Resist!

The day after terrorists attacked the offices of Charlie Hebdo, the left-wing daily Liberation came out with a dark front page emblazoned with one word: Resist!

Presumably against the dying of the light.

What happened in Paris late last week is more than just the usual terrorist atrocity. By attacking a publication that is considered at the frontier of free expression, the al Qaeda-inspired terrorists assaulted the very core of the liberal and secular culture that is at the base of the world’s first republic.

In France, understandably, the philosophers swing into action nearly as quickly as the police commandoes.

Even as the terrorists were still holding hostages, public intellectuals were loudly debating the state of the social fabric, the erosion of the mores and norms that bind the community together, the curious demographics that evolved in France, the possible resurgence of anti-Semitism and an imminent backlash of anti-Islamic opinion.

Alarmed at what happened in Paris, Israeli president Benjamin Netanhayu reiterated his nation’s standing invitation for French Jews to resettle in the homeland. Rattled by the most recent attack, and the threat of sustained anti-Semitism, a number of French Jews have considered the option.

The demographics are remarkable. France is now home to about 15 million Muslims, the largest Arab and North African immigrant community in all of Europe. Most of them live in ghettos in the banlieu — the poor areas surrounding the large cities.

The unemployment rate for young Muslims in the periphery of Paris, for instance, is a startling 40%. The disenfranchised everywhere are also the disenchanted. The ghettos are really large tinderboxes and quite a number of idle young immigrants are seduced by groups like the Al Qaeda and the ISIS. French Muslim militants constitute the largest group among the foreign fighters in the fold of militants in Iraq and Syria.

A cultural struggle has been quietly in progress in France. Recall that, during the Sarkozy presidency, a law was passed banning Muslim women from wearing the hijab in public. The Muslims complained this violated their cultural practices. The French government maintained the practice constituted oppression of women.

In a city in nearby Belgium, the large Islamic community demanded pork be removed from school cafeterias. The city council maintained that those who chose to settle in Belgium must live as the Belgians do.

Recognition of the widening cultural tensions explains why the rally convened by President Francois Hollande centered on the theme “Unity.” This is an unprecedented rally, attended by leaders of European governments and Israel. The state takes the lead in weaving a new cultural consensus for a whole continent where immigrants have become large minorities.

That is the only way to resist what could be a scourge of Islamic fundamentalism.

Rebasing

Let me begin with a proper disclosure: I was part of the team that worked on the privatization of the metropolitan water utilities during the Ramos administration.

That team decided to divide the existing MWSS system into two parts in order to enable benchmarking and encourage competition. The bidding format was designed based on who could offer the lowest rates for water. Such a format forestalled populist protests because water would not only be cheap but also abundant.

This particular privatization program was considered such a success it was copied elsewhere.

Before privatization, water rates were always politicized. Consumers wanted to pay as close to zero as possible. The unscrupulous simply hijacked water through illegal connections. Consequently, non-revenue water rates were high, water service was poor, capital outlay was nil and the amount of subsidy tremendous.

Our government-run water utility was completely unsustainable, akin to the government-run MRT today. The poor suffered mismanaged water the most. They had to buy their water needs by the drum at 500% the normal tariff. Only a very small percentage of households were reliably connected to the water system. Privatization was a difficult but urgent reform measure at that time.

From the start, the West Zone (now serviced by Maynilad) was more problematic. The system was ancient, built by Spanish engineers during the 1800s. Maps showing where the pipes ran were destroyed during WWII. Population was most dense in this area and the majority relied on more expensive vended water. The human and economic costs were simply intolerable.

After privatization, the concessionaires have invested well over P100 billion upgrading the distribution system. They need to invest more to achieve 100% connections to households.

Two years ago, the MWSS regulators committed something bizarre. They arbitrarily removed the corporate income tax provisions in the concession agreement and forced the concessionaires to bring down prices rather than adjust them according to the formula provided when privatization happened.

The strange behavior of the MWSS, arbitrarily invalidating contract provisions, alarmed investors. The financial models the concessionaires worked on were compromised. New investments in the distribution system were imperiled. We were in danger of returning to the status quo ante where the poor bought their water from ambulant vendors.

Maynilad, in particular, sought arbitration from the Appeals Panel of the International Chamber of Commerce. After studying the case closely, the arbitration panel upheld the alternative rebasing adjustment sought by Maynilad in a ruling issued last December 29.

Maynilad CEO Victorio Vargas welcomed the ICC ruling, saying this “confirms that the concession agreement works and restores investor confidence in the public-private partnership program of the government.” The ruling, he adds, “ensures the continued implementation of Maynilad’s capital expenditure program… intended to benefit our consumers.”

The wayward MWSS, for its part, needs a crash course on respecting contracts.