The EU Finances Privatization Of Water
By Abel Esteban Cabellos
20 April, 2007
Axix Of LogicSince 2005, the European Union has provided funding to the Public-Private Infrastructure Advisory Facility (PPIAF), a public-private consortium in charge of providing technical assistance in processes of privatization of infrastructure for vital public needs such as water or sanitation. Since 1999, PPIAF has spent more than 22 million euros in 37 poor countries to promote a private water model that marginalizes broad sectors of the population and has sparked popular upheavals.
Although the United Nations and some governments of poor countries officially recognize access to drinking water as a human right, and despite the alleged obligation of states to safeguard, protect and respect all human rights, in practice, access to drinking water is a pipe dream to approximately 1.1 billion people, and is now considered in many states to be a marketable service. Far from safeguarding this basic right, according to Thomas Fritz, researcher of the Berlin-based non-profit association Center for Research and Documentation Chile-Latin America, “multilateral and bilateral development agencies are playing a key role in the privatization of water services and sanitation in countries of the southern hemisphere,” preparing the way, sponsoring and initiating privatizations.
By mid 2005, the European Commission (EC) became a donor to the Public-Private Infrastructure Advisory Facility (PPIAF), granting a total amount of one million euros from the 9th European Development Fund (EDF) for a period of two years. Since then, EuropeAid, the EC's Cooperation for Development Agency, participated in several meetings held by the executive body of the consortium, and has deepened its participation through the ACP Business Climate Facility (known as BizClim, providing assistance to boost the development of the private sector in Africa, the Caribbean and Pacific regions), an institution that receives the entirety of its funding from the 9th European Development Fund and which plans to reproduce some of PPIAF's functions.
PPIAF's mission is aimed at “helping to eliminate poverty and to achieve sustainable development in developing countries by facilitating private sector involvement in the development of infrastructures.” To achieve this goal, PPIAF funds technical assistance on both the process of introducing the private sector and the model of privatization to be implemented in water, energy, transport and telecommunications. It also supports activities that seek to persuade public opinion on the benefits of these reforms.
According to the consortium, since its founding in 1999, approximately 22 million US dollars have been spent on activities in the water and sanitation sector, an amount that, according to recent research by the NGO World Development Movement (WDM), was found to be involved in one or more processes of privatization in this sector in 37 countries. The WDM’s criticism centers on the use of public development funds to pay consultants who, on the one hand, are promoting models that have systematically failed to provide these services to the poorest sectors of the population, provoking in some cases major social conflicts (e.g. the “water war” in Bolivia); and on the other, are manipulating public opinion by means of activities they call “propaganda.” Thus, the NGO alleges that the PPIAF is interfering in the countries’ internal debate on the model for provision of public services.
Alarmed by the results of this research, dozens of NGOs from all over the world have written to the European Commission, demanding an end to its support for PPIAF, though no response has yet been received. The organizations suggest that the EU instead create a mechanism to provide support only to reforms within the public sector, or cooperation between public bodies in the water sector. After research revealed that in at least 17 of 37 countries, privatization is a condition being imposed by international financial institutions for access to grants, loans or debt relief, the NGOs say that “PPIAF is an institution that is playing a central role in the pressure being exerted by some donors on developing countries in order to privatize their water and sanitation sectors.”
An activist with Mumbai Paani in India had this to say:
“Based on an analysis of previous cases, it would seem that the World Bank is in command, while PPIAF only funds the studies.”
Mumbai Paani is a coalition of groups in civil society platform that opposes the process of privatization of water and sanitation services of K-East in Mumbai, India, an initiative promoted by PPIAF with the World Bank as the agency for implementation.
According to researcher Absar Jafri, the municipal corporation of Mumbai, with no consultation or debate between representatives of the city council, charged PPIAF and the World Bank with the task of reforming the water services in one of the cities' most profitable sectors, in exchange for a “pitiable” donation of $600,000 by PPIAF.
The latter firm contracted the French company Castalia (involved in another failed privatization in Manila, Philippines) to conduct studies that would eventually lead to contracting of services to foreign companies, a procedure in accordance with internal proceedings of the World Bank. According to Jafri:
“... the World Bank, humiliated in Delhi (where popular mobilizations paralyzed their plans) is searching desperately for a successful example of its failed privatization model, and has chosen the profitable services of K-East to achieve this end”.
Although Spain does not directly participate in PPIAF, several citizen organizations, coordinated by Ecologistas en Acción (Environmentalists in Action) have initiated contacts with political representatives in search of support for the above demands.
Private sector development and business negotiations “In the light of the importance of corporate activity for strategies of growth, development, employment, generation of income and poverty reduction”, the European Commission announced in a communiqué to the Council of the European Parliament in 2003 its support for private sector development as a crucial elements of its development policy.This belief has taken the form of the nearly 3 billion euros granted by the 9th European Development Fund (EDF) to facilities for a series of African, Caribbean and Pacific countries (ACP) earmarked for promotion of private sector business, development of the financial sector, reform of public enterprises and the development of structural sectors such as energy and water through the development of public-private partnerships (known as PPP, this concept has been a target for heavy criticism defenders of public services for being an euphemistic form of referring to privatization).
At the same time, in 2002 the EU launched a Water Initiative (EUWI) designed to “contribute to the achievement of the Millennium Development Goals (MDGs) and WSSD targets for drinking water and sanitation”. Strongly criticized by multiple NGOs from the very start, three years after EUWI's launch, “not a single additional person has received access to water and sanitation” says a report published by WaterAid and Tearfund, as consequence of, amongst other factors, its “focus on attracting private financing despite the proven disinterest of international investors in financing water and sanitation projects in developing countries”.
On the other hand, the EC's official policy considers UN Development Goals to be a priority for its commercial negotiations with third countries. Nevertheless, according to the Corporate Europe Observatory's investigator Christina Deckwirth, the liberalization of the water services was one of the European Commission's key objectives in negotiations for the liberalization of the trading of the services, both on a multilateral level (WTO's Millennium Development Round), and in bilateral and regional negotiations (EU-Mercosur, EU-ACP).
Abel Esteban Cabellos, member of the Corporate Europe Observatory (CEO), Amsterdam. Translated into English by Iris Buehler and revised by James Hollander, Tlaxcala*
Original Source in Spanish: DIAGONAL
© Copyright 2007 by AxisofLogic.com (Translation copyright)
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