The struggle for water - a local challenge

from Klaus Lederer, Berlin/Germany

Two years ago, at the World Social Forum in Porto Alegre, I had the opportunity to report on the situation of water supply and sanitation services in the Federal Republic of Germany and in the capital of Germany, Berlin. During that workshop it already became clear how very different the concrete conflicts about access to water and the principles of handling water are in Europe and in countries of the south. In some respects, Europe is the starting point of the commercialisation offensive. It is the home base of multinational groups of companies ranging from Veolia to Suez and SAUR to RWE. It was here that they first mobilised the capital before setting off on their worldwide shopping expeditions. Here they enjoy the backing of their national governments who also stand up for good commercial conditions within the EU.

The example of Berlin is interesting for our debate in many respects. To begin with, Berlin’s water company - the Berliner Wasserbetriebe (BWB) - is Europe's biggest integrated water supply and sanitation network. In addition to this, public authorities have concluded legally secured contracts with two of the companies, RWE and Veolia, which extend over thirty years and guarantee the enterprises virtually safe profits and remove the city of Berlin's exclusive control over the water company’s economic development for a very long period. At the same time, this is a classic example of political failure.

For decades the Berliner Wasserbetriebe were run as a publicly owned enterprise. After the fall of the Wall in 1989, the water service infrastructures in the two halves of the city were united. Considerable investments were required, and price rises followed. The water quality was, and still is, excellent. Initially, there were absolutely no grounds for a discussion about privatisation.

Berlin only began experiencing a wave of privatisation in the mid-nineties, and the main cause of this was Berlin's budgetary crisis. The reunified city was struggling as a result of its rapidly declining revenues. The status of the city changed with the end of the Cold War, and it lost its financial 'front-line bonus' from the Federal Government. In addition to this, there were tax reforms in favour of big business and high earners – at the expense of public revenues. This prompted the city's SPD-CDU coalition government to sell Berlin's electricity and gas companies and other items of the city’s silverware. In 1997, the salespersons started to focus on the Berliner Wasserbetriebe.

They met with little resistance, and not without reason. The charging policies of the public water companies were not transparent. And what exactly the company earnings were used for was equally unclear. At the beginning of the nineties the city government was already accepting the fact that the enterprise was being groomed for growth. The idea was that the company should expand, become involved in international business, and thus create revenue and jobs for the city. This was all financed with revenues provided by Berlin's citizens. The enterprise then founded a telecommunications subsidiary, a waste-water recycling subsidiary and other affiliated companies, and put in bids for municipal water and waste-water services in Eastern Europe and Asia. The hope was that the Berliner Wasserbetriebe could attain a position in the water sector similar to that of the Swedish state enterprise Vattenfall in the electricity sector.

A substantial part of these investments was, to put it bluntly, a complete waste of money. The struggling city had to financially support the company. As a result the public enterprise BWB made negative headlines. Many people sympathised with the argument that a private company would never have embarked on such risky experiments for fear of insolvency. Even now many people in Berlin are still arguing that the city's budgetary crisis is a good reason to sell off parts of the public infrastructure. The government coalition at that time paved the way for the privatisation of 49.9% of the water company, and it was put into practice in 1999.

My party, now The Left Party, was in opposition in the city parliament at that time. It tried to prevent the sale. The dangers of such a partial sale were made public. Our appeal to the Constitutional Court – made together with Alliance 90/The Greens – unfortunately failed. The court simply demarcated the legal tariff boundaries, but left the risky construction untouched. However, the city had made a binding agreement with the private companies to finance the collective bargaining risks itself. This established the long-term dependence of water tariffs and company policies on the interests of the private shareholders. Union resistance was broken by means of a 'contract of trust'. This contract granted the employees comparatively good employment and pay conditions until 2015.

In 2001, scandals surrounding public banking institutes swept through the city’s political landscape. There were economic practices similar to those found earlier in the water company – but in this case the damage was in the billions. New elections were declared in the city which resulted in a social-democratic/socialist coalition.

From 1999 onwards, the water company maintained the tariffs for three years as agreed in the contract. This was then followed by a period of annual increases. These are partly due to a reduction in water consumption and increasing energy costs. On the other hand they are also partly due to the guaranteed rate of returns. But Berlin also receives revenues from the company, which makes the whole thing ambivalent.

