A new logic of infrastructure supply: the commercialization of water and the transformation of urban governance in Germany.

• Date: 22 September 2006
• Author: Wissen, Markus,Naumann, Matthias
• Published date: 22 September 2006
• Author: Wissen, Markus

Introduction

THE PRIVATIZATION OF WATER SUPPLY AND SEWAGE DISPOSAL 1S A CURRENT POLITICAL issue in many countries around the world (Shiva, 2002; Swyngedouw, 2004). It is highly contested because water is an indispensable good: to exclude people from access to drinking water means to deprive them of the basis of their existence; and a lack of access to sanitation systems is a threat to living quality because it can be the cause of serious diseases. Furthermore, water is used as a resource and means of production that cannot be substituted by other resources.

This is most visible in agriculture, but also in the generation of electricity. Its quality as an essential precondition for human life and a general condition of production constitutes the material presupposition for the contested character of water. However, to understand why water conflicts have gained importance in recent years, the social presuppositions also must be taken into account. These are largely shaped by neoliberal ideology, according to which private investors are prepared to organize water supply and sewage disposal more efficiently and with a higher quality than are public authorities. As a consequence, public waterworks and sewage treatment plants are sold to private companies; or, as is the case in many developing countries, community-based and often informal modes of using water are threatened by the introduction of formalized and individualized user rights (Hoering, 2006). This happens with the active support of international organizations such as the World Bank, the International Monetary Fund, and the World Trade Organization (Dickhaus and Dietz, 2004; Hoering, 2006).

What is involved here is the struggle between the logic of water as a public good that should be accessible to everybody independently of his or her purchasing power, and the logic of water as a commodity that is produced and sold under capitalist market conditions. Yet even if the strength of the second logic has gained significantly in recent years, successful anti-privatization struggles, such as in Cochabamba, Bolivia, show that it remains a question of (local) social conflict whether water supply follows the principles of local participation and social justice or becomes privatized. Thus, to understand how the comprehensive trend of "privatization of water" is implemented, modified, or successfully contested, the social processes at the local and regional levels, as well as the national and supranational conditions under which these processes take place, must be investigated.

This article deals with the recent transformation of the German water sector. Unlike many other regions of the world, the water situation in Germany is quite comfortable. In material terms, Germany is equipped with large groundwater reservoirs that allow water companies to deliver high-quality water without chemical treatment. Even drinking water gained from riverbank filtration or dams is of high quality. The proportion of the population with access to water supply and sewage disposal is high, (1) and leakage is low. Furthermore, there are no problems with quantity. Even in periods of drought, a regular water supply is guaranteed. German water companies do not face difficulties of delivery, but rather must cope with the problem that their supply capacities exceed the demand for water. (2)

However, this does not mean that there is no privatization pressure on the German water sector. (3) To the contrary, nearly every major German city has transferred its water services to a company with a private legal form, which, even if all its shares stay in municipal hands, tends to "free" itself from municipal control to pursue economic goals. In addition, a significant number of cities have sold shares in their water companies to private enterprises. Most prominent in this respect is the case of Berlin, where the global players Veolia and RWE own 49.9% of the shares in the water company. Water privatization in Germany is thus embedded in the broader context of commercialization, i.e., the "introduction of markets as allocation mechanisms, and the introduction and elevation of the profit motive to the primary goal" (Bakker, 2003: 360). This process is to a certain extent independent of the ownership structure of water companies: it also affects companies that remain under public control, insofar as they become formally privatized and transform themselves into "quite normal competitors on liberalized markets" (Schoneich, 2002). (4)

That water is commercialized despite its relative abundance requires an explanation. In many other places in the world, water privatization is embedded in a discourse of scarcity. It is construed as a scarce resource and "thus an inevitably expensive commodity to be bought and sold in the market" (Kaika, 2005: 143). (5) Below we will analyze the current transformation of the German water sector, seeking the forces that drive commercialization in an environment of abundance and the resulting consequences for urban governance. Our analysis focuses spatially on the shrinking regions of East Germany, where the discrepancy between supply and demand is most obvious.

