During the first three months of the year, the Quebrada Santander Rural Sanitation System supplied three to four truckloads of water daily to supply the empty tanks in the neighboring town of Pichasca - solidarity typical of these systems in Chile, which did not endanger the supply of its members and was supported by special subsidies to cover the water emergency. CREDIT: Orlando Milesi/IPS

By Orlando Milesi
RENGO, Chile, Aug 16 2022 (IPS)

Local leaders of the Rural Sanitation Services (RSS) warn that the digging of illegal wells by large agro-export companies in Chile is aggravating the effects of drought and threatening drinking water supplies and social peace.

Leaders of these programs also emphasize that the new constitution that may emerge from the Sept. 4 plebiscite would guarantee the human right to water, which would strengthen its management and that of river basins, in addition to facilitating a response to the water crisis to prevent it from triggering protests and social conflict.

Water rights were commercialized during the 1973-1990 dictatorship of General Augusto Pinochet, and between 1994 and 2006 the governments in power during the democratic transition sold the large water utilities to foreign companies, which have controlled the water supply in Chile’s cities since then.

The water supply in rural areas, considered unprofitable by these companies, was left in the hands of the country’s 2,306 RSS, which were institutionalized and transformed into Rural Sanitation Services in 2020 by a legal reform. They operate throughout this long narrow South American country of 19.5 million people and have 7,000 leaders and 6,000 workers.

The RSS, made up of cooperatives, local residents’ committees and other social organizations of different sizes, have the role of guaranteeing the drinking water supply in rural areas, with the State as supervisor and infrastructure provider. It is possible that in the future they will also take on responsibility for sanitation.

These systems benefit 2.1 million people, to whom they provide water at a lower price than the distribution and sanitation companies.

During the COVID-19 pandemic, 90 percent of the RSS never stopped serving their users, and despite the quarantine most of them paid their monthly fees, to maintain the system.

The Directorate of Hydraulic Works (DOH) of the Public Works Ministry told IPS that during the 2021-2022 period it will invest some 57 million dollars in seeking new sources of supply, and in the conservation and integral improvement of the systems. For 2023 the projected investment is 14 million dollars.

Maintenance is an ongoing job at the La Alianza RSS in the town of Choapino, some 105 km south of Santiago, Chile. CREDIT: Orlando Milesi/IPS

Relief for growing water stress

The Chilean economy is based on mining, especially copper, and large agricultural exports, two industries that require large amounts of water in a country with limited water resources.

The result is growing water stress, which accentuates the tension between powerful industries and human consumption and small-scale agriculture, aggravated by the private management of an essential resource such as water.

Against this backdrop, the RSS have alleviated access to water, but as recurrent droughts and other climatic impacts accentuate the water deficit, their role is becoming more difficult, without a substantial change in the right to water.

Francisco Santander, treasurer of the RSS in Quebrada Santander, in the Andes foothills 450 km north of Santiago, told IPS that “the first well we drilled by hand with 20 members in 1999. Now there are 45 of us.”

“The largest 50-meter well was dug five years ago. It is one of the deepest in the municipality of Río Hurtado. We bought a piece of land and applied for a drilling project. The money was provided by the DOH,” he said in an interview from his hometown.

The investment included pumps, a solar panel for energy, gabions (a basket or container filled with earth, stones, or other material), a well and a 50,000 liter tank.

“Last summer, faced with the drought crisis, we sold water to Pichasca (a neighboring town). They asked us for help. We gave them up to four truckloads a day for their tanks and they paid with an emergency subsidy. Our well is holding up well under a moderate level of consumption,” Santander proudly explained.

The solar panel was the first in Rio Hurtado and reduced energy costs by one-sixth. It contributes to the low price charged for water: 1.3 dollars per cubic meter and 2.2 dollars as a basic service fee.

Gloria Alvarado with the RSS in El Patagual, which serves 800 members in Pichidegua, a municipality of 18,000 inhabitants 165 km south of Santiago, was president of the National Federation of Rural Drinking Water and was a member of the Constitutional Convention that drafted the new constitution that voters will approve or reject in next month’s plebiscite.

Speaking to IPS from El Patagual, as a national expert, she warned about the critical water situation caused by climate change and drought, which is aggravated by overuse, poor distribution of rights and deficient watershed management.

A view of the 75-cubic-meter water storage tank installed at La Alianza, in Choapino, where the office also operates to attend to the needs of members and receive payment of their bills. The users of these rural sanitation systems, which are common in Chile, are not usually late with their payments, because thanks to these systems they have water in a country where water management has mostly been privatized. CREDIT: Orlando Milesi/IPS

“Petorca (a municipality 205 km north of Santiago) has a very green side with avocado plantations, but has another where the people have no water to drink and are supplied by water trucks. It is difficult for a 50-meter RSS well to compete with a 200-meter well,” she said, complaining about the agro-export companies.

She also alluded to the heavy use of water by forestry companies in southern Chile and mining companies “which until recently had no obligation to report their water use,” as they now do thanks to Article 56 of the new Water Code.

In Chile’s central valley, the plantations of fruit exporters have expanded exponentially, without any limits on their expansion, which has left many areas at water risk, Alvarado said.

“There is no land use planning or protection of the ecological function of the land. Today rural drinking water is at serious risk because there is unequal competition between those who extract for human consumption and those who extract for commercial and industrial use,” she said.

“Seventy-nine percent of water rights are in the hands of one percent of Chileans. It is inequitable and many families suffer the consequences,” she said, complaining that an essential resource has been transformed in Chile into a tradable commodity.

José Rivera is the administrator of the 500-family RSS in La Alianza in Choapino, in the municipality of Rengo, 105 km south of Santiago.

The town is part of the central region of O’Higgins, the largest exporter of fruit, wine, pork and chicken, “which basically means it exports water,” he said during a visit by IPS to the La Alianza facilities. As a result, he said, “we used to make 30-meter wells here, today we dig 100-meter wells, and in the nearby municipality of Machalí we dig 200 meters.”

According to Rivera, who is secretary of the National Federation of RSS Chile, another problem in O’Higgins is that for the last 10 years wells have been dug stealthily and without oversight.

“Farmers have so many plantations that they began to extract groundwater and make clandestine wells. There are thousands of wells” that nothing is known about and which are subject to no controls, he said.

Their RSS has two wells: one is 80 meters deep and the other 100. One collects water in a 75,000-liter metal tank and the other in a 200,000-liter concrete tank. A third 200,000-liter tank is planned.

“Before, we were basically the only ones who used groundwater. Today the agribusiness companies are replacing river water with groundwater and we have no inspectors in the General Water Directorate. They have no resources and no authorization to enter a farm,” Rivera said.

One solution, in his opinion, would be the use of drones to investigate unregistered wells.

“The biggest problem, and I’m speaking for the association, is that there is a war of wells. If I dig a 40-meter well, the farm will dig a 100-meter well and so on and so forth. The State will not have resources and neither will we. And there will be another outbreak of social unrest,” he predicted.

Rivera calls the situation “a silent water earthquake,” after touring the region and seeing the thousands of hectares of land planted.

“The coastal dry land is full of olive trees, where there were none before. Pichidegua is full of avocado trees. It is a crime because we have no water. The powerful, who own 500 or 1000 hectares, take water from here and transport it to the hills, where there are more and more plantations,” he said.

Meanwhile, “there are small farmers with five or six hectares who are without water,” he said, describing the situation as “serious, a powderkeg.”

José Rivera, administrator of the La Alianza RSS, checks the instruments of the new flow measurement system that indicates, second by second, how much water is in the tank and how much is being consumed in the water starters installed in the houses of each of the members of this rural sanitation system, a social organization unique to Chile, which alleviates the water deficit in the country. CREDIT: Orlando Milesi/IPS

Water as a human right

Alvarado said the solution to water management lies in the new constitution.

The text approved by the Constitutional Convention “will redistribute the right to use water,” she said. “It will put an end to the ownership of rights, which will be converted into use authorizations.”

She said that one of the origins of the water crisis is that there is an over-granting of rights that exceed the actual water sources and that there are very few water inspectors.

“An autonomous National Water Agency will be created and there will be integrated basin management in which users will be on an equal footing,” she said.

Rivera said the large landowners deceive small farmers by telling them that if the new constitution is approved they will be left without water, while “the constitutional proposal actually states that water is a public good.”

A step in the right direction

He highlighted, as a positive step, the promulgation in April of this year, under the government of leftwing President Gabriel Boric, of the reformed Water Code “for which we fought for 15 years.”

“The new law is very good because it protects rural areas and indicates that no one can ask for a concession in a rural area. They cannot privatize. Urban sanitation companies cannot enlarge their area of operation,” he stressed.

“We were recognized as RSS and today we can dig wells and draw water if it is for survival and basic consumption,” he added.

“Nobody wanted to change the Water Code, nobody wants to change the constitution…who is ‘nobody’? the economic powers-that-be. They do not want to change. We have to change,” he argued.

By Federico Lavopa
BUENOS AIRES, Aug 12 2015 (IPS)

The investor-state dispute settlement (ISDS) system has come under increasing criticism in recent years.

Inconsistent decisions, poorly reasoned awards, lack of transparency, parallel proceedings, serious doubts about arbitrator’s impartiality and the sheer size of the compensations sought by investors and awarded by arbitration tribunals are just some examples of the flaws that have been pointed out by detractors of the system.

Federico Lavopa

The dozens of cases that were initiated against Argentina as a result of the outburst of one of its worst economic and financial crises in late 2001 became an often-quoted sad illustration of many of these shortcomings of the ISDS system.

Apart from the tragic consequences entailed by the economic and political crisis which was faced by Argentina, in particular in 2001/2002, which included a fall in gross domestic product (GDP) per capita of 50 percent, an unemployment rate of over 20 percent, a poverty rate of 50 percent, strikes, demonstrations, violent clashes with the police, dozens of civil casualties and a succession of five presidents in 10 days, Argentina received a flood of claims from foreign investors that were filed under different ISDS mechanisms and, in particular, before the International Centre for Settlement of Investment Disputes (ICSID).

Indeed, in the period 2003-2007, claims against Argentina represented one-quarter of all the cases initiated within the framework of the ICSID Convention. These claims before international arbitral tribunals challenged the changes to the economic rules that Argentina had implemented to contain the effects of perhaps the worst economic cycle of its history.

After 1991, Argentina had embarked on an economic deregulation and liberalisation programme. Among others, this programme included the convertibility of the Argentine peso and the creation of a currency board to maintain parity between the peso and the U.S. dollar by limiting the local money supply to the amount of Argentina’s foreign exchange reserves. “If all investors that sued Argentina had obtained 100 percent of their claims, the total amount that the country should have had to bear would have been at around 80 billion dollars”

This economic and pro-market programme was accompanied by a strong emphasis on the attraction of foreign investment which, among other aspects, resulted in the conclusion of 58 bilateral investment treaties (BITs) – 55 of which came into effect.

It also included a mass privatisation process of public companies which, at that time, represented an important part of the domestic economy.

This market-oriented model reached its limits in the late 1990s, and in May 2003 a new president took office, whose government reformed the regulatory framework for the economy – particularly that for the public services privatised over the 1990s – and introduced a package of emergency laws which implied a considerable change in the conditions under which foreign investors and, in particular, public services providers had to run their business in Argentina.

As a consequence, many of them decided to resort to the investor-state dispute settlement mechanisms embodied in the dozens of bilateral investment treaties that Argentina had signed in the 1990s. In total, in the period 2001-2012, exactly 50 cases were filed against Argentina.

A striking characteristic of the Argentinian experience is the amount of requests for compensations made by the companies that sued Argentina. According to estimates made when the peak of cases following the crisis was reached, if all investors that sued Argentina had obtained 100 percent of their claims, the total amount that the country should have had to bear would have been at around 80 billion dollars.

This sum would have been practically impossible to pay, even if Argentina had not been undergoing a period of acute economic crisis, because it represented approximately 13 percent of Argentina’s GDP for 2013.

Although Argentina’s response to this flood of cases was varied and it is still early to offer definite figures, it is already possible to conclude that, in general, arbitration tribunals were prone to render awards in favour of investors.

Almost 45 percent of the cases have received a condemnatory award, although most of these cases could still be reversed by annulment proceedings, whereas only 15 percent of the arbitration proceedings ended up with a final decision completely in favour of Argentina. The remaining 30 percent are mostly cases which resulted in an agreement between the parties or which were altogether suspended.

All in all, of the 80 billion dollars of the possible amount of compensations calculated when the peak of cases against Argentina was reached following the crisis, Argentina has so far received final rulings involving the payment of 900 million dollars.

The first salient conclusion is that the ISDS system has a very low capacity to adapt to totally exceptional circumstances for which it does not seem to have been designed. Despite the efforts of Argentinian attorneys to show that the measures implemented in the post-crisis period were adopted in an emergency context, being so exceptional as to justify any breach of the substantial clauses of the BITs, few tribunals were prepared to sustain this defence.

This notwithstanding, and with most of these cases having already been dealt with, the upcoming scenario for Argentina seems much less drastic than that forecast when the peak of cases was reached.

While they represent a heavy burden for a developing country like Argentina, so far the compensations actually paid amount to a small portion of the sum initially estimated.

The Argentinian case also represents a worrisome example of the failure of the ISDS system to ensure coherence and soundness in its decisions.

Although the dozens of cases submitted against Argentina addressed exactly the same package of measures (the post-crisis emergency laws) and  had to assess very similar arguments of the different claimants and a practically identical series of defences put forward by the Argentinian government, the conclusions at which they arrived have shown striking differences.

Additionally, some of the decisions have been subject to strong criticism and/or declared null and void by annulment committees.

Finally, the experience of Argentina shows the difficulties that arbitration tribunals might encounter when trying to scrutinise the economic policy choices made by governments. On top of the sensitiveness of examining sovereign decisions of States, arbitrators might find themselves in the awkward situation of deciding on highly technical matters which they are clearly ill-equipped to assess.

The case of Argentina thus represents a sad example of the urgent need to reconsider and reform the ISDS system. Yet, the lessons to be drawn from this experience do not seem to lead to clear conclusions about which direction to take.

On the one hand, the system has proved to be extremely inflexible, which prevented it from addressing the exceptional peculiarities of the Argentinian case. On the other hand, however, the wide margin of discretion available for the arbitral tribunals resulted in the adoption of inherently poor decisions, and with high levels of incoherence among them. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

*  This column is based on a paper with the same title published as South Centre Investment Policy Brief No 2, July 2015, available here.

Excerpt:

Arnot coal-fired power station in Middelburg, South Africa. Climate activists are pushing for a much greater rollout of renewable energy as the key to shifting the carbon-intensive energy sector towards a sustainable low carbon future. Photo credit: Gerhard Roux/CC BY-SA 4.0-3.0-2.5-2.0-1.0

By Munyaradzi Makoni
CAPE TOWN, Jul 28 2015 (IPS)

Anti-nuclear energy activists are up in arms, and have taken to vigils outside South Africa’s parliament in Cape Town to protest against President Jacob Zuma’s push for nuclear development.

The protest has been building since September 2014 when Zuma struck a deal with Russia’s Rossatom to build up to eight nuclear power stations in South Africa. The stations would cost the country around 1 trillion South African rands (84 billion dollars).

As the protests mount, the Southern African Faith Communities’ Environment Institute (SAFCEI), an interdenominational faith-based environment initiative led by Bishop Geoff Davies, has said the government’s nuclear policy is not only foolish but immoral.“SAFCEI does not believe that nuclear energy is an answer to climate change but is a distraction likely to bankrupt the country [South Africa] and lead to further energy impoverishment” – Liziwe McDaid, energy advisor for the Southern African Faith Communities’ Environment Institute

SAFCEI is demanding that the government take a fresh look at its drive for nuclear energy, and the call has found resonance among clean energy civil society organisations (CSOs) in South Africa.

Although CSOs and government agree in the need to tackle climate change urgently, they differ on core issues as South Africa prepares for the U.N. Climate Conference (COP21) in Paris in December.

“We believe that adaptation needs to be given greater emphasis,” says Liziwe McDaid, SAFCEI’s energy advisor. “Building the capacity of affected and vulnerable communities to respond to climate change must be a priority,” she adds.

For mitigation, argues McDaid, a much greater rollout of renewable energy is the key to shifting the carbon-intensive energy sector towards a sustainable low carbon future.

As a participant in the country’s National Climate Change dialogues, she says that SAFCEI shares the aspiration for responsible climate change and “we are in agreement with government on many of the priorities as outlined in the White Paper.”

South Africa’s White Paper seeks to prioritise climate change responses that have huge adaptation benefits, imply significant economic growth and job creation, and are responsive to public health and risk management.

However, stresses McDaid, when it comes to nuclear energy, “SAFCEI does not believe that nuclear energy is an answer to climate change but is a distraction likely to bankrupt the country and lead to further energy impoverishment.”

Dissenting voices

Meanwhile, David Hallowes researcher and editor of Slow Poison for groundWork, another climate change pressure group, feels there is no consensus between the government and the CSOs ahead of the crucial Paris meeting.

South Africa is not doing enough on adaptation, said Hallowes. “Government is still allowing mining and industry to poison water and land in key catchments and agricultural areas,” he told IPS, adding that the result is that climate impacts will be amplified.

The same plants and developments that are driving climate change are poisoning and killing people, animals and plants that are in the path of pollution, “so the people’s struggles for an environment not harmful to their health and wellbeing are also climate struggles.”

According to Hallowes, “there are different views on what can be achieved with renewable energy. We (groundWork) do not think it can power infinite economic growth and hence we do not believe it can sustain a capitalist economy. In the short term, we think we should be looking for a reduction in energy consumption. The question is who gets it for what.”

Referring to South Africa’s Renewable Energy Independent Power Producer Procurement (REIPPP) programme, which some say proves the benefits of privatisation, he also pointed to differences over nationalisation or privatisation.

“We think we should have a programme that creates democratic ownership and control of renewable energy at different levels from community or settlement, to municipality to national. We call it energy sovereignty.  The National Union of Metalworkers of South Africa calls it social ownership. It’s the same thing.”

The groundWork researcher said that CSOs want to see an end to new coal developments, such as new mines or power stations. “I think everyone agrees but don’t necessarily mean the same thing. For some, it’s just a matter of jobs. We think it means the transformation of the economy towards equality and freedom that is democratic control rather than plutocratic control.”

Muna Lakhani, founder and national coordinator of the Institute for Zero Waste in Africa (IZWA), is equally concerned that government is not doing enough to fight climate change.

“Our government sees too much of ‘business as usual’ and is very lax in implementing even the minimal legislation, such as air quality permits, carbon taxes and the like,” he says.

According to Lakhani, CSOs are mostly united on key issues, such as the call for no more fossil fuel, a bigger push for renewables, and promoting local resilience especially of poorer communities and the generally disadvantaged.

Government role

Leluma Matooane, director of Earth Systems Science at Department of Science and Technology (DST) says the Department of Environmental Affairs has the responsibility to implement the country’s National Climate Change Response Policy but that the DST has taken a leadership and coordinating role in climate change research and in ensuring that the country’s responses to climate change are informed by robust science.

Under DST’s 10-Year Innovation Plan, argues Matooane, more focus is being placed on improving the scientific understanding of the drivers, impacts and risks of climate change, as well as on technological innovations the country may need to allow vulnerable sectors of the economy and society at large to adapt.

While views may differ on how to deal with climate change, notes the DST official, government has allowed the setting up of a multi-stakeholder grouping in which government has been joined by the private sector and civil society to discuss solutions.

Discussions in this grouping, he adds, influence and shape the country’s position in international debates and there is a deliberate attempt to have South Africa’s representatives deliver the similar position and messages at different platforms.

Edited by Phil Harris   

By Savio Carvalho
LONDON, Jul 16 2015 (IPS)

Corporate lobbyists are unusual guests at development meetings, but when the United Nations held its Financing for Development conference in Addis Ababa this week to decide who pays for its new “Sustainable Development Goals”, some governments laid out the red carpet for the private sector.

Photo Courtesy of Amnesty International

Unfortunately, the conference failed to agree on any mechanism for making sure the role of companies in development is kept transparent and accountable.

Some see giving companies a bigger role in development as a simple win-win. Governments get access to financing to take the pressure off aid budgets and come up with the 2.5 trillion dollars needed to respond to poverty and climate change, while meeting the housing, health, education and infrastructure targets in the post-2015 agenda.

On the other hand, companies get a potential say in policy making and access to juicy public contracts.

But before governments allow companies to shoulder significant responsibility for fighting poverty, climate change and other global challenges, they will have to convince critics who warn that they are putting the fox in charge of the henhouse.

While getting companies involved in development has the potential to provide important sources of funding to improve lives, experience equally shows that when companies are not held to account, people and communities can be seriously harmed. If private sector involvement in development is going to pay off for the people who need it and not just corporate shareholders, states have to leave impunity at the door.

Increasing the role of the private sector in the delivery of crucial public services such as water, education and health is fraught with risk. On July 2, the U.N. Human Rights Council warned that without proper regulation the privatisation of education could put the right to education at risk for countless children, especially if it means those children who cannot afford to pay lose out on quality education.

Around the world, Amnesty International has documented too many cases of marginalised communities waiting to see justice done, sometimes for decades, for human rights abuses perpetrated after a multinational company rolled into town. States who seek the involvement of the private sector in advancing development goals without putting effective safeguards in place, forget these cases at their peril.

The more than 570,000 victims of the 1984 Bhopal toxic gas leak, India’s worst industrial disaster, are still waiting for justice more than 30 years later. The firm responsible, Union Carbide, is now owned by U.S.-based Dow Chemical. A Bhopal court is pursuing criminal charges against Dow but the company has failed to even show up to multiple hearings over the last year. Meanwhile, survivors have tried and failed to seek justice in both India and the U.S.

While Union Carbide paid some compensation to those affected under a 1989 settlement agreement with the Indian government, it was wholly inadequate to cover the harm caused and there were serious issues with the way it was paid out to victims. At the time, the Indian government lacked the leverage to effectively hold a powerful global company to account.

Foreign companies operating in countries that are rich in natural resources and poor in regulation can reap huge profits at the expense of vulnerable people.

Earlier this year Amnesty International warned that Canadian and Chinese mining giants have profited from, and in some cases colluded, with  human rights abuses by the Myanmar authorities to exploit one of the country’s most important copper mines, with thousands of people being illegally driven off their lands, serious environmental risks going unchecked, and peaceful protest brutally suppressed.

