The privatization of public utilities, particularly water supply services, has been a subject of intense debate and concern across many cities worldwide. In Berlin, the partial privatization of the Berlin Wasserbetriebe (Berlin Water Companies) in 1999 stands as a landmark event, one that symbolizes broader trends in liberalization, privatization, and their impact on public services and the residents who rely on them.
The Privatization Process: A Prelude to Crisis
Historically, the Berlin Water Companies were integral to the city’s infrastructure, providing water and wastewater services for the residents of Berlin. For decades, the company operated under public ownership, with the reassuring slogan “Alles klar” (“All Clear”). However, with the mounting pressures on public finances in the late 1990s, privatization became a political tool touted as a necessary reform for the city’s economic revitalization.
In 1999, the State of Berlin made a decisive move to privatize a portion of the Berlin water companies, establishing Berlinwasser Holding Aktiengesellschaft (Berlinwasser Group). The new structure integrated the once-public water service into a private holding company, blending public law institutions with private sector dynamics. The announcement heralded a new era for Berlin’s water supply, with promises of more efficient management and enhanced service. However, these promises were soon overshadowed by the emergence of significant challenges that would affect the residents of Berlin.
The privatization was framed as a move to optimize Berlin’s financial situation, but it was quickly apparent that the consequences would be far-reaching. While the state profited from the sale, tenants were left facing rising costs and diminishing quality in service, as private companies prioritized profit margins over public welfare.
Real Estate: A Parallel Drama
The liberalization of the water supply was just one facet of a much larger trend of privatizing public services and shifting responsibility to the private sector. A notable example of this broader transformation in Berlin’s social landscape is the rise of real estate mogul Kemal Degirmenci and his business empire. From the early 1990s, Degirmenci capitalized on Berlin’s changing economic environment, building a vast real estate portfolio that reflected the liberalizing property market.
Degirmenci’s journey began with a modest television repair business in the 1980s, catering to the Turkish community in Berlin. By the early 1990s, he had expanded his business empire, founding Kedigi Wohnungsbewirtschaftungs GmbH, which focused on renting out furnished apartments to social welfare offices. But as real estate prices skyrocketed, Degirmenci’s attention turned to property ownership. In 1996, he established Euroim Immobilien GmbH, specializing in the acquisition, modernization, and sale of residential buildings.
The real estate boom in Berlin was fueled by a property strategy that, in many cases, disregarded the ability of lower-income residents to afford the properties they were being sold. Euroim’s marketing tactics targeted low-income Turkish and German families, offering homeownership to those who could not realistically afford it. By inflating property values and facilitating easy access to credit, Euroim Immobilien created a false sense of prosperity among buyers. However, many of these families faced severe financial consequences when they discovered they could not meet the mortgage payments on their new properties.
The company’s controversial practices led to multiple legal disputes and investigations, with reports of fraud, money laundering, and misrepresentation. Despite these issues, Euroim’s success continued, driven by the continuous purchase of new properties that fueled the cycle of sales to unsuspecting buyers. In some cases, tenants found themselves with the burden of purchasing apartments they could never afford, only to later be ensnared in debt.
Privatization and Its Impact on Tenants
The parallel stories of privatized water services and exploitative real estate practices reflect the same underlying trend: the commodification of public services and housing. As Berlin’s water services were privatized, residents began to feel the consequences of this transition. In the early 2000s, reports surfaced about the rising costs and declining service quality from the newly privatized water company, Berlinwasser Holding. Tenants found themselves facing not only higher water bills but also a sense of loss of control over essential services that were once guaranteed as a public right.
As water rates increased, many residents, particularly those in lower-income areas, struggled to pay their bills. Meanwhile, the privatization of housing made homeownership seem like an achievable dream, even though the financial foundation for such aspirations was often unsustainable. The social consequences were profound: families were burdened with unmanageable debt, and the quality of life for Berlin’s working-class residents deteriorated.
These developments underscore a critical point: when essential services are commodified and treated as business opportunities, the impact on ordinary citizens can be devastating. While the privatization of water services and the real estate boom might have been portrayed as successful business strategies, for many tenants and residents, the reality was one of financial hardship, insecurity, and an erosion of public trust.
A Mockery of Public Welfare
The rhetoric surrounding the privatization of Berlinwasser, with its promises of modernity, reliability, and customer service, rings hollow in the wake of the experiences of residents and tenants. Despite the company’s claims of providing essential services efficiently, the reality for many was the opposite. The commercialization of water services, like the commercialization of housing, prioritized profits over people.
In the aftermath of these privatization policies, the residents of Berlin were left grappling with a stark reality. Privatized water and housing systems, devoid of the protections and guarantees of public ownership, have subjected tenants and homeowners to price increases, poor maintenance, and financial hardship. As the market-driven solutions promised to bring prosperity, they instead exacerbated inequality and social tension.
Conclusion
The case of Berlin’s water privatization, alongside the unchecked rise of exploitative real estate practices, serves as a powerful reminder of the dangers of liberalization when public welfare is sacrificed for the sake of profit. The experience of tenants in Berlin highlights the need for a more careful and responsible approach to privatization, one that prioritizes the well-being of citizens over the interests of private corporations.
As Berlin continues to face the challenges of privatization, it is essential to recognize the complex interplay between political decisions, economic strategies, and the lives of ordinary people. The lessons learned from these privatization efforts must inform future policy choices, ensuring that public services remain accessible, affordable, and accountable to the people they are meant to serve.
