Ecopolitics and The Privatization of Water

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Ecopolitics and The Privatization of Water

• SCHEIRING Gábor
• 19 October, 2006.

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Overwiev of the presentation

• Part 1 Politics
• Introduction to Hungarian politics
• Current political situation
• The need for Ecopolitics as radical democracy
• Védegylet
• Part 2 Water Privatization
• History
• Effects
• Part 3 The Politics of Water Privatization
• Parties
• Civil society
• Védegylet and Ecopolitics

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Historical context

• Real Existing Socialism (Ulrich Beck) between
  49-89
• KÁDÁR János, de facto leader (chair of The Party)
• Kádárist tactics soft repression (no trouble,
  basic income, social security, provided you are
  loyal and sit quietly at home)
• Consequences Institutionalized cynicism and
  apathy. State gives and takes we just have to
  survive
• Consequence for movement theory closed and hard
  dictatorships are not the worse (Czech
  Republic, Latin America), because they create
  popular dissent

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Political traditions

• What about the democratic opposition of the
  eighties? 3 major wings
• Political (idealist, American sense) liberals
• KIS János hu, Adam MICHNIK pl, Václav HAVEL
  cz
• Idea of civil society, basic rights, active
  citizenship, third way (in the beginning)
• Economic liberals, reform socialists
• Pragmatic stance, mainly economists
• Hayek, Friedman, Thatcher
• Task of creating market economy like a religious
  conviction
• Völkisch, nationalist camp
• Very diverse ranging from moderate liberals
  through christian-democrats, christian social
  thinking (not to be confused with
  christian-socialism as experienced in LA eg.), to
  right-wing radicals
• Main organizational principle the nation (save
  the nation)
• At the extreme xenophobia (towards Romanians,
  Slovaks, Gypsies, Jews), luckily a quite
  restricted social phenomena, but exists
• The National Tradition is opposed to the West -gt
  romantic anticapitalism, antimodernism

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Current political situation

• Be aware with the meaning of left and right!
• Marxism was already completely dead in the 80ies
  in Hungary! (Only two-three socially and
  politically marginal intellectuals)
• Political liberals abandoned the idea of civil
  society and the language of human rights
• Coalition with reform-socialists (technocrats,
  not social-democrats)
• Abandoned liberal idealism and progressivism
• Dominated by economic liberalism
• Modernization above all
• Hero Ferenc Gyurcsány. The Only One, who is able
  to defeat Orbán, and continue the process of
  modernization and budget reforms.
• Conservativism is antimodernist conservativism
• Skepticism about liberal dreams of reason
• Skepticism about free market -gt strong state
  needed
• National-populism and media-clericalism
  (anti-abortion)
• Nation above all
• Hero Viktor Orban, anarcho-liberal cool guy of
  the 80/90ies, who united the right
• Eg. Anti-privatization campaign buy local, buy
  Hungarian campaign support for family
  agriculture.
• But Homophobia, nationalism, centralizing power,
  eroding democratic norms, corruption, pro
  middle-class

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Current political situation

• Political life is dominated by a hysteric
  bipartisan clash
• Dual party system, with formally democratic
  institutions, but without real social-embedding
• The political elite has lost connection with the
  social base
• Very undemocratic, all-encompassing battle of two
  camps, who see the devil in the other
• Apolitical civil society members of former
  strong movements Danube-movement became members
  of leading parties
• Many current leaders of civil society
  organizations are anti-political and apolitical
• Lack of political articulation of system-critique

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An alternative Ecopolitics as radical democracy
(Mission of Védegylet)

• As said Marxism is dead (except for 2-3
  intellectuals)
• Labor movement is also dead (trade-unions are
  completely empty, operated by unmotivated
  business activists)
• Environmentalism is socially embedded, more
  accepted, although often apolitical
• Task Revitalizing and re-politicizing the idea
  of civil society
• -gt showing people that they can have impact on
  politics and policies
• -gt reclaiming politics

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Védegylet (Protect the Future)

• Civil Ecopolitical Organization
• 6 years old
• Budapest based, operates countrywide
• Recent years strengthening international
  embeddedness
• NGO of the year 2004
• 10 employees, many-many volunteers
• Think-and-do-tank research, policy work, local
  conflicts, referenda, lobbying, networking local
  initiatives, building up political momentum from
  below, party ?

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The Water Sector History

• Before the nineties drinking water provision had
  been the responsibility of the state
• During the socialist era household water and
  sanitation services were free of charge
• The local government act (1990) transferred the
  responsibility of water provision to the local
  governments
• Changes resulted in a mixed ownership structure
  (about 20 of the water companies are still
  state-owned)
• Fragmented structure, with altogether 369
  companies
• Steep increase in water prices coupled with a
  significant decrease of water consumption during
  the last 15 years

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The Water Sector Current Situation 1

• The number of houses connected to water is high,
  still 4.5 of the population are not connected
  with piped water,
• The city of Szeged was the first to start
  negotiating about a privatization agreement in
  1994 and several other cities and regions
  followed,
• About 40 of the water is distributed by private
  companies/joint ventures,
• Many companies are Hungarian, but the well-known
  multinational companies have also been very
  active in Hungary Veolia, SUEZ, RWE, E-on, and
  Berlinwaters.