Far from investigating the abuses, one multinational company involved used an opaque trust fund in the British Virgin Islands to divest its investment, in a manner which possibly breached economic sanctions applicable at the time. Reducing their exposure to the problem, rather than fixing it, has often been the mantra of companies faced by scandalous abuses.

For residents of Niger Delta, the legacy of half a century of oil production in Nigeria is the devastation of their farming and fishing lands. Today the oil spills continue unabated. In Shell’s operations alone, there were 204 spills in 2014. Shell blames sabotage and theft, but old pipelines and badly maintained infrastructure are a major cause of pollution.

This year one local community in Bodo has finally won 80 million dollars in compensation from Shell for the impacts of a massive spill, but only after a lengthy court battle in the UK and years of false claims by the company.

These are cautionary tales world leaders should consider as they plan to entrust the private sector with responsibility for funding and carrying out development projects. In all these cases, corporate political and financial clout created barriers to local communities accessing justice and accountability.

Governments have watched corporate political power grow for decades, often doing their best to get out of its way instead of properly regulating it to ensure that human rights are not violated.

Corporate lobbyists, meanwhile, have done everything possible to ensure that the important international standards addressing these risks remain entirely voluntary.  Voluntary codes of conduct and standards that have no enforcement mechanism ultimately lack the teeth to really change corporate behaviour, and when abuses occur, they can leave victims with little or no hope of remedy.

If private sector involvement in development is going to pay off for the people who need it and not just corporate shareholders, states have to leave impunity at the door. Companies that want to make a profit through work on sustainable development must be required to show they have a clean track record when it comes to human rights.

They must demonstrate that they have internal systems that ensure they do not cause human rights abuses. They must disclose information to communities about any local operations that impact them, as well as any payments they make to the authorities.

Crucially, governments must be ready to hold companies to account when abuses happen. The failure of all but five countries to meet the U.N.’s official aid targets is a crying shame, but if filling the gap by giving the private sector free rein leads to human rights abuses in already vulnerable communities, it will only rub salt in the wounds that sustainable development is supposed to heal.

Edited by Kitty Stapp

Excerpt:

By Karine Jacquemart and Anuradha Mittal
PARIS/OAKLAND, California, May 11 2015 (IPS)

In our work at Greenpeace and the Oakland Institute around access and control over natural resources, we face constant accusations of being anti-development or “Northern NGOs who care more for the trees”, despite working with communities around the world, from Cameroon, to China, to the Czech Republic.

Karine Jacquemart

This name calling, aimed at discrediting struggles for land, water, and other natural resources in the Third World countries, hides an ugly truth.  The land rush unleashed around the world to own and exploit Earth’s natural bounty is not only fierce and unfair, but increasingly fatal.

Recent reports, including a Global Witness report titled ‘How many more?’ released in April 2015, document the increase in the assassinations of land and environmental activists globally – a shocking average of over two a week in 2014.

As individuals and groups in the frontline of struggles face intimidation, arrests, disappearances, and even death, it is an ethical imperative to support the struggles of the grassroots land defenders against corporations and governments. This is what unites organisations like Greenpeace and the Oakland Institute.

Over the last decade, an estimated 200 million hectares – an area five times bigger than California – has been leased or purchased throughout the world, through completely opaque deals in most cases.

Natural resources in Africa are some of the most sought after, hence the fact that Africa experiences more than 70 percent of the reported land deals.

Anuradha Mittal

Multinational companies with assistance from powerful partners – the World Bank Group and G8 “donor” countries – are moving in, chanting their “development” formula: facilitate foreign investment through large-scale land acquisitions and mega-projects to ensure economic growth which will trickle down to translate into development for all.

Our work reveals a very different and worrying reality on the ground. Local communities and indigenous peoples report lack of consultation; their lands, homes and forests bulldozed and cleared for foreign investors; their livelihoods shattered.

As one villager in the Democratic Republic of the Congo said, “I want to remain a farmer on my land, not a daily worker depending on a foreign company”, or in the words of a Bodi chief in Ethiopia, “I don’t want to leave my land. If they try and force us, there will be war. So I will be here in my village either alive on the land or dead below it.”

They, and countless more, are victims of the theft of natural resources, made invisible and voiceless by those who define what development looks like.“As individuals and groups in the frontline of struggles face intimidation, arrests, disappearances, and even death, it is an ethical imperative to support the struggles of the grassroots land defenders against corporations and governments”

As if destruction of lives and livelihoods were not enough, those who resist are harassed, even face violence, by governments and private companies.

A planned palm oil plantation by the U.S.-based Herakles Farms in Cameroon threatens to evict thousands of people off their land and destroy part of the world’s second largest rain forest.

The company’s former CEO, responding to criticism of the project, said in an open letter: “My goal is to present HF for what it is – a modestly-sized commercial  oil  palm  project  designed  to  provide employment and  social  development and improve  the  level  of  food  security, while incorporating industry best practices.”

What he failed to mention is how a Cameroonian activist, Nasako Besingi, who heads a local NGO, The Struggle to Economize the Future Environment (SEFE), learnt first-hand the consequences of opposing the project. Arrested in 2012 for planning a peaceful demonstration in Mundemba, Nasako and two of his colleagues languished in a jail for several days.

Soon after his release, while touring the area with a French television crew, he was ambushed and assaulted by men he recognised as employees of Herakles Farms. Instead of protection from this violence, Nasako and SEFE face legal battles, including one of the favorite corporate tactics – a defamation lawsuit, intended to intimidate him and the others who oppose.

Privatisation of land and theft of natural resources will be irreversible and will put people, forest, ecosystems and the climate at risk, if it goes unchecked. The time is now to choose a development path that prioritises people and the planet over profits for the rich. (END/COLUMNIST SERVICE)

Edited by Phil Harris

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

Almost exactly two years ago, on the morning of Apr. 24, over 3,600 workers – 80 percent of them young women between the ages of 18 and 20 – refused to enter the Rana Plaza garment factory building in Dhaka, Bangladesh, because there were large ominous cracks in the walls. They were beaten with sticks and forced to enter.

Forty-five minutes later, the building collapsed, leaving 1,137 dead and over 2,500 injured – most of them women.

The Rana Plaza collapse is just one of a long series of workplace incidents around the world in which women have paid a high toll.

It is also one of the stories featured in the UN Women report Progress of the World’s Women 2015-2016: Transforming Economies, Realizing Rights, launched on Apr. 27.

All too often women fail to enjoy their rights because they are forced to fit into a ‘man’s world’, a world in which these rights are not at the heart of economies.
Coming 20 years after the Fourth World Conference on Women in Beijing, China, which drew up an agenda to advance gender equality, Progress of the World’s Women 2015-2016 notes that while progress has since been made, “in an era of unprecedented global wealth, millions of women are trapped in low paid, poor quality jobs, denied even basic levels of health care, and water and sanitation.”

At the same time, notes the report, financial globalisation, trade liberalisation, the ongoing privatisation of public services and the ever-expanding role of corporate interests in the development process have shifted power relations in ways that undermine the enjoyment of human rights and the building of sustainable livelihoods.

Against this backdrop, all too often women fail to enjoy their rights because they are forced to fit into a ‘man’s world’, a world in which these rights are not at the heart of economies.

What this means in real terms is that, for example, at global level women are paid on average 24 percent less than men, and for women with children the gaps are even wider. Women are clustered into a limited set of under-valued occupations – such as domestic work – and almost half of them are not entitled to the minimum wage.

Even when women succeed in the workplace, they encounter obstacles not generally faced by their male counterparts. For example, in the European Union, 75 percent of women in management and higher professional positions and 61 percent of women in service sector occupations have experienced some form of sexual harassment in the workplace in their lifetimes.

The report makes the link between economic policy-making and human rights, calling for a far-reaching new policy agenda that can transform economies and make women’s rights a reality by moving forward towards “an economy that truly works for women, for the benefit of all.”

The ultimate aim is to create a virtuous cycle through the generation of decent work and gender-responsive social protection and social services, alongside enabling macroeconomic policies that prioritise investment in human beings and the fulfilment of social objectives.

Today, “our public resources are not flowing in the directions where they are most needed: for example, to provide safe water and sanitation, quality health care, and decent child and elderly care services,” says UN Women Executive Director Phumzile Mlambo-Ngcuka. “Where there are no public services, the deficit is borne by women and girls.”

According to Mlambo-Ngcuka, “this is a care penalty that unfairly punishes women for stepping in when the State does not provide resources and it affects billions of women the world over. We need policies that make it possible for both women and men to care for their loved ones without having to forego their own economic security and independence,” she added.

The report agrees that paid work can be a foundation for substantive equality for women, but only when it is compatible with women’s and men’s shared responsibility for unpaid care work; when it gives women enough time for leisure and learning; when it provides earnings that are sufficient to maintain an adequate standard of living; and when women are treated with respect and dignity at work.

Yet, this type of employment remains scarce, and economic policies in all regions are struggling to generate enough decent jobs for those who need them. On top of that, the range of opportunities available to women is limited by pervasive gender stereotypes and discriminatory practices within both households and labour markets. As a result, the vast majority of women still work in insecure, informal employment.

The reality is that women also still carry the burden of unpaid work in the home, which has been aggravated in recent years by austerity policies and cut-backs. To build more equitable and sustainable economies which work for both women and men, warns the report, “more of the same will not do.”

At a time when the global community is defining the Sustainable Development Goals (SDGs) for the post-2015 era, the message from UN Women is that economic and social policies can contribute to the creation of stronger economies, and to more sustainable and more gender-equal societies, provided that they are designed and implemented with women’s rights at their centre.

Edited by Phil Harris    

The Koreas on the globe. Credit: TUBS/ Licensed under CC BY-SA 3.0 via Wikimedia Commons

By Ahn Mi Young
SEOUL, Feb 18 2015 (IPS)

The two Koreas are an odd match – both are talking about possible dialogue but both have different ideas of the conditions, and that difference comes from the 62-year-old division following the 1950-53 Korean War.

During this time, North Korea has become a nuclear threat – estimated to possess up to ten nuclear weapons out of the 16,300 worldwide (compared with Russia’s 8,000 and the 7,300 in the United States) according to the Ploughshares Fund’s report on world nuclear stockpiles – and South Korea has become the world’s major economic success story.

In a national broadcast on Jan. 16, South Korean president Park Geun Hye presented her vision for reunification by using the Korean word ‘daebak‘ (meaning ‘great success’ or ‘jackpot’). “If the two Koreas are united, the reunited Korea will be a daebak not only for Korea but also for the whole world,” she said.North Korea has become a nuclear threat – estimated to possess up to ten nuclear weapons out of the 16,300 worldwide – and South Korea has become the world's major economic success story

Since she became leader of the South Korea’s conservative ruling party in 2013, Park has been referring to a new world that would come from a unified Korea. Her argument has been that if the two Koreas are reunited, the world could be politically less dangerous – free from the North Korea’s nuclear threat – and a united Korea could be economically more prosperous by combining the South’s economic and cultural power and the North’s natural resources and discipline.

Denuclearisation has been set as a key condition for daebak to come about. At a Feb. 9 forum with high-ranking South Korean officials, President Park said that “North Korea should show sincerity in denuclearisation efforts if it is to successfully lead its on-going economic projects. No matter how good are the programmes we may have in order to help North Korea, we cannot do so as long as North Korea does not give up its nuclear programme.”

However, observers have said North Korea has no reason to give up its nuclear weapons as long as it depends on its nuclear capability as a bargaining chip for political survival.  “Nuclear capabilities are the North’s only military leverage to maintain its regime as it confronts the South’s economic power,” said Moon Sung Muk of the Korea Research Institute of Strategies (KRIS).

In fact, there are few signs of changes. North Korea has conducted a series of rocket launches, as well as three nuclear tests – all in defiance of the U.S. sanctions that are partially drying up channels for North Korea’s weapons trade.

Amid recent escalating tension between Washington and Pyeongyang over additional sanctions, activities at the 5-megawatt Yongbyon reactor in North Korea which produces nuclear bomb fuel are being closely watched to monitor whether the North may restart the reactor.

In the meantime, South Korea has been denying the official supply of food and fertilisers to North Korea under the South Korean conservative regimes that started in 2008.

During the liberal regime of 2004-2007, South Korea was the biggest donor of food and fertilisers to North Korea.

Then there appeared to be a glimmer of hope when North Korea’s enigmatic young leader Kim Jong Un presented a rare gesture of reconciliation towards South Korea in his 2015 New Year’s speech broadcast on Korean Central Television on Jan. 1.

“North and South should no longer waste time and efforts in (trying to resolve) meaningless disputes and insignificant problems,” he said. “Instead, we both should write a new history of both Koreas … There should be dialogue between two Koreas so that we can re-bridge the bond that was cut off and bring about breakthrough changes.”

In his speech, the North Korean leader even went as far as suggesting a ‘highest-level meeting’ with the South Korean president. “If the South is in a position to improve inter-Korean relations through dialogue, we can resume high-level contacts. Also, depending on some circumstances and atmospheres, there is no reason we cannot have the highest-level meeting (with the South).”

In South Korea, hopes for possible inter-Korean talks have been subdued. “What North Korea wants from dialogue with the South is not to talk about nuclear or human rights, but to have the South resume economic aid,” said Lee Yun Gol, director of the state-run North Korea Strategic Information Centre (NKSIS).

The government in Seoul remains cautious about Pyongyang’s peace initiatives. “We are seeing little hope for any rosy future in inter-Korean relationships in the near future, although we are working on how to prepare for the vision of ‘daebak‘,” said Ryu Gil Jae, South Korean reunification minister, in a Feb. 4 press conference.

North Korean observers have said that economic difficulties have been pushing the North Korean government to relax its tight state control over farm private ownership. North Korean farmers can now sell some of their products in markets nationwide, in a gradual shift towards privatised markets.

Further, according to Chinese diplomatic academic publication ‘Segye Jisik’ (세계 지식), quoted by the South Korean news agency Yonhap News, the North Korean economy has improved since its new leader took office in 2012. From a 1.08 million ton deficit in stocks to feed the 20 million North Koreans in 2011, the deficit now stands at 340,000 tons.

According to observers, this report, if true, could send the signal that if North Korea is economically better off, it may be politically willing to reduce its dependence on the nuclear card in any bargaining process with South Korea.

U.S. sanctions have been used in the attempt to force North Korea to denuclearise, thus restricting North Korea’s trade, and the U.S. government levied new sanctions against North Korea on Jan. 2 this year in response to a cyberattack against Sony Pictures Entertainment. The FBI accused North Korea of the attack in apparent retaliation for the film, The Interview, a comedy about the assassination of North Korean leader Kim Jong Un.

But, while sanctions may work in troubling ordinary North Koreans concerned with meeting basic food needs, they have little impact on the North Korean government. “North Korea’s trade with China has become more prosperous and most of North Korea’s deals with foreign partners are behind-the-scene deals,” said Hong Hyun Ik, senior researcher at the Sejong Research Institute.

And, in response to the threat that it may be referred to the International Criminal Court (ICC), on the basis of U.N. findings on human rights, Kim Jong Un reiterated: “Our thought and regime will never be shaken.”

South Korea may now stand as the only hope for North Korea, as the United States and the United Nations gather to turn tough against the country over the human rights issue, and South Korea may find itself faced with a ‘two-track’ diplomacy between the hard-liner United States and its sympathy for the North Korean people.

In past decades, North Korea has usually played out a game with the United States and South Korea. “In recent year, the United States has been using ‘stick diplomacy’ against the North Korea, while South Korea may want to shift to ‘carrot diplomacy’,” said Moon Sung Muk of the Korea Research Institute of Strategies (KRIS).

“The Seoul government knows that the pace of getting closer to the North should be constrained by U.N. or U.S. moves,” Moon added.

Edited by Phil Harris    

Survivors of the May 2014 Soma mine disaster, the worst in Turkey's history which left more than 300 people dead. Credit: Wikimedia Commons

By Tessa Love
ISTANBUL, Oct 26 2014 (IPS)

Six days a week, Tahir Cetin spends seven and a half hours hundreds of feet underground on a narrow ledge, mining coal near Soma, Turkey. He breathes in dust that is destroying his lungs, and digs into walls that could collapse on top of him. With one false step, he could fall to his death.

After five years of these conditions, and the low quality of life he faces due to little pay and poor treatment, the father of three says with resignation that it does not matter if he is alive or dead.

“It is slavery,” says Cetin, who lost his nephew in May this year, when an explosion at the Soma coal mine in Manisa in western Turkeycaused an underground  fire, killing more than 300 people in the worst mine disaster in the country’s history. “As workers, we are valuable, but we are despised and mistreated by our country.”“The reason these people died [in the Soma mine disaster of May 2014] is because of the government’s neoliberal policies of subcontracting and making profits. The people really responsible are those in the government who allow privatisation” – Arzu Cerkezoglu, Secretary-General of DISK

According to Hurriyet Demirhan, a board member of the Chamber of Mining Engineers, nearly every miner in Turkey works under such conditions, which are chronic and widespread, and many wonder if or when another Soma disaster will repeat itself.

Both Demirhan and Arzu Cerkezoglu, Secretary-General of the Confederation of Revolutionary Trade Unions of Turkey (DISK), the union that now represents the Soma workers, believe that this will inevitably happen in one or more of the 450 mines facing exactly the same threat as Soma unless drastic changes are made.

DISK, as well as the Chamber of Mining Engineers, has filed reports about all of them, warning the government of their lack of safety. In 2010, Demirhan even filed a report on Soma, listing it as the most dangerous, but no changes were introduced.

While a fire that knocked out power at the mine and shut down ventilation shafts and elevators caused the Soma disaster, Cerkezoglu blames the government for the accident, and she points her finger at privatisation as the biggest problem with Turkey’s mining sector.

“The reason these people died is because of the government’s neoliberal policies of subcontracting and making profits,” she argues. “The people really responsible are those in the government who allow privatisation.”

Privatisation of Turkey’s mines began in the 1980s, when there was widespread agreement that the state was incapable of running mines efficiently. Now, private companies apply for permits through the Ministry of Energy and when they are approved, they hire auditors, engineers and safety personnel, all of whom are supposed to ensure the safety of the mines and fair treatment of the workers.

However, according to Demirhan, because it is the company that hires these personnel, they do little when they find something amiss. Add to this a mentality of high production at low cost, and the result is extremely poor conditions and abysmal pay.

It is through this process, says Demirhan, that workers lose their rights – and death is the consequence. “All of this is the responsibility of the state,” he adds, “and it is only through policies written by the state that workers can regain their rights.”

Immediately after the Soma disaster, DISK began working directly with mine workers and the families of the deceased to compile a file listing their demands for Soma and mining safety in general, which they presented to the Ministry of Energy in early July.

These demands include greater job security, higher pay, shorter and fewer shifts, an earlier retirement age, and compensation for the families of workers who died in the disaster, including new homes, double salaries, and forgiven debts, according to Tayfun Gorgun of DISK.

Gorgun is currently stationed in Soma and is working with the state to ensure that these demands are met for the 8000 workers still mining in the Soma area. But while the government has made promises to meet these demands, he says, progress has been slow.

The biggest promise the government has made so far has been to do away with subcontracting in the mining sector, which would stop many of the problems caused by privatisation. However, this issue, along with several others, has not even made it into the draft legislation phase.

According to Gorgun, “the government’s strategy is to decrease rights by letting time pass until people forget. The only way to make these changes happen is for the public to continue to care.”

Demirhan agrees, saying: “The state knows we will forget. We have forgotten before, and we will again.”

Cerkezoglu is confident that change will come, saying she believes that “the resistance of workers will lead to a change of living conditions and collective work agreements.”

For his part, Cetin wryly acknowledges that workers have been displaying this resistance. “We have asked for our rights, we’ve gone on strike and we’ve marched,” he says, but then he describes the violence that workers have faced for their efforts, including being beaten with batons and gassed by riot police.

“We have always known the taste of dynamite dust in our lungs, but we had never known the taste of pepper gas. Thanks to the state, we now know that as well.”

(Edited by Phil Harris)

Manuel Campos, a 56-year-old taxi driver, is not covered by either the public or private pension system in El Salvador. His only hope is that his children will support him in his old age. Credit: Edgardo Ayala /IPS

By Edgardo Ayala
SAN SALVADOR, Aug 29 2014 (IPS)

Two of the promises made 16 years ago when El Salvador’s pension system was privatised have failed to materialise: There was no expansion of social security coverage and no improvement in pensions. Now pressure is growing for a reform of the system.

Although 20-year-old Kevin Alexis Cuéllar is one of the 2.7 million people enrolled in the private Pensions Savings System (SAP), he has no coverage.

Cuéllar, who is self-employed and does not have steady work, told IPS that he does not pay into the private account which will supposedly provide his pension when he retires. Men in El Salvador retire at the age of 60 and women at 55.

The system established in 1998 has run up against the reality of employment conditions in this Central American nation of 6.2 million people.

A 2013 report by the International Labour Organisation (ILO) and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) found that 65.7 percent of the economically active population works in the informal economy. Based on statistics from 2011, that is equivalent to 1,269,000 people.

Cuéllar operates a sound system at business events promoting brand awareness. Forced to drop out of school to work before finishing the eight years of basic education, it will not be easy for him to find formal employment in this country, which has no specific plans to reduce the size of the informal sector.

The situation worries him. “The time will come when I won’t be able to work, because of old age or sickness, and we’ll be left without a pension,” he told IPS.

That fear is shared by the tens of thousands of families who have no social security coverage.“It was clearly the business deal of the century, the right to a pension was commodified, to the benefit of financial groups.” -. Trade unionist Francisco García

Expanding coverage “is one of the pending challenges” of the private system, María Elena Rivera, a researcher at the Guillermo Manuel Ungo Foundation (FundaUngo), told IPS.

Although 2.7 million people are enrolled in the private pension scheme, only 653,257 are active contributors, according to figures from July. The rest are not formally employed.

That means only one out of four people of working age are active contributors to the private pension savings scheme, Rivera said.

The government of rightwing president Armando Calderón dismantled the public social security system in 1998 and created the private pensions scheme, in the midst of a wave of privatisations sweeping Latin America.

Under the new scheme, contributions from workers and employers generate a payment of 13 percent of the monthly salary that goes into the employees’ individual accounts.

These individual savings will produce, after 25 years of contributions, the money that will pay the pensions of workers once they reach retirement age.

Other Latin American countries like Chile, Colombia, Dominican Republic, Mexico and Peru also privatised their pension systems.

