· Published in Cities versus multinationals

Leaving Water Privatisation Behind. Paris, Grenoble and the advent of the water remunicipalisation movement in France

How did France, a pioneer of water privatisation, become a hotbed for remunicipalisation? Cities like Paris and Grenoble not only ended the domination of corporate heavyweights like Veolia and Suez over the sector, but also played a key role in inventing a new generation of public water services, both in France and abroad. But the fight is far from over.

In 2019, the city of Paris celebrated the 10th anniversary of its remunicipalised water service, when management and operations were taken from the hands of private companies and a new public company, Eau de Paris, was established. The end of water privatisation in Paris has been groundbreaking in many ways. Firstly, because of the sheer size of the city and its symbolic importance. Secondly, because it is the city in which the two global leaders of the private water sector, Veolia and Suez (which shared the Paris contract) have their headquarters. And lastly, and perhaps most importantly, because of the very way the remunicipalisation process was conceived and implemented. Its intention was not just to get rid of private operators that failed to provide satisfaction, but rather to promote the public service, its values, and, ultimately, its capacity to be more efficient and innovative than private companies, and address the social and environmental challenges that water operators are increasingly facing.

Ten years after the city’s remunicipalisation, it is hard to find anybody who would dispute the achievements of the new public water operator Eau de Paris. In 2017, it was awarded the prestigious United Nations Public Service Award. When the water was remunicipalised, the price of water was cut by 8% as a result of savings on financial transfers to private companies and their shareholders. In 2020, prices are still lower than they were before remunicipalisation and are the lowest in the entire Paris region. Eau de Paris also introduced innovative transparency mechanisms and democratic governance processes. These included the “Paris Water Observatory”, a commission of citizens and civil society representatives with a significant consultative role in the running of the operator. Eau de Paris also has an active policy of facilitating access to water for poorer households and homeless people (including, in recent years, homeless migrants and refugees). It has increased the number of public water fountains throughout the city. It has launched programmes to encourage water conservation. As in other cities in France and elsewhere, Paris has also initiated partnerships with the agricultural sector in order to protect its water catchments. These programmes provide financial and technical support to enable farmers to switch to organic methods, which will then reduce the level of pesticides and nitrates in ground and surface water, and thus the investments required to make raw water drinkable.

Eau de Paris comes out looking pretty good when one compares it to its arch-rival SEDIF (Syndicat des eaux d’Ile-de-France), the inter-communal operator of a large chunk of the Paris suburbs which is also Veolia’s largest contract in the world. In addition to charging a significantly higher price for water than Eau de Paris, SEDIF is regularly criticised (by a number of sources including the regional court of auditors) for its lack of transparency. Another key difference between Eau de Paris and private corporations is the emphasis on technology. The latter tends to prioritise technological solutions to make water drinkable or to treat wastewater, because it is more lucrative and because it locks in their role as the service provider (as these technologies are proprietary). These solutions can also be easily replicated across the different contracts they have. By contrast, Eau de Paris has deliberately chosen to focus on prevention and limit investments, concentrating only what is actually required.

Paris, however, wasn’t the pioneer of water remunicipalisation in France. It was preceded by another city, Grenoble, in the French Alps. Like Paris, Grenoble chose not only to do away with a water privatisation contract marred by corruption, but to actively build a water public service tailored to the needs and future challenges of the city and its citizens. Better quality water was provided at a cheaper price, and democratic governance mechanisms were introduced. The success of the new water operator later resulted in a wider political programme of remunicipalising and “greening” public services and prioritising local suppliers.

Grenoble and Paris are also alike in that they did not only stop water privatisation and go on building a successful public water service on their home turf; they also actively engaged in promoting and assisting with water remunicipalisation elsewhere in France, and even in other countries. Officials, politicians and civil society experts from Grenoble helped make remunicipalisation happen in Paris. In turn, officials, politicians and experts from Paris helped other municipal leaders, citizen groups and unions oppose privatisation plans in their cities or undertake their own remunicipalisation projects. The participatory governance mechanisms introduced in Grenoble when it remunicipalised its water service were replicated and expanded in Paris, and served as inspiration for other cities.

