Las Americas

Sometimes I wish that I had not smoked quite so much pot in college because when real life turns suddenly weird, that flipped-out “How-did-I-get-here?” sensation will still kick in. Like, for example, on the morning of June 19, at the opening of the World Bank Third Annual Conference and Expo: “Leveraging Cross-Sector Partnership in a Global Economy.” On that day, the atrium of the World Bank was decked out with red banners proclaiming: “SHARE: people, perspectives, skills, knowledge and learning,” together with illustrations of each concept. The pictures included sequential large-scale projections on the auditorium wall of a crowd of nondescript multiethnic faces, a picture of a bridge, a bull’s eye with an arrow in it, a sketch of what appeared to be a brain, and the ABC’s. In the background John Lennon repeatedly sang “Imagine.” You know, “Imagine no possessions, I wonder if you can…something, something, no greed or hunger, a brotherhood of man…Imagine all the PEO-ple, etc.”

This was just the background for a World Bank show where, over the course of the morning, we learned what cross-sector partnership really means: large corporations, in tandem with the World Bank’s access to taxpayers’ billions, will do what they want with the assets and peoples of developing nations. Because the World Bank feels that “…the almost five billion people who live in emerging economies deserve the benefits that an effective and competent global development partnership can provide.”

One of the best ways to deliver these benefits, we learned that day, is through Public-Private Partnerships (PPPs). This is not the Sister Cities program, though, or an exchange of high school students or anything like that. At about 10:30 A.M., Mr.Gérard Mestrallet, the Chairman and CEO of Suez, an incomprehensibly large corporation that “delivers the essentials of life,” presented the real deal. Typically, the opening statements for a World Bank conference would be delivered by James Wolfensohn, the World Bank President, but since the day represented a cross-sector partnership, Mr. Mestrallet did the honors on behalf of the Bank’s corporate sponsors.

Jamal Saghir, the director of the Energy and Water Department of the World Bank, introduced the Suez CEO, acting more or less like an especially obsequious shoe salesman when directly addressing him. This is because Mr. Mestrallet’s corporation controls such companies as ONDEO (the water solutions provider–”passionate, caring, flexible and reliable”), Tractebel (“covering the complete energy value chain”), and SITA (“waste services involving cleanliness and flawless professionalism”). Altogether the Suez group generates nearly US$ 40 billion in revenues each year, and Monsieur Mestrallet is therefore someone you want to have on your side.

He appeared that morning to flog PPPs in water services and to declare: “Water for all, quickly! It is attainable. We all have an interest in finding solutions now. The world needs the efforts of each and every one of us to declare a ‘Water Truce.’ Opposing economic and ideological standpoints need to be reconciled so that they cease to be so very detrimental to the interest of the underprivileged around the world.”

Reconciling opposing standpoints, of course, means agreeing with Mr. Mestrallet’s perspective and endorsing the profit-seeking motives of Suez–er, ONDEO–in developing water resources. Suez itself has a long and checkered history in the developing world, starting with Ferdinand de Lesseps and the famous Canal. The canal could be seen, in fact, as an early and crude form of a PPP: Public money paid a private company to build the Suez Canal so that other private companies and a couple of kings could sack the continent of Africa more quickly and cheaply.

Mr. Mestrallet and Suez do not like to think of their enterprise in this way. They are frustrated by the tiresome debates about the dangers of private companies controlling the national infrastructures of poor countries. Privatization, as a term, has acquired a negative and avaricious connotation, much like the word “extortion,” and they are anxious to declare themselves against this grasping and parasitical practice. Suez does not want to privatize water. Water is a public good that belongs to everyone. Suez/ONDEO wants only to control and operate water services. Through a PPP, the government of country X, let’s say Argentina, retains ownership of water and infrastructure; Suez/ONDEO simply operates the services. The government contracts out maintenance of infrastructure, administration, and billing to the private company, but retains ownership and regulatory functions. The government is thus always able to protect the public from the possibility of plunderous practices by a monopoly service provider.

There are two problems here. First of all, water in its natural state, that is, just lying around, isn’t much good to anyone–certainly not anyone living in a city, which is most of us, and increasingly not to anyone living in the country, where groundwater is more and more polluted with herbicides, pesticides, fertilizer, and great huge leaking piles of dung. I mean, feel free to drink out of a puddle or a gutter if you like, but if you do this for long, your future babies will not have enough working eyeballs. So the water of value, the liquid you can charge for, comes out of the tap or the pipe–the stuff that is going to be controlled by Suez.