Participation in the SAP was mandatory for workers under the age of 36. Their individual accounts are run by pension fund administrators (AFP).

Men over 55 and women over 50 had to stay in the public system, which is to disappear as that generation gradually retires and passes away.

In the public pay-as-you-go system, all workers pay into the same fund, which is financed on the basis of solidarity between generations.

Those who were between the ages of 36 and 50 in 1998 could choose between the public or private systems.

“It was clearly the business deal of the century, the right to a pension was commodified, to the benefit of financial groups,” the secretary of the Workers’ Union of the National Institute for Public Employees’ Pensions (SITINPEP), Francisco García, told IPS.

The union wants to return to a mixed system, with the state controlling the pension system, and the AFPs as optional.

The government of leftwing President Salvador Sánchez Cerén, in office since June, said the private system has failed. But it has not given any indication of what reforms it will push through in the next few months – although it has ruled out a return to a public social security system.

In July, SAP had just under 7.5 billion dollars in accumulated contributions. Those funds were initially to be invested in El Salvador’s stock market, and the yield would go into the employee’s account.

Investing the funds in the stock market was also supposed to help drive the country’s productive development, by giving a boost to key sectors of the economy, generating more formal sector jobs and making it possible to expand coverage. In addition, the pensions would be improved.

The minimum retirement and disability pension is 207 dollars a month.

But the local stock market is too small to help productive enterprises get off the ground, analysts say, and formal employment did not receive the expected boost, nor did pensions grow.

Manuel Campos, a 56-year-old taxi driver, who is not enrolled in either the public or private pension systems, only hopes that once he is too old to work, or if he falls ill, his three children will help support him.
“If I didn’t have that hope, maybe I would have to do what so many people are doing today: beg on the streets,” Campos told IPS while waiting for customers on a street in San Salvador.

In another part of the capital, 40-year-old Sandra Escobar is preparing lunch that she will sell at noon in the business where she works as a cook: a small tin shack on the side of the road.

“My idea is to save up, little by little, to have something for my old age. But it’s hard,” said Escobar, while cooking beef in a frying pan.

When most of the younger workers opted for the private system in 1998, the government assumed the burden of the underfinanced public system, which according to the latest data, from 2012, was around 420 million dollars a year.

That is the amount needed to pay the pensions of the employees who stayed in the public system: 100,247 as of October 2012, according to a document from the Salvadoran Association of Pension Fund Administrators (ASAFONDOS), which represents the two AFPs.

In 2006, the legislature approved the Fideicomiso de Obligaciones Previsionales (pension trust fund), through which the AFPs are legally obligated to invest part of the funds in bonds issued by the state, and thus obtain the resources for paying pensions.

But these bonds have low returns, 1.4 percent a year, not enough to significantly increase the pensions of workers. Legally, El Salvador’s AFPs cannot invest in the international stock market, where they would obtain higher returns.

IPS was unable to obtain an interview with the president of ASAFONDOS, René Novellino. But a report he published in 2013 proposed approving a gradual opening up of the system, with clear limits and strong oversight, to investment in international stock markets, among other measures.

FundaUngo is calling for a national dialogue, so all of the sectors can set forth proposals for reforming the system.

In the meantime, soundman Kevin Cuéllar, cook Sandra Escobar and taxi driver Manuel Campos continue to face the reality of informal employment, with no prospects for receiving a pension when they reach retirement age.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

PPC power station in Ptolemaida. northern Greece. Credit: Nikos Pilos

By Apostolis Fotiadis
ATHENS, Jul 9 2014 (IPS)

Plans by the Greek government to sell companies that handle the key resources of energy and water face serious obstacles and its policy to offer investors exceptional privileges in an effort to boost interest in privatisation is coming under strong pressure.

Privatisation is one of the ‘prerequisites’ of the Troika – the tripartite committee led by the European Commission with the European Central Bank and the International Monetary Fund – in exchange for additional bailout money that Greece is seeking to continue to avoid insolvency.

The Greek government recently announced plans to sell a 30 percent share of its Public Power Corporation (PPC), and create a new ‘Small PPC’, which will be sold to private investors.

The new company will take with it some key production sites, lignite mines, and hydroelectric and natural gas units. In addition, about two million customers will be transferred from the original company and will be obliged to receive services from the new company for six months.Tax exemption seem to be a vehicle the Greek government favours using in its effort to attract investors to the country.

The lucrative terms and assets accompanying the new company, described in the legislation that creates it, are already attracting many local investors as well as major foreign energy companies like Germany’s RWE as well as the French EDL and the Italian ENEL.

The plan has caused strong reactions in north-western Greek cities where communities depend heavily on employment created by PPC mines and electricity production plants. PPC unions decided to take strike action to protest the privatisation plans, but these were declared illegal. The Greek opposition has called for a referendum on the issue but it appears unable to gather the 120 signatures of members of parliament necessary for it to go through parliament.

Kriton Arsenis, an independent Member of the European Parliament, has asked the European Commission whether obliging customers to receive services from the company constitutes an illegal state subsidy. In response, European Commissioner for Energy Gunther Oettinger said that the Commission “does not have adequate information to deliberate on whether this constitutes illegal state subsidy”.

At the end of March, Arsenis submitted a similar question concerning the Hellenic Republic Asset Development Fund (HRADF), which has been set up to manage Greek privatisations, and met with a similarly evasive answer.

The HRADF has announced the sale of 100 percent of Hellinikon SA – which administers 6,200 acres of land occupied by the former Athens Airport of Hellinikon – to Lamda Development.

Arsenis pointed that Article 42 of Law 3943/2011 establishing Hellinikon SA states that the company “shall be exempt from any tax, duty or fee, including income tax, in respect of any form of income derived from its business, of transfer tax for any reason, and capital accumulation tax” and again asked the Commission whether this unjustifiable tax exemption constituted state subsidy.

European Commissioner for Competition Joaquin Almunia replied that “Greece has not notified the Commission about the alleged tax exemption measure”, thus the Commission does not have sufficient information to assess whether it constitutes state aid and will ask Greece to provide clarifications on the issue.

Tax exemption seem to be a vehicle the Greek government favours using in its effort to attract investors to the country. Last week, Greek Energy Minister Ioannis Maniatis said that oil and gas explorers would pay 25 percent tax, down from the current 40 percent, to attract them to help exploit Greece’s untapped offshore hydrocarbon resources. “We have done this in order to incentivise our investors to invest in the future of Greece” he told a conference in London.

Plans to privatise water utilities stalled last month after the Supreme Court considered privatisation of the Athens Water Supply and Sewerage Company (EYDAP) unconstitutional. Following this decision, the transfer of a 34.03 percent share of the company’s stock holding to HRADF has been cancelled and the privatisation authority has publicly admitted that it is reconsidering the tender despite still holding 27.3 percent of the company.

This has effectively cast doubts on the privatisation process for EYATH, the water and sewage company of Thessaloniki, Greece’s second largest city. HRADF President Konstantinos Maniatopoulos was quoted saying in Greek media that “it will be difficult to continue the process for EYATH without taking into account the decision for EYDAP.”

The Suez/Ellaktor and Merokot/G. Apostolopoulos/Miya/Terna Energy consortia had been in the process of submitting binding offers by June 30. It appears now that HRADF will return about 50 percent of the 74 percent of its share in EYATH back to the state.

Two weeks ago, the Greek National Commission for Human Rights produced a focus report about the protection of access to water. Kwstis Papaioanou, President of the Commission told IPS: “International experience has proven that privatisation curtails the access of people to safe water. It is very encouraging though that the water has united citizens against its privatisation.”

Privatisation of water has indeed provoked strong public reactions. In an informal referendum in Thessaloniki in which over 200,000 people took part, 98 percent voted against privatisation.

“The court’s deliberation against privatisation of water companies is very clear but I would not be surprised if the government finds a way to circumvent it. There are plenty of other examples in which they have not implemented court decisions,” Arsenis, told IPS.

“Those interested in Greek public assets do not think like real investors. They take an interest only in privileged deals when profits are guaranteed and when most of investment risk is undertaken by the state in advance so that they have secured income that will cover their expenses in two or three years’ time.”

A first privatisation target of 50 billion euros in revenue by 2020 has been cut by more than half, with the country’s lenders now forecasting 22.3 billion. So far, only 3 billion has been collected.  The 2014 and 2015 targets for revenue from privatisations were set at 1.5 billion euros and 2.24 billion euros respectively but these are now very unlikely to be achieved.

The University of Puerto Rico showcases a solar-powered home at the 2009 Solar Decathlon in Washington, D.C. Five years later, renewable energy sources have yet to be used widely on the island. Credit: Stefano Paltera/US Dept. of Energy Solar Decathlon

By Carmelo Ruiz-Marrero
SAN JUAN, Apr 28 2014 (IPS)

Everyone in Puerto Rico agrees that the island’s ailing Electric Power Authority (PREPA) is badly in need of an overhaul, both in engineering and economic terms.

Its inefficient, largely obsolete, and highly polluting generating facilities, most of which use petroleum as fuel, require expensive repairs or must be replaced altogether.“There is no free lunch. Technological fixes are traps." -- Juan E. Rosario

Its finances are in a shambles. The utility’s debt stood at just over 8.95 billion dollars as of 2013, and its rates are rising ever faster, with commercial and residential ratepayers crying for relief.

However, there is sharp disagreement among stakeholders as to what is to be done. PR Senate president Eduardo Bhatia presented an energy reform bill, approved by the Senate and currently being considered by the House, that he claims will bring efficiency, transparency and clean and cheap energy.

Its proposals include net metering and a new regulating entity that would oversee rates and assure transparency.

“In order for energy costs to go down, we need to demand clean and cheap energy. We need efficient generating plants. Through this bill, PREPA is given a timetable to generate 60 percent highly efficient energy as required by industry and by U.S. regulations,” the Senate president told the local press earlier this month.

Puerto Rico is a commonwealth of the United States. It is subject to U.S. laws and regulations.

Senator Bhatia denies that his bill leads to privatisation of the Authority. “The most important thing is to end the inefficient monopoly that PREPA has been over the years. What I propose is not privatisation.”

But organised labour views the Bhatia proposal as a trojan horse.

The Alliance of Active and Retired PREPA Employees and UTIER, the employees’ union, point out that there is no electricity monopoly in Puerto Rico, given that over a third of the country’s electricity is supplied by private corporations. PREPA purchases electricity from two facilities owned by the Ecoelectrica and AES energy corporations, which burn natural gas and coal respectively.

The Alliance claims that for all their talk about environment and renewable energy, privatisation advocates fail to mention that the private AES facility, which provides the island with 15 percent of its electricity, burns “precisely the most polluting fuel, which is coal, which not only contaminates the air we breathe, but also its ashes are being buried in our coastal plains and it’s contaminating our aquifers.”

In a Mar. 31 communique, the Alliance adds that Bhatia’s proposal for deregulation and free competition actually impedes PREPA from competing in conditions of equality with the private sector.

PREPA’s current rate is 28 cents per kilowatt hour, which is decried by pro-privatisation sectors as one of the world’s highest. Although relatively expensive, it is lower than in Germany (29.2 cents kwh), Denmark (30 cents), Hawaii (34.08 cents), the Philippines (36.13 cents), and the nearby Virgin Islands (52.5 cents), according to data presented by the Alliance.

The utility is economically tied down by 392 million dollars in annual subsidies it is forced to give by virtue of legislation. These include subsidies for churches and other non-profit institutions (three million dollars), the tourism industry (nine million), agriculture (oine million), rural electrification and irrigation (six million), and small businesses (less than one million).

But these pale in comparison to the 261 million dollars given to municipalities, known as the CELI subsidy, 17 million for the 2008 Industrial Incentives Act, and 35 million to subsidise the AAA water utility. These last three comprise 80 percent of all subsidies given out by PREPA.

Privatisation opponents question what will happen to all these subsidies if the Authority is put under the control of private business.

The Alliance and UTIER insist that deregulation and private sector involvement will not lower rates. The Alliance cites U.S. Department of Energy data that show that between 1997 and 2012, electricity rate hikes were higher in deregulated states than in regulated states.

Towering over PREPA’s debacle are the utility’s bondholders, or ‘bonistas’ as they are called in Puerto Rico.

“The utility’s bondholders have been setting the country’s energy policy… they determine where the Authority will invest its money, and what payroll expenses should be,” said UTIER President Angel Figueroa-Jaramillo.

According to the 1974 Trust Agreement that governs the Authority’s relationship with bondholders, if PREPA’s income goes down, rate hikes are automatic.

“The bondholders are people and institutions that have lent money to PREPA,” explains economist Sergio Marxuach of the Centre for the New Economy. “Money is lent through bond issues. In exchange for that money, PREPA makes some promises to those who buy those bonds.”

In its fiscal year 2010 report to bondholders, PREPA boasts that its cost reduction programme includes reducing personnel through “attrition”, that is by voluntary retirements and by eliminating temporary jobs. Between January 2009 and the end of June 2010 the Authority eliminated 739 jobs.

“In the last 15 years, the number of employees has been reduced,” the UTIER president told IPS. “Especially in areas of conservation and maintenance, even though the infrastructure is growing – less people to maintain more infrastructure.”

Marxuach differs in his perspective regarding bondholders. “We could transition to renewable energy and change the energy model without necessarily affecting the bondholders,” the economist told IPS.

“They are only interested in getting paid. They are not in the business of operating power utilities. [For some people] it is convenient to use this group of investors as the boogeyman. We need to be sceptical towards these allegations that the bondholders do not let us do anything, because it is not true.”

What to do about PREPA’s environmental liabilities? How can the utility’s air pollution and carbon emissions be lowered?

“There is no free lunch. Technological fixes are traps,” says environmental activist and organiser Juan E. Rosario, community representative in the PREPA board of directors.

Rosario agrees that Puerto Rico must move to renewable energy but is concerned that the citizenry does not understand the costs involved or the amount of time such a transition will take.

“Wind and solar power are intermittent sources, their availability changes constantly,” Rosario told IPS. “This makes them less reliable than fossil fuels. And this, therefore, presents some serious technical problems. It’s a whole different game with a different set of rules.”

Rosario suggests natural gas as a transition bridge from the current coal and petroleum burning system of today to a future based on renewable energy sources.

“Natural gas is much cleaner, especially with respect to solid particles. This is no small matter. Seventy-five percent of all particulate air pollutants in Puerto Rico that come from stationary sources are produced by PREPA’s facilities,” he said.

But Rosario advises that people must brace for the costs. “The Palo Seco thermoelectric power plant [in the town of Toa Baja] cannot possibly be retrofitted for natural gas. It has to be decommissioned and scrapped, and that can cost 600 million dollars.”

“PREPA can cut emissions by 30 percent just by adopting conservation and efficiency measures. And most importantly, its income must be decoupled from the sale of electricity. If it isn’t decoupled, its management will never have any incentive to be efficient.”

After two decades of aggressively privatising its public services, the Philippines is beginning to realise the cost of mindless market reforms.

Recent months have seen an explosion of public outrage over a proposed increase in electricity prices, which threatens the country’s economic trajectory and is undermining the interest of millions of ordinary consumers, who have long suffered from exorbitant costs of public services.

The Philippines already has among the world’s most expensive electricity rates, which in 2011, some estimates suggest, even surpassed those of post-Fukushima Japan – making electricity prices in the Philippines the most expensive in Asia.A growing number of Filipino citizens have come to realise the consequences of hasty privatisation of public services.

For many economists, this served as a major disincentive against desperately needed inflow of Foreign Direct Investment (FDI). No wonder, despite attaining “investment grade” status from the world’s leading credit rating agencies in 2013, the Philippines is still struggling to attract high-quality investments.

Things came to a head when the Manila Electric Company (Meralco), the country’s leading electricity distributor, announced a further increase in electricity costs in late 2013. Meralco tried to justify the proposed increase – the highest single price hike in the company’s history – on the grounds that it had to undertake emergency purchases in the Wholesale Electricity Spot Market (WESM) to cover for a maintenance shutdown in its principal source of energy, the Malampaya natural gas pipeline.

But once the Energy Regulatory Commission (ERC) approved the proposed price hike, there was an immediate explosion of public outcry, with leading legislators and public intellectuals raising suspicions of oligarchic collusion.

“I find it difficult to believe that at the very time that the Malampaya [pipeline] would go into a month-long hibernation for maintenance, about eight power suppliers to Meralco would [also] go offline unexpectedly, forcing Meralco to go to WESM, which was supplied by power companies that were controlled by the same interests that went offline,” legislator Walden Bello told IPS.

“With Meralco’s sudden demand, the electricity price per kilowatt hour tripled, resulting in these controlling interests making a killing. The only question unresolved for me is to what extent Meralco was involved in the collusion by its power suppliers.”

Given the quasi-monopolistic nature of the Philippine energy market, with overlapping cross-ownership between distributors and producers, critics claimed that Merlaco and other major producers allegedly “staged” an emergency shutdown to justify the purchase of “artificially high” emergency supply in the spot-market.

Given the limited capacity of the ERC, and separate ongoing corruption investigations against ERC chairperson Zenaida Ducut, an increasing number of people raised the possibility of regulatory capture.

Under growing public pressure, the Philippine legislature, the Department of Energy (DOE), and the Department of Justice (DOJ) launched parallel investigations into the matter, while the Supreme Court passed a temporary restraining order on the proposed price hike by Meralco.

Like many other developing countries, the Philippines underwent a series of sweeping market reforms in the 1990s. As far as the electricity sector was concerned, the process of market transition culminated in the passage of the Electric Power Industry Reform Act (EPIRA) in 2001.

It was a landmark piece of legislation, replacing the Rate of Return on Base (RORB) system with a Performance-Based Regulation (PBR) regime. Its advocates promised, among other things, lower power costs, efficient transmission of electricity, and expanded capacity for energy production.

But in reality, a privatised electricity sector meant its domination by influential business families, who transformed the electricity sector into one of the country’s most profitable businesses.

The cost of the bungled privatisation process was borne by the consumers and the economy. The manufacturing sector – relying on affordable and reliable sources of energy, and crucial to the provision of large-scale employment – suffered from increasingly exorbitant power costs, making the Philippines highly reliant on services and domestic consumption as its engines of growth.

The Ibon Foundation, a research and development NGO in the Philippines, says electricity costs rose more than 112 percent in the 2001-2011 period.

Three years into office, President Benigno Aquino III managed to bring about an unprecedented period of political stability and economic revival to the country. But his good governance initiatives ultimately fell short of overhauling the country’s power infrastructure. There was also minimal improvement in the creaking regulatory agencies.

“In not calling Meralco and the power generators to task, the President lost an opportunity to show he understands the plight of consumers that are now suffering power rates that are among the highest in Asia,” Bello told IPS, reflecting the growing demand among leading legislators and the general public for a more decisive intervention by the government.

“The administration will be remembered as being soft on big business if it continues its hands-off attitude in this matter.”

Although President Benigno Aquino initially refused to directly intervene in the matter, he eventually agreed to review the 2001 law, signaling his willingness to introduce crucial reforms in the energy sector.

“We are open [to review]…When it comes to court action or any legal remedy that is available to consumers or to anybody who has the legal standing to do so, they are free to do so,” deputy presidential spokesperson Abigail Valte said.

It seems that a growing number of Filipino citizens have come to realise the consequences of hasty privatisation of public services. As a result, more people are calling for decisive state participation in the economy and empowerment of regulatory agencies to ensure energy security and protection of consumer welfare.

Residents of the Flores neighbourhood in central Buenos Aires protesting the outages during Argentina’s worst heat wave in 100 years. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
BUENOS AIRES, Jan 10 2014 (IPS)

Record temperatures at the start of the southern hemisphere summer in Argentina have been accompanied by highs on the thermometer of social discontent, as consumption peaks left thousands without electricity and threw into sharp focus the failings of the privatisation of the power industry in the 1990s.

The power outages have gradually become less and less frequent. But the street protests continue, as does the controversy over whether the shortages in energy supply were the sole responsibility of the electricity companies, or whether the government should be blamed as well.

Debate is also raging over what needs to be done to avoid a repeat when the next heat wave hits.

It’s almost midnight in the middle-class neighbourhood of Flores in central Buenos Aires, and the pot-banging protests have woken up the privileged few who have power and air conditioning, in the midst of temperatures that at the end of 2013 were over 40 degrees C in Buenos Aires and surrounding districts.

Men, women and children are blocking traffic with bonfires as they furiously beat spoons against pots and pans to get the government’s attention.

The heat wave in northern and central Argentina left at least six people dead, and drove electricity consumption up to record levels, which caused blackouts that lasted from two hours to 10 days in different parts of Buenos Aires and outlying neighbourhoods, affecting some 200,000 people at the peak of the heat wave.

Many welcomed the New Year by candlelight or while staying at the homes of relatives who still had electricity.

“All of the food in our fridge went bad,” a local resident from Flores, who only gave her first name, Jacqueline, told IPS. “We don’t have any water because the pump doesn’t work [without power]. We have to climb up four storeys carrying buckets to take a bath, and with this horrible heat you can’t sleep without a fan.”

The criticism mainly targets Edesur, a subsidiary of Italy’s ENEL, one of the distributors of electricity on the outskirts of Buenos Aires, along with the Argentine company Edenor. The two firms took over distribution of electricity in the area after privatisation of a number of sectors began in 1992.

Because of the deteriorated condition of the power grid, it was unable to handle the extraordinary levels of consumption, and cables and transformer stations burned out.

“They didn’t make the investments that they were supposed to make, and they use their policies to extort [the government]. If the business isn’t profitable, as they claim, why don’t they leave?” complained Federico Bernal, editorial director of the Latin American Centre of Scientific and Technical Research (CLICET).

In Argentina, the energy industry is subsidised and rates are frozen, although the centre-left government of Cristina Fernández began to exempt the wealthiest neighbourhoods from that policy in 2013.

The companies say that with the high inflation rate, the policy discourages investment.

Bernal told IPS that there is no “energy crisis,” but rather “a circumstantial problem” concentrated in the distribution of electricity.

Argentina has a total installed generating capacity of about 25,000 MW, higher than the country’s demand. Even on the days of highest consumption, supply exceeded demand by some 3,000 MW, he pointed out.

The expert also attributed the supply problems to economic growth.

In the decade from 2003 to 2013, the expansion of the economy and the improvement in living standards and social conditions drove up demand for electricity by 50 percent. Household consumption, in particular, doubled.

