Can Corporations Help Save Baltimore’s Crumbling Water System? (2/2)

December 5, 2014

Emanuele Lobina, author of a new report "Troubled Waters" argues private water companies could spell disaster for the city's water system

Emanuele Lobina, author of a new report "Troubled Waters" argues private water companies could spell disaster for the city's water system



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Story Transcript

JAISAL NOOR, TRNN PRODUCER: Welcome back to The Real News Network.

We’re continuing our conversation with Emanuele Lobina about his new report Troubled Waters: Misleading Industry PR and the Case for Public Water.

Emanuele Lobina, he’s principal lecturer at Public Services International Research Unit at the University of Greenwich in the U.K.

Thank you so much for joining us.

EMANUELE LOBINA, PRINCIPLE LECTURER, PUBLIC SERVICES INT’L RESEARCH UNIT: Thank you.

NOOR: In your report you point to at least 30 cases that’s happened in the United States where cities that have private management or private ownership of their water system buy it back from these private companies and make them public again. Can you give us what you feel are key examples for people in Baltimore to know about?

LOBINA: Well, Certainly in the U.S.–Atlanta in Georgia and Indianapolis in Indiana. There are many more examples. Those examples are in the report.

Internationally, because we have to say that various cases–and there are more than the thirty-three we identified at the time of the research, of the time of the report. There is–an ongoing collaborative project of re-municipalization PSIRU is conducting together with others, like Transnational Institute and Multinational Observatory. And we are focused on re-municipalization after the research for the report was concluded. And so we found many more new cases. And, in fact, the number of cases that we have identified in the U.S., as globally, is double, the one that is reported in the report troubled waters.

So this is just an illustration of how this re-municipalization trend, a global trend and a U.S. trend, is emergent globally. And it has also been characterized by a strong acceleration, particularly in the last five years after Paris, which is why, again, Paris is such an important case–decided to re-municipalize.

Paris has been an important example for many French cities and many European cities, and I’m sure many other cities beyond Europe. That is not only the case of Paris in France; there is Berlin in Germany, where, for example, a Veolia subsidiary has been providing the service among great controversy until a few months ago, where the service has been re-municipalized. And other cases include Budapest in Hungary, and we could go on. In the Global South we can talk about major cities like Buenos Aires or La Paz, both of which have been flagships of privatization–water privatization programs.

NOOR: So we’re almost out of time, but I wanted to ask you one more question. Rudy Chow, the director of the Department of Public Works in Baltimore, he argued at a City Council hearing on Monday, when questioned by city counselors, that he had to bring in a private company because he didn’t have a choice. The workers here in Baltimore didn’t have the training and expertise and knowledge to address the issues that need to be fixed in the water system. In your report, you also lay out some alternatives to private partnerships, to private ventures. Can you give us some examples?

LOBINA: I am always very cautious when I hear the expression “there is no alternative” or variations on the theme. One of the reasons why there is alternative in Baltimore and there is a public alternative in Baltimore is that, first of all, we should be aware of the false promises of the private sector in the–private industry in the water sector, the false promises of water privatization and public-private partnerships, which include greater efficiency and greater technological solutions.

Now, in many cases, first of all, (A) the greater superiority in terms of efficiency of the private sector is a myth. There is no evidence of that, despite a significant number of studies. Quite to the contrary, there is evidence of many cases of the most efficient and effective public utilities being found in the public sector.

But going back to technological solutions, what happens in many cases is that water multinationals have been found to charge for technology and knowhow, for knowhow coming from the mother company, which actually should have been already available to the operating subsidiaries. And this has been identified as a mechanism to inflate prices. There are many examples of these, of cases where private water operators and multinationals have been identified as using the knowhow mechanisms as a way to inflating prices. Those cases can be found in France, in Italy, and elsewhere.

Now, so first of all we have to be aware of the false promises of the private sector as regards to their claims of greater efficiency and more advanced technical solutions. As the report, the argument underpinning the report, informing the report, is that the private sector is very good at promising, but has a poor track record when it comes to delivering it on its own promises.

And one of the problems, again, with the private sector is that there is rigidity choosing a public-private partnership, which is why public-private partnerships rarely are the solution. The reason for this is that this rigidity is due to the profit maximization imperative of the private sector, which basically puts the interests of private shareholders above and on top of the interest of the community, which the private operators are supposed to serve.

Now, [fact (?)] things change when we look at the public sector, because the public sector is not subject to the profit maximization imperative. And this means that there is a greater flexibility of the private sector to find different managerial and technical solutions to make sure that the profit of the local authority is put first and foremost, without talking about the fact that with the public sector there is greater democratic accountability. And this flexibility, the fact that there is no–the public sector is not subject to the profit maximization imperative also means that advanced solutions, advanced forms of citizen participation in decision-making can be taken that can never be taken under public-private partnerships, because the private sector expects full control over cash flow and managerial decisions.

So the public alternative that is available to Baltimore, as to any other U.S. city or as to any other city in the world, is an alternative whereby public water operators can take advantage of the fact that the greatest majority of urban water operators in the world are public. They are not subject to be profit maximization imperative. And they can share experiences. They can share knowledge as to the more appropriate ways to introduce technology which is appropriate for the context specific to Baltimore, in this case, or to another city, or to adopt different solutions from the managerial point of view.

Now because the public sector is not subject to the profit maximization imperative, knowledge can be treated as a public good, not as a private good, which is subject to commercial confidentiality or something that we put a price tag on. And so a public-public partnerships, which is a form of organizing this exchange of knowledge and expertise between public actors is certainly a viable alternative to [engaging in (?)] public-private partnerships and a viable alternative to escaping the rigidity of public-private partnerships and escaping this rigidity, which usually puts the interest of private shareholders above the interests of our local communities.

Other alternatives includes in-house restructuring or, as they are better known, this form of reform, this type of reform, is better known in the U.S. [re-engineering (?)], whereby full public ownership and full public control is maintained. At the same time, new ways of organizing the decision-making process, from the Nigeria point of view, or also just from the point of view of introducing a greater transparency and accountability, public participation, in the form of citizen participation, also takes place. And, again, there are many cases where this is taking place not only in the U.S., but also internationally.

I would just like to finish with one example, which fails us again, as in the public sector it is possible to find the most advanced cases of enhanced efficiency and enhanced effectiveness. One of this is in Cambodia, one of the poorest countries in the world, Phnom Penh, the capital city where the public water operator has been able to turn itself around from a poor-performing public utility into an extremely efficient and effective public utility, boasting an increase, an extension in terms of service access, bringing the access to the poor, to the people, which is not paralleled by operations under any private operator and their extended services from 20 percent of the population to 90 percent of the population.

NOOR: We’re going to have to hold it there, but thank you so much for joining us. We really appreciate your report.

LOBINA: Alright. Many thanks.

NOOR: And thank you for joining us at The Real News Network.

End

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