

[Richard Raznikov is an attorney practicing in San Rafael, California. He blogs at News from a Parallel World. Find more articles by Richard Raznikov on The Rag Blog.]