June 30, 2021

Veolia and Suez merger directly threatens human right to water

On May 14, the world’s largest private water corporations Veolia and Suez signed an agreement to move forward on a merger. This merger represents the biggest consolidation of corporate control of water in over a decade. Mainstream news coverage has been scant, revealing a lack of understanding of the dire threat the deal poses to people’s human right to water on a global scale.

There’s more to this merger than stock prices, this is about people’s lives.

These two France-based giants have made riches from privatizing water: Taking control of public water systems and running them for profit. While much of their recent marketing isn’t explicitly on drinking water, make no mistake: Privatizing community water systems is core to their business. Today, 284 million people’s water and/or wastewater systems are tied to Veolia or Suez. That means this is more than a merger of two multibillion dollar corporations — there are direct and dire consequences for peoples’ human right to water.

Time and again, water privatization has failed communities, and Veolia and Suez’s track records are especially egregious.

At its core, privatization shifts the priority of a water system from providing universal service to maximizing profit for shareholders. Following privatization, there have been double- and even triple-digit rate increases that have an outsized impact on people with low incomes who are already struggling to meet their daily needs.

The United Nations Special Rapporteur on extreme poverty and human rights found that “privatization often involves the systematic elimination of human rights protections and further marginalization of the interests of low-income earners and those living in poverty.” In communities that are already dealing with systemic exploitation and an intentional lack of investment, water privatization is especially harmful.

Veolia and Suez have faced opposition on every continent they operate in because of their track record of rate hikes, job cuts, and corner-cutting that jeopardizes public health.

In Osorno, Chile, a Suez subsidiary mismanaged the water system for years, which culminated in an incident that left about 98% of the population without water for over 10 days. Despite over 90% of voters calling to end the contract, the notoriously litigious Suez threatened to take Chile to international arbitration if the local regulator pursued de-privatization. After intimidating the Chilean government, Suez sold off its local subsidiary, walking away with millions and shielding itself from accountability.

In Flint, Michigan, Veolia was brought in to assess the city’s water months after residents began to raise serious safety concerns about it. The corporation told the city its water was safe even as Veolia employees privately discussed concerns about potential lead contamination. At the same time that Veolia was dismissing safety concerns of residents with statements like “some people may be sensitive to any water,” it was jockeying to secure a multimillion dollar privatization deal in Flint.

What’s more, the merger’s impact on water access isn’t going to be felt equally within countries or around the world. As is too often the case, Global South and low-income communities will likely bear the brunt of the fallout from this multibillion dollar deal.

Consolidating power into the hands of an even smaller group of wealthy individuals and institutional shareholders in the Global North with expansion plans for the Global South threatens to worsen an already unjust status quo.

In France, the corporations are promising competition and job guarantees. But, the current agreement sets the stage for the monopolization of the water sector for the rest of the world. Veolia will have far more resources to influence governments and expand its reach globally while the “new Suez” will be uniquely positioned for expansion into African and Asian countries.

To make matters worse, private equity firm Global Infrastructure Partners (GIP) is set to own 40% of the new Suez. GIP has deep ties to the World Bank: Former World Bank Group President Jim Yong Kim and the Former CEO of the World Bank’s International Finance Corporation Jin-Yong Cai are both partners at GIP.

These two men have led an institution that has dogmatically advanced water privatization in the Global South for decades, claiming that “development” was the goal despite an abundance of evidence that privatization does not meaningfully increase access, especially for low-income communities. Now they stand to profit from those very policies.

Fortunately, demands for publicly controlled, democratically accountable water systems are growing. For nearly a decade, water justice advocates in Lagos, Nigeria – led by our allies at Corporate Accountability and Public Participation Africa – have successfully staved off water privatization attempts, including by Veolia, citing the overwhelming global evidence of its failures.

There’s no question that we need to build and improve water infrastructure on a massive scale, especially in low-income and Global South communities. And fulfilling the human right to water also has far-reaching impacts on the right to education (particularly for women and girls), on public health, and beyond. But, a merged Veolia-Suez giant simply will not get us there. It’s the opposite of what people around the world are demanding.

The reality is that the driving force behind improved water access in the last several decades is dedicated public investment, not privatization schemes.

Corporate mergers like this are rife with issues of transparency and accountability. But, when the “product” is a human right, the consequences of such a deal can be orders of magnitude worse. Governments should reject this corporate power grab, prevent the privatization of the water sector, and instead return water systems to community control with robust public funding. And people around the world should call on their elected officials to stop privatization in their own communities and stand in solidarity with those already fighting for their human right to water.

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