Private sector lobbyists have been quick to portray this “campaigning” for remunicipalisation as ideologically motivated. The people that drove remunicipalisation in Grenoble and Paris were clearly convinced of the virtues and of the potential of the public service, and wary of profit-seeking in the water sector. But their choice to become active advocates of remunicipalisation was also a reflection of the numerous obstacles they had faced (and still face) when they tried to go against the interests of powerful corporations. They understood that cities needed to join forces if they wanted to build a successful public service alternative for the long term.

Turning the tide of water privatisation

The 1990s were in many ways the apex of water privatisation. For a time, the notion that private water management was the only way forward seemed to prevail. New contracts were piling up all over the globe for Veolia and Suez (as well as other companies – such as Bechtel, Thames Water or RWE – which saw water as a promising industry). Cities in the United States, in Europe, and in the global South, from Argentina to Indonesia and the Philippines, were handing over their water services to private operators in droves, lured by promises of efficiency, technological innovation and extra cash, and in many cases pressured by international financial institutions. Up until then, private water management had been the exception. Only France and, to a lesser extent, Spain gave any space to private companies in the management of water and sanitation services. Then came the neoliberal wave of the 1980s, which saw Chile (under General Pinochet) and the UK (under Margaret Thatcher) privatise the water sector entirely. It seemed for a while as if the rest of the world was about to move into a new era of private water management.

Only it didn’t quite happen that way. It only took a few years for the water privatisation wave to come to a halt. Many flagship water contracts signed in the 1990s were cancelled, in Buenos Aires and La Paz, Atlanta, Berlin and Dar es Salaam. Several factors were behind this failure. The financial crisis in Asia and South America played a role, as did the collapse of the monetary system in Argentina in 2001-2002, which destroyed the economic equation of many water contracts. The second factor was popular resistance to privatisation, which always involved price hikes. The “Water War” of Cochabamba, in Bolivia, where weeks of protests led to the forced departure of US corporation Bechtel and a return to public water management, remains the symbol of this widespread rebuff of a water service dominated by corporate interests. In Cochabamba at the time, just as in French cities like Paris and Grenoble, this opposition had also been morphing into a more positive force: the “remunicipalisation” movement, the focus of which was not only on opposing corporations and privatisation, but also on reforming and democratising the water services of old.
Since then, the global water landscape has been dominated by a sort of position warfare. On the one hand, corporations (predominantly Veolia and Suez) continue to seek new conquests, often with the active support of international donors and institutions, but with mixed success. They regularly meet significant resistance from a diverse coalition of trade unions, social movements, civil society groups and politicians. The fight against the water privatisation in Greece, imposed by the infamous European ”Troika” [1] in charge of enforcing austerity measures on the country in the 2010s, is a good example.

In France, the U-turn against water privatisation was even more radical. In addition to Grenoble and Paris, dozens of French cities, both large (Rennes, Nice and Montpellier) and small, remunicipalised their water services in the decade between 2005 and 2015. To this day, not one of them has chosen to re-privatise its water services, and there is not a single example of a city that had maintained public management of its water over the years choosing to shift to private management [2]. It’s true, however, that a number of large French cities such as Lyon, Marseille, Toulouse and Bordeaux opted to stick with Suez and Veolia when their water contracts expired, sometimes despite active citizen campaigns urging them not to do so. In general, their justification was the significant cuts in the price of water granted by the private water companies (more on this below). Due to both these contract renewals and contracts maintained in the Paris region such as SEDIF, private water companies still provide water to the majority of the French population (but not to the majority of French cities).