The government began to take measures to address the rise in demand, Bernal said. The works in progress – thermal and hydroelectric plants and renewable sources like solar and wind energy – should bring installed capacity up to 32,100 MW by 2015.

But according to Bernal, the national electricity regulator, ENRE, in the Planning Ministry, shares responsibility for failing to “force the companies to make the necessary investments and to upgrade.”

But he admitted that “it was very difficult to foresee what happened, with the worst heat wave in 100 years.”

“This is a problem of a long process of disinvestment, lack of oversight and control, and disorganisation of an essential branch of the economy,” Gustavo Vera, an opposition legislator in the city of Buenos Aires, told IPS.

Vera brought legal action against executives of Edesur and Edenor, ENRE, the city government, and central government officials, for “sabotage and disturbance of the public order.”

The legislator argued that the courts must investigate whether the chaos has been a maneuver by the power companies to force a rise in electricity rates.

He also stressed the lack of transparency in the companies’ investments, as a precedent to the crisis.

Víctor Bronstein, director of the Centre for Studies on Energy, Politics and Society, agreed that the problems had nothing to do with the generation or distribution of energy.

“We are not in an energy crisis,” he told IPS. “There was a problem of distribution that can be solved. If the necessary investments are made, by 2015 we can have a calmer summer.”

The expert referred to the errors in the wave of privatisation during the neoliberal government of Carlos Menem (1989-1999), which he said caused the current “tension between the logic of the market and the security of the energy supply.”

“When energy distribution was privatised, quality of service was used as a criterion of control,” and the state was left with only the task of levying fines, and without participation in planning, he said.

But that logic, based on expanding the number of customers, “doesn’t work” in this industry because “there is no substitute for energy,” as there are no competitors in the regions assigned.

“The state has to find ways to provide guarantees in the areas where the company can fail,” such as “reaching agreements on an investment plan” or “auditing investment models and projections,” he said.

Bronstein said there were shortcomings in the planning of power distributors, which failed to take into account factors like population and economic growth, and even cultural changes in consumption patterns.

“They cut rates and easy access to credit was provided. The use of air conditioning became more widespread. And the critical situation occurred at a time of high temperatures,” he said.

The expert said the low cost of electricity encouraged waste, which should be counteracted with “awareness-raising campaigns.”

He also mentioned other “pending tasks,” such as designing a billing system that “establishes a social tariff that isn’t only based on consumption patterns.”

The government fined Edenor and Edesur and ordered reparations for people affected by the blackouts.

It also stripped the companies of control of the investment fund, to which the government contributes funds for infrastructure works to repair and upgrade the power grid.

According to the official resolution, the “negligent attitude” of the private companies that hold concessions to supply electricity meant the resources “were not used in works that would have at least partially eased the situation.”

The government is also analysing the possibility of cancelling the two companies’ contracts.

Fishermen from the Mexican town of Coatzacoalcos working to contain an oil spill in their fishing grounds in 2012. Credit: Prometeo Lucero/Greenpeace

By Emilio Godoy
MEXICO CITY, Dec 19 2013 (IPS)

As Mexico is about to open its oil industry up to foreign investment, it will need penalties for negligence and regulations that force private firms to follow best practices in order to avoid problems like oil spills, analysts say.

On Dec. 10-11, the Mexican Congress approved the constitutional reform opening up oil exploration, extraction, refining, transportation, distribution and sale of oil and its by-products to local and foreign private investment.

It is a decision that dismantles the very foundations of the 1938 nationalisation of the oil industry.

“This is a good opportunity for the Mexican state to build a robust regulatory framework and above all to develop the capacity to penalise opportunistic or negligent behaviour,” José del Tronco, a professor at the Latin American Faculty of Social Sciences, told IPS.

The expert said that if oil and gas production are stepped up, greater prevention of risks is needed, and companies should incorporate the environmental and human costs of their activities.

Congress passed the reform of articles 25, 27 and 28 of the constitution, making it possible for the government to sign service, production and profit-sharing contracts with private firms.

The reform also allows the government to grant permits or concessions for the exploration and exploitation of oil blocs – a mechanism used in countries like Argentina, Ecuador, Peru and the United States.

The corporations will also be able to store, transport and sell oil products – which effectively breaks down the monopoly of the state-run Pemex oil company.

But Pemex, also a multinational corporation, will be just one more contractor, and will not maintain control over the activity or over the contracts with new operators, which will fall under the authority of the energy ministry.

The regulatory framework, Tronco said, would have to be very different than when it was only necessary to exercise oversight over one company governed by local rules. Multiple operators will participate in a range of activities, and controls and oversight will be hindered without clear rules that take into account international legislation.

In case Pemex commits breach of contract, the companies will be able to turn to international dispute settlement bodies, such as the North American Free Trade Agreement (NAFTA) panel procedures or the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).

The full extent of the reform will be defined by secondary laws that lawmakers will draft in the next few months, and by regulations to be put in place by the government.

The reform was approved in a record 80 hours by the legislatures of 17 of the country’s 31 states – which was needed to enshrine it in the constitution.

Now it has been sent back to Congress for final ratification, before President Enrique Peña Nieto signs it into law.

“International experiences are not encouraging,” Greenpeace Mexico spokesman Raúl Estrada told IPS. “It isn’t clear how the people will benefit from throwing the industry open.

“They say it will draw investment, and that the investment will be spent on the secondary effects of the reform,” such as oil spills and pollution, he said.

The reform has caused political tension. The two left-wing parties in Congress, the Party of the Democratic Revolution and the National Renewal Movement, are opposed to it on the argument that it privatises Pemex and hands over the country’s oil to foreign companies.

Both parties say they will bring legal challenges against the reform and organise a referendum in 2015, based on the federal law on popular consultations passed on Dec. 11.

The reform was voted 95 to 28 in the Senate and 354 to 134 in the lower house.

It was supported by the two traditional forces, the Institutional Revolutionary Party and the opposition National Action Party, along with two smaller parties, Ecological Green and New Alliance.

The government said output of crude would rise from the current 2.5 million barrels per day to three million by 2018 and 3.5 million by 2025, while natural gas production would go up from 5.7 billion cubic feet a day to 8.0 billion by 2018 and 10.4 billion by 2025.

It also projected a one percent rise in GDP by 2018 and a two percent increase by 2025, while promising that 500,000 new jobs would be created in the next four years and 2.5 million over the next 11 years.

The areas where new regulations would be needed are exploration and exploitation of wells deeper than 1,500 metres and shale gas fields, which Pemex has been working on since 2010 with scant results.

After the April 2010 Deepwater Horizon oil spill in the Gulf of Mexico, the National Hydrocarbons Commission (CNH), implemented new industrial safety provisions for deepwater drilling, to prevent such accidents.

The regulations include the assessment of contingency plans and a requirement of accident insurance. But the reform involves a revision of the provisions, so that they also apply to private companies.

“It’s not clear that the state will be more rigorous with Pemex than it could be with private companies. Is it more likely that they will come down hard on Pemex or on Exxon?” Tronco asked rhetorically.

“Do we have the capacity to administer justice in either one of the spheres, public enterprises or private companies? If we don’t, we have to start to build it,” he said.

The U.S. government does not fully implement the new industrial safety and environmental protection standards created after the 2010 disaster, Estrada said.

“We have many many examples of how the law is broken,” he argued. “How does the reform translate into public policies, budget, transparency, monitoring and oversight over the use of resources and the objectives achieved? That is the important part, to see whether these reforms will work or not.”

Greenpeace has protested the way Pemex operates in communities where the oil industry is active.

And such conflicts will be aggravated when the industry is opened up to private companies, Estrada said.

The reform creates the National Industrial Safety and Environmental Protection Agency, which will set industry standards. There are concerns over whether there will be overlap and duplication of efforts with the CNH, the environment ministry, and the federal environmental protection agency, PROFEPA.

A water truck in Port Louis, Mauritius. Credit: Nasseem Ackbarally/IPS

By Carey L. Biron
WASHINGTON, Dec 4 2013 (IPS)

As government representatives gather Tuesday in Indonesia for what could be final negotiations towards a global trade agreement under the World Trade Organisation (WTO), environmentalists and social justice campaigners are urging them to specify that water resources cannot be treated as commodities.

Critics of the privatisation and “financialisation” of natural resources are pointing to mounting interest by multinational investors in viewing common water resources as tradable, a change that development advocates worry could impact particularly on poor and marginalised communities. While international agreements enshrined a universal right to water (and sanitation) in 2010, international trade agreements have yet to follow suit – a gap that some say is becoming increasingly dangerous.“These entities have made bets that water will eventually be distributed and sold much like petroleum is today." -- William Waren

“Our concern is that the financialisation and privatisation of water is already very much a long-term goal of major multinational companies and investors,” William Waren, a trade policy analyst with Friends of the Earth U.S., a watchdog group, told IPS.

“These entities have made bets that water will eventually be distributed and sold much like petroleum is today. They know that global warming will make water resources increasingly scarce, so they want to get ahold of these resources and eventually sell it at their asking price.”

Of those who have made such bets so far, Waren mentions Suez Environment, the French water giant, as well as T Boone Pickens, the U.S. oil tycoon-turned-alternative energy magnate. Regardless of where these investors are based, however, their focus is international.

Just ahead of the start of the WTO ministerial talks, taking place Tuesday through Friday in Bali, Friends of the Earth International offered a series of case studies on the experiences of a dozen countries around the financialisation of common water resources. The report argues that a confluence of international financial institutions and corporations are “paving the way” for this process.

Yet these forces are being offered crucial aid by international trade agreements, both the vagaries of current accords and the more explicit strategies in those still under negotiation, particularly spearheaded by the United States.

These “key drivers of the deregulation and liberalization processes that have opened the water and sanitation sectors to corporate profiting-making, and as key building-blocks to the architecture of impunity that protects it,” the report states.

“Standing out amongst them are the new and increasingly less transparent and non-democratic modalities of transoceanic partnerships led by the United States … and the World Trade Organization’s agenda on environmental services.”

Old public commons

Key in this discussion is an international trade agreement signed more than a half-century ago. The predecessor to today’s WTO, created in 1995, was an accord known as the General Agreement on Tariffs and Trade (GATT).

Today, GATT provisions continue to coordinate policy for the trade in physical goods. Yet Waren says neither GATT nor the WTO has ever clearly defined what constitutes a “good” or whether it includes water.

“The traditional view in international law is that water belongs to the public commons, so back in 1948 there was no consideration of what the big corporations are contemplating today – the complete control of the system from well to tap,” he says.

“So, we need to make sure there’s language in new trade agreements offering specific assurances that water is regarded as part of the public commons that is not a good or product.”

Likewise, the WTO’s discussion on trade in services remains under negotiation, largely made up of countries offering their own commitments. Yet thus far no country has made substantive commitments regarding domestic water supplies, while advocates worry that a suite of GATT commitments could substantially increase corporate control over common water resources.

Meanwhile, this week’s discussions in Bali are being seen as a last chance for the WTO to come to a multilateral agreement, as negotiations have dragged on under the current round of talks for a decade. Amidst mounting frustration, much of the momentum has instead shifted to state-to-state trade treaties and investment agreements.

Two of the largest ever contemplated are currently under negotiation, both led by Washington: the 12-member Trans Pacific Partnership and another free trade area between the United States and the European Union. If the two were to come to fruition, they would cover the vast majority of the world’s economy.

Yet these so-called U.S. models also come with stringent pro-business requirements and quasi-judicial enforcement mechanisms that put investors on the same level as sovereign states.

“There is a clear and present danger in these investment agreements, and water policy is an almost constant issue,” Waren says.

“Part of the problem is that much of investment case law has an explicit right to export. So countries acting to deal with a dwindling water supply, especially in the Global South, may not realise they’re giving the right to investors both to make investments and to export.”

And despite the United Nations’ 2010 agreement on the universal right to access to water, the international tribunals that adjudicate disputes under investment agreements typically don’t recognise international humanitarian law. For critics, such a system underlines the importance of the WTO explicitly engaging with the issue of water as a tradable good.

A third more expensive

It is somewhat ironic that the push towards increased multilateral financialisation of water could be coming from the United States, where the experience surrounding the privatisation of public water utilities has been notably negative.

The country’s largest private water company, American Water, was formerly owned by a German company. But that owner pulled out in large part due to public resistance towards both private and foreign ownership of water resources.

“There has clearly been resistance to private ownership,” Mary Grant, a researcher with Food & Water Watch (FWW), an advocacy group, told IPS. “Communities have made clear that they want local ownership of their systems in order to control both quality of service and the rates charged.”

FWW surveys have found that investor-owned utilities in dozens of U.S. states have typically charged a third more than those owned by the public, a lack of efficiency corroborated by other investigations. Profit-driven systems also experience problems in deciding where to extend service, with companies at times proving reluctant to do so in low-income areas or very small communities.

“The U.S. experience shows that water privatisation has been a failure,” Grant says. “It hasn’t resulted in better services even while it has led to higher rates and, often, worse service. Local, public provision is the most responsible way to ensure that everyone has access to safe and affordable water.”

By Martin Khor
GENEVA, Aug 17 2013 (IPS)

Two new trade agreements involving the two economic giants, the United States and the European Union, are leading a charge against the role of the state in the economy of developing countries.

Attention should be paid to this initiative as it has serious repercussions on the future development plans and prospects of developing countries.

The two latest attempts towards this are through the Trans-Pacific Partnership Agreement (TPPA) and the Trans-Atlantic Trade and Investment Partnership (TTIP). A new feature of both, as compared to other FTAs, will be discipline on the operations of state enterprises and a reduction of the state’s role in development.

Martin Khor. Credit: Nic Paget-Clarke

The latter is a subject of long-standing discussion. The immediate post-colonial period saw a tendency towards a strong state, including government ownership of some key sectors, such as industry and banking.

Past decades witnessed a wave of privatisation across both rich and developing countries. But the state still owns or controls utilities, infrastructure, public services, banks and a few strategic industries in many developing countries.

Countries provide incentives for foreign companies, such as tax-free status. However, the state also offers special treatment to local companies, such as grants, cheaper-than-normal credit, subsidies, and government contracts.

The developmental role of the state in developing countries is now coming under attack from developed countries.

This is promoted by the big companies in the U.S., Europe and Japan, which seek to enter the markets of developing countries – the source of their future profits.

The support given by the state to domestic companies is seen by multinational companies as a hindrance to their quest for expanded market share in developing countries.

They are thus seeking to change the worldview and policy framework in developing countries, to get them to reduce the role of state enterprises as well as to curb the governments’ promotion of local private companies.

A sub-chapter on state-owned enterprises is a prominent part of the TPPA, which is being negotiated by the U.S. and Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Japan has just joined too.

The U.S. and Australia are leading the move to have rules to discipline the role of the government in the economy, through a two-pronged approach.

First, to get government or other monopolies to behave in a “non-discriminatory” way, including when they buy or sell goods and services. For example, they are not allowed to give preferences or incentives to local firms.

Second, companies that are linked to the government (including through a minority share) should not get advantages vis-à-vis other firms in commercial activities. Of course, the developed countries that are proposing this are thinking of their companies -how they can get more access to developing countries’ markets.

In the TTIP, a U.S.-European Union agreement, negotiations for which started in July, the EU has prepared a sub-chapter on state-owned enterprises, with rules that seem quite similar to what the U.S. and Australia are proposing in the TPPA.

Although the TTIP only involves Europe and the U.S. directly, the rules it sets are intended to have consequences for other countries.

According to press reports, the two economic giants are planning for the rules they set in the TTIP to become the standard for future bilateral agreements that also include developing countries.

They also hope that these rules will eventually be internationalised in the World Trade Organisation, which has over 130 member states.

The EU position paper on state-owned enterprises says that its aim is to “create an ambitious and comprehensive standard to discipline state involvement and influence in private and public enterprises” and for this to “pave the way to other bilateral agreements to follow a similar approach and eventually contribute to a future multilateral engagement.”

In other words, the constraints on the role of the state, and the reduction of the space for behaviour or operations of state-linked companies, will become the way of the future for all countries, if the U.S. and European plans succeed.

These attempts to curb the role of the state in the economy are worthy of serious study and counter-action.

Developing countries that succeeded in economic development were able to combine the roles of the public and private sectors in a partnership that advanced overall national development.

Asian countries, including Japan, South Korea, Malaysia, Singapore and China, have pioneered this model of public sector collaboration with the private sector.

Those few developing countries that managed to get development going were all driven by the “developmental state”, or the leadership role of government in establishing the framework of economic strategy, and the collaboration between the state, state enterprises, and commercial companies.

Ironically, agricultural subsidies, the main trade-distorting practice of developed countries and regions like the U.S., Europe or Japan, have been kept off the agenda of the FTAs negotiated by the U.S. and EU with developing countries, including the TPPA.

The developed countries are clever not to include what would be more damaging to them. Thus the developing countries are deprived of what would have been the major trade gain for them.

Naturally, there are pros and cons to any agreement, including the FTAs. Any potential gain for a country in exports or investments should be weighed against potential losses to domestic producers and consumers, and especially the loss to the government in policy space and potential pay-outs to companies claiming compensation under the FTAs’ investment rules.

But if developing countries have to come under new international rules that curb the role of the state and that re-shape the structure of their economy, then the prospects for future development will be adversely affected.
(END/COPYRIGHT IPS)

Excerpt:

The latest railway tragedy in the Argentine capital, the third in less than two years on the same commuter line, brought to light the severe limitations of a hybrid public-private system, despite the changes underway.

Thursday’s collision, which killed three people and injured over 300, occurred when a commuter train on the suburban Sarmiento line crashed into a train that had stopped near the station in Castelar, on the west side of the city of Buenos Aires.

Interior and Transport Minister Florencio Randazzo said the packed train had undergone repairs and had a new brake system. He suggested that the conductor, who was detained pending investigation, may have been speeding.

Last year, the centre-left government of Cristina Fernández launched a plan for investment and greater state involvement in the metropolitan railway network, after two serious accidents on the Sarmiento line, which links the centre of Buenos Aires with the western suburbs, and was previously run autonomously by a private firm.

The first accident happened in September 2011, when a bus crossed the tracks in front of an oncoming train. The barriers were down but the driver presumably thought they were stuck, as they often were. The train, which crashed into the bus, was derailed and was hit by a train approaching from the other direction. The accident left 11 dead and 212 injured.

And in February 2012, a commuter train slammed into a retaining wall at a railway terminus in the Buenos Aires neighbourhood of Once, killing 51 people and leaving over 700 injured.

After that tragedy, the Fernández administration withdrew the concession from the Cometrans consortium, and as an emergency measure created a new management unit with two private operators that were already running the other suburban lines.

The new unit runs the Sarmiento line under supervision and orders from the state, which now has greater decision-making authority and control and can levy fines that are automatically discounted from the private companies in case of infractions or breach of contract.

The centre-right government of Carlos Menem (1989-1999) privatised Argentina’s railways in the early 1990s, awarding the concessions to private companies. The contracts were renegotiated over and over again, while the quality of the railway services took a nosedive due to a lack of investment, maintenance and upgrading.

Nevertheless, the state coffers continue to shell out an average of 3.8 billion dollars a year in subsidies to keep fares down; 25 percent of that total goes to the six commuter lines serving the suburbs of Buenos Aires.

“There have been changes recently. Some things have improved. But Randazzo isn’t a magician, he’s a minister,” Norberto Rosendo, the president of the Comisión Nacional Salvemos al Tren (Save the Train National Commission), told IPS.

Rosendo was an engineer for Ferrocarriles Argentinos, the state-run company that ran the railways up to the 1990s.

“Improvements have been delayed for more than 20 years, since the railways were privatised and systematic maintenance stopped being carried out. And the outsourcing of repairs doesn’t work,” he said.

Rosendo was referring to the system under which the state hands over the parts to be repaired to Emprendimientos Ferroviarios SA, of Cometrans, which was removed as operator of the Sarmiento and Mitre lines after the February 2012 catastrophe in Once.

The owners of Cometrans and roughly two dozen former government officials are facing charges of criminal negligence and fraudulent administration in relation to the accident.

According to Rosendo, the government could have expropriated the Emprendimientos Ferroviarios SA repair workshop, which employs some 400 workers.

Gradually moving back into state hands

“Why isn’t a state-run company directly set up?” he complained. “I believe it’s because it would reduce the opportunities for corruption, since a state-owned firm has to be held accountable, but third parties are more difficult to control.”

The expert clarified that he was not making an accusation against the minister, who he had no reason to believe was part of a network of corruption, but was criticising the system itself.

“They should move towards total nationalisation, with participation by workers and users,” he recommended. “That is the kind of company that is needed, one that is held to account, that has its own repair shops, that doesn’t have to pay others to fix things or commission new carriages from China.”

Randazzo had announced a contract with Chinese companies for the production of carriages that would mean the complete renovation of the trains on the Sarmiento and Mitre lines in 2014.

The trains that are now running are 50 years old and are subject to continuous repairs. “They have to be thrown out as junk,” Rosendo said.

Users of the system also have complaints and suggestions. VIAS (Verificación Informativa y Auditoría Social) is a group of people who use the railway system in Argentina and carry out surveys and post photos to document complaints on Facebook.

In recent months, improvements have been reported, such as the reopening of bathrooms in train stations, more flagmen, and different safety measures.

But trains are still delayed, there are still doors that don’t close, and there are even risks of electrocution.

Carlos de Luca is one of the activists with the Frente de Usuarios Desesperados del Sarmiento, a movement of users of the Sarmiento line that in the years before the accidents was collecting signatures and protesting the often appalling conditions in the trains.

Although the movement’s complaints did not help prevent the tragedies, they did serve as information and evidence in the lawsuit over the February 2012 catastrophe, he told IPS.

“My wife was pregnant, and I used to go meet her at the station because she was scared. One day she fell. Incredible things happened in Sarmiento, like people who would return home barefoot” because they had lost their shoes in the daily crush.

“Today we are in anguish over this new accident, but I believe that something is changing since the state took over responsibility,” he said.

“The thing is, the changes can’t be seen overnight, as you would like, but we see there is a will to improve things,” he said. “What we have always been asking is for the state to take charge.”

“Peace at home, peace in the world” is the official motto of the Turkish Republic. Coined in 1931 by the republic’s founder, Mustafa Kemal Ataturk, it implies a causal relationship, but the events this week in Istanbul and dozens of other cities of Turkey suggest that causality can work in reverse order, too.

With protests continuing over the past week, two years of Arab Spring and intense socioeconomic unrest in southern Europe seem to be spilling into Turkey, which until now had stayed out of trouble.

