A 2009 protest in Argentina's Santa Fe province against water privatization to Suez. Photo: International Rivers via Flickr (CC BY-NC-SA).
TTIP won't stop public services being run for ordinary people? Tell that to Argentina
17th April 2015
Now it's Argentina's turn to be sued in a secret 'free trade' court run by the World Bank, writes Nick Dearden. After bringing a profiteering water company that was missing all its service and quality targets back into public ownership, the country has been ordered to pay $405 million 'compensation'.
Argentina has been hounded by cases like this ever since its economic crisis. That's because the government took serious action to place human rights before corporate interests, telling big business they couldn't profit from misery.
Another week, another victory for big business over a government in a secret pseudo-court.
This time it's the turn of private water giant Suez, who successfully sued Argentina for reversing the privatisation of Buenos Aires's water supply.
No matter that the country was in a state of economic crisis when the nationalisation took place, and the government didn't want water prices to rise by 60%.
No matter that the company time and again failed to meet its performance targets. In the world of corporate courts, nothing matters except an investor's 'right' to profit.
Yet it is exactly this system of so-called Investor State Dispute Settlement (ISDS) that we will be signing up to if the US-EU trade deal known as TTIP goes ahead.
Last time I wrote about this it was Canada in the firing line - successfully sued for turning down a large quarry which would have caused severe environmental damage in Nova Scotia, threatening a whale haven with dynamite blasts and heavy shipping. Taxpayers may have to pay as much as $300 million in compensation.
The 'free trade emperors' have no clothes
Yet again and again government ministers tell us there's nothing to fear. Nothing in TTIP will prevent us running public services in the way we choose, they insist, or from regulating business in the public interest.
Try telling that to Argentina, which now 'owes' $405 million, according to one such corporate court, this one based in the World Bank - which just happened to also be a shareholder in the Suez-run private water scheme.
The story began when a free market government in Argentina privatised Buenos Aires's water supply back in 1993,egged on by the World Bank. A 30-year concession was given to a group headed by Suez, which promised to make water access universal and improve the water quality to meet international standards, all while maintaining reasonable tariffs.
From the start, targets were repeatedly not met, while tariffs increased, and the performance indicators were renegotiated. By 2002, average residential tariffs had increased by 88%, while inflation had only increased by 7%. Investment was below what had been promised, debt ballooned, but the profits kept rolling in.
In 2001-2, Argentina went through a dramatic crisis, exacerbated by international lenders like the International Monetary Fund, which caused mass impoverishment. As the country was rebuilt, emergency laws were passed to save Argentina's people from further deprivation.
With the private water company threatening another massive price rise, the government of Nestor Kirchner passed an emergency law to bring the company into public ownership.
When putting human rights before profit is a 'trade crime'
Argentina has been hounded by cases like this ever since its economic crisis. That's because the Argentinian government at the time took serious action to place human rights before corporate interests, telling big business they couldn't profit from misery.
Some of these cases have seen Argentina paying out, others have been resisted, turning into odious debts which hedge funds (known as vultures) use to threaten the country to this day.
This particular case has been brought under a bilateral trade agreement between Argentina and France. But the central mechanism is the same as that which is being proposed under TTIP and a separate treaty which the EU is about to ratify with Canada (known as CETA).
These agreements will allow tens of thousands of corporations access to these secret pseudo-courts to take exactly this type of action against European governments.
Argentina has at least 20 more cases like this pending, arising mostly from the government trying to regulate energy and water prices, which is exactly what the Labour Party is promising to do in the upcoming general election.
What's more, the threat of these corporate courts is having a much wider impact on governments' willingness to even try to represent their people. As senior barrister Toby Landau says:
"No state wants to be brought under a treaty to an international process. It has an impact upon diplomatic relations, it may have an impact upon a state's credit standing ...
"As a practitioner I can tell you that there are states who are now seeking advice from counsel in advance of promulgating particular policies in order to know whether or not there is a risk of an investor-state claim."
The European Parliament has a vote on TTIP in June. This case should make absolutely clear to MEPs that the ISDS system must be a red line not to be crossed by any political party that cares about democracy.
Action: Tomorrow, Saturday 18th April, is TTIP Action Day! People across the world will be taking part in more than 550 actions to protest TTIP and other dangerous trade deals. You can find your local action here.
Sign an EU-wide petition against TTIP - it already has almost 1.7 million signatures and has a target of 2 million by October 2015.
Also on The Ecologist: 'Our public water future - closing out the corporate profiteers '.
Nick Dearden is director of the Global Justice Now (formerly World Development Movement), and former director of the Jubilee Debt Campaign.
This article is an updated version of one first published by Global Justice Now.
Using this website means you agree to us using simple cookies.