Water Movement in Argentina
The story of water privatization in Argentina is one of government corruption, corporate mendacity, World Bank coercion, bribery, cloudy water and murkier intention. It is a handbag of human vice, weakness, helplessness and suffering.
In 1993, the Argentine government privatized the Buenos Aires water utility; consummating the largest such deal ever proposed. The year before privatization, the public utility, Obres Sanitarias de la Nacion (OSN) was considered to be a competent, well run organization. OSN supplied drinking water and sewage service comprehensively to Buenos Aires three million inhabitants. However, the Latin America trend of urban migrations had by 1993 saddled the city with nine million more people living in teeming extra municipal suburbs and slums. It was clear that OSN would need a huge infusion of capital to extend its services en masse to the arrives. In response the World Bank offered up hundreds of millions of dollars, with one recalcitrant condition that water be privatized.
Auguas Argentinean led by two French corporate giants, Compagnie generale des Eaux (then Vivendi, now Veolia) and Lyonnaise des Eaux (Noe Suez) who won based on their offer of the largest rate reduction 26.9 percent. Before the government could concede its water to private management, however they had to overcome the loudest and most problematic sector of the opposition, organized by labors. Though labor leaders were initially fervently bent on fighting privatization “to the last drop of blood”, the government and World Bank affiliates circumvented these obstacles with institutionalized and sanctioned bribery, through the Programa de Propriedad Participada (PPP).
The PPP targeted union leaders and offered them a 10 percent stake in the new company, and union opposition dried up; half of OSNs 7200 workers lost their jobs. After paying for the support of union officials, the company quickly fulfilled its contractual obligation by dropping tariffs by 26.9 percent. However, in the two years the government had artificially raised rates 62 percent in addition to adding an 18 percent sales tax to water bills. In essence, the public had been duped. Agues Argentinas exercised the obligatory tariffs cut which had supposedly won them the contract, by simply rolling back part of a rate cushion with which the government had set them up.
Before privatization, non-payment of tariffs had been somewhat of a problem. Agues Argentines effectively dealt with this problem by cutting off poor Argentines after three un-paid bills. Consequently the company persuaded 90 percent if its customers to pay.
Within a year of assuming control of water in Buenos Aires, Aguas Argentinas petitioned the newly established government authority, for a rate increase, even though the company had previously agreed that there would be no real rate increase for 10 years. The government authority’s operations are financed through the collection of 2.6 percent, of Aguas Argentinas billing, agreed, increasing rates 13.5 percent in exchange for expediting contractual investments in slum communities. Despites the now evident dishonesty with which Aguas Argentines had won the Buenos Aires contract, the World Bank stepped in to publicly defend the company, issued loans worth 911 million dollars, and even purchased a five percent share of the company making the World Bank a lender in partner in and public relations arm of their model privatization project.
After the Mass Protest Movements were sprouting and gaining the strength, thousands blocked the roads leading in to the capital and protest of 800 dollars fees charged by Agues Argentina to connect to the water and sewage systems. Meanwhile, a congressional commission issued a report indicting the company for “serious grave” breeches of contact, failing to meet goals regarding infrastructure development, and falling to inform its regulatory body, and government disrupt the protest movements, Agues Argentines lowered the 800 dollar connection fee to 200 dollars, but stabilized that decrease with the creation of a new fee, entitled’ Universal Service” to be paid by all. The company succeeded in imposing fees not elaborated in its contract.
Argentinean president Carlos Memem, in an effort to further protect Aguas Argentines from public accountability, undercut the regulatory body by signing a decree which placed it under the control of political ally and secretary of the Environment, Maria Julia Aslogaray. Aguas Argentines had only built a third of new pumping stations and underground mains it had promised to complete by 1997. It had only invested 9.4 million of a promised 48.9 million in sewage net works. It was delaying due to the need for further investigation the construction of the Berazategui wastewater treatment plant. Consequently, sewage was being dumped into rivers and cesspools, raising nitrate levels in the water and risk from various waterborne illnesses. The World Bank commented this on the delay of the project: that it was saving Agues Argentines a heady 100,000 dollars a day by not building the plant.