Still, the economy is strong, although not as strong as it has generally been in the past decade. As a result, the similarities Turkey shares with northern and southern Mediterranean countries that are also going through a crisis have more to do with poor leadership.

Financial success, fuelled by foreign direct investment (FDI) in luxury real estate in Istanbul and along Turkey’s Aegean coast and by massive privatisation of state enterprises, has given the ruling Justice and Development Party (AKP) unparalleled popularity as well as an increasing feeling of invincibility."The ruling Justice and Development Party (AKP) has unparalleled popularity as well as an increasing feeling of invincibility."

Since AKP’s 2011 electoral victory, this sentiment has translated into diminishing transparency and accountability by key government figures. Recep Tayyip Erdogan, AKP’s leader and the Turkish prime minister, and a handful of close collaborators have ostentatiously disregarded calls by trusted advisors to consider the average citizen’s concerns and be more inclusive of the 50 percent of Turkey’s population that has not voted for AKP.

Lack of government transparency, such as in southern Europe, and arrogance towards citizens and their fundamental freedoms, such as in the Middle East, have paved the way to an explosive manifestation of the sense that enough is enough, resulting in three deaths, over 1,000 injuries and 1,700 arrests.

Some observers claim that the crisis started with a kiss, referring to a ban in May by Ankara’s authorities of displays of affection by couples in public areas that triggered youth demonstrations in the capital. Others point to earlier signs of discontent.

In May 2012 and the following fall, Erdogan challenged women’s rights to abortion and caesarean section for giving birth, repeatedly proclaiming that women should have a minimum of three children. Women’s associations took to the streets.

More recently, the Turkish parliament, where the AKP holds 326 of 550 seats, passed legislation severely restricting the promotion and consumption of alcohol, and Erdogan has promised high taxes on alcoholic drinks.

Secularist Turks, some of whom have voted AKP in past elections because of the government’s economic performance, have begun complaining that Erdogan is interfering with people’s lifestyles in an unacceptable way.

At the same time, citizens are tired of an excessively liberal economy that has increased the income gap between the bourgeoisie and the working classes.

The decision to turn Gezi, the only green park in central Istanbul, into a shopping mall and luxury apartment complex was the trigger rather than the cause of the Gezi revolt. Cumhuriyet Avenue, adjacent to the park, has already been demolished to make way to a large complex of expensive shops, residences and shopping malls, while Taksim Square, a landmark of Istanbul, will be converted to a large mosque.

Independent research by a non-governmental organisation published in 2012 showed that Turkey, with a total population of 75 million, possesses 85,000 mosques, 17,000 of which were built in the past 10 years.

In comparison, the country has 67,000 schools, 1,220 hospitals, 6,300 health care centres and 1,435 public libraries. The annual budget of the Ministry of Culture and Tourism is less than half of that of the Directorate General of Religious Affairs, which represents the Sunni Muslims of the country (80 percent of the population).

FDI that has flowed into Turkey since 2002, mostly from Qatari and Saudi investors and U.S. and Dutch pension funds, has concentrated on speculative high-end real estate projects. The number of shopping malls grew from 46 in 2000 to 300 in 2012. Istanbul alone currently has 2 million square metres of malls under construction, according to CBRE, an international consulting firm.

A series of privatisations announced this year – a railway system, the national airline, major energy state enterprises, the highways and bridges network – will provide funds for undertaking grandiose construction projects: a third bridge over the Bosporus, a third airport in Istanbul, an artificial second Bosporus that will facilitate even more premium real estate developments, and the largest mosque in the Middle East, to be built in Istanbul.

The demonstrations that began ten days ago were spontaneous and peaceful and appeared to reflect citizen frustration with aloof state governance, but the zero-tolerance attitude adopted by the police and incendiary statements by Erdogan and certain ministers have transformed them into an unexpected political crisis that has uncertain implications for Turkish democracy.

IPS has spoken with political personalities and well known journalists who have been reluctant to discuss the situation as it evolves.

The personal secretariat of Fetullah Gulen, a Turkish Muslim theologian and head of a worldwide movement promoting moderate Islam and inter-faith dialogue, told IPS that Gulen will issue a statement at the end of this week. Currently living in self-exile in the state of Pennsylvania in the United States, he is followed by millions of Muslims.

As rallies continued Wednesday and student mobilisation has been announced for Thursday, the Turkish president, Abdullah Gul, and the vice prime minister, Bulent Arinc, both known for political maturity and moderation, have tried to offer limited excuses for police excessive force.

The true litmus test for the evolution of Turkey’s political climate will take place upon Erdogan’s return from North Africa later this week. But statements similar to those he made before his departure, such as “I will press with the Gezi project—if you don’t want a mall I will build a mosque” or labelling the protesters “marauders”, are unlikely to restore social peace.

To old hands in Turkish politics, the current unrest is reminiscent of the hegemonic style of the Democrat Party leadership of the 1950s.

“In 1957, Prime Minister Adnan Menderes and President Celal Bayar were quite confident because they had received 47 percent of the votes in the elections,” said Huseyn Ergun, a veteran politician and current chairman of the Social Democrat Party (SODEP), described.

“They had started to put sanctions on the opposition party and its deputies. They also had an investigation commission in parliament against the opposition and destroyed Istanbul landmarks. You know how all this ended.”

Indeed, their reign ended in 1960 with a military coup, history that Turks are not eager to see repeated in their lifetimes.

An armed policeman stands guard in the village of Ierissos, where residents have been protesting a mining project. Credit: antigoldgreece.wordpress.com

By Apostolis Fotiadis
HALKIDIKI, Greece, Apr 27 2013 (IPS)

Any sense of tranquility that hangs around the mountain of Skouries in northern Greece, 80 km east of Greece’s second largest city Thessaloniki, is a façade. Home to some of the oldest forests in Greece, the pristine region is now a battleground, as the local population takes on the Canadian mining giant Eldorado Gold Corporation and its local subsidiary, Hellas Gold.

At the intersection between the road that leads to the village of Ierissos and another going up to the only operational mine in the region, on the mountain of Mavri Petra, one is stopped by a security guard, with the questions: “Who are you and what do you want?”

The guards have good reason to worry. A huge majority of this community of 40,000 opposes the extractive project, which aims to mine approximately 12 billion dollars worth of copper, gold, silver, zinc and lead that have been slumbering untouched under this mountain.

This past February, hooded men wielding Molotov cocktails set fire to bulldozers, containers and other equipment to mark their resistance to so-called “cheap extraction” plans, approved by the Greek government in 2011.

The corporation has pledged to invest 1.2 billion dollars into the creation of a huge open pit mine, as well as a network of smaller mines below the surface of the mountain. It says the project will generate over 1,000 jobs for locals and pump new life into Greece’s sputtering economy.

A close analysis of the contract shows Greece will not pocket even a significant portion of the mines’ projected revenue.

Christo Pahtas, mayor of the municipality that houses the natural deposits, signed away extraction rights to a 317,000-square-kilometre area without specifying royalties for the state.

Currently, Greece is only eligible to earn social security contributions for workers employed in the project, and taxes from the company’s profits — which could reduce dramatically if Eldorado opts to process minerals in another country.

Arguments over the extent of possible environmental impacts have already split the scientific community here. The state-run Institute of Geology and Mineral Exploration has formally thrown its support behind the investment, even while academics cry foul on the company’s claims that “new” extraction methods will spare the local ecosystem.

“The company speaks ‘half-truths’,” Georgios K. Triantafyllidis, a lecturer on mining and metallurgical engineering from the University of Thessaloniki, told IPS. The company has promised to refrain from using chemicals like cyanide or from emitting arsenic into the surrounding forests – but their “novel” practices are based on “scientific theories not yet proven in production”.

Past mining activity has set a negative precedent among locals, who do not trust claims of environmental sustainability. On Apr. 3, the results of a chemical analysis of samples from an old mining site the company plans to reintegrate into its production network showed arsenic contamination that was 42,000 times higher than the allowed levels.

On Apr. 17 the Constitutional Court of Greece declined the motion filed by residents against the validity of the Ministry of Environment approval of the environmental study submitted by Hellas Gold.

Locals are also concerned that mining will destroy the tourism industry here, currently the region’s biggest employer and income generator.

But the mineworkers and their families are determined for the project to succeed.

Having spent 26 years working in mines Aggelos Deligiobas, president of the Miners Union, told IPS he and others employed in the sector “will do everything in order to save [our] jobs”, insisting that if there was a real threat of environmental damage, they too would intervene to prevent it.

Disagreements have run deep into the local community, causing rifts between friends, neighbours and even families.

This instability could impact attempts by the Hellenic Republic Assets Development Fund to catch the eye of foreign investors in a 50-billion-dollar sale of most of the country’s wealth, a privatisation spree that many have termed a “total carve up” of the Greek economy.

Media coverage of the state’s heavy-handed repression of protests against this wave of privatisation could dissuade investors and spur support for local activists.

Last September, for example, the police cracked down brutally on a group of protestors marching peacefully toward the open pit construction site. The ensuing images of elderly villagers running to escape heavily armed riot police shocked the country.

In a press conference on Mar. 20, Eldorado Gold threatened to reconsider its investment if the government failed to “stabilise” the situation.

The company also launched what experts here called a “charm offensive”, inviting journalists of major publications and TV channels to tour Eldorado Gold’s sites in Greece and Turkey between Apr. 7 and 10, a move the Green Ecologist Party here has denounced as a ploy to deflect criticism.

On Apr. 9, a Facebook page dedicated to the company received more than 10,000 “likes”, many of them originating in Moscow, eliciting accusations from social media aficionados that the company has resorted to “buying” a good reputation.

According to statistics from the research company Media Services SA, Hellas Gold has given itself a virtual makeover. Between January and March 2013, the company paid over 630,000 euros for adverts, more than the company spent for all of 2012, shelling out roughly 370,000 euros in March alone.

One of the most popular advertisements uses images of the “workers” along with their names, implying that these are legitimate defenders of a plan resisted by hooded vandals.

Against a 24 percent dip in the advertising market in Greece, it is clear the company is going against the trend of the business community to stabilise its position in Greece.

Several requests for comments from Hellas Gold and Eldorado Gold went unanswered.

More than 100 environmental, social and indigenous organisations protested Monday in the Chilean capital to demand that the state regain control over the management of water, which was privatised by the dictatorship in 1981.

More than 6,000 people took part in the peaceful, colourful “great carnival march for the recovery and defence of water” in Santiago, according to the organisers, one of whom was former student leader Camila Vallejo, who plans to run for parliament for the Communist Party.

The demonstrators also delivered a letter to right-wing President Sebastián Piñera, complaining that the water shortages affecting local communities were not only due to persistent drought but also to structural problems in the policies governing the exploitation of natural resources.

“We have discovered that there is water in Chile, but that the wall that separates it from us is called ‘profit’ and was built by the (1981) water code, the constitution, international agreements like the Binational Mining Treaty (with Argentina) and, fundamentally, the imposition of a culture where it is seen as normal for the water that falls from the sky to have owners,” the letter says.

“This wall is drying up our basins, it is devastating the water cycles that have sustained our valleys for centuries, it is sowing death in our territories and it must be torn down now,” it adds.

The mining industry, which uses significant quantities of water, is one of the pillars of the Chilean economy, with copper exports alone accounting for one-third of all government revenue.

“There is a water crisis at the national level,” indigenous leader Rodrigo Villablanca, president of the Diaguita Sierra Huachacan Community in northern Chile and spokesman for the “Hope of Life” Ecological and Cultural Committee, told IPS.

The movement is fighting for the repeal of the water code, adopted by the 1973-1990 dictatorship of General Augusto Pinochet, which made water private property by granting the state the right to grant water use rights to companies free of charge and in perpetuity.

The code also allows water use rights to be bought, sold or leased, without taking into consideration local priorities for water use, the organisations complain.

“Our main demand is the repeal of the water code that is denying us the right to have water to live,” Teresa Nahuelpán, an activist with the Movement for the Defence of the Sea in Mehuín, 800 km south of Santiago, told IPS.

The code “favours profits and the wealthy,” she argued.

The organisations are also demanding the repeal of the bilateral mining treaty signed by Chile and Argentina in 1997 which, they say, hands foreign mining corporations all of the water and energy they need for their operations along the border between the two countries.

The treaty states that the public institutions of the two countries will act in a coordinated manner with a view to facilitating mining investment and the development of the industry. It goes on to say that towards that end, public authorities will permit the use of “all kinds of natural resources, inputs and infrastructure”.

Villablanca said “the binational mining treaty hands over 4,000 kilometres of (Andes) mountains to transnational corporations.”

The community leader said the agreement “allows the extraction of natural resources and the use of water to be granted practically free of charge to companies.

“In Latin America, the biggest concentrations of freshwater are in the Andes mountains,” home to 80 percent of Chile’s indigenous communities, who “depend on these sources of water for survival,” he said.

Furthermore, “these mining and water use concessions (to private interests) are inheritable; they are forcing the highlands communities to retreat. Indigenous people have been moving out and small-scale mining and livestock-raising, which the communities depended on for subsistence, have been hurt,” Villablanca added.

“The aim of the march was to have an impact on public opinion, in Chile as well as at an international level,” he said.

Nahuelpán said “the march is a wakeup call for people, and a demand for water that allows us to continue living, that gives us life.

“Logging companies in the south have also caused a great deal of damage” to Mapuche communities, she added. “The territories are drying up; there are many communities that have no water, and that are getting water from tanker trucks.”

The Mapuche are Chile’s largest indigenous group, numbering about one million in a country of nearly 17 million people. They represent 87 percent of the native population, and live mainly in the south of the country, where Mapuche communities frequently clash with logging companies over land and water.

The latest setback in the organisations’ struggles was an early April Supreme Court verdict ruling that it is not illegal for a mining company to not pay for extracting groundwater on land it was granted under concession because it is merely “exploring” for minerals in the water, rather than “exploiting” the water.

Environmentalists warn that the ruling could serve as a legal precedent for mining corporations to use water without any controls, even until a water source has been exhausted.

The ruling was in favour of the Sociedad Legal Minera NX Uno de Peine company, which the Dirección General de Aguas, Chile’s water authority, had denounced for using groundwater without a permit.

But the Supreme Court ruling stated that the groundwater pumping operation in question was authorised by the exploration concession and did not require a permit from the water authority, as stated in article 58 of the water code.

“We’re talking about water that was in the basins, which enables Chile’s valleys to survive,” said Villablanca. “In a word, they are leaving all of Chile without water.”

Oil, the symbol of modern Mexico, is once again stirring up local political waters, with turbulent debates on the fate of the state-owned oil monopoly and conflicts over the privatisation of key economic and strategic areas.

The leading issues of contention revolve around the reform of Mexico’s state oil company Pemex (Petróleos Mexicanos), pitting advocates of full state control, who call for only minor changes in the company’s administration, against proponents of opening the industry up to private capital in prospecting, crude refining, petrochemical and other activities.

“We have to get back to discussing these issues urgently, with a frank and open debate on the need to modernise, backed by solid arguments. Addressing safety, health, environmental and other practices in Pemex is a pressing matter,” Miriam Grunstein, a researcher with the state Economic Research and Teaching Centre, told IPS.

Mexican President Enrique Peña Nieto, of the traditional Institutional Revolutionary Party (PRI), is in favour of a constitutional reform, proposed last year as part of his campaign platform. The reform would allow Pemex to receive investments from individuals and to partner up with private companies for crude petroleum exploration and extraction, without privatising the company.

In December, after the new administration took office, all the parties with parliamentary representation signed seven agreements on oil-related matters, which included retaining government control over oil resources and implementing reforms to grant Pemex management autonomy.

One of these agreements, known as the Pact for Mexico, covers a number of issues ranging from human rights to the economy, as well as safety and justice, accountability and democratic governance.

“Necessary reforms will be implemented, both in parastatal regulations and in the energy sector and the fiscal system, with the aim of transforming Pemex into a productive public company, without relinquishing state ownership but allowing it to be competitive in the industry,” reads the agreement, which sets out a series of executive and legislative transformations.

In recent years, Mexico’s oil company –which currently yields an average of 2.5 million barrels of crude a day– has experienced a drop in performance, with a contraction in production, decreasing exports, a growing debt and increasing imports, revealing the need for substantial changes.

According to a book on Mexico’s oil industry published in 2012 by industry expert Roberto Ortega, Pemex was the sixth largest oil company in the world in 2004 and by 2011 it had dropped five places to number 11. In crude reserves it went from number nine to number 17 in the world, and in gas reserves it plummeted from number 21 to number 35.

Hydrocarbon imports, including gasoline and other fuels, represent a great burden, as the company’s numbers reveal that in 2012 it imported more than 600,000 barrels a day.

The situation with natural gas is no better, with foreign purchases above one billion cubic feet per day last year.

In 1938, Pemex became Mexico’s most emblematic company when then-president Lázaro Cárdenas nationalised the oil industry, forever linking it to the PRI as a symbol of the country’s sovereignty, and later to the left-wing Party of the Democratic Revolution formed in the late 1980s from a PRI breakaway group.

“The ban on oil exploration concessions, reserve sharing and any form of competition with other prospectors won’t be lifted,” Ortega, a former Pemex general manager, said.

“The fiscal reforms in Pemex go hand in hand with a general reform. There’s no sense in separating them. But these will be the most debated reforms and differences may lead parties to withdraw from the pact,” the expert told IPS, in reference to Peña Nieto’s announcement that he would propose changes in the tax regime.

Pemex is the world’s fourth largest oil producer and the third largest exporter of crude oil to the United States, according to the company’s information. It ranked 34th in the 2012 Global Fortune 500, the annual ranking of top corporations worldwide as measured by revenue, compiled and published by Fortune magazine.

Pemex, which reported 127 billion dollars in revenue in 2012, is subject to a special tax regime, channelling a large part of its income to the state, with little funds left over to invest in prospecting and technological and infrastructure development. The company also represents a source of income that finances 33 percent of the national budget.

The left-wing National Regeneration Movement, headed by former presidential candidate Andrés López Obrador and on its way to becoming a full-fledged political party, has launched a plan of action to defend crude oil, including demonstrations, forums and campaigns to raise awareness on the value of Pemex.

The tension in political and business circles was aggravated by an explosion on Jan. 31 in Pemex headquarters in Mexico City, which killed 37 people and left 120 injured. The authorities have yet to determine the cause of this accident.

“Private investments will prove a healthy injection provided competition and transparency mechanisms are changed. Private is not necessarily good, just as public is not necessarily bad,” Grunstein noted.

In 2008, a much debated oil industry reform was implemented to improve the state company’s administration and strengthen accountability and transparency. Among the measures introduced then were the reorganisation of its Managing Board and the establishment of monitoring and auditing committees to supervise the awarding of contracts and other business deals.

For analysts like Ortega, one of the effects of these changes was the imposition of even more regulations. The state company is governed by some 2,000 rules and procedures and approving a new management project involves a seven-stage procedure.

“If we want to turn Pemex into a competitive company, we need to see if we can do it with the current infrastructure. It can’t be modernised if we don’t first analyse its production capacity and it won’t autonomous while it’s tied to the national budget,” Ortega said.

A report issued in November 2012, under the title “A New Beginning for Mexican Oil: Guiding Principles and Recommendations for a Reform in Mexico’s National Interest”, concluded that “the current oil industry model, in terms of its legal, regulatory and organisational structure, has run its course”, and suggests a legal and regulatory reform for the sector.

Berkeley activists march in San Francisco from the offices of Richard Blum, chair of realty giant CBRE which is selling post offices for the U.S. Postal Service, to the office of Blum’s wife, Sen. Dianne Feinstein. Credit: Harvey Smith/IPS

By Judith Scherr
BERKELEY, California, Jan 31 2013 (IPS)

Several dozen people filled the seats in a downtown storefront Tuesday night to plan how to save a landmark they say belongs to the community – a 99-year-old post office the United States Postal Service wants to sell.

Berkeley is just one of thousands of cities across the U.S. that has lost or is facing the loss of its post office. For tiny hamlets, such as Deadwood, Oregon with a population of 200, the crisis is not about losing a historic landmark, it’s about losing the community’s gathering place.

Where the USPS isn’t shuttering “underperforming” post offices, it’s slashing hours. It is also consolidating sorting centres and trying to outsource trucking services. These actions cause service reductions and kill middle-class jobs, but post office officials say the growing debt requires scaling down.

Community and postal worker activists disagree. “These (post offices) are the commons,” said Dave Welsh, a Berkeley resident and retired letter carrier. “These are buildings paid for by our parents and our grandparents and our great grandparents. It’s public space. It’s taking our commons away from us.”

No one disputes that the post office is bleeding red ink. Most evident is the increase in electronic communications and decrease in first-class mail. Less known is a 2006 law requiring the Post Office to prepay 75 years of retiree health benefits over 10 years. That costs the USPS about 5.5 billion dollars annually. Adding to the deficit, the USPS has overpaid billions of dollars into pension funds.

Postmaster General Pat Donahoe has asked Congress to adopt legislation that would reverse the requirement to prepay retiree benefits and rectify the pension fund overpayment. He also wants legislators to allow cuts in postal delivery from six days to five – a move that would cut 25,000 jobs according to the National Association of Letter Carriers – and to increase prices on postal products based on market demand.

Speaking at a legislative hearing, the postmaster general underscored the contradiction: Congress expects the post office – which gets no taxpayer subsidies – to perform as a for-profit business, but at the same time Congress has imposed restrictions on pricing and product sales.

While they support the postmaster’s demand to stop prepayment of retiree benefits and rectify overpayments, post office activists and union workers have spoken out against the closures, consolidations and plans to privatise functions.

Jessica Campbell of Oregon’s Rural Organizing Project says downsizing leads to poor service and pressure to privatise. “It’s like the process that privatisers take to privatise social services,” Campbell told IPS. “They defund it or they disable it in some manner and then they can point at it and say, ‘Look how this service is failing. And wouldn’t a private alternative serve us better?’”

In fact, some 800 USPS truck drivers in California are currently in federal court fighting a move by USPS to turn their routes over to private companies. “Some of the big trucking companies – their mouths are watering at the prospect,” Welsh said.

Tom Dodge, a USPS truck driver in Baltimore, Maryland, said the California case is just the beginning of an attempt to privatise 6,900 union trucking jobs across the country. He said trucking companies motivated by profitability, won’t respect the post office mission of delivering mail to customers quickly.