The French (water) connection

What has made France such a hotbed of water remunicipalisation? The answer is simple: it is the country with the longest, most extensive experience in water privatisation. French officials and citizens have had more experience of the down side of water privatisation, and there have simply been more water contracts to remunicipalise. Numerous studies by consumer organisations have found that the price of water was higher in privatised cities than in cities under public management. The remunicipalisation wave in France was actually triggered by a French law established in the nineties. In a context of high-profile scandals related to the illegal funding of political parties by private companies, a landmark transparency law, the “loi Sapin”, was passed in 1993 which introduced transparency provisions in public procurement and privatisation contracts, and also limited the duration of these contracts. Basically, the law forced mayors and other local politicians, who had previously been able to decide on contracts on their own, to conduct a transparent assessment procedure before awarding or renewing public service contracts. All of a sudden, private water management was no longer a “fait accompli”.

The movement for water remunicipalisation in France has clearly never been a large- scale grassroots citizen movement. Both the general public and civil society have always expressed support for public water management, including anti-corruption groups, consumer and residents associations and environmental organisations. But it hardly ever featured as a high-priority issue. Nor was keeping water public or restoring it to public management ever high on the agenda of local politicians. But it was a clear political symbol, especially for the left. “Generally speaking, a public water system is the one favoured by the general public,” says Anne Le Strat, the leading figure in Paris’s remunicipalisation. “But this only really materialises when there are concrete, successful examples, like that of Paris.”

It was a matter of key figures taking the matter into their hands, drawing on the support of civil society and public opinion, while emphasising the symbolic importance of both water and public service, to achieve their ends. “What is key is building alliances,” says Jean-Claude Oliva, coordinator of Coordination Eau Ile-de-France, a civil society group that is one of the leading proponents of remunicipalisation. In a city like Avignon, there was a strong citizen movement backing remunicipalisation, and the mayor was willing to make it happen, but they could not find a way to overcome the opposition. In Grenoble, local civil society played a key role in challenging corruption in the water sector and pushing for remunicipalisation. In Paris, the arrival of a progressive majority in the city council in 2001, and of green politician Anne Le Strat, in charge of the city’s water portfolio, was to play a decisive role. In Nice, remunicipalisation was achieved through the resistance of local mayors of mountain villages (which were to be absorbed in the wider Nice agglomeration) who wanted to keep their water systems public. This was particularly remarkable given that Nice’s water service had been run by Veolia since the 19th century and that the mayor is a very conservative politician.

Interestingly, the remunicipalisation movement in France was also partly driven by technically-minded people who did not necessarily have very strong views about the merits of public and private management in themselves, but were dissatisfied with the abuse of absolute power of Veolia, Suez as well as the smaller company, SAUR. They primarily saw remunicipalisation as a way of reintroducing a bit of healthy competition, but were also perfectly happy to team up with more politically-driven officials and activists.

Workers in the water sector and their unions, however, were another issue altogether. At first, some of them actually opposed remunicipalisation. This was partly due to the fact that they were content with the wages and conditions offered by private water companies. And workers were not necessarily enthusiastic about the uncertainties involved in a change of ownership. Moreover, proponents of remunicipalisation were sometimes undiplomatic in their public discourse on private companies, failing to differentiate between workers, who were just doing their job, and company executives and shareholders, who were focussed on making a profit. Over time, lucrative water contracts were scaled down, forcing private water companies such as Veolia to cut jobs and reduce advantages for workers, making it the less attractive option. Under municipal contracts, workers could at least take pride in upholding public service values.

The Empire strikes back

Towns and cities have been a driving force in the remunicipalisation movement. In France as well as at global level, water remunicipalisation has often pitched “cities” (local politicians and officials, along with social movements and citizen groups) against national governments and international institutions – in this case, mostly the European Union. The latter are not necessarily openly pro-privatisation; instead, they maintain a posture of apparent neutrality while adopting policies that effectively favour the private sector.

