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Europe, Italy

Italians say No! to Privatisation

By Tom Gill

Water privatisation has been imposed on people across the globe, from Armenia to the UK.

It has been hugely unpopular but people have rarely been asked whether they want their water – a common good for all – to be used to profit a few.

Italian citizens have had just such an opportunity, and 25 million gave a resounding No.

Changes to Italian law to extend water distribution access to privateers and lift the cap on water bills were the subject of two of the four national referendums held on June 12-13, with the other two revoking legislation giving impunity to politicians and promoting nuclear energy.

Media commentary has focused on how the referendums marked a massive defeat for premier Silvio Berlusconi and his government.

The billionaire media magnate faces legal action over alleged financial and sex crimes and he is an enthusiast for nuclear energy.

He also publicly opposed the vote, telling Italians to “go to the beach.” Instead, people who in a string of previous referendums have done just that voted in their millions.

So the result was indeed a defeat for him personally, his People of Freedom party and his allies the Northern League.

Fuelled by the Fukushima nuclear disaster, it was for sure a defeat for nuclear energy too, but it was also a massive set back for privatisation policies and those who preach the rollback of the state.

Out of the 57 per cent who voted, 96 per cent said No to the sell-off of their precious aqua vita.

Italians have abrogated article 15 of the Ronchi Decree, named after one of Berlusconi’s ministers Andrea Ronchi, which stipulated that by 2011 all municipal water companies would have to open up their capital to private companies.

They also repealed a provision that would have given privateers the right to “equal treatment and no discrimination” vis-a-vis the public sector and a right to buy up to a 70 per cent stake in local water companies, up from the current 40 per cent cap.

Finally, they overturned article 154 of the environmental code which gives investors in water services a guaranteed return on investment of 7 per cent, which effectively meant that private water companies could charge as much as they wanted to guarantee a higher profit.

The story of this campaign starts in the early 1990s when governments began a sweeping privatisation programme to reduce the public deficit and debt to meet the demands of membership of the single currency.

In this effort Rome was no longer constrained by ideological opposition – the main opposition Italian Communist Party dissolved in 1989-91 and the smaller Socialist Party had shifted sharply rightwards – or the clientelism of the Christian Democrat Party which had been swept away in the Clean Hands corruption scandals.

First ministers flogged off state industry. Then it was the turn of public services – including water.

To be sure, the privatisation of Italy’s water sector to date has not been anywhere near as complete as in Britain.

It followed the public-private partnership (PPP) model which was introduced in 1996 and 2000, forcing local authorities to become limited companies.

Most municipal water services still remain in entirely public hands, but where private investors have moved in it has become clear that the promised benefits of a competitive market – higher quality, higher investment and lower prices – have not materialised.

Bills have increased by 65 per cent over the past eight years as 21 of the top 25 most expensive water companies have private shareholders.

In Latina near Rome, an area where the French multinational Veolia has a stake in the PPP, users are paying between 300 per cent and 3,000 per cent more, and 700 families were forced to cut their water consumption, according to La Repubblica newspaper.

In contrast, 100 per cent publicly owned Milan is the cheapest in the country.

Privatisation enthusiasts have argued that these higher bills reflect higher investment, which is badly needed to stem water losses. However, there’s little evidence to support this.

The wholly publicly owned Naples water company is one of the cheapest in the country and it has the second-lowest water losses in the country after Milan.

Furthermore, water companies with private-sector shareholders have been found to engineer all sorts of wheezes to avoid digging into their own pockets, demanding state handouts to fulfil promised investment programmes.

If the rush for “blue gold” has burned holes in the pockets of the Italian public, it has also undermined democratic accountability as foreign multinationals have swept into the market.

France’s Suez, which has worldwide annual revenues of €85 billion, became the object of scrutiny by local regulators.

The head of the watchdog soon came to the conclusion that he had no real ability to effectively probe and police the private shareholders and, denouncing the “endemic weakness of the public-private” relationship, he threw in the towel.

In 2007 Suez and its local partner, Roman firm Acea – Italy’s biggest water utility in which Suez has an 11 per cent stake – were fined by the anti-trust body for restricting competition and prioritising market share over efficiency.

The growing power of local private shareholders and their multinational backers can also be measured by the fact that, despite having a minority stake in the water companies, they often get their candidates into top executive positions.

An analysis of all published studies on water privatisation published in 2009 by Cornell University’s professor Mildred Warner, an international expert on local government service delivery and privatisation, found no empirical support for taking water out of public ownership.

But none of these arguments would have won the day without a huge effort by trade union central CGIL working in regional and national alliances with a plethora of civil society organisations loosely co-ordinated by the Italian Forum of Water Movements.

The focus of the thousands of trade unionists and individuals in local committees across the country was to collect the 500,000 signatures required in order to trigger a referendum, which they exceeded by nearly a million.

It was a long haul involving a decade of hard work, identifying common positions, making the arguments and building alliances between public service workers and the users of the services they delivered.

Now there will be more hard work to get the referendum results implemented on the ground.

Since the arguments are the same for any service of public utility, the potential for a wider anti-privatisation push is enormous.

Already campaigners are stepping up activity over the privatisation of Italy’s public spaces, including their prized beaches.

There are huge corporate interests at stake, but the changing political tide means that in some places, such as Puglia and the new left administrations in Naples and Milan, anti-privatisation campaigners will get a sympathetic hearing.

It is also significant that the largest party of the centre left, the Democrats (PD), swung behind the campaign, albeit reluctantly, as they realised its mass support.

While the media is generally hostile, there is a potential ally in the influential liberal newspaper Il Repubblica.

Owned by Italy’s powerful Benetton group, the newspaper has long a strong advocate of smaller state and deregulation.

But it has become more sceptical of this position, recently running some excellent articles uncovering the reality of private enterprise’s record in running water services.

If clearly just a beginning, Italy’s referendum success nevertheless opens up a European front against privatisation.

With public services and workers currently under massive pressure in Britain and across Europe, it is important that we celebrate and learn from this victory.

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope

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