“In the trucking industry, the way they make money, is by running full trucks down the road, so they use the least amount of fuel, and the maximum load in a certain period of time,” Dodge told IPS.

“Applying that to the mail industry isn’t going to work. If you have a scheduled time to get people’s mail delivered, you have to be able to pick that mail up quickly and get it to a sorting facility and back out on airplanes and across the country.”

The service cuts will cost jobs. Postal jobs have declined from 750,000 two decades ago, to about 550,000 today. Union contracts prohibit layoffs for workers on the job for six years, but relocation to available positions is not an option for everyone.

“In this time of high unemployment, the federal government should be creating jobs, not destroying them,” Welsh said.

Steven Pitts, labour policy specialist at the University of California Berkeley Labor Center, said one should look at how cuts at the post office impact whole communities, especially the African American community, given the “greater openness in the public sector” to employ racial minorities.

While African Americans are 13 percent of the U.S. population, they make up about 21 percent of the USPS workforce, according to 2009 Equal Employment Opportunity Commission data. That means post office layoffs hit the African American community hard.

“We have clear sectors where African Americans are employed,” Pitts told IPS, “and when those sectors get destroyed, that’s what we mean by structural unemployment, structural racism. What’s frustrating is, when people look at the well-being of the Black community, and they look at outcomes in terms of crime and the larger issue of poverty, what people fail to do is look at what’s done to destroy those pillars of success.”

Some activists fear dismantling the post office will eventually lead to privatisation, as has happened in public education and prisons. A recent white paper, “Restructuring the U.S. Postal Service: The case for a Hybrid Public-Private Partnership,” calls for privatising all postal functions except the “last mile” mail delivery.

The “hybrid” post office would slash the number of union workers: “The new system accommodates the ongoing loss of tens of thousands of employees through retirement and separation incentives, including nearly 50,000 mail handlers, more than 100,000 postal clerks, tens of thousands of managers and supervisors, and thousands of other support and overhead personnel,” the paper says.

Edward Hudgins, director of advocacy at the Atlas Society, participated in writing the paper. He told IPS that because the post office is a monopoly, people don’t have the choice of a less expensive vendor. People prefer shopping at Walmart rather than going to a “cute little mom and pop store,” because Walmart goods cost less, he said.

“If you want to have a government monopoly that guarantees extra-high pay – higher than what the market would allow for – that is a problem,” he said.

But Sally Davidow, spokesperson for the American Postal Workers Union, believes the calls for privatisation are disingenuous. “There are people who can’t wait to get their hands on the publicly-owned post office,” she said.

For several decades, governments around the globe have turned to privatisation as the best option to help relieve the world’s destitute by providing them with health care services, water and electricity. By and large, however, this effort has failed.

Numerous experimental alternatives to privatisation exist, but a report by the Municipal Services Project has an idea that is not outlandish or even terribly experimental.

If public pension and other government funds redirected their investments, it says, they could help provide improved access to water, energy and health services for the world’s poor. Municipal Services Project is an organisation that researches alternatives to privatisation and the commercialisation of public service provision.

“Public funds should serve to reinforce much needed public services,” David McDonald, co-director of the Municipal Services Project, said.

The research initiative is co-directed by Queen’s University in Canada and the University of the Western Cape in South Africa, with other partners including the Universidad Mayor de San Simón in Bolivia, as well as NGOs such as the Bangkok-based Focus on the Global South and the Accra-based Africa Water Network.

An approximate sum 75 billion U.S. dollars is needed to bridge the global public services gap, mainly in the developing world, where up to two billion people lack access to basic services such as water and sanitation, electricity and health care, says the report.

So how can countries close this gap? The Municipal Services Project suggests taking advantage of two types of funds: public pension funds, made up of contributions from public employers and employees; and sovereign wealth funds, through which governments collect and invest revenues from natural resources, budget and trade surpluses and other forms of state income.

Together, these two funds manage as much as 10 trillion U.S. dollars worldwide and invest heavily in the private sector, seeking – though not always achieving, in the volatile current economic climate – an average return rate of seven percent, according to the report.

Some funds currently invest in some public service providers, such as privately owned utility companies and infrastructure operators, such as those at toll roads and airports.

If the funds were willing to invest as little as 1 percent of their assets in publicly owned and operated infrastructure, argues the report, it could create an initial capitalisation pool of up to 100 billion U.S. dollars – 25 billion more than the 75-billion-dollar gap.

Investment in public services more beneficial

Research has shown, the report’s authors point out, that while investment in the private sector may be more profitable for shareholders over a period of one to three years, “regulated public utilities tend to be more reliable sources of income growth over the longer term”.

In fact, some public pensions funds are already being invested in ways that provide public services, although they usually do so through private firms, thereby complicating the picture.

The Ontario Teachers’ Pension Plan invests in three private for- profit Chilean water companies, for example, and has been pressured by activists to divest.

“Privatisation of public services has had disastrous development results,” Madeleine Bélanger Dumontier, spokesperson for the Municipal Services Project told IPS. When private entities are responsible for providing services that traditionally have been publicly provided, the poor tend to end up worse off.

The privatisation of the delivery of public services – water or electricity, for example – have offered “disappointing results”, the report agrees, explaining that these results occur even though “governments and international financial institutions have touted” privatisation as a “solution to…shortcomings”.

Ultimately, the report sees funds such as pension plans and sovereign wealth funds as an alternative source of public funding that could help bolster public services.

It points out that while no single model exists to subsidise the provision of essential services, including health care, to the world’s neediest, current experiments “suggest that the ‘public’ approach is alive and well, thriving with community participation and constituting a real alternative to privatisation”.

NGOs and researchers must collaborate

Donald Cohen, chair of In the Public Interest, a national resource centre on privatisation and responsible contracting, thinks the report is an important addition to the discussions about public-private partnerships. “There is massive need for capital across the world, and there are lots of pension funds which are looking to invest,” he said.

According to Cohen, fund managers might be more easily convinced to put money into public infrastructure rather than a single public service, because more money is involved and therefore more revenue is to be gained.

The question, however, is whether investors exist that are interested in not only financial profits but also in social well being, and so the report also looks into how fund managers might be convinced to invest in public service provision for those 1 to 2 billion people without adequate water, sanitation, energy and health care.

“We are proposing that civil society activists and fund members put pressure on pension and sovereign wealth funds, possibly working with governments, to commit some funds for ‘experimental’ purposes,” Bélanger Dumontier said.

This would require a major collaborative effort among researchers, NGOs, legislators and activists in both the North and the South, as well as the creation of a global coalition that can pressure funds, governments and even the United Nations to commit to a set of development goals and targets that allocate public funds for public services.

Education and information campaigns, which would inform the public as well as fund members about the nature of current investments and strategies of the funds, are one strategy the report suggests.

It also recommends lobbying legislators and politicians to change existing laws or impose new legal requirements on existing funds.

Fund members should, insists the report, use their power to actively contribute to the funds’ policy strategies and put pressure on the funds’ boards to redirect the investments.

(END)

In a world where governments are increasingly subservient to global finance capital, multinationals are gaining ground in the fight against state regulations that aim to protect the environment, public health or social policies.

According to the most recent data released by the United Nations Conference on Trade and Development (UNCTAD), the number of lawsuits brought against governments by companies evoking clauses in bilateral investment treaties (BITs) was 450 at the end of 2011.

These are only the known cases; most most are kept secret.

In the many instances in which these lawsuits have been successful, governments have been made to pay fines amounting to tens, sometimes hundreds of millions of dollars or euros.

The highly controversial BITs – which establish the conditions for investment by companies of one country in another state – have handed multinational corporations an arsenal of clauses with which to fight state regulations against harmful investment.

In 2011, Argentina held the record of known cases (51), followed by Venezuela (25), Ecuador (23) and Mexico. Most of the claims against Argentina are related to the 2011 financial crisis and many to the privatisation of water. In total, Buenos Aires has been fined more than one billion dollars by multinational corporations.

Last year, Ecuador was forced to pay fines of 78 million dollars to the United States’ oil company Chevron, which claims that the country’s efforts to protect the Amazon from pollution have negatively affected business.

This year, Argentina may face a new case, after the government moved to regain state control over the country’s biggest oil firm, which had been owned by the private Spanish oil company Repsol for many years.

According to UNCTAD, the year 2011 saw 40 percent of cases decided in favour of states and 30 percent in favour of investors, while the remaining 30 percent resulted in settlements.

Ironically, BITs allow companies to sue governments but not vice versa.

In December 2011, for instance, the Stockholm-based Vattenfall threatened to sue Germany for the federal government’s decision, in the aftermath of the Fukushima catastrophe, to phase out nuclear energy by 2022.

The Swedish nuclear company was poised to rake in compensation amounting to more than a billion euros. Evoking the Energy Charter Treaty – a multilateral agreement that protects investment in the energy sector – Vattenfall first tried, unsuccessfully, to convince the federal government to accommodate its requests.

The deadline for peaceful dispute settlement expired last March and now Vattenfall could sue the government at any time.

“Germany has around 130 BITs that could potentially severely restrain its environmental policy,” Nathalie Bernasconi, of the Geneva-based International Institute for Sustainable Development (IISD), told IPS.

“Foreign investors may challenge, in an international arbitration process, any change in law and policy to protect the environment and public health, to promote social or cultural goals, or to grapple with financial or economic crises. However, it is impossible to predict the outcome with any precision because each will depend in large part on the composition of the arbitral tribunal deciding the case, which consists of three highly-paid individuals, typically specialised in commercial rather than public law.”

It is the second time that Vattenfall has attacked Germany on environmental charges. In 2009, it challenged the standards set out in an environmental permit required for the operation of its coal-fired power plant situated on the river Elbe, which runs through Hamburg.

Claiming that the regulations – aimed at limiting the increase in water temperatures caused by the plant’s operations – were too strict, the company brought the case to an arbitral tribunal at the International Centre for Settlement of Investment Disputes (ICSID).

In order to settle, Germany agreed to change the conditions under which the permit was delivered and the case was dropped.

“A legal analysis by a German law firm commissioned by Greenpeace confirms that the environmental standards in the permit were diluted in a way that was probably not required under German law. It is a typical case where a government… (has) abandon legislation or standards it originally planned to adopt out of fear of being sued or condemned in an international procedure,” Bernasconi commented.

Another emblematic example of the power corporations wield over governments is the case brought by Philip Morris International against Uruguay and Australia under BITs the countries had signed with Switzerland and Hong Kong respectively.

The U.S. tobacco giant is using these treaties to challenge new legislation concerning the health warnings and advertising on cigarette packages – even though the regulations are in compliance with and encouraged by the World Health Organisation (WHO) framework convention on tobacco control.

According to Veijo Heiskanen, a specialist in international arbitration at Lalive law firm in Geneva, “From the 1960s to the 1970, states had a direct role in economies. With the privatisation (wave) of the 1990s, this direct role was replaced by regulation.”

This led to questions about whether the implementation of these regulations was adversely affecting investors, particularly foreign ones, which is often the case.

While investor protection was initially necessary to regulate government measures like nationalisation, the trend now seems to be leaning heavily on corporations challenging these regulations.

For example, in the late 1990s, Mexico was fined 16.7 million dollars for forbidding the U.S.-based company Metalclad from dumping toxic waste in the Guadalcazar County in the northern part of the north-central state of San Luis Potosí.

“The real question is whether (BITs) regulations are appropriate and states should seek (sound) legal advice to make sure that they are in compliance with international standards,” stressed Heiskanen. “These disputes are politically sensitive because there are (millions of dollars) at stake.”

Prior to paying fines to Chevron last year, Ecuador was sentenced to the payment of 700 million dollars back in 2010. That same year the Swiss cement supplier Holcim obtained 650 million dollars from Venezuela, when the country nationalised cement production.

All experts are agreed that legislation and regulations need to find a better equilibrium so that they cannot be exploited by states or investors.

“Investment protection treaties must be modernised to strike a better balance between investors’ and states rights,” Bernasconi concluded. “The old model doesn’t work any more.”

States and citizens alike have become extremely mistrustful of the dispute settlement process. “The commercial arbitration model on which investment arbitration is built is just not adequate for resolving sensitive issues of public policy,” she added.

“A lack of transparency, unpredictability and conflicts of interest have simply become unacceptable. This discontent has led countries like Australia to disfavor investor-state dispute settlement entirely and others to terminate their investment treaties.

“Watching these developments, countries like Brazil, which never ratified any of its investment treaties, must count themselves lucky,” she added.

After the Argentine Congress approved the renationalisation of YPF, the country’s biggest oil company, late Thursday, thousands of demonstrators from different political and social groups cheered the decision outside the legislature.

President Cristina Fernández announcing the nationalisation of YPF. Credit: Office of the president of Argentina.

A total of 208 out of 257 deputies in the lower house voted for the expropriation of a 51 percent controlling stake in the company, after the Senate did so a week ago in a 63-3 vote, with four abstentions. The bill, originally introduced by President Cristina Fernández on Apr. 16, now goes to her desk, to be signed into law.

But in contrast with the strong legislative and popular support for the move, opposition leaders and experts point to the uncertainty surrounding the country’s new energy policy, in which YPF will play a central role.

“The parties supported the creation of a new state enterprise. But how will we reach the goals of regaining our self-sufficiency, and attracting investment?” Gerardo Rabinovich, an engineer with the “General Mosconi” Argentine Institute of Energy (IAE), made up of experts who worked in the oil and gas industry during governments of the Radical Civic Union party, told IPS.

The new law declares domestic supplies, production, industrialisation, transport and sales of oil and gas a question of “public interest”, and seizes 89 percent of the YPF shares owned by the Spanish company Repsol.

Of Argentina’s 51 percent, just over half will be held by the federal government, and the rest will be in the hands of the oil and gas-producing provinces.

The remaining 49 percent of YPF will belong to the Petersen group, a private company owned by the Eskenazi family of Buenos Aires, which has 25 percent of the shares, and Repsol, which will be left with six percent, while the rest trades on the New York and Buenos Aires stock exchanges.

Things have now come full circle. YPF (Yacimientos Petrolíferos Fiscales), which was created as a state-run company in 1922, was privatised in two stages by the neoliberal government of Carlos Menem (1989-1999), in 1993, and in 1999, when it was sold to Repsol. Since then the state has held less than one percent of the shares in the company.

Besides presenting the bill on the expropriation of YPF, the centre-left Fernández administration appointed officials to temporarily run the company for 30 days.

Everyone in favour of expropriation

A few hours before the vote in Congress, the president said the seizure of the company’s shares would pose “a big challenge: to create a modern and competitive oil company, aligned with the country’s interests.”

According to local newspaper reports, the search is already on for the right people to run the company.

Miguel Galluccio, an Argentine engineer who worked at YPF before it was privatised and has ample international experience in the oil industry, appears to be the leading candidate to head the firm, and according to the Buenos Aires dailies Ámbito Financiero and La Nación, has already been selected by Fernández.

The law states that between 1998 and 2011, total oil production in Argentina went down 15.9 million cubic metres, 8.6 million of which were the responsibility of YPF, which drastically reduced exploratory drilling.

From an annual average of 110 exploratory wells drilled by the then state-owned company from 1970 to 1992, the number plunged to just 30 in 2010. Since then, the economy has required growing amounts of imported oil and gas to fuel its steady economic growth.

The text of the law also notes that total production of natural gas, a key source of energy for electricity generation in Argentina, fell 6.6 million cubic metres between 2004 and 2011, 6.4 million of which corresponded to YPF.

That means the company was responsible for 54 percent of the drop in oil extraction and 97 percent in the decline in natural gas production, the law says.

As a result, YPF lost clout in the local energy sector. Its share of production fell from 42 percent in 1997 to 34 percent in 2011.

Against that backdrop, legislators of the Frente para la Victoria – the governing left-wing faction of the Peronist party – allied lawmakers, and most of the opposition voted to pass the law without modifications.

For example, filmmaker Fernando “Pino” Solanas, a lower-house member of the small local opposition party Proyecto Sur, backed the president’s bill after describing his opposition to the privatisation of YPF in the 1990s, which cost him an attempt on his life that left him with a permanent disability in his legs.

Uncertain future

But there are still doubts regarding the future of YPF, such as the ones raised by the IAE in a document favourable to the recovery of state control over the company, but critical of the government’s bill.

In the paper, the IAE argues that the proposed expropriation does not ensure that oil and gas production will increase to past levels, and does not guarantee the attraction of “the investment that is indispensable for achieving the self-sufficiency that (the law) proclaims as its objective.”

Rabinovich said that in order to move towards a long-term sustainable energy policy, what was needed, in the first place, was “a new law on hydrocarbons that provides the investor with a legal framework that makes it possible” to operate in the oil and gas industry.

The law currently in force dates back to 1967, when the entire energy sector belonged to the federal government. Today, the oil and gas reserves belong to the provinces, thanks to a 1994 constitutional reform, and the companies that exploit and commercialise them have changed hands.

The IAE says it is necessary to create a regulatory agency along the lines of Brazil’s National Petroleum Agency, in order to guarantee transparency and the development of human resources.

“Much more than the expropriation (of shares) from Repsol is needed,” said Rabinovich.

Claudio Lozano, a lower house legislator from the centre-left Frente Amplio Progresista, also told IPS that he had reservations.

His party was divided in the Senate vote, but unanimously backed the bill in the Chamber of Deputies.

Lozano, an economist, said it was necessary to go beyond the nationalisation of YPF. He proposed moving towards 100 percent state control of the company, and recovering the state’s capacity to regulate the entire energy sector.

“We’re only able to oversee 34 percent of the country’s oil and 23 percent of the gas, which was what YPF had, but we have to go after the rest of the sector,” he said.

Lozano said that, besides passing a new law that would create a framework for the oil and gas industry, it is urgently necessary to repeal the 1992 decrees that deregulated the sector and allowed private oil companies operating in the country to rake in most of the industry’s profits.

“The first article in the law, which declares all activity in the oil and gas industry a matter of public interest, cannot translate into operating capacity unless these decrees, which run counter to the new law’s stated aim, are eliminated,” he said.

If the 1992 decrees are not repealed, he said, there is a risk that the new YPF “will become the dumb partner” in the energy sector.

Almost six years after the nationalisation of gas and oil reserves in Bolivia, foreign companies maintain an active presence in the sector, and the government is now offering them greater incentives to increase oil production.

Gasfield discovered by Repsol in Huacaya, 800 km southeast of La Paz. Credit: IPS/Photostock

During the same week that President Cristina Fernández de Kirchner of Argentina announced the expropriation of 51 percent of shares in the oil company YPF, previously held by the Spanish corporation Repsol, the Bolivian government issued a decree that raised incentives for crude oil production from 10 dollars to 40 dollars a barrel.

Supreme Decree 1202 establishes that the Bolivian national treasury will issue tax credit notes in the amount of 30 dollars.

For each barrel (159 liters) of crude they produce, foreign oil companies will continue to receive 10 dollars in cash in addition to a credit note that can be used for tax payments.

In a statement released by the state-owned oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) on Apr. 19, company president Carlos Villegas stated that the reason for the allocation of this additional incentive was that “operators have not made significant investments to find larger reserves of oil.”

Researcher Carlos Arze of the Centre for Research on Labour and Agrarian Development (CEDLA) explained that the contracts signed between foreign companies and the Bolivian government following the 2006 nationalisation did not include clauses obliging the companies to replenish reserves.

On May 1, 2006, leftist President Evo Morales announced the nationalisation of Bolivia’s hydrocarbon reserves. In October of that year, new contracts were signed with the oil and gas companies operating in the country – most of which were foreign-owned – and endorsed by the Bolivian Congress.

Six years later, these companies are earning 824 million dollars in profits, “and not a single one has pulled out of Bolivia,” Arze told Tierramérica. He recalled the comments of a Brazilian businessman who concluded at the time that his operations in Bolivia would be even more secure, since they now had congressional backing.

“If this was an anti-imperialist nationalisation, why didn’t they leave?” asked Arze.

In 2004, the oil and natural gas industry in Bolivia was worth 1.172 billion dollars. The companies operating in the sector took 71 percent of the profits (832 million dollars), according to Arze.

The new contracts changed the equation. Now, private operators receive 27 percent of revenues, while the state keeps 73 percent through various taxes, shares and royalties, he noted. But in absolute terms, the amounts earned by the companies have changed very little.

In 2010, the sector generated 3.053 billion dollars, of which the oil and gas companies received 824 million dollars. If you add the incentives for oil production, estimated at six million dollars annually, the total is 830 million, just two million dollars less than they earned before the rules of the game were changed, noted Arze.

According to YPFB, between 2001 and 2005, the state took in 332 million dollars annually in oil and gas revenues.

After nationalisation, these revenues rose to a yearly average of 2.07 billion dollars. Over the last six years, the state has earned 12.424 billion dollars from oil and gas operations.

Gas production has risen from 40.4 million cubic metres daily in 2005 to 45.06 million cubic metres in 2011.

But oil production has fallen. In 2005, Bolivia produced 50,035 barrels of oil a day, but in 2011, output had dropped to 41,147 barrels.

As of June 2011, 15 foreign companies, headed up by Petrobras of Brazil, had signed contracts with Bolivia for oil and gas exploration and extraction activities, for terms of between six and 28 years, according to figures from YPFB.

Political economy professor Julio Alvarado told Tierramérica that Bolivia’s current oil policy is aimed at encouraging foreign companies to continue operating in the country’s most productive fields.

Alvarado noted that the nationalisation decree ordered an audit of the transnational companies, but the final reports were not made public. This protection of corporate data is a demonstration of a policy favorable to foreign investors, he said.

In the meantime, Bolivia has become increasingly dependent on fuel imports for domestic consumption. In 2010, imports totaled 600 million dollars, in 2011 they had risen to 900 million, and this year they are expected to reach 1.2 billion dollars, according to Alvarado’s figures.

In 2010, Spanish oil and gas company Repsol was the foreign company with the second largest share in production in Bolivia, with 8.7 percent, far behind Petrobras, which accounts for 63 percent.

In the oil sector, Repsol has operations in a quarter of the country’s blocks and fields and accounts for five percent of exploration activities.

During the nationalisation process, the Bolivian state’s forced purchase of 1.1 percent of the Spanish share in the Andina company was compensated with a payment of 6.2 million dollars in 2007.

In contrast, the nationalisation of the shares held by U.S.-based Amoco in the Bolivian company Chaco resulted in the filing of a lawsuit against the Bolivian state for 233 million dollars, said Arze.

