Tuesday, May 16, 2006

Lost in the water of globalization

I have just returned from a trip to Central America (October 2000) during which I noted that an important issue in the debate on how to improve public services like water and power was the awarding of concessions to international water companies. I thought at that moment, not without some sadness, how some cultures that hundreds of years ago were expert at building and managing their aqueducts have today simply given up even trying.

Having three daughters of different ages, I have several times had to watch a movie aimed at adolescents called Clueless (in fact, it’s a great movie, and I might be using my daughters just as an excuse). In this movie a young girl tries to pass the exam for her driver’s license. After being severely reprimanded by her instructor for not knowing how to park her vehicle, she curtly answers back with the excuse that valet parking could be had everywhere. I feel that today many of us react in the same way to the difficulty of improving our public services and making them more efficient: “why try so hard when foreign investors can do it?” 

Evidently it is very often necessary to invest a considerable amount of resources or advanced technological know-how in order to offer an efficient and economically viable public service to the end user. In these cases a country may not have any alternative but to call on international investors and offer them a deal. However, in those cases where the only thing that is required to make a project go forward is good administration and a sound strategy for creating and maintaining relationships with users, specifically addressing issues such as quality and tariffs, it is difficult to condone the lack of desire to find a local solution to a local problem. One asks simply where we stand on our ambitions as a nation. 

You may ask what, for example, the administration of water systems or the distribution of power has to so with being a nation. The answer is probably “directly—nothing.” However, building a nation is not easy and requires at a minimum that its society learn how to resolve certain problems on its own. Taking the easy way out and simply calling in foreign assistance in order to solve problems in the water or power sectors could be compared to parents doing their child’s homework to insure a good grade while at the same time not allowing the child to learn how to do thing on his or her own.

Much of the pressure that creates the conditions for the sale of concessions of public services to multinational companies comes from multilateral agencies. You know the saying, “Do not give a man a fish, but teach him instead how to fish”? On occasion I ask myself whether these agencies “are not really asking developing countries to sell their fish-rods and their oceans. 

In Venezuela, we are close to renewing our efforts to privatize certain public services. In this sense, I feel it is important to ask ourselves without any inferiority complex, whether international investors should or should not have access to these services at all. I make reference to complexes simply because I feel many of us suffer from a “globalization insufficiency” complex that now exceeds that of the ardent nationalism that affected us a few decades ago.

What should we do then, in order to insure that national interests are always present in the privatizations that loom in the future? Above everything else, it is important to recognize that the way the privatization process is designed will either attract or scare away national investors. For example, if in the case of the privatization of a power distribution network the state wishes to obtain a large price for selling the utility which it has owned, a price which must then be passed on to the customers of the network itself, the total costs involved will be so high that they will automatically disqualify or discourage any local investor. If on the contrary, use of the power-generation assets were awarded on the basis of who offers to charge the end user the lowest possible rate, local investors would have a better chance of participating. 

Finally as no one is prophet in his own land, looking for foreign support I wish to make reference to a declaration I heard by David Montgomery, Viscount of Alamein, son of Field Marshall Montgomery (Monty) and the new British Ambassador to Mexico. He maintained that he simply could not understand why Argentina had sold all its public utilities to foreign investors. I do not understand it either, but what I am sure of is that unless we wish to lose our country in the waters of globalization, we must define with utmost clarity some strategic borders, and I don’t mean just our geographical ones. 

How depressing! With so much to be gained from globalization, why do they have to do it the wrong way, and why do they have to start doing it wrong just here and now?

As published in "Voice and Noise", 2006