Secondly, when a government, under pressure to cut its budget from the IMF and the World Bank, contracts out the provision of any service for a period of 10 to 30 years, as water contracts usually run, it quickly loses the ability to monitor the contract. Over a relatively short period of time, the expertise and technical ability to operate the water system pass to the contractor. At the end of a decade or so, the municipal government can barely tell hot from cold. And since, according to the World Bank, the government couldn’t run the system efficiently in the first place, how is it possibly going to keep tabs on Suez or ONDEO or whatever it’s calling itself 15 years from now?

And unfortunately, the government will need to be able to monitor. For example, in March 1999, Aguas Argentinas, a subsidiary of Suez, was detected providing nitrate-laden water to more than three million inhabitants in seven poor districts in Greater Buenos Aires. High levels of nitrate in water can cause death in infants and cardiovascular problems in adults. The company’s strategy: Create an Emergency Committee to “relativize the problem,” i.e. make it seem like it’s less awful than it is. To accomplish this worthy goal, the Emergency Committee bought bottled water products and infants’ food to show that nitrates were present in these substances, too. (Oh, okay, so the levels were a lot lower). The problem was really only a PR issue anyway because Aguas Argentinas had negotiated a contract with the government of Buenos Aires that exempted the company from responsibility for nitrate levels. The contract did say that the public should be notified about dangerous levels, but it didn’t say by whom, so Aguas didn’t do it.

Mr. Mestrallet’s ‘Water Truce’ does not address these depressing details, and the CEO himself wishes that his critics would stop being so negative and so very detrimental to the interests of the underprivileged around the world. He has really thought this out. Rather than privatizing water systems, Suez will only operate them by contract or concession or lease or something, and that way, the risk for damage to infrastructure due to natural or political events stays with the government, which is also often responsible for much of the investment in equipment and connections. Meanwhile the right to collect money accrues to the private company. This is rather like having a job that consists of going to collect your paycheck.

The role of the government in PPPs will be limited, and although Mr. Mestrallet, in his efforts to serve the poor, did not discuss the matter openly, he is anxious to get the World Bank to subsidize Suez directly. That’s right. He tells us that he is calling upon the World Bank to “optimize the use of public funds by building financing models which leverage private investment.” The World Bank should ensure the “proper allocation of risk between public and private sectors.” If the PPP is working efficiently, we assume, then the proper allocation of risk would be: public/all, private/none. The Bank would perform this function by ensuring that partners to the PPPs live up to their commitments and by guaranteeing private companies against loss due to currency devaluation. Or, most attractively, by investing in the enterprise, too, as the World Bank did with Aguas de Illimani, the Bolivian subsidiary of Suez. This one supplies water to El Alto, up the hill from La Paz. The International Finance Corporation (IFC) of the World Bank provided 8 percent of the capital for the El Alto project of Suez, using the taxpayers’ money of developed countries to fleece the taxpayers of underdeveloped ones. This is what Mr. Mestrallet means by a Public-Private Partnership. The IFC invested in the subsidiary directly to provide stability and guarantees to private investors, after a major political uprising effectively stopped the privatization of water in Cochabamba. So, when the public makes clear that it opposes privatization through concession, sale, or contract, the World Bank will step in to reassure private investors and encourage their continued participation, if the enterprise is profitable.

But wait. If I remember my economic principles correctly, I thought that capital justified its right to a profit by its willingness to take risks. But under this particular Truce, the public sector will guarantee the profitability of the enterprise, the World Bank will put up public money, and the government assumes responsibility for the assets. The private company maintains the infrastructure, keeps track of the meters and collects the money. Imagine that. Or…

Imagine there’s no water,It’s easy if you try.No wells or standpipesWith Suez standing by.Imagine all the PEO-ple,Living high and dry.

Oo Hoo Oo Oo OoImagine no possessions,It isn’t hard to do,After all the BankersHave their way with you.You may think that they’re greedy,They don’t care what you believe,They hope someday they can charge you,For the oxygen you breathe.

Frequent contributor and sometime lyricist Gabriela Bocagrande lives in Washington, D.C.