Repsol is in charge of production at the Margarita gas field in the southern department of Tarija, which holds some two trillion cubic feet of gas and is the source of the eight million cubic metres of gas per day supplied to Argentina – an amount equivalent to the daily consumption in Bolivia.

In March 2010, Bolivia pledged to increase gas exports to Argentina to up to 20 million cubic metres daily by 2017.

The source of this gas is the Margarita-Huacaya field, operated by different companies. Repsol is present as part of the joint venture Repsol YPF E&P Bolivia SA, which has a 37.5 percent stake in the field.

Arze believes it will be a profitable business for Repsol, since it will benefit from the prices paid by Argentina, roughly 11 dollars per million British thermal units (BTU) in the first quarter of 2012.

Brazil, which imports three times the daily consumption in Bolivia, pays nine dollars per million BTU.

*The writer is an IPS correspondent. This story was originally published by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme, United Nations Environment Programme and the World Bank.

Ignoring widespread concern over the safety, efficacy and cost of pentavalent vaccines, India’s central health ministry has, this month, approved inclusion of the prophylactic cocktail in the universal immunisation programme in seven of its provinces.

Pentavalent vaccine doses, a cocktail of five antigens in a single shot, confers immunity against five paediatric diseases – diphtheria, pertussis, tetanus, hepatitis B and haemophilus influenza type b (Hib), with the last one considered particularly problematic by some experts.

Pentavalents, produced by several manufacturers and promoted by the Global Alliance on Vaccines and Immunisation (GAVI), has had a history of causing adverse reactions and deaths in India’s neighbouring countries like Bhutan, Sri Lanka and Pakistan.

In 2010, the National Technical Advisory Group on Immunisation (NTAGI), a body of experts selected by the Indian government, recommended limited introduction of pentavalents in southern Kerala and Tamil Nadu and evaluation of results over a year before extension to other states.

Pentavalents were launched in Kerala and Tamil Nadu in December 2011, but the results were not encouraging. Kerala recorded four infant deaths following vaccination, with symptoms similar to what were seen in other South Asian countries.

Public health activists in Kerala, a state with 100 percent literacy and human development indices similar to those of advanced Western countries, quickly filed a public interest litigation (PIL) in the Kerala High Court asking for intervention in having the programme called off and a return to the existing health plan.

But despite infant deaths and two pending PILs (with yet another being heard in the Delhi High Court) against pentavalents, the health ministry announced on Apr. 16 that pentavalents would be introduced in five more states – Gujarat, Haryana, Karnataka, Goa, Jammu and Kashmir and Puducherry in October.

In making the decision, the government overlooked the NTAGI, which has not even been convened since August 2010 when the body suggested limited introduction to Kerala and Tamil Nadu as the two states have good adverse event following immunisation systems.

“Going by what we have seen in the neighbouring countries and now in the state of Kerala, pentavalents can, without warning, cause children (to suffer) hypersensitivity reactions and death,” Jacob Puliyel, an eminent paediatrician at St. Stephen’s hospital in New Delhi and member of the NTAGI, told IPS.

Puliyel likened the situation to penicillin sensitivity and said it bordered on criminality to be administering pentavalents without first testing a child for hypersensitivity. “Every child that is being given a dose of pentavalent vaccine is a potential victim of the adverse reaction,” he said.

Puliyel was among the many eminent physicians and public health activists in India who wrote to World Health Organisation (WHO) director-general Margaret Chan on Apr. 3 asking the health body to “re-evaluate” its recommendation of pentavalent vaccines on the grounds of safety.

Another signatory, Dr Meera Shiva, an expert on pharmaceutical drugs attached to the voluntary Medico Friends Circle, told IPS that WHO had to delist a number of brands of ‘prequalified’ pentavalent vaccine, “but adverse reactions persist and we have surely not heard the last of them.”

The letter to Chan, written under the aegis of the All-India Drug Action Network, an umbrella of public health activist groups, suggested that the cause of the vaccination- related deaths was likely to be “hypersensitivity reaction as described in the post mortem report on one of the children (who died) in Kerala.”

“Unlike conventional drug treatments meant for the management of existing diseases, in prophylaxis with vaccines, safety is of paramount importance. Vaccines that frequently and unpredictably cause the death of healthy children cannot be recommended,” the letter to Chan said.

Policy analysts specialising in vaccines said they were dismayed at the move to approve pentavalents in as many as seven of India’s states, which account for 340 million of India’s 1.2 billion people.

“Pentavalents are a test case for India’s new policy on vaccines that is in keeping with liberalisation and openly favours pharmaceutical majors at the cost of India’s public sector vaccine units,” said Madhavi Yennapu, a scientist who specialises in vaccines at the central government’s National Institute of Science, Technology and Development Studies.

Twenty of India’s 23 public sector vaccination units, once the mainstay of the country’s immunisation programme, have been shut down one after another over the last four years on the grounds that the quality of their products was suspect.

Yennapu pointed to the draft National Vaccination Policy, released last year, for clues on why the government has not made any serious attempt to revive the vaccine- manufacturing units by enforcing quality standards, for instance.

The new policy demands that the “risk of manufacturing vaccines by private manufacturers must be cushioned by assistance from (the) government” and suggests that it be made mandatory for the government to support vaccine producers with advance market commitments (AMCs).

Madhavi explained that AMCs provide guaranteed markets for a vaccine even before trials are conducted, with the government committed to paying a supporting minimum price. “Even if the vaccine turns out to be less efficacious than the existing one the government must honour the AMC by buying the new vaccine at the agreed price.

“This means that AMC funds must be deposited with the World Bank ahead of vaccine delivery by countries that GAVI is supposed to be helping with the introduction of new vaccines,” Madhavi told IPS. “Naturally, GAVI would be looking at large countries like India, Brazil and China to provide the AMCs.”

For a country like India, what is important is to “see how many vaccines are needed to prevent how many deaths and at what cost, rather than throw out tried and tested vaccines in favour of a cocktail (pentavalent) which not only has doubtful advantages but has been shown to cause adverse reactions,” Madhavi said.

According to Madhavi, there is no hard scientific evidence to show that India needs the Hib vaccine .”It is clearly piggybacking on other vaccines and the public made to pay for it.”

The existing diphtheria, tetanus, pertussis (DPT) vaccine costs about 30 cents for all the doses needed to immunise a child, while immunisation with pentavalents will cost more than 10 dollars. “We need to ask ourselves if introducing the new vaccine is really worth all the public money being spent on it,” Madhavi said.

Hundreds of Spanish companies continue to do business in Argentina, despite Madrid’s campaign in defence of Repsol, which controls YPF – the oil company that the government of Cristina Fernández plans to renationalise.

Fernández sent Congress a bill on Monday Apr. 16 to seize 89 percent of Repsol’s shares in YPF, Argentina’s largest oil company, which would give the Argentine state a 51 percent stake.

In response, the centre-right government of Spanish Prime Minister Mariano Rajoy launched a diplomatic offensive in search of international allies against the move.

The chief interest of Spain, the fifth biggest importer of Argentine products in 2011, is biofuels, of which it imports 800 million dollars worth a year, representing 68 percent of total imports from this country, according to the Abeceb consultancy.

But on Friday, the Spanish government decided to limit its imports of biofuels from Argentina, by applying a measure approved in October 2010 that favours companies located in Europe.

However, the tension between the two governments contrasts with the business-as-usual attitude among Spanish companies of all sizes that operate in Argentina, and among investors as well, as capital continues to flow in, according to the Spanish chamber of commerce in Argentina (CECRA).

There are 205 Spanish companies active in key sectors of the Argentine economy, like energy, telecommunications, public services, banks, insurance, real estate, the fishing industry, the food industry, publishing, construction, infrastructure, the automobile industry, software, tourism, and retail chains.

Figures from the Spanish Embassy in Argentina indicate that 28 percent of foreign investment in this South American country in 2009 was from Spain.

The Argentine branch of the Spanish telecoms company Telefónica reported earnings of 4.16 billion dollars in 2011, which represented five percent of the global business of the transnational corporation, 63 percent of whose clients are in Latin America.

Another big Spanish company with a large presence in Argentina is the power utility Endesa: 4.7 percent of its assets in Latin America are in Argentina. The Santander and BBVA banks are also active here.

“One way or another, this will affect the Spanish economy,” Juan Benítez, a professor of applied economics in the southern Spanish city of Málaga, told IPS.

A decline in the performance of a company like Repsol affects not only the shareholders, but also the company’s workers, suppliers and firms with which it has trade ties, he said.

Repsol had just over 36,300 employees in 2010, distributed among more than 30 countries. But 46 percent were in Spain and 37 percent in Argentina.

Less than a month ago, CECRA received a delegation of representatives of 22 small and medium businesses who came from Madrid in search of opportunities that could be provided by becoming suppliers to large Spanish companies that are already established here.

The president of CECRA, Guillermo Ambrogi, told the press in February that Argentina “will continue to be the third biggest recipient in Latin America of foreign direct investment from Spain, after Mexico and Brazil.”

CECRA, which works with the ministries of foreign relations and industry of Spain, has 830 members in Argentina, which are Spanish companies or joint ventures of different sizes.

Ambrogi, who also represents the federation of Spain’s chambers of commerce in this region, reported that Spanish investment in Argentina has totalled 60 billion dollars over the past 17 years.

Taking a cautious stance in the wake of the announcement of Argentina’s seizure of a majority stake in YPF, CECRA refused to talk to journalists, and only held meetings with the Spanish Embassy, to reach a consensus before taking a stance.

Although this silence may indicate concern among Spanish businesses, activity has continued as usual.

And while tension had already built up long before between Repsol and the Argentine government, due to a fall in production and a lack of investment by the Spanish company, other Spanish firms described their ties with the centre-left Fernández administration in positive terms ahead of this week’s decision involving YPF.

“Our relationship with the government is good, we haven’t had any problems,” the spokeswoman for Gas Natural BAN, Betina Llapur, told IPS just before the Argentine president made her announcement.

The Spanish firm Gas Natural Fenosa owns 50.4 percent of the shares in that company, and the state National Social Security Administration (ANSES), which administers Argentina’s pension funds, owns a 25 percent stake.

At the end of 2010, Gas Natural BAN had nearly 1.5 million clients and a 23,000-km distribution network in greater Buenos Aires.

“The demand for more investment doesn’t apply to us, because we have expanded our networks and added 30,000 new clients per year,” in areas with low purchasing power, Llapur said.

She also stressed that the company has “a very good relationship” with the representative of ANSES on the board of directors. “We regard him highly, and he works for the company,” she said.

In Spain, the impact could also be more limited than expected, to judge by the movements of Spanish officials abroad.

Spanish economist Jesús Carrión, a researcher with the Observatory on Debt and Globalisation (ODG), told IPS that moves like the expropriation of Repsol’s shares in YPF hurt “the economic elites, but don’t hurt us as a society.”

According to Repsol’s figures, Spain does not hold a controlling stake in the company: 42 percent of the shares are held by foreign investment funds and 9.49 percent belong to Pemex, Mexico’s state-owned oil company.

The rest belongs to Spanish investors: the CaixaBank (12.8 percent), the Sacyr construction company (10 percent), local investment funds (9.9 percent), minority investors (a combined total of 10.8 percent), and Repsol.

Héctor Valle, an Argentine economist with the private Foundation for Export Research and Development (FIDE), described the re-nationalisation of YPF – which was privatised in 1993 and purchased by Repsol in 1999 – as “a positive step” and “the most important energy-related decision in the last 20 years” in this country.

He told IPS that “the relationship between the Spanish investment group and the government hit bottom a long time ago” due to widely divergent needs and interests between the company and the Argentine state.

He said that Repsol saw its participation in YPF from the viewpoint of a multinational, which invests where profits are highest, and that this vision clashed with Argentina’s development needs.

Valle does not see the decision as part of a broader move by the Argentine government against Spanish companies. But he conceded that the Spanish economy, which is suffering a severe crisis, could be indirectly affected by the decision to expropriate a majority stake in YPF.

“They have fiscal deficit problems, and multinationals are helping them get into the black by channelling the profits they are making in their subsidiaries back to the parent company,” he said.

The expropriation of Repsol’s shares in YPF could thus represent an inconvenience, but not of the magnitude expressed by Spanish government officials, Valle said.

Carrión concurred that the earnings of Spain’s companies “depend enormously” on their subsidiaries in Latin America. But at the same time, he said, the corporations do not take into account the environmental impacts of their activities, on indigenous communities, for example.

* With reporting by Inés Benítez in Málaga, Spain.

European civil society organisations continue to demand that international financial institutions (IFIs) such as the World Bank and the International Monetary Fund apply the same standards of transparency and accountability to their internal affairs that they demand for governments across the world.

These demands are being made just ahead of the spring meetings the IFIs will hold later this month in Washington D.C., and refer in particular to the nomination of a new president for the World Bank.

“The election of the new president of the Bank is typical of the lack of transparency and democracy that reigns in the international financial institutions,” Peter Chowla, an economist working for the Bretton Woods project (BWP), told IPS.

The BWP, a London-based international coalition of economists and anti-globalisation activists, focuses its work on the IFIs, to challenge their power, open policy space, and promote alternative approaches.

Traditionally, the U.S. government and the European Union share the leading positions at the IFIs. While the U.S. government occupies the coveted presidency of the World Bank with a candidate of its own, the EU places one European technocrat at the helm of the IMF – no fair election process precedes either of these appointments.

Last year, the French government obtained the backing of European governments to name former French finance minister, Christine Lagarde, managing director of the IMF, despite vociferous opposition from developing countries.

This year, U.S. president Barack Obama has nominated Korean-born physician Jim Yong Kim to become the Bank’s next president.

Although there are two alternative candidates for the position, the present Nigerian minister of finance Ngozi Okonjo-Iweala and her former Colombian counterpart José Antonio Ocampo, it is taken as given that Kim’s candidacy will obtain the support of European countries, and that he will be elected during the bank’s board hearings scheduled to take place in Washington from Apr. 9-11.

It is expected that the confirmation of Kim as new president will be announced on Apr. 11.

Chowla recalled that such “opaque processes” of nomination were conceived more than 60 years ago, when the IFIs were founded, and no longer fit into “the present global economic and political structures.”

But disagreements between European civil society organisations and the IFIs go beyond nomination procedures, and include the institutions’ policy recommendations for governments about management of climate change financial facilities.

Jeroen Kwakkenbos, policy and advocacy officer at the European Network on Debt and Development, told IPS that the World Bank had “neither a mandate nor the qualifications” to participate in the management of the future Green Climate Fund, which is supposed to administrate future financial resources for adaptation and mitigation of climate change, or of REDD (reducing emissions from deforestation and forest degradation in developing countries).

“We urge the IFIs to remain outside the management of these facilities,” Kwakkenbos told IPS. “Such entities should be managed under democratic principles – that is, one country, one vote, following representation of stake holders in the boards of the organisations.”

Chowla stressed that the main problem with the IFIs is that these institutions continue to apply the neoliberal doctrine that characterised them throughout the 1980s and 1990s.

“These characteristics are deregulation, privatisation, and bilateral free trade agreements between industrialised and emerging countries,” Chowla pointed out. “Four years after the global financial crisis broke out, there are no tangible signs of new regulation of financial flows.”

Chowla specifically mentioned the financial flows to emerging countries, which have triggered important dislocations of exchange rates, leading to what some economists have dubbed “the currency war”.

“(A)symmetry in the recovery of developing countries and the recessions in Europe after the crisis have led to major and unstable short term capital flows to developing countries,” Chowla stated.

These flows have proved to be significantly destabilising, causing sharp appreciation of currencies of emergent developing countries such as Brazil.

Chowla said that the IMF analysis of this destabilising monetary phenomenon on emerging countries is flawed, because it is either based on econometric exercises relying on highly uncertain variables, or on the Fund’s own policy recommendations, which the authorities have not yet even agreed with.

Furthermore, the Bank and the Fund have helped to impose austerity programmes upon European countries already suffering deep economic downturns, regardless of the dramatic social consequences of cuts in public spending and social welfare, Chowla said.

Chowla also mentioned the support the World Bank continues to offer for privatisation programmes across the world.

“In Romania,” he said, “the Bank is the main force behind the planned highly controversial privatisation of the local health system, opposed by unions and civil society groups.”

Other groups, such as the Europe Corporate Observatory, raise similar complaints against the Bank and the IMF, for supporting free trade agreements (FTAs) with developing countries, which obviously damage local public health initiatives and food provision.

The most salient case is the European FTA with India, slated to come into force this year, which would force the Indian pharmaceutical industry to cease producing inexpensive generic medications to treat contagious diseases such as HIV/AIDS, which most of the developing world is dependent on as a cheap alternative to patented drugs.

By Julio Godoy and - -
BERLIN, Mar 14 2012 (IPS)

The trend of privatisation and commercialisation of water services, which set in in the 1980s and continued throughout the 1990s, has come to a halt due to the process’ own failures, and has given rise to a return of those services into efficient public management, according to a new book.

Released on Mar. 11, “Remunicipalisation: Putting water back in public hands” was authored by several activists at the Amsterdam-based Transnational Institute (TNI) and the watchdog Corporate Europe Observatory (CEO) in cooperation with several non- governmental organisations.

However, in an interview with IPS, the authors of the book warned that the European Union’s management of the present sovereign debt crisis in several member states is putting pressure upon certain governments to again privatise their water services.

“The world economic crisis that broke out in 2007 has somehow changed the picture of remunicipalisation, because of the financial sector bail-out, which has triggered the sovereign debt crisis in Europe,” Martin Pigeon, expert for public services at CEO, told IPS.

“Now EU institutions, which seem unable, or unwilling, to understand the specificities of the water sector, are pushing very strongly the governments in Greece, Portugal, Spain, and Italy to re-privatise their municipal water systems,” Pigeon added.

This policy is a clone of the outdated and delegitimised structural adjustment policies of the 1980s and 1990s, he said.

For this and other reasons, Pigeon said that the remunicipalisation trend still needs “committed and vigilant citizens” participating in the process to master the multiple challenges the public water management sector is facing now.

The book reviews the experiences of four cities and one country around the world, which, during the past decade, have managed to recuperate water services from commercialisation and privatisation.

In the book, one of the authors, David A. McDonald, says that, while the reasons for remunicipalisation are quite diverse, they “stem in no small part from the failures of water privatisation.”

McDonald remarks that “even the World Bank (one of the main supporters of privatisation in the first place) has called for a ‘rethink’ of privatisation policies, having recognised the regulatory problems associated with multinational water providers, and having seen the effects of a profit-driven service delivery model on workers, low-income households and the environment.”

McDonald said that as a result of the realisation of the failures of privatisation, “there has been less direct privatisation of water services since the 1980s and 1990s.”

But the commercialisation of water continues, he warned, “largely through the use of public-private partnerships (PPPs). In effect, the World Bank and many United Nations agencies still advocate for private sector participation in water services and continue to invest in think tanks, conferences and publications that promote and finance private involvement in water services around the world.”

Pigeon said the idea of the book was to study a handful of recent remunicipalisation cases to determine to what extent the process really improved the services in terms of accountability, transparency, performance, social focus, and integration of broader ecological dimensions.

Since remunicipalisation was happening globally, the activists at TNI and CEO wanted to study at least one case per continent, to get a grasp of the diversity of contexts and see whether any common pattern was emerging.

“In the end, we chose to do five cases: Paris (France, back to public management in 2010), Buenos Aires (Argentina, 2006), Dar es Salaam (Tanzania, 2004), Hamilton (Canada, 2004), and a 2006 national sector reform in Malaysia whose implementation is still on-going,” Pigeon explained.

Pigeon said that each case illustrated different aspects of the reasons and effects of remunicipalisation. “Paris shows how a well-prepared remunicipalisation can deliver spectacular achievements, as well as (highlight) the specific technical points that must be paid attention to in the process,” Pigeon pointed out. On the other hand, “Dar es Salaam illustrates the painful realities of international ‘development’ institutions being in control of a crucial local policy, and to what extent the prevailing technical paradigm of centralised networks is not necessarily adaptable everywhere.”

Furthermore, “Malaysia is a fascinating example (of) an attempt at building from scratch a sort of perfect technocratic model, insulated from politics and run by the magic of arms-length relationships, an attempt that we think is not only illusory but dangerous for the country,” Pigeon added.

The case of Buenos Aires illustrates just how long lasting the legacies of corporate control can be, as well as the extent of legal protection given to international companies by the system of bilateral or multilateral investment treaties.

The privatisation of water services in the Argentinian capital shows that the PPPs promoted by international financial institutions such as the World Bank, and a handful of private water management multinationals, as the ideal dual management for water services, actually constitute a dangerous legal trap for governments and societies.

Argentina, which terminated its contract with the French company Suez in 2006, is potentially facing a fine that could amount to hundreds of million dollars from the International Centre for the Settlement of Investment Disputes, Pigeon recalled. This fine would be a penalty imposed upon the Argentinian government, precisely for having terminated the concession contract before its legal expiration with Suez for Buenos Aires’ water systems, even though the company’s performance had been very poor.

Pigeon said that such problems can also be found in the wealthiest countries.

“In Brussels, Belgium, it took a major scandal – when yet another French company, Veolia, closed a sewage plant for a week, sending raw sewage directly into the river – and two years of investigations by a college of independent experts to realise that the contract contained problematic but well-hidden loopholes and that the company had built a plant smaller than what was expected,” he said.

Pigeon added that, despite the promising perspectives of remunicipalisation of water services, the commercialisation of water continues.

“A striking finding during the research was the continued ideological domination of the private sector, leading the public managers of many of these remunicipalised systems to see themselves as business managers and endorse the private sector’s definition of performance, based on full cost recovery and microeconomic efficiency,” he said.

For these reasons, Pigeon urged civil society groups to continue participating in the debates on water services.

“It took committed, vigilant citizens to create controversy around water privatisation, make it a political problem and eventually pave the way for change to occur,” Pigeon said. “Now there are fundamental challenges to be taken up in the water sector and, if public ownership is a necessary prerequisite to progressive water management, it cannot be the end of the story.”

Among these challenges, Pigeon underlined issues “like bridging the divide between rural and urban water issues, water policy and land planning, adapt technology to various contexts, break the dead end of ever-increasing pollutants concentration in centralised sewage systems, climate change adaptation and mitigation.”