I997, after Aguas Argentines creatively quelled popular dissent against its operations, it began pushing hard to revise the 30-year contract agreed upon four years earlier. To assist the World Bank sent one of its senior water manager to join the staff of Agues Argentines, of which of course it owned a five percent stake and into which it had invested hundred of millions. The manager continued to be paid by the World Bank and stayed with the Argentine company until a new contract was signed in 2000, after which he returned to lead a World Bank team, which gave to Argentina another loan worth 30 million dollars. The World Bank and the rest of the international leading community were obviously extremely committed to the success of the Argentina water privatization project. However, it become even more obvious that the World Bank had a different idea of success than the people of the country it was trying to help.
In 2001 Argentinean economy collapsed famously, facing spiraling debts due to inflation, the private water company agues Argentinean leveraged infrastructure development. The company demanded a fixed Peso dollar exchange rate for the repayment of its external debt and or another rate increase of 42 percent. When the government in crisis refused these demands, Aguas Argentine threatened to take the Argentine government to the International Center to the Settlement on Investment Disputes, which is part of the World Bank, which of course owned five percent of the company. Argentina tried to forbid Aquas Argentines from the complaint, but acted to allow it.
Now the ordinary Argentines are learning to live with out drinking water and sewage disposal. Across Argentina the World Bank regime of water privatization spelled disaster for both the water consumers and for the multinationals corporations involved. In Buenos Aires, Tucuman, Santa Fe and Cordoba, citizens fought privatization and concomitant new fees and rate increases. Corporate response to the Argentine economic collapse and Peso devaluation has been not to ensure the water supplies of thirsty communities, but to attempt to saddle poor citizens with prohibitive rate increases so it can maintain corporate profits and the bottom line.
The story of water privatization in Argentina is one of government corruption, corporate mendacity, World Bank coercion, bribery, cloudy water and murkier intention. It is a handbag of human vice, weakness, helplessness and suffering.
In 1993, the Argentine government privatized the Buenos Aires water utility; consummating the largest such deal ever proposed. The year before privatization, the public utility, Obres Sanitarias de la Nacion (OSN) was considered to be a competent, well run organization. OSN supplied drinking water and sewage service comprehensively to Buenos Aires three million inhabitants. However, the Latin America trend of urban migrations had by 1993 saddled the city with nine million more people living in teeming extra municipal suburbs and slums. It was clear that OSN would need a huge infusion of capital to extend its services en masse to the arrives. In response the World Bank offered up hundreds of millions of dollars, with one recalcitrant condition that water be privatized.
Auguas Argentinean led by two French corporate giants, Compagnie generale des Eaux (then Vivendi, now Veolia) and Lyonnaise des Eaux (Noe Suez) who won based on their offer of the largest rate reduction 26.9 percent. Before the government could concede its water to private management, however they had to overcome the loudest and most problematic sector of the opposition, organized by labors. Though labor leaders were initially fervently bent on fighting privatization “to the last drop of blood”, the government and World Bank affiliates circumvented these obstacles with institutionalized and sanctioned bribery, through the Programa de Propriedad Participada (PPP).
The PPP targeted union leaders and offered them a 10 percent stake in the new company, and union opposition dried up; half of OSNs 7200 workers lost their jobs. After paying for the support of union officials, the company quickly fulfilled its contractual obligation by dropping tariffs by 26.9 percent. However, in the two years the government had artificially raised rates 62 percent in addition to adding an 18 percent sales tax to water bills. In essence, the public had been duped. Agues Argentinas exercised the obligatory tariffs cut which had supposedly won them the contract, by simply rolling back part of a rate cushion with which the government had set them up.
