ABSTRACT
On 29 October 1999, a few days after the start of a new legislature, the old Berlin Parliament met in extraordinary session to ratify the law on the partial privatization of the Berlin water company, Berliner Wasserbetriebe (BWB). A few hours later, the Berlin Senate finalized the sale of 49.9 per cent of BWB’s assets to a consortium consisting of the German utility RWE (Rheinisch-Westfälisches Elektrizitätswerk), the insurance company Allianz and the French group Vivendi (former Compagnie générale des eaux, now Veolia). This partnership, with a planned term of 29 years, for which the city of Berlin received €1.68 billion, was to unleash local political passions and attract interest from numerous international private operators. How could the water services of Berlin, capital of a country known for its local public management and its excellent technical competencies in the water sector, have been opened up to cooperation with a private foreign operator? And why did this cooperation arouse so much opposition? This case1 relates on the one hand to the varieties of capitalism and to models of urban governments (Boyer, 2002; Crouch and Streeck, 1996; Czada and Lehmbruch, 1998; Hall and Soskice, 2002; Kocka, 1996; Lorrain, 2005), and on the other hand, to the instruments of public action (Lascoumes and Le Galès, 2004; Lascoumes and Simard, 2011; Lorrain, 2004, 2008a). The central thesis on models is that in countries characterized by a market economy, different configurations have emerged over long periods of time, configurations that are underpinned by specific primary principles. For example, in Germany at the end of the nineteenth century, the equation proposed was that essential public goods (Daseinsvorsorge) be managed by public entities. This principle was embodied in formal institutions with responsibility for the municipality and in the establishment of a specific form – the multisector municipal enterprise, the Stadtwerke – which was subsequently implemented through different instruments (or second-rank institutions) operating at the coal-face: technical and accounting standards, methods of pricing and profit sharing, monitoring rules. These principles were all shared among/used by the protagonists of the water sector. The management of urban services in Germany therefore constituted a “strong local public model” (Lorrain, 2005) espoused by the political elites, regional civil servants and a large proportion
of the population. In their view, this system, which gave them direct control of the action – through public ownership – expressed a more general political principle, the principle of the free administration of the municipalities. Against this background, the involvement of a private consortium in Berlin’s water management, albeit being a minority shareholder and under public control, would seem in many respects to generate tensions between a model with its own coherence and a concept of urban public action characterized by a belief in the contracting out of services. Initially, it was the elected officials who called on the private sector to resolve problems of public management, and to cope with Berlin’s increasing budget deficit. However, once the reform was underway, it was associations from civil society who expressed their objections, relying on the second-rank institutions to demonstrate that the application of certain rules (e.g. profit sharing or the procedure for calculating price increases) perverted the higher principles of public management. These “small” institutions therefore had a dual function: they provided a concrete illustration of contrasting approaches in the manner of resolving practical problems, and because they were public and familiar to all, they could provide a basis for contesting decisions: they became the instruments of controversy. This case represents not only an attempt to import an institutional solution, but also a confrontation between two models of urban services. This chapter studies the various protagonists involved in the development of this partnership, their motives, their strategies and their interests. It begins by examining the period preceding the partial privatization, the problems that local politicians faced after Reunification and the first reform of BWB. It then shows that this partial privatization was made possible by substantial work on the institutions (tariff structure, legal form) which gave rise to a complex model of cooperation. Finally, the presentation of the partnership shows how the question of the increase in prices for water services and the non-proportional distribution of dividends among shareholders were used to remunicipalize BWB. Beyond the political debates over the benefits or disadvantages of the partial privatization, the different protagonists relied largely on the “small” institutions as a way to maintain or challenge the partnership, leading ultimately to a remunicipalization that reaffirmed the German model of water management.