First we outline our conceptual framework, drawing on David Harvey's concept of the "built environment" and on the "splintering urbanism" approach of Stephen Graham and Simon Marvin. Second, we describe recent developments in the German water sector. Then we turn to the crisis of water supply and sewage disposal in shrinking regions, focusing on the East German city of Frankfurt (Oder). Finally, we analyze the political dynamics that are induced, or at least strongly influenced, by the process of infrastructural transformation.

Built Environment and Splintering Urbanism

Commercialization of the water sector must be viewed against the background of a comprehensive trend toward infrastructural change, which is characterized by massive private investment in an area that was long considered part of the public domain in many parts of the world. In his Limits to Capital, David Harvey has offered an explanatory framework for this phenomenon. His starting point is the falling rate of profit, which Marx analyzed as the central source of crisis inherent in capitalist development. The falling rate of profit results from competition-driven technological change in production and finds its expression in "a surplus of capital relative to opportunities to employ that capital" (Harvey, 1999: 192), that is, in an over-accumulation of capital. Surplus capital runs the risk of being devalued. One strategy to prevent this is to invest it in the "built environment," by which Harvey means a range of immobile elements that together form the general conditions of production and consumption and are employed in the production process as fixed capital: "factories, dams, offices, shops, warehouses, roads, railways, docks, power stations, water supply and sewage disposal systems, schools, hospitals, parks, cinemas, restaurants--the list is endless" (Ibid.: 233). Employing Harvey's concept, the recent round of privatization is a strategy to resolve the crisis provoked by the over-accumulation of capital: capital that cannot be employed with sufficient profitability in the first circuit of capital (industrial production) is invested in the second circuit (the built environment). (6)

Harvey's approach forms a theoretical framework that allows an interpretation of ongoing privatization processes by placing them in the context of the tendencies toward general capitalist crisis. However, it is not a substitute for the concrete analysis of privatization. Furthermore, difficulties arise from its use as a methodology upon which such an analysis can be based. This is due to the fact that in Limits to Capital, Harvey largely remains on the abstract level of value theory, only hinting at the role of social conflicts and the state. To identify the actor constellations and transformations of the (local) state through which the privatization of infrastructures occurs, and are simultaneously shaped by this privatization, we draw on further conceptual approaches that "explore the essential role of non-value elements that complement and supplement the law of value in reproducing the circuits of capital and the dominance of capital accumulation as a principle of societalization" (Jessop, 2004: 495).

Such an approach is the "splintering urbanism" perspective, as developed by Stephen Graham and Simon Marvin (2001). Within this approach, infrastructural change is conceptualized as a contested social process. It is seen as an essential part of the "shifts in the social 'landscapes' of contemporary cities" (Ibid.: 220). Networked infrastructures such as water supply and sewage disposal systems, streets, electricity, and telecommunications are understood as outcomes and presuppositions of social processes, as socially shaped and society shaping (Coutard, Hanley, and Zimmermann, 2005). Their crucial importance for urban life, which has long been underestimated and taken for granted by the social sciences, is due to the fact that they organize the "perpetual process of transformation of nature into city" (Kaika and Swyngedouw, 2000: 120). Furthermore, utilities often belong to the largest local and regional enterprises, and are thus important employers, real estate owners, and investors (Marvin, Graham, and Guy, 1999).

The recent transformations of networked infrastructures are seen in the light of "five interrelated shifts" (Graham and Marvin, 2001:92 ff.): (1) The visible deterioration of infrastructure services and systems, such as in bridge closings or breaks in water mains. (2) A shift in the political economy of urban infrastructure development, a process driven not least by the world financial markets, which are tapped by private capital in its search for infrastructure projects in which to invest (an observation corresponding with Harvey's argument of...