Before privatization, non-payment of tariffs had been somewhat of a problem. Agues Argentines effectively dealt with this problem by cutting off poor Argentines after three un-paid bills. Consequently the company persuaded 90 percent if its customers to pay.
Within a year of assuming control of water in Buenos Aires, Aguas Argentinas petitioned the newly established government authority, for a rate increase, even though the company had previously agreed that there would be no real rate increase for 10 years. The government authority’s operations are financed through the collection of 2.6 percent, of Aguas Argentinas billing, agreed, increasing rates 13.5 percent in exchange for expediting contractual investments in slum communities. Despites the now evident dishonesty with which Aguas Argentines had won the Buenos Aires contract, the World Bank stepped in to publicly defend the company, issued loans worth 911 million dollars, and even purchased a five percent share of the company making the World Bank a lender in partner in and public relations arm of their model privatization project.
After the Mass Protest Movements were sprouting and gaining the strength, thousands blocked the roads leading in to the capital and protest of 800 dollars fees charged by Agues Argentina to connect to the water and sewage systems. Meanwhile, a congressional commission issued a report indicting the company for “serious grave” breeches of contact, failing to meet goals regarding infrastructure development, and falling to inform its regulatory body, and government disrupt the protest movements, Agues Argentines lowered the 800 dollar connection fee to 200 dollars, but stabilized that decrease with the creation of a new fee, entitled’ Universal Service” to be paid by all. The company succeeded in imposing fees not elaborated in its contract.
Argentinean president Carlos Memem, in an effort to further protect Aguas Argentines from public accountability, undercut the regulatory body by signing a decree which placed it under the control of political ally and secretary of the Environment, Maria Julia Aslogaray. Aguas Argentines had only built a third of new pumping stations and underground mains it had promised to complete by 1997. It had only invested 9.4 million of a promised 48.9 million in sewage net works. It was delaying due to the need for further investigation the construction of the Berazategui wastewater treatment plant. Consequently, sewage was being dumped into rivers and cesspools, raising nitrate levels in the water and risk from various waterborne illnesses. The World Bank commented this on the delay of the project: that it was saving Agues Argentines a heady 100,000 dollars a day by not building the plant.
I997, after Aguas Argentines creatively quelled popular dissent against its operations, it began pushing hard to revise the 30-year contract agreed upon four years earlier. To assist the World Bank sent one of its senior water manager to join the staff of Agues Argentines, of which of course it owned a five percent stake and into which it had invested hundred of millions. The manager continued to be paid by the World Bank and stayed with the Argentine company until a new contract was signed in 2000, after which he returned to lead a World Bank team, which gave to Argentina another loan worth 30 million dollars. The World Bank and the rest of the international leading community were obviously extremely committed to the success of the Argentina water privatization project. However, it become even more obvious that the World Bank had a different idea of success than the people of the country it was trying to help.
In 2001 Argentinean economy collapsed famously, facing spiraling debts due to inflation, the private water company agues Argentinean leveraged infrastructure development. The company demanded a fixed Peso dollar exchange rate for the repayment of its external debt and or another rate increase of 42 percent. When the government in crisis refused these demands, Aguas Argentine threatened to take the Argentine government to the International Center to the Settlement on Investment Disputes, which is part of the World Bank, which of course owned five percent of the company. Argentina tried to forbid Aquas Argentines from the complaint, but acted to allow it.
Now the ordinary Argentines are learning to live with out drinking water and sewage disposal. Across Argentina the World Bank regime of water privatization spelled disaster for both the water consumers and for the multinationals corporations involved. In Buenos Aires, Tucuman, Santa Fe and Cordoba, citizens fought privatization and concomitant new fees and rate increases. Corporate response to the Argentine economic collapse and Peso devaluation has been not to ensure the water supplies of thirsty communities, but to attempt to saddle poor citizens with prohibitive rate increases so it can maintain corporate profits and the bottom line.
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