Wednesday, September 24, 2008

The Trickle Down Effect

Leaving aside the music chosen for the Partido Popular conference in Madrid at the weekend, the policy declarations for the event were also a little bit outdated. As merchant banks and insurance companies crashed so expensively in the US, Madrid's PP decided to take us all back to the 1980's when complete economic liberalisation could be argued for on the grounds that people had forgotten why it fails. Current events were not allowed to intrude as we were treated to declarations against the public “monopolies” in education and health. As if anyone could seriously argue in Spain that education is a monopoly when so much of the public funding for it goes on propping up private schools. No matter, reality was kept safely at bay.

The jewel in the crown of the new proposals from “Espp's” ever more extreme Madrid party was a proposal to privatise 49% of the local water company – the Canal Isabel 2. Now of course the case for privatisation is unanswerable, after all it's intolerable that a company which delivers some of the best quality drinking water in Spain and which made a profit of almost 80 million euros last year without charging rip-off prices should be allowed to continue in this way. Especially when it has 670 million euros worth of assets, including some very nice city centre sites that used to be used for boring activities such as storage of drinking water.

So the stage is set for an exercise in “popular capitalism”. It works this way, first the water company uses its profits on an expensive share issue campaign to entice the small investor who then in turn sells on the shares to larger investors. Meanwhile, the newly private company is obliged to pay its directors (probably the same ones as before) much higher salaries on the grounds that the market dictates this. At the same time as it will no doubt dictate that the other employees of the company need to be put on less secure, worse paid contracts. The final bill is of course picked up by the lucky consumer, probably still unaware of the numerous benefits resulting from this process.

Then came the catch. It turns out that the responsibility for delivering water to the residents of the Madrid region doesn't belong to the Canal Isabel 2 at all. Instead, it forms part of the responsibilities of the individual municipalities who have in turn ceded this to the water company under the misunderstanding that it was a public utility company. Madrid's mayor Alberto Ruiz Gallardón was very quick off the mark on this point, suggesting that he might need to put the water services for the capital up for auction if the Canal was going to be privatised. He's looking for alternative sources of funding, and if he can combine that with the possibility of poking Mrs Aguirre in the eye then that makes it all the more attractive. The PSOE run municipalities in the region have also made it clear that they will seek renegotiation of the agreements they have to supply and treat water. None of this means that the privatisation process will be stopped, after all us consumers will still need to drink. Gallardon's move does raise the intriguing possibility that Madrid's water could end up being delivered by Aguas de Barcelona. Don't tell Espe, she doesn't like “foreign” companies.

1 comment:

Troy said...

Lets hope that there are enough Bolivians in Madrid to remember how to protest against such things. Remember that the Right tried to privatize their water there and they protested hard and won.

Aguirre needs to be stopped at all costs. Water, Public Health, Schools, she's going for it all!