The austerity packages imposed on the countries of southern Europe have become a new driver for the privatisation of public services - warns the European Federation of Public Service Unions
on the role of private water companies in the European Union comes at a timely moment. Privatisation of water companies tops the agenda in many countries and is being pushed by the EU and the European Central Bank. And we now learn that the Greek and Spanish deficits for 2012 will be larger than expected earlier. We should not be surprised about this as austerity measures cut deep in government spending for social welfare, funding for public infrastructure works and the purchasing power of public servants.
Such expenditure is normally considered to assist in stabilising an economy and would need to be increased to get economic growth again. With this stability gone - the economy sinks and shrinks and the government receives less income, deficits grow, interest rates on sovereign bonds increase and a new cycle of austerity is requested. This is currently the dominant EU philosophy. Austerity is part of the conditions imposed by the ECB and the European Commission, if governments want money from the EU funds for monetary stability.
And with each cycle of austerity, the pressure to sell-off public assets increases. Publicly owned water companies in Athens, Thessaloniki, Madrid and Lisbon are all being put up for sale. The commission and the ECB are major drivers of this push. The commission argues that privatisation "has the potential of increasing the efficiency of companies and, by extension, the competitiveness of the economy as a whole - while attracting foreign direct investment".
This is hardly the neutrality towards ownership the treaties requires of the commission. It is an ideological statement, not based on any sound analysis of the actual facts or on what has gone wrong with water privatisation, in the United Kingdom for example. There are several trends starting to reveal themselves. The ownership of private water companies in Europe has become even more concentrated than before. It is now overwhelmingly dominated by the French multinational Suez Environment - part of GdFSuez - and Veolia. Both Suez and Veolia - and other smaller companies such as French firm SAUR and Spanish firm FCC - are increasingly dependent on state capital for their activities in the water sector.
The capital comes from the government of France and from international development banks, including the European Bank for Reconstruction and Development and the International Finance Corporation. This challenges the commission claim that privatisation would bring in foreign private capital. In addition, there continues to be a significant trend towards remunicipalisation with cities such as Berlin and Budapest following the example of Paris.
These cities have understood that public enterprise is actually more effective and leads to lower prices than the private sector. But the austerity packages imposed on the countries of southern Europe have become a new driver for privatisation. There is continued strong public resistance to water privatisation. The claims of the commission and ECB are not only flawed, they run counter to what large parts of the population passionately defend: public ownership of key services. And the first European Citizens Initiative on the 'human right to water'
brings many environmental groups, trade unions, municipalities and antipoverty campaigners together for an alternative and positive agenda. They are against the dominant EU policy of liberalisation.
Jan Willem Goudriaan is deputy general secretary of the European Federation of Public Service Unions