Competition law, which governs the awarding of public service contracts and procurement, often favours corporations. The law tends to treat private companies with a national or European scope as the “normal” market players, and smaller, local or state-owned operators (remunicipalised or municipal water operators being all three) as exceptions that require justification. Another area of policy that can be partial to the private sector is that pertaining to water resources management in general and the conditions in which water services are delivered. Lastly, cooperation and overseas aid policies also favour the expansion of French and European water companies into other parts of the world. Programmes designed to fund access to water are increasingly redesigned as “public-private partnerships”. In other words, EU tax payers are the ones funding new privatised contracts for companies such as Suez or Veolia.

Needless to say, water companies invest a considerable amount in lobbying at national and EU level in order to ensure that the legal and regulatory environment continues to favour their interests. However, in addition to the lobbying aspect, there are two key reasons that national and EU decision-makers favour private water corporations. The first one is that they almost all operate under a mantra of fiscal austerity, which encourages them to push water out of public budgets. The second one is that they are generally bent on supporting “national champions” (or European champions) both in their own markets and abroad.

How have the water companies themselves responded to remunicipalisation? Losing the Paris contract was, undoubtedly, a shock for Veolia and Suez, now forced to answer difficult questions as to why their own city of origin had turned its back on them. Their response has essentially been to slash water prices, by as much as 20% to 25% in cities such as Lyon, Marseille and Toulouse. This has effectively meant that they have opted for a “low cost” water service, with less maintenance and investments, which many fear will quickly prove unsustainable both for the companies and for the services they are providing. Jean-Claude Oliva also points out that the communication around the price of water is often misleading. “You need to look at the whole tariff structure, not just at the price of water for 120m3 of water, which is the usual reference but is actually quite a lot. If you take a lower consumption of water, often the actual price cuts are much smaller.”

Suez and Veolia also tend to pursue low-profile contracts, such as the building or operation of water plants, which are less lucrative but also less risky. This could be seen a form of undercover, insidious privatisation. Both companies have also recalibrated their strategy, focussing on their capacity to offer local officials a range of services across sectors, and playing on the potential synergies across water, sanitation, waste, heating or public facility management, often with a “big data” or “smart city” component. They now tend to portray themselves as integrated providers of “sustainability solutions” for cities. Evidently, they maintain a very strong focus on ready-to-use technological solutions and on remediation, rather than on prevention policies such as zero waste. Their “new look” mostly amounts to window-dressing.

“We can go even further and do even better”

After years of remunicipalisation success, has the French water sector reached a new equilibrium between public and private management? This is, at least, what the private water sector and its allies would like to suggest, as they tend to imply that there is no longer any difference between public and private. Cases of remunicipalisation seem to have been fewer these last years, although in 2018 there was a significant dent in the SEDIF contract with around 20 members opting out of the inter-communal body to build public operators. Water privatisation in its “pure”, cynical form is clearly no longer on the agenda. But even as they have changed narratives and recalibrated their strategies, private water companies are still fundamentally pursuing the same objectives.

Remunicipalisation is an uphill battle, as it always has been. “What we have won, we have not lost again,” says Anne Le Strat. “One could say we have won the battle of ideas, but only part of the political battle. The private water companies remain powerful, but they don’t control the game entirely anymore.”

With the climate crisis and the accumulating social and ecological issues that cities are facing, efforts to reinvent sustainable and democratic public services and uphold public service values are more urgent than ever. “We can still go further and do better,” Anne Le Strat points out. “Public water still has a lot of political potential, especially in a context where access to natural resources and addressing basic needs becomes more of a problem. It is not the private sector that will provide solutions.”

By Olivier Petitjean (Observatoire des multinationales)

Olivier Petitjean is a French journalist based in Paris (and occasionally much further away, in New Zealand). He is the co-founder and coordinator of Observatoire des multinationales, dedicated to investigating French corporations and corporate power in general.

Illustration: Eduardo Luzzatti

Photo: Jeanne Menjoulet CC BY-ND via flickr.

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[1Formed by the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF).

[2There have, however, been a number of smaller public water companies absorbed by larger intercommunal water bodies with a privatised management of the service.

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