Controlling the Tap

In a move which places the major waterworks in both Britain and the United States under German control, the Essen-based rwe group is cementing a deal giving it control of New Jersey-based American Water Works Company Inc. Having taken over British water giant Thames Water last year, the German conglomerate is wasting no time penetrating other overseas markets, particularly the U.S.

Takeovers in Australia and Chile indicate how widespread and aggressive theGerman market attack on strategic utility companies is. Rwe is spreading its wings to embrace gas and electricity generation and distribution facilities, as well as waste management, in addition to its huge interests in water.

The current deal for American Water Works is a real feather in the German giant’s cap. It is the largest and most geographically diversified publicly traded water services company in the U.S. This acquisition will give rwe a presence in 44 countries on six continents, serving a combined population of 56 million.

Of concern, however, is that such large holdings of interests—which literally give control over the tap that controls the flow of water and energy to such a large area—have strategic implications. Having the hand on the tap gives a powerful bargaining position to Germany regarding any nation that may have a falling-out with them in the future. This prospect seems to escape those who permit such deals.

The industries involved in the massive takeovers of water, gas and electricity generation and distribution are handing over control of the basic resources upon which their nations depend for their daily operation and survival. While the merchants rejoice today over these transactions, the masses may have to pay the penalty for their short-sightedness tomorrow.