Contrary to government rationalisations, privatisation is not necessarily in the interests of disadvantaged South Africans, argues Brendan Martin
THE price of water was as popular a talking point in the Gdansk birthplace of Polish Solidarity this week as the defeat of the city’s favourite son, Lech Walesa, in the presidential election.
Water tariffs have risen several times since Gdansk’s water supply was semi-privatised in 1992, but the demand of the French transnational SAUR for a further 40 percent price hike is threatening to provoke a citizens’ revolt.
The financial logic behind it has only, as it were, poured oil on troubled waters. SAUR reasons the increase is needed because its revenue is short of target, and its revenue is short of target because consumption is lower than projected — and consumption is down because prices are up.
Having spent last week in South Africa and the previous one in Poland, I was struck by the fact that, even if the two countries’ political and economic predicaments are in many ways as comparable as Baltic winter and Cape summer, when it comes to the abuse of state ownership, the realities of sudden exposure to globalisation and the controversies surrounding privatisation of vital public utilities, they have much in common.
The African National Congress and its allies resisted privatisation in the latter years of apartheid precisely because the regime planned to use it as a vehicle to institutionalise through economic means the political power it was resigned to losing. Now the ANC has stunned its allies with last week’s announcement of several partial privatisations.
It is too easy to dismiss the government’s reasoning as window dressing to cover an ideological betrayal. The fact that post- apartheid South Africa inherited one telephone line per 100 black people, against 60 per 100 among whites, and that most blacks have no running water while nearly every white takes it for granted, should be trumpeted the world over to undermine the idea that state ownership and equitable provision necessarily go together.
But the left’s merciful release from its statist stranglehold is in danger of being replaced by no less limiting fantasies about the intentions of private capital for public
‘Major electric, telecommunications and water utilities in industrial countries face slowly growing demand and increased competition (following deregulation) in their home markets,” said the World Bank in last year’s World Development Report, Infrastructure for Development. “As a result, they are vigorously seeking high-yield investments in developing
Matching their investment strategies to the development needs of countries like South Africa is the kind of win-win deal that would give capitalism a good name, except for one problem: it is not an even match.
The bigger the share of the public service market grasped by those companies — and the private infrastructure business is already worth $60-billion a year, according to the World Bank — the less able are national states to resist dealing with them, but the more hazardous doing so will be.
The massive gaps between need and provision, combined with the public debt and spending restrictions likewise inherited from the past, leave South Africa with no choice but to open the door to those with the capital, technology and know-how to tackle the task, goes the government’s argument (despite its rebuttal by Eskom’s massive achievements in connecting black communities to electricity supply).
Public finance benefits from the windfall (this will be the case for selling a stake in Eskom), and there is no danger to the public interest because the terms of the partnership will ensure continuing public control, the argument goes on.
But just as the notions of 18th century free market economic theory lose their elegant equilibrium in the tendency to monopolisation, so the ability of governments to enforce the terms of long-term deals with the public service transnationals has more to do with the shifting balance of power between national states and global capital than with the wording of contracts.
Gdansk’s contract with SAUR enables the city council to veto price rises but, having turned the utility over to SAUR, the cash-strapped municipality may find that it needs SAUR a lot more than SAUR needs it. Why should Bouygues stand losses in Poland when the door is opening to big profits in, say, South Africa?
So, while the circumstances of Solidarity’s birth predispose it against state ownership; while Cosatu’s tradition demands an opposite burden of proof, the driving forces of globalisation and privatisation are producing a common cause. It is neither privatisation nor nationalisation as ends in themselves, but a search for solutions to the problems of economic empowerment and social justice, which enable local communities to shape their own destinies rather than have them usurped by either distant state or distant corporation.
Oh, and fair pay and employment conditions, proper consultation and negotiation agreements with their workers’ unions, too.
Brendan Martin is an international consultant on privatisation and public sector reform and author of In the Public Interest? Published by Zed Books