Energy Crisis!
Deregulation and Privatization of Public
Services under FTAA
California’s energy crisis is quickly
becoming old news. The mainstream press is
saturated with reports of exorbitant rates and rolling blackouts that have plagued the
state in the years since its ill-fated move to deregulate and privatize utilities. Hardly
a soul in Sacramento these days would dare subscribe to the notion that deregulation has
been good for the California economy. Thousands of utility workers have been laid off,
union contracts have been steadily eroded, the health and safety of low-income, elderly
and sick Californians – all of whom suffer the most because of blackouts and rate
hikes – has been put at risk. And yet further deregulation and privatization of
essential public services is exactly what the federal government has in store for us under
the proposed Free Trade Area of the Americas (FTAA).
What is the Free Trade Area of the Americas?
The Free Trade Area of
the Americas is the name given to the expansion of NAFTA to include the other 34 countries
of the Western Hemisphere. Its objective is to extend and solidify the corporate
“free” trade regime embodied in agreements like GATS – the WTO agreement on
trade in services – and NAFTA. The general idea behind these agree-ments is to ensure
“equal treatment” and market access for transnational corporations and to
protect foreign investors from “discrimination” by local, state and national
governments. Such provisions however also bestow sweeping new authorities on international
trade agreements and grant huge new powers to multinational corporations.
Like NAFTA, the FTAA
will allow corporations to sue governments over local, state and national reg-ulations
that inhibit their market access or threaten their bottom line. Unfortunately for the
people of California and the rest of the Western Hemisphere, these regulations include
some of our most cherished environmental, public health, safety and labor protections.
Corporations have already used NAFTA and agreements like it to claim millions of dollars
in damages from national governments and in some cases even reverse government regulation.
Why should I care about the FTAA?
The U.S. government is
planning to combine the worst aspects of NAFTA (investor-state dispute resolution) and
GATS (which covers federal, state and local jurisdictions) to give corporations the right
to sue for access to government-provided social services under FTAA. If such
“national treatment” rights in services are included in the services chapter of
the FTAA, a broad range of public services at all levels of government would have to be
opened up for competition from foreign, for-profit service corporations.
Under the FTAA
corporations would effectively be able to use the threat of legal action to force local,
state and national governments throughout the Western Hemisphere to privatize essential
public services. Such services would include among a wide range of others: health care,
elder care, child care and education; municipal services; libraries and cultural centers;
police, prisons and correctional facilities; sewer and water services; and yes, also that
recently deregulated public service we’ve all come to know and love, energy.
What does this all have to do with California’s
energy crisis?
The U.S. negotiators
have made a specific point to include energy services among the list of public services to
be opened to international trade. Still worse, the FTAA agreement is using an expansive
definition of energy services that will open up every aspect of the sector to
privatization and control by foreign multinationals. A report put out by the office of the
U.S. Trade Representative (USTR) states “To realize fully the benefits of an
efficient competitive energy sector, we need to consider the entire chain of activities
involved in resource identification: preparation/production and conversion, transmission
and transportation, distribution and sales and marketing (both wholesale and retail) and
information management.”
Why would our government sell us down the river like
this?
“Services” is
the fastest growing sector in inter-national trade; and of all services, health, education
and water are shaping up to be the most potentially lucrative of all. Global expenditures
on water services now exceed $1 trillion every year; on education they exceed $2 trillion;
on health care, expenditures exceed $3.5 trillion. The U.S. govern-ment and its corporate
backers are eager to take advantage of these trends and open up markets throughout the
developing world to competition in services.
Service corporations
are also busy lining the pockets of politicians with large campaign contributions. In
2000, California Secretary of State Bill Jones reported that PG&E, Southern California
Edison and Sempra Energy spent $1,264,675 in legal bribes to California legislators. These
companies are corrupting democracies throughout the hemisphere, planning to pay the way
for the FTAA.
How will
this effect people in Latin America and the Caribbean?
People in the global south have already been
living under this FTAA model for over a decade. It is based on the failed structural
adjustment programs of the World Bank and the International Monetary Fund that were
foisted on countries in order to, allegedly, make them eligible for debt relief and
foreign aid. The deregulation and privatization imperatives of structural adjustment
forced most countries in the global south to dismantle their public infrastructure, and
now U.S. firms are well positioned to take over essential services, making them available
only to those with money.
What have people in Latin America been doing about
it?
California’s
deregulatory woes are hardly an isolated affair. People
are rising up against failed corporate-led economic policies around the world to demand
public services and human rights for all, regardless of income. The people of Cochabamba,
one of Bolivia’s poorest areas and home to its third largest city, led a successful
fight to reclaim public control when their public water service was privatized.
In 1998, the World
Bank, which has promoted water privatization schemes in many parts of the world, refused
to guarantee a $25 million loan to refinance water services in Cochabamba unless the
government leased the public water system to the private sector and passed the costs on to
consumers. Only one bid was considered, and the company was turned over to Aguas del
Tunari, a subsidiary of a conglomerate led by San Francisco engineering giant Bechtel
Corporation.