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The Water Sector Current Situation 2

• Since local governments cannot sell all the
  assets, after Szeged, Budapest, Pécs and several
  other cities, villages or regions opted mostly
  for the following formula in the privatization
  arrangement only a minority (less than 50) stake
  of the company is transferred to private hands,
  making it a partial privatization.
• The minority owners typically a multinational
  company or a consortium of companies get the
  management rights in a long term concession
  contract for 15 or (as in the case of Budapest)
  25 years.
• Privatization contracts or at least some parts
  of them are kept secret
• Water prices are still set by the local
  government

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Investors preferences

• The larger regional water companies are not as
  attractive for private investors as smaller but
  maybe more lucrative companies serving cities and
  towns
• Multinational investors only bought assets in the
  largest Hungarian cities Budapest, Pécs, Szeged,
  Szekszárd, with relatively high population
  density
• Multinational companies have followed some kind
  of a cherry picking logic
• Prices of privatized companies are not higher!
  (no significant causal relationship between
  ownership and price)

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Arguments for private sector involvement, and
experience

• Water-privatization is dealt with in the context
  of general privatization and transition to
  market economy
• This is a cause for concern, as there are major
  differences in the possibilities and limits of
  public utility privatization as compared to
  general privatization.
• Privatization promised to increase efficiency
  through the creation of real ownership
• Privatization in itself proved to be a necessary,
  but not sufficient condition for creating
  efficient corporate governance.
• Another very important motive for privatization
  was the necessity to increase budgetary income.
• For instance, experts say that when the Budapest
  Waterworks were (partially) privatized, the
  company had already gone through a major
  restructuring. No huge and pressing investment
  needs existed and the company was well managed.
  The main reason for selling 25 of it (plus the
  management rights) was the budgetary income that
  could be realized.

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Arguments for private sector involvement, and
experience

• A next very important argument often heard for
  privatization is that the private sector may be
  better able to secure new funds for investments.
• Expectations about large capital investments have
  not necessarily always been met in reality. The
  most important investments were financed from the
  central governments or the citys budget.
• Finally, public debates often circle around the
  highly ideological question whether the state is
  a bad owner or not
• A series of cases underpin the statement, that
  legal, moral and cultural institutions are needed
  to frame market activities and to channel
  private utility towards the public good

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Political debates around privatization

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Political debates around privatization

• Debates about water privatization are embedded in
  general debates about privatization with no clear
  separation of public services and public goods
  from other services and goods.
• Hungarian parties do not have a clear, coherent
  and well articulated strategy towards private
  sector involvement in the water sector.
• Every party now in parliament has supported water
  privatization in towns until recently
• The situation has got clearer recently with the
  christallization of the anti-privatization
  campaign of Fidesz (Right wing!!!)
• Attitudes of the Hungarian left and right towards
  the market and privatization do not follow
  western patterns, are under the influence of
  local path dependencies creating a quite unique
  political cultural situation with a
  modernist/modernizer left and a
  modernization-critical right
• None of the above mentioned NGOs has managed to
  significantly thematize water-privatization in
  the political agenda, and act upon the conflicts
  that have emerged around the privatized water
  utilities in Budapest or in Pécs

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Voices of Civil Society

• Lack of labor movement, lack of development NGO
  sector, lack of Marxism, liberalism lost its
  idealism and became a bare economic liberalism -gt
  strong alterglob movement could not emerge
• Environmental NGOs, mainly Védegylet, consumer
  protectionists, and ATTAC Hungary have played a
  role in debates around water privatization
• Védegylet
• Trade and Development program

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Examples of what VE does

• Trade and Development program
• Ecopolitics as radical democracy (non orthodox
  marxist critique of privatization)
• Fighting for transparency, more participation and
  direct citizens control
• Festivals, Conferences, anti-GATS campaign, GATS
  free zones, publications
• Participating in international networks Our
  World is Not for Sale! Network Seattle to
  Brussels Network Social Forums Transnational
  Institute.
• Organizing big conference-festivals, to raise
  awareness and to educate
• Issuing booklets and policy positions to spread
  information
• Currently we are finishing a book on public
  services restructuring in Hungary from a critical
  perspective
• Trying to establish the ideological and social
  background of a critical stance towards
  privatization without turning back to top-down
  state control
• New Municipalism as an alternative to neoliberal
  globalization

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Conclusion

• Water privatization is not a big social
  conflict
• Privatization was not followed by a significant
  price increase
• Therefore strong privatization campaigns have not
  emerged
• Strategies of parties are not clear, but are
  tangibly different from their western
  counterparts.
• Védegylet is developing a program that can be an
  alternative both to the orthodox-left and to
  neoliberalism, and to position it in the highly
  polarized Hungarian polity as a viable
  alternative
• Ecopolitics as radical democracy.

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Védegylet, 2006 Summer

• Védegylet
  www.vedegylet.hu iroda_at_vedegylet.hu
  sch.gabor_at_vedegylet.hu