Swiss resist attempts to tap into water market

The Swiss take a sceptical view of foreign firms' designs on their water Keystone

The Swiss government is resisting calls by foreign multinationals and the European Union for it to open up its water distribution market.

The EU and Switzerland have launched preliminary consultations on a raft of requests they have made to the World Trade Organization.

Brussels made the request for Switzerland to liberalise its water distribution network following pressure from multinationals like the French companies Vivendi-Générale des Eaux and Suez-Lyonnaise des Eaux, which would like to get a foothold in the Swiss market.

The European Commission’s Director General for Trade, Peter Carl, told swissinfo that similar requests had been made to other OECD countries. Parties have until March 2003 to finalise their positions.

No obligation

Swiss officials were unwilling to talk on the record, but sources at the Swiss State Secretariat for Economic Affairs (Seco), who are involved in the negotiations, say they are opposed to the liberalisation of the distribution of drinking water.

They will explain to the EU that Switzerland’s water distribution network is organised and distributed at a local level. “We have no mandate to change this. There is no room for manoeuvre,” said a leading Swiss negotiator at the WTO.

The Swiss believe it is up to each country to decide which public utilities it wishes to open up to competition. The Geneva-based WTO confirmed to swissinfo that it had no rules obliging a member state to liberalise its public services.

However, the water sector is only one element in the negotiations, and many fear that Switzerland may be forced to back down on this area in return for EU concessions elsewhere.

“There’s no obligation. It’s a question of give and take,” said Carl.

The Swiss note that the example of other countries that have liberalised the water distribution market has been far from encouraging. In general, prices have gone up while long-term investment has dwindled, they say.

Written into constitution

The Swiss government has a strong ally in its battle against Brussels: several non-governmental organisations and politicians have banded together to form the Working Group on Water as a Public Property

“Water distribution in Switzerland works very well under the public system,” says Peter Niggli of the Swiss Coalition of Development Organizations, the driving force behind the working group.

He points out that, in many cantons, it is written into the constitution that water should have the lowest possible price, be available to everyone, and that its distribution should not be for profit.

This has not dissuaded the big international water companies. Last year, Vivendi opened an office in Geneva to gauge the potential of the Swiss market, while a handful of banks have opened special funds for investing in private water distribution networks.

“If you turn water into a normal profit-driven business, you’ll have a short-term view, less ecological respect and higher prices,” Niggli told swissinfo. “It runs against the idea of democratically-controlled basic social services.”

He points out that it would also mean the privatisation of a natural monopoly: “It doesn’t make economic sense. Unlike in the telecommunications sector, you cannot really have true competition. And telecommunications is not essential for life.”

While it is understood that the federal government largely shares this view, NGOs are concerned that Bern may be forced into making concessions.

“Seco knows that this is a sensitive issue, and for the time being they are refusing to give ground. But we don’t know what they are asking of the EU. These negotiations could take years,” Niggli says.

swissinfo, Roy Probert