Once the water system was privatized, Bolivians making $100 a month
were suddenly paying $20 of it for water. Some bills are said to have risen as much as 400
percent. For most Bolivians, this meant that water would
now cost more than food; for those there were unemployed or on minimum wage, water bills
suddenly accounted for close to half their monthly earnings.
The selling off of public enterprises such as transportation,
electrical utilities and education to foreign corporations has been a heated economic
debate in Bolivia. But this was different; polls showed that 90% of the public wanted
Bechtel turned out. Led by Oscar Olivera, a
former machinist now turned union activist, a broad-based movement of workers, peasants,
farmers and students created La Coordinadora de Defensa del Agua y de la Vida - La
Coordinadora for short - to fight privatization and return the local water system to the
people.
Hundreds of thousands
of Bolivians marched to Cochabamba in a showdown with the government in April 2000. A
general strike and transportation stoppage brought the city to a standstill. Finally, on
April 10, the directors of Aguas del Tunari and Bechtel abandoned Bolivia, taking with
them key personnel files, documents and computers and leaving behind a broken company with
substantial debts. Under popular pressure, the government revoked its hated water
privatization legislation. Deeply chagrined
at the failure of its pet project, the local government basically handed over the running
of the local water service, SEMAPA, to the protesters and La Coordinadora – debts and
all.
To add insult to
injury, Bechtel is now suing the government of Bolivia for close
to $40 million at the World Bank's International Court for the Settlement of Investment
Disputes. It is claiming NAFTA-like “rights to profit” under a 1992 Bilateral
Investment Treaty (BIT) that Bolivia signed with Holland. Bechtel, an American company,
must have smelled the conflicts in Bolivia brewing. In late1999 it transferred and renamed
the holding company of Tunari from the Cayman Islands to Holland in order to take
advantage of this agreement. This is another example of how capital can move quickly
across borders, making it nearly impossible to make global corporations accountable to
local needs.
What can I do to help?
Learn more about the FTAA and the many alternatives!
The corporate agenda of privatization and deregulation both at home and abroad conflicts
directly with the fundamental respon-sibility of governments, as codified in the UN
Declaration of Human Rights and many national constitutions, to provide basic services
such as healthcare, education, clean water and electricity for all its people. Such
essential services should be excluded from trade and investment agreements, which are
being crafted to promote the profit making goals of multinational corporations.
While the USTR position
pays lip service to not having the FTAA negotiations promote privatiz-ation of social
services-including education and healthcare services – it does not propose to carve
out these essential services. If the U.S. government is serious about protecting public
health and education from corporate intrusions it should propose excluding them entirely
from the FTAA through carve-outs, as it proposes for transportation services. The same
protection should be given to drinking water supplies.
Energy, like water, is
a public good. As the leaders of La Coordinadora proclaim, “It must be provided by
the people on a non-profit basis. It must be efficient, free of corruption, fair to the
workers and guided by a commitment to social justice (providing first for those without)
and it must act as a catalyst to further engage and organize the grassroots.” We must
demand that our leaders treat it as such and provide essential services like education,
energy and water in a manner which protects people’s access, not corporate profits.
Join the California Public Power
Campaign! www.powertothepeople.org
Oppose the disastrous effects of deregulation (price hikes, blackouts, gutting of
environmental controls) and help build a movement for state-wide public power. Los
Angeles, Sacramento, Palo Alto and over 40 other California cities own their own power,
pay less and have surplus energy. Over 2000 municipalities in the U.S. and the entire
state of Nebraska also enjoy reliable and affordable public power. Contact your state
representatives and tell them you support statewide public power. For additional
information contact TURN: (415) 929-8876 or The Campaign Against Utility Rate Increases:
(415) 789-8344. Other groups working on this issue include: CalPIRG: (916) 448-4516 and
The Foundation for Taxpayer and Consumer Rights (310) 392-0522 and Global Exchange.
Protest the FTAA in Your
Hometown – Stop Fast Track! The Bush Administration needs “Fast Track Trade
Negotiating Authority”, a mechanism that limits congressional oversight and public
debate, in order to turn the FTAA into law. The thousands of people that converged in
Quebec City, April 18-22 during the Summit of the Americas and protested in hundreds of
cities throughout the hemisphere are well on their way to defeating the FTAA. Our job in
the U.S. is to defeat Bush’s bid for Fast Track, which will likely be voted on late
summer or early fall. Check www.tradewatch.org
for sample letters to send to your member of Congress. Teach-ins, conferences, and street
demonstrations are still being planned by local Stop FTAA coalitions. Find out about
organizing in a town near you: www.stopftaa.org, www.jwj.org,
or www.a20.org.
To
learn more about the FTAA and proposed alternatives, and to find out how you can
contribute to the struggle for economic justice, contact Juliette Beck at (415) 558-9846
ext. 254 or Juliette@globalexchange.org