Following the coalition’s narrow confirmation in office in the elections of 2006, an agreement has been made to secure and sustain public service infrastructures. Meanwhile, the Social Democratic Party has come to view the partial privatisation contract of 1999 as a major disaster. This insight has also found its way into the coalition agreement between the two parties, which now states: 'The coalition will make every effort to transfer the BWB back into local authority ownership'. However, we can make no secret of the fact that so far we have not found the legal or financial means to successfully implement this agreement. At the moment, it is still a declaration of political intent – and for the investors it is a statement that the majority of the city parliament does not politically desire them in Berlin. Water infrastructures should be under public scrutiny. Decisions about them should be democratically made, instead of subordinating their social, ecological and urban economic function to the primacy of reproducing capital.

But something else has to be said here. At the moment there is little motivation in the city to actively support the buy-back of the private shares. The dissatisfaction with price developments in the company is no different from that expressed towards the former publicly-owned company. It is of a general nature, and not politically charged. Apart from this, it affects Berlin itself. The revenues gained by the city of Berlin are urgently needed in this critical situation to secure the city’s social assignments. To a certain extent, the Land and private investors are contractually united in a mutual looting mission. This represents a political dilemma from which we cannot easily escape.

We must account for the fact that Berlin's water quality is still as high as ever, and the price is comparatively low. Quotas for increasing charges, such as those in southern countries following privatisation, are simply inconceivable in the heart of Europe. The private companies are aware that they have to create a favourable public atmosphere in Europe which allows them to continue on global expansion. In Berlin nobody’s water supply will be cut off. Critical questions concerning the social survival of Berliners are located in different dimensions to those confronting our friends in Africa or South America.

Even the mood among company employees is somewhat ambiguous. They ask themselves if life with a publicly-owned company might be a case of 'jumping out of the frying pan and into the fire'. Their situation is secure up to the year 2015. In contrast to this, even publicly-owned companies are currently still in the process of rationalisation and under pricing pressure. The background here is a combination of current modernisation concepts for the public sector, European legal regulations, and the real changes in the general financial and economic conditions. In Berlin these are, for instance, the hospital, transport and waste disposal services, which we are safeguarding from privatisation.

In Germany and Europe, fundamentally alternative reform concepts for the public sector are still being discussed by too few participants, let alone being carried out by responsible authorities. Such reforms do, however, require democratic access to the public sector. This is why we need to transfer privatised companies back to local authority ownership as soon as this appears possible. We are encouraged by opposition trends, visible for instance in France, where SUEZ and Veolia originated. In France, over 50 local authorities recently re-acquired water networks and facilities. People and local authorities are fed up with paying for fat profits whilst watching the infrastructures decline. It seems the pendulum is slowly swinging back in favour of publicly-owned services. The question is whether, and when, the trend will reach other European countries. In Germany, transferring privatised companies back to local authority ownership is currently more of the exception. But the fact is: change starts at grass-roots level! This is where the spirit of the times can be altered, and the politics of globally expanding shareholder value can be countered with natural resources.

What does this imply for us? In Europe and Germany we have to prepare for changing conditions which will open up new possibilities for us. They'll be less euphoric, but definitely more substantial. Over the past five years, The Left Party has done everything in Berlin to ensure greater transparency in publicly-owned company management and greater democratic accountability to the city's parliament and government. This marks the beginning of a different kind of development logic. What we need are forms of public organisation which are tailored to specific local tasks, which enable the economic fulfilment of assignments without looking at profit maximisation, and which give priority to ecological, social and urban development aspects. This includes democratic scrutiny over the enterprises. They must not be allowed to fall into the hands of local elites, nor should they be forfeited to megalomaniac urban policies in the scramble for location prestige. After all, the pressure to act in this way is an expression of our current political and economic conditions of reproduction. Nobody can simply ignore or exclude this. We have to seek ways of structurally counteracting this pressure. However, there also has be a change in direction in social and financial policies throughout Europe. This is needed in order to free the local communities from pressures to make profits from infrastructures dedicated to public welfare in order to finance their social tasks.

Participatory forms of water acquisition and waste-water disposal are an absolute exception in Germany at the moment. They are still rarely found, and then only in very small communities. In these particular cases, large-scale, technically complex and extremely expensive infrastructures are impractical. At the present time, the water cooperative is not a convincing or feasible alternative for large integrated urban areas. But maybe this is just a question of time…

Nevertheless, water cooperatives are incredibly important for other reasons: they stand for the principle of solidarity in the environmentally friendly use of water. It is still as important as ever to keep one special point alive in this debate: water is a local natural resource, which has to be managed and sustained locally. Water is an asset, which should not be subjected to profit maximisation. Its distribution and use must be carried out with the greatest possible participation, and with the access and acceptance of all. With this aim in mind, we must stick together in our struggle under extremely varied circumstances – on the spot and worldwide.