Excerpt:

1.1 billion people in developing countries have inadequate access to water, and 2.6 billion lack even the most basic sanitation. Credit: Mantoe Phakathi/IPS

By Cléo Fatoorehchi
AIX-EN-PROVENCE , Mar 7 2012 (IPS)

Back in 2001, Gérard Mestrallet, CEO of the transnational water giant GDF- Suez, highlighted his company’s “commitment to fight for better access” to safe water and sanitation throughout the world, in order to put an end to all deadly water-borne diseases, from children’s diarrhoea to parasitic diseases to dysentery.

Over a decade later, roughly 1.8 million children continue to die each year as a result of diarrhoea, and some 443 million school days are lost annually due to water-related illnesses, according to the latest data provided by the United Nations’ 2006 Human Development Report.

In addition, over 1.1 billion people in developing countries have inadequate access to water, and 2.6 billion people lack even the most basic sanitation.

A week ahead of the World Water Forum (WWF), slated to run from March 12-17 in the Mediterranean city of Marseille, France, organisers told a press conference that they were determined to bring “concrete solutions” to the problem of water distribution and scarcity.

Even though commitments made in the past may not have been followed with concrete solutions, sponsors of the event defended the Forum as a necessary space in which to debate and raise awareness on various water crises.

But as plans forge ahead for a convergence that has, since its inception in Marrakech, Morocco in 1997, failed to bring about lasting solutions to the world’s water problems, activists are gathering a few kilometers away from Marseilles to articulate a different agenda.

Organisers of the Alternative World Water Forum (known by its French acronym FAME), which will take place simultaneously as the WWF, see the Forum as an outmoded apparatus, lagging woefully behind a growing movement for “water justice” around the world.

“If the right to water was adopted by the U.N. General Assembly on Jul. 28, 2010, it is not thanks to the (WWF). Rather, it is thanks to our fight and to social movements,” Jean-Claude Oliva, water expert and active participant in FAME, told IPS.

He criticised the failure of the 2009 WWF in Istanbul to include “access to water” as a basic human right in its final declaration, a formula demanded primarily by a block of Latin American states.

Though it has been announced that the upcoming Forum will officially recognise this right to water in its next declaration, many believe that this is simply a media strategy, designed to co-opt the idea as its own and appear more inclusive of civil society.

The image of the WWF as a democratic space has also been mounted on the Forum’s ‘Platform of Solutions’ and through its ‘Grassroots and Citizenship’ commission.

However, these moves have done little to change the Forum’s reputation as “a Davos of Water”, said Laurent Flety, local organiser with FAME, referring to the World Economic Forum that is notorious for being a talking shop, resulting in little concrete action.

Indeed, one of the primary objections to the WWF is that its decision makers often defer to private companies to make critical decisions about water distribution; numerous CEOs, including the heads of multinational titans like Coca-Cola and Nestlé, have been invited to address attendees at high-level panels.

“They (WWF) calls upon the private sector to solve the problem and we refuse this because (corporations) will privatise and monitor water all over the globe,” Kim Lê Quang, a Belgian representative of FAME, told IPS.

In contrast, FAME will gather over 1000 people from at least 50 countries around the world to share their experiences of public management of water resources. They aim to pressure governments to include the right to drinking water and sanitation in national constitutions, as a means to ensure the implementation of the right to water as a basic human right.

Their primary goal is to promote public management of water, especially through “public-public partnerships” (PUPs), which they see as benefiting all stakeholders. Establishing a non-commercial relationship, the municipality can provide a transparent and accountable service, involving grassroots civil society and thus enhancing the whole community by building management capacity at the local level.

In order to assist communities from the developing world to repossess their water service, the sewage authority for Paris, SIAAP, developed a partnership with the city of Hue in Vietnam, to empower locals to renovate and plan the future design of the sewage system.

Likewise, the public water authority for Paris, Eaux de Paris, worked with the engineering school of Sfax in Tunisia, to share techniques and best practices.

FAME commends such partnerships, and calls on governments to spread those ideas worldwide.

According to the geopolitical expert Daniel Van Eeuwen, if such momentum keeps up it could eventually allow communities to set affordable prices for everyone, instead of relying on market- and profit- dictated prices.

Though the movement is still nascent in France, the overtly political battle for water as a public good and a human right began in earnest with Bolivia’s water wars in 2000, when local communities waged fierce protests against the privatisation and commodification – and the soaring prices that immediately followed – of water.

As a result, Van Eeuwen explained, there is strong awareness of the evils of privatisation in Latin America, which has the strongest public ownership of natural resources of any region.

The Bolivian model of expelling transnational corporations that tried to control local water supplies was emulated across Latin America and elsewhere, because “these companies did not keep the promises they made (to the people) when signing contracts,” explained Oliva.

“The privatisation model is failing, and advances neither the right to water politically nor concrete access to water for people (in need),” he concluded.

FAME hopes to address these issues by being an alternative voice loud enough to drown out the din from the WWF next week.

Excerpt:

Increasingly frequent and tragic railway accidents in Argentina, like this week’s crash, show that the rail system, run by private companies that receive hundreds of millions of dollars in subsidies from the state, constantly ignores warnings from inspectors and fines, observers say.

“Another catastrophe could happen at any time,” former socialist lawmaker Héctor Polino, founder of Consumidores Libres (Free Consumers), a citizens group that has filed numerous complaints against the companies running the railways, told IPS.

The debate on the state of Argentina’s privatised and heavily subsidised rail network has flared up again in the wake of the Wednesday Feb. 22 crash, when a packed commuter train slammed into a retaining wall at a railway terminus in Buenos Aires.

The train entered the station at a speed of more than 20 km per hour and did not stop, for reasons that have yet to be determined, killing 50 people and injuring more than 700 others.

Some passengers said there were signs of problems with the train just before the accident.

The crash was the second in the Argentine capital in less than six months. The first occurred in September on the same line, Sarmiento, when a bus crossed the tracks in front of an oncoming train. The train crashed into the bus, and after it was derailed it was hit by a train approaching from the other direction. The accident left 11 dead and 212 injured.

Polino said the state of Argentina’s rail system today is the direct result of the wave of privatisations carried out by the government of Carlos Menem (1989-1999), which put the railways into the hands of private companies. Since then, the system has been plagued by negligence, mismanagement, a lack of maintenance, and “connivance” between the companies running the rails and officials in charge of oversight, he said.

“The proof of that is Ricardo Jaime,” he said, referring to the official who headed the transport secretariat during the government of late former president Néstor Kirchner (2003-2007), and who was kept in his post by Kirchner’s widow and successor, Cristina Fernández.

Jaime resigned as transport secretary in 2009, citing “personal reasons”. But he was facing a number of corruption charges in cases that are still making their way through the courts.

Now he has been charged with receiving free vacation flights from Claudio Cirigliano, whose holding company owns Trenes de Buenos Aires (TBA), the company that runs the Sarmiento line and others.

According to the lawsuit, Cirigliano paid for plane tickets to Brazil for Jaime, who at the time was in charge of granting subsidies to the private concession-holders running the rail system, so that they would keep ticket prices down.

Polino pointed out that when he was in the lower house of Congress, Consumidores Libres got the courts to issue an interim measure to prevent the companies from raising ticket prices. Cirigliano tried repeatedly to meet with him, but outside of his office in the legislature.

“I always refused, so he went to my office to ask me to stop pressing forward with the case,” Polino said. “A member of the transport workers union also came to ask me, in (Cirigliano’s) name, to do the same thing.”

The system was privatised in the early 1990s, when 10-year concessions were granted to private companies to run the railways, while the state continued to own the stations, tracks and trains.

The Argentine government received a massive World Bank loan to drastically reduce the workforce at Ferrocarriles Argentinos, the state enterprise that owned the entire national railway system until then.

After that, the private companies that were granted concessions whittled the country’s railway network down to one-fourth of its capacity.

Although Kirchner cancelled one of the concessions on the grounds of breach of contract, the service was then handed to another private company.

In recent years, there have been some improvements to the rail services, but the underlying system has not changed, Polino said.

Cristina Suárez with the Frente de Usuarios Desesperados del Sarmiento, a rail users group, told IPS that they had filed “all kinds of complaints” between 2006 and 2010, to draw attention to the serious flaws in the system.

“Overcrowding, lack of safety, lighting and hygiene, and broken barrier arms” were some of the most serious problems she listed with regard to the Sarmiento line, which connects a populous district on the west side of Buenos Aires with the centre of the city.

The campaigns carried out raised awareness among users, but few improvements have been seen, Suárez said. “A few tracks were fixed and new units were purchased, but obviously the problems are still there,” she added.

The creation of tunnels for some stretches of railway was announced, but work has not begun. And the incorporation of new carriages has been slow.

But the companies continue to receive hefty subsidies – a combined total of three billion pesos (698 million dollars) from the transport secretariat in 2011 alone.

Polino said he had gained access to a March 2010 report by the National Commission for Transport Regulation, which answers to the transport secretariat, in which inspectors pointed to serious violations by TBA and recommended that the company be fined.

The inspectors mentioned “steady deterioration of the infrastructure granted in concession” to TBA, due to “insufficient maintenance and failure to follow technical standards.”

But the company was never fined, the former legislator said.

The inspectors’ observations concurred with reports by the comptroller-general’s office, which for nearly a decade has periodically pointed to serious maintenance and safety problems in the companies running the railways, and in TBA in particular.

Norberto Rosendo, a railways engineer who is the president of the Comisión Nacional Salvemos al Tren (Save the Train National Commission) which plans to “battle the concession-holders,” agreed with Polino and went a step further in his criticism.

“I know that the inspectors at the Commission for Transport Regulation have worn themselves out making complaints, but the problem is that the legislation protects the companies,” he told IPS, referring to laws passed in the heat of the severe economic crisis that hit Argentina in late 2001 and 2002.

Rosendo said “the problems have to do with a system for which the state earmarks discretionary funds, which creates a breeding ground for corruption” because those funds can be diverted from their intended purposes.

But he acknowledged that under the current transport secretary, Juan Pablo Schiavi, “things have improved a great deal.

“Now there is an overall plan for the railways and a lot of investment, but it’s not enough,” he said. “There is a structure of corruption, and powerful underlying interests that involve government officials, the companies, and trade union leaders.”

For the first time in its history, Serbia has bought back a company sold to a foreign investor almost ten years ago, for the symbolic price of a single dollar. But while the purchase has stirred a sense of national pride, it is hardly a success story for the Balkan economy; rather, it has exposed the failure of a decade-long effort to privatise the national economy.

Serbian Prime Minister Mirko Cvetkovic signed the resale deal on Feb. 1 with representatives of U.S. Steel, the first private enterprise to enter the country after the downfall of former leader Slobodan Milosevic in 2000.

Back in 2003, U.S. Steel bought up the bankrupt Sartid steel mill in the eastern town of Smederevo for 33 million dollars.

Six months ago, the company announced it was leaving Smederevo due to years of underperformance. The plant had been operating well under its annual capacity of 2.4 million tonnes since 2007 and, together with its sister factory in Slovakia, made a loss of 65.5 million dollars in the first three quarters of 2011.

The Serbian Government has been consistently down-playing the negative effects of the embarrassing situation by promising to keep all 5,500 mill workers at their jobs.

“We’ll find the money either by borrowing from banks or redistributing budget allocations,” Cvetkovic vowed, while admitting that the annual cost of keeping the mill running could reach 100 million dollars, a bill the struggling economy can ill afford to pay.

Critics say the sale was a desperate move ahead of the May 2012 general elections that the regime hopes to win, but do not believe the government has the capacity to save the dying mill nor the workers who depend on it for a livelihood.

On the verge of recession?

Perhaps the only positive outcome of the steel mill purchase is that it has shone a harsh light on the last 12 years of privatisation in Serbia, which began in earnest after Milosevic was forced to quit office back in 2000 and have resulted in some 20 billion dollars worth of foreign direct investment (FDI) in the country.

Privatisation has been described by each successive government since 2000 as Serbia’s “only option” for economic recovery, but recent studies and analyses prove that it has devastating results that often lead to recession and possibly even the collapse of national economies.

“Some 3,000 firms were privatised since 2001,” Danijela Rajkovic of the Social-Economic Council of Serbia, an entity comprised of experts from the labour ministry and representatives from all major trade unions in the country including Nezavisnost (Independence) and the Union of Autonomous Syndicates of Serbia (SSSS), told IPS.

However, she said that the Privatisation Agency has annulled roughly 600 contracts so far, due to a range of “irregularities”, including certain companies defaulting on payments, and both foreign and Serbian buyers going bankrupt as a result of poor sales or underproduction.

She told IPS that nations in ‘transition’ (political or economic) were responsible for between 10-15 percent of annulled privatisation contracts worldwide.

“Serbia stands at the top with an average of 20 percent; in the industrial sector, almost a third (of the contracts) were annulled,” Rajkovic said.

According to the Council’s study on the impacts of privatisation in Serbia – the only comprehensive report compiled on the subject – more than 500,000 people have been left jobless since 2000, impacting over a million of these workers’ dependants.

This is particularly significant for a nation whose total labour force is just 3.2 million people and where the unemployment rate stands at a staggering 23.7 percent.

Svetlana Mancic an official of the SSSS, told IPS that only a third of the surviving private firms – just 800 in total – are economically active today, while “only 20 percent of them pay regular salaries to their employees.”

Experts agree that hastily implemented and unregulated privatisation is only partially responsible for Serbia’s current unemployment epidemic.

Serbia’s trade relations with economies hamstrung by ripple effects of the 2008 global economic downturn has placed additional strain on the developing country.

Some 500,000 people lost their jobs in the 2008-2011 period, due to global economic contraction.

“The aim of transition was not only the sale of companies to private owners,” economic analyst Misa Brkic told IPS. “There was also the need for a new economic climate and the development of industrial policies to support certain areas of production.”

Sadly, that did not happen. Instead, Serbia has experienced a slowing down of its economic partnerships with Greece and Italy and is now on the brink of recession itself, he said, adding that growth forecasts for Serbia have fallen from 1.5 to 0.5 percent this year.

Brkic, along with many other experts, believes that Serbia might face recession as early as June of this year.

He stressed that negative growth of gross domestic product (GDP) for two quarters in a row would bode very badly for the country.

Months of protest across the European Union, sparked by ‘indignant’ youth demanding an end to the brand of free market capitalism that has blighted the continent with an unemployment epidemic, finally bore fruit on Jan. 30 when Jose Manuel Barroso, president of the European Commission, proposed an ambitious jobs scheme.

Protesters at an anti-G20 rally in Nice, France, in November 2011 demanded an end to Europe's austerity programme. Credit: Cléo Fatoorehchi/IPS

“We cannot accept that almost a quarter of Europe’s young people are unemployed,” he stressed during the last informal EU summit, referring to Eurostat’s Dec. 2011 proclamation that 22 percent of the youth labour force – roughly five and a half million young people in the region – are without work.

The details of the estimates are alarming: youth unemployment stands at 48.7 percent in Spain, 47.2 percent in Greece and 35.6 percent in Slovakia.

Barroso sent a letter to the eight member states with the highest levels of youth unemployment – Spain, Greece, Slovakia, Lithuania, Italy, Portugal, Latvia and Ireland – requesting their special cooperation with the Commission’s proposal.

“I will be proposing the creation of joint ‘action teams’ comprised of the Commission, member states and national social partners, to come up with targeted plans by April to help tackle youth unemployment. I also want member states to commit to a ‘Youth on the Move’ pact to ensure that all our young people are either in a job, in education or in training within four months of leaving school,” he said at the EU summit.

Though many consider the proposed solutions inadequate compared to the magnitude of the problem, ‘los indignados’ nevertheless commended the move as a long-overdue acknowledgment of the crisis.

“They (the decision-makers) understood they cannot continue to overlook this burning issue of youth unemployment,” Kim Le Quang, a young Belgian “indignado,” and one of the country’s coordinators, told IPS.

He explained to IPS that the movement is motivated by the change in policies and actually sees it as a sign of hope.

Since the Anti-G20 Summit in Nice last November, the indignados met regularly to discuss and devise new strategies for mobilisations against the austerity plans in Europe that gutted – and continue to slash – public spending.

Many hope that Barroso’s announcement is only the beginning of greater change.

“As soon as March arrives, and with it spring, we will go into the parks again to put into place (people’s) assemblies,” Kim said, adding that numerous actions will take place throughout May in commemoration of the one-year anniversary of the 15-M movement in Madrid.

Meanwhile, plans for an international activist conference, scheduled for February at the European Central Bank headquarters in Frankfurt, are well underway. The conference will double up as a platform for protest against “austerity measures dictated by the profiteers of the financial and economic crisis,” according to a Jan. 22 press release.

Though these preparatory meetings still gather at least a hundred of activists from all over Europe, Kim acknowledged that the movement’s lack of organisation might hinder its growth.

He recalled a mobilisation in Brussels becoming too technical and suffering from faulty translation, thus driving most of the attendees away early, though he hastened to add that the horizontal mode of operation was key to the movement’s success.

“There is the will to make this the most horizontal and the most democratic movement possible; and democracy takes time,” he said.

He justified these organisational problems as a result of careful attempts to guard against co-optation by a union or political party. The protesters believe that change will come from the people themselves and have refused to let the occasional lack of clarity impede their momentum.

“The movement has been built on a long-term basis,” a Parisian ‘indignado’ named Gary, told IPS. “We are waiting for results to come. For now, we are focused on some core issues,” such as expanding the mobilisation and fight against economic austerity in Europe.

Gary, though not one of the most active indignados, has not abandoned the movement.

“For the moment, this is the only alternative we have,” he said.

Another French activist, Zum, insisted: “to protest, to demonstrate to political leaders that society does not agree with them …is the only way to change the world.”

Both are convinced this is the main reason why the movement could go on for years, until governments take the necessary measures to dress deep social wounds.

Kim also believes that the movement’s success is derived partially from its global scope.

Still going strong in over 1000 cities around the world from the Occupiers to the Arab Spring activists, the persistence and successes of each movement seem to fuel the others.

The next issue the indignados plan to fight is the privatisation of water, at the next World Water Forum in Marseille from March 12-17.

For two years, organisers have been planning an Alternative World Water Forum, which will take place during the same week as the official meeting, just a few kilometres away. The people’s convergence plans to draw together numerous associations, experts and citizens to address the critical water issues that, Kim concluded, governments and international organisations have so far failed to solve.

For more than a week, thousands have been demonstrating in cities across Romania. Participants from all walks of life bring to the fore the broadest array of demands in what looks like a celebratory discovery of street protest. The main call is against lack of transparency and accountability in decision-making.

In 2009, Romania’s centre-right government contracted a 20 billion euro loan from the IMF; the government then adopted one of the toughest austerity packages seen in Europe, centered around 25 percent reductions in state salaries and cuts in social assistance.

What sparked the protests was a draft law to privatise the health system presented by Romanian President Traian Basescu in early January, authored by a presidential commission without public debate. The draft proposed that all medical insurance packages including basic universal coverage be managed by private funds and that emergency services be opened up to private providers.

This prompted Secretary of State Raed Arafat, the creator of an efficient ambulance system (SMURD) functional in many Romanian towns, to argue that the implementation of the new law would destroy SMURD.

For a demoralised people, this may have just constituted the last straw: people took to the streets, in Bucharest and other cities, in the hundreds and thousands, starting from Jan. 12.

“Family doctors do not want to see a reform in healthcare, emergency system employees do not want reforms, and a large section of the public does not want reform either,” Basescu declared Jan. 13 while withdrawing the draft law, apparently failing to make the distinction between “reform” and “privatisation”. It is such statements – against the backdrop of austerity – that have made Basescu increasingly unpopular.

The executive has bypassed the parliament to decide over major laws 13 times over the past four years compared to only four times during the social-democrats’ 2000-2004 mandate.

In 2011, the government introduced legislation to outlaw public gatherings near public institutions without permission as well as legislation allowing private companies to conduct expropriations in the name of the state. This last law was meant as a direct tool to help Canadian company Gold Corporation finally win its long-term battle with locals to open a cyanide-based gold exploitation in Rosia Montana, western Romania.

The end of last year saw the emergence of small episodes of public mobilisation against these government tactics: using the headings of the Spanish indignados or of the Occupy movement, young people in major cities protested the expropriation law, often merging this theme with calls for better grassroots representation.

Apparently inconsequential, these actions now find their natural continuation in this month’s protests. But what makes the current protests particularly striking is their bringing together of young educated people with other social categories most hit by austerity measures: pensioners, working class, even the homeless.

Banners seen in the centres of major towns exhibit anti-government slogans, image associations between President Basescu and communist dictator Nicolae Ceausescu, calls for direct democracy, criticisms of corruption (a popular display is ‘We apologise for not being able to produce as much as you steal’), expressions of desperation such as ‘We are hungry’, but also more specific demands such as the halt of the Rosia Montana project, free healthcare and decent education for all, rights for the disabled.

“There is a lot of trust among people, it is easy to discuss everything with those around even though many social groups and political positions are present, from pensioners who come and spend the afternoon in the square and working class middle aged ladies, to NGO activists, punks, anarchists, hipsters and football fans,” says PhD student Mihai Lukacs who has participated in the demonstrations.

“Everyone is looking for the same thing, direct participation, direct democracy – all political representatives attempting to come to the square have been rejected by the people. The same thing happened with fascist groups such as the New Right: they were kicked out of the square by protesters.”

Protests have on a couple of evenings turned violent, most notably during the first weekend of protest (Jan. 14-15) when bank machines and shop windows were smashed, trash bins set on fire and several people were wounded by flying rocks. Different accounts claim that the violence was committed by football fans, or by provocateurs infiltrated by the government or the police, or by angry youth wanting to smash the symbols of neo-liberalism. The media has focused extensively on the violence.

Yet sociologist Mircea Kivu argues that too much attention to the violence erodes both the understanding of the protests and their strength: “Identifying the ‘violent people’ as a common enemy of the police and demonstrators creates a new theme that replaces the core message of these protests: the exasperation that brought people to the streets in the first place. The debate becomes centered on the violence, the government is able to declare its concern with it, rather than be concerned by the main calls of the protest, while demonstrators begin to stress non-violence rather than insist on their core message.”

That violence is in reality marginal is confirmed by political scientist Oana Popescu, who has been witnessing the demonstrations: “The majority of people out in the streets considered the violence as something unrelated to them, to their protests, and kept themselves away.”

For Popescu, one main lesson to be learnt from these events is how to integrate protest into regular democratic practices in Romania: “It is good these actions are taking place: they can be an opportunity to learn how to protest, how to express ourselves. I hope this will be an occasion for us to become more mature politically and that it will not end up with all of us going home and just congratulating ourselves for a great deed.”