Citizens Stand for Water

Water privatization is at the forefront of the fight against corporate globalization. It is an issue that raises questions of human rights, governmental obligations and just how far the people will be pushed.

Many consider access to water a human right, rather than a commodity to be bought and sold. One such group is La Red Nacional de Defensa de los Consumidores (the National Consumer Defense Network), based in Managua. Nicaragua is a shining example of a water-rich country threatened with a corporate-imposed drought, one which will primarily affect the poor. The Network's desire is to inform the average consumer of his or her rights, concentrating on the debate around this precious resource.

Water is much more than just a resource; in Nicaragua, as well as in other developing countries, it symbolizes the struggle for sovereignty. Decisions made concerning water services should lie with the government, but under International Monetary Fund (IMF) and World Bank policies, that decision-making power is taken out of their hands. When loans are dependent on privatization measures, the government is forced to ignore the disadvantages of what privatization might mean for their economy in order to comply with regulations.

Public Citizen's Water For All Network highlights one of the problems found in World Bank and IMF procedures concerning water: "Many World Bank structural adjustment loans and water sector restructuring loans now require governments to replace public subsidy with a policy promoting 'full cost recovery'…. This means that water consumers must pay the full price for operation and maintenance (and sometimes even expansion) of the water utility." Rather than improving access and service, this requirement puts water out of the reach of the poorest populations by raising the price.

The saga of the electricity company in Nicaragua serves as a warning of problems brought on by privatization. Several years ago, under intense pressure from the IMF and World Bank, the Nicaraguan electricity distribution service was sold to a Spanish company, Union Fenosa. According to an IMF representative in Managua, Luis E. Breuer, privatization is meant to improve service and provide greater geographical coverage. However, Union Fenosa, in the first two years, managed to both double the rates and leave certain segments of the population with sporadic or no electricity.

The privatization of electricity also essentially stole infrastructure donated by non-governmental organizations, as occurred with a project sponsored by the Juan XXIII Institute and Quest for Peace. The community El Regadío, in the department of Estelí, saw their donated electrical lines commandeered by the newly-arrived Spanish company. Other international and national NGOs may well worry about what might happen to their sponsored water projects in similar communities, if water privatization is to be pursued.

The Consumer Defense Network brought the case of Union Fenosa to court, where the rate hikes were found to be in violation of constitutional provisions. Union Fenosa is currently on the rocks, prompting even the IMF official to suggest government subsidies to help the electricity company perform its duties. However, in a country like Nicaragua, excess funds for governmental programs are few and far between.

Mr. Breuer claims that water is not destined to be privatized in any of the current IMF plans for Nicaragua. However, it was only recently that the IMF was pressuring Nicaragua to do just that in order to receive another US $131 million in loans. Furthermore, the realization of that loan was to allow Nicaragua to be classified under HIPC (Heavily-Indebted Poor Country). The IMF protested the National Assembly's moratorium on further water-related privatization, which prevented hydroelectric power generation from being bought by private enterprise. The IMF's apparent plan was to force Nicaragua to put that service on the auction block in order to get the loan, and thereby be approved for HIPC. Luckily, the IMF did not persist with this plan and was placated by changes to the national budget, even though as late as 2002, they were claiming Nicaragua was in breach of its agreement because of the moratorium.

The moratorium is in effect only until the National Assembly establishes a national regulatory framework. The Consumer Defense Network has already put forth a potential water bill which, unlike the state's proposed bill, treats water as a human right and underlines the necessity of low-cost access to it. During the Nicaragua Network's May delegation, titled "Beyond the Washington Consensus," we met with two representatives of the Consumer Defense Network, Santo Amador and Gonzalo Sagrado. They highlighted the importance of water for Nicaraguans, particularly considering that only 62.7% of the population was covered by the water service in 2001. Furthermore, the Nicaraguan economy's heavy dependence on agriculture makes water an even more valuable resource. With their program, the Consumer Defense Network seeks to raise a critical consciousness in society around this subject.

This critical consciousness is lacking in many places around the world. Not many of us were aware that the New Orleans community has been fighting water privatization for the last five years. In the end, the privatization did not take place, but it was as much due to a lack of buyers' interest as it was a strong grass-roots movement against it. Another city in the U.S. has already suffered the consequences of privatization: Atlanta, GA, where a 20 year contract with a private water enterprise was terminated after only 5 years, due to improper billing and faulty maintenance. In Bolivia, too, water proved to be an important catalyst for social uprising, resulting ultimately in President Sanchez de Lozada's resignation.

In an earlier issue of the Nicaragua Monitor, it was revealed that two of the key areas suggested for privatization measures, León and Chinandega, have some of the richest aquifers in Nicaragua. Though IMF-instigated privatization has been curtailed for the moment, Nicaragua's water resources have been threatened in many other ways. According to a study by Néstor Avendaño, a well-known Nicaraguan economist, "drinking water is already being conditioned for privatization through long-term rental to the (local) private sector of the public companies that generate this service."

Also, in the text of CAFTA, the recently-signed U.S. – Central America Free Trade Agreement, which is awaiting ratification, specific municipalities in Nicaragua were committed to opening their service industries, including electricity, education, and water, to the international market. These municipalities are obliged to enter into services trade, meaning buying or selling the administration of these sectors, though as the Nicaraguan newspaper El Nuevo Diario pointed out, few would be financially able to buy into service industries in other CAFTA countries. Much more likely, the municipalities would be forced to sell their service industries to foreign companies. Moreover, a good number of the areas listed lie on or near important aquifers, such as Boaco, Ciudad Sandino, San Ramón, Santa Lucia, and Macuelizo. Carlos Pacheco, a lawyer with the Centro de Estudios Internacionales (Center for International Studies), and a member of the Consumer Defense Network, attacked this measure for ultimately violating regional autonomy in Nicaragua.

Fortunately, once the public was made aware of this, an annex to CAFTA was issued by Nicaragua which stated explicitly that "the establishment, construction, and development of public works for the supply and distribution of drinking water, and collecting and disposing of waste-water, may only be performed by the Empresa Nicaragüense de Acueductos y Alcantarillados Sanitarios (ENACAL)," the state water agency. This is an important victory in the fight against water privatization. ENACAL can, however, still "commercialize" the collection, treatment, and final disposal services for waste-water, meaning administration of those services can be bought by international companies. The fight against water privatization has not yet been won.

It is necessary to involve average citizens in the debate around public services. As the Citizens' Network on Essential Services points out, "whenever citizens are weak and lack voice, services fail to reach the poor. And whenever providers have incentives other than serving customers, service quality is undermined." This holds true in both privately- and publicly-administered services. Organizations such as the Consumer Defense Network serve to inform and empower consumers to use their voice, to insist on improvement in services.

In a similar vein, Avendaño writes that "citizen participation is important to avoid having drinking water become a commercial good for a profit-seeking company." This citizen participation has proven to be key in other struggles against water privatization, and is already showing its strength in Nicaragua.

At one of the largest demonstrations since 1990, in Managua in June, concerned citizens gathered outside the National Assembly to demonstrate just that. Another of the many civil society groups working against the privatization of water, the Nicaraguan Community Movement (MCN), organized this show of opposition. Their representative, Enrique Picado, declared "Water is vital to all life…. That means plants and animals as well as us humans. Water is the single most important resource of our planet. To attempt to limit it to only those who can pay for it at prices determined by the powerful is, quite simply, criminal."

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