Water privatisation hits developing countries

WASHINGTON: The World Bank has engaged in a multi-pronged effort to 
promote a water policy that benefits large multinational corporations at 
the expense of poor people in developing countries, according to a human 
rights group Public Citizen.

World Bank policies impose a "market price" for water in poor countries and 
contribute to increasing rates of cholera and other waterborne diseases, 
the report said.

The World Bank claims that its goal is to alleviate poverty, but its loan 
policies are at odds with this objective. The report recommends that World 
Bank loans focus on increasing access to water and sanitation services in 
low-income and under-served areas, rather than relying on full cost 
recovery and water privatisation.

Not only has the World Bank required countries to privatise water services 
as a condition of receiving loans, but the Bank has engineered the creation 
of public utility regulatory bodies that lend credibility to the Bank's 
pro-corporate water policies.

Further, the Bank has launched an orchestrated public relations effort to 
promote the idea that water is a commodity, not a human right. To this end, 
the Bank has joined water companies and government development agencies to 
create a broad array of organisations that hold conferences, have task 
forces, release vision statements and distribute glossy publications.

These groups often co-opt the social and environmental principles espoused 
by non-governmental organisations about access to clean and affordable 
water as a basic human right.

"As private companies started to view water as a lucrative natural 
resource, much like oil or gold, the concept of commodifying water was 
born", said Wenonah Hauter, director of Public Citizen's Critical Mass 
Energy and Environment Program.

"In the past decade, we have seen the provision of water services pushed 
into the hands of fewer and larger multinational corporations. At the same 
time, poverty and disease levels have risen in developing countries."

The World Bank policies that are most harmful promote the privatisation of 
water utilities, which creates lucrative new business opportunities for 
major global water corporations, and "full cost recovery", which refers to 
the collection of fees from consumers for the full cost of the operation 
and maintenance of water utility services.

These are part of the World Bank's standard policy that promotes 
privatisation, deregulation, trade liberalisation and fiscal austerity. It 
was largely instituted in the past 20 years when the promotion of 
privatisation mirrored the global trend toward more market-oriented 
economic policies.

But critics say this market-oriented slant benefits major corporations such 
as French-owned water giants Vivendi Universal and Suez, and furthers 
inequality in the developing world.

Indeed, prior to the 1980s, World Bank economists and development experts 
maintained that investment in public water utilities would trigger a 
development "take off". However, the scale shifted when investors began to 
realise the potential profit from privatising an increasingly scarce 
natural resource.

The World Bank now claims that the private sector, rather than publicly 
owned water utilities, is best able to provide the financial resources and 
expertise needed to address the growing problems in water service 
management.

Yet private sector companies are organised to make a profit, not to fulfill 
socially responsible objectives such as achieving universal access to water 
and sanitation services.

In many developing countries, where most citizens earn less than $2 a day, 
private sector companies are unable to meet shareholder obligations to 
provide a market rate of return and also implement universal coverage with 
acceptable quality and at affordable prices. Water rates soar and large 
sectors of the low-income population remain unserved.

"When water becomes more expensive, and therefore less accessible, it 
creates a public health crisis", said Sara Grusky, report author and co-
ordinator of the International Water Working Group.

"If people cannot afford clean water, they resort to using water from 
polluted streams and rivers, which increases the risk of many waterborne 
diseases like cholera."

For example, in Ghana in May 2001 after the International Monetary Fund 
(IMF) and World Bank policies led to an increase in water fees, three 
buckets of water cost a family almost 20 percent of the daily minimum wage.

In 2001, 50 percent of World Bank loans required countries to privatise 
services and more than 80 percent of the loans contained cost recovery 
requirements.

To quell the growing public concern about privatisation, the World Bank 
often calls its policies "public private partnerships." Water companies 
enter into a lease with a country under the most profitable conditions 
possible, which often don't burden the company with the responsibility of 
infrastructure investment costs.

"The shared agenda between the World Bank and the global water giants is 
just one more example of corporate interests overriding basic human needs 
and livelihoods", said Hauter.

To view the report online, please go to http://www.citizen.org/documents/ProfitStreams-
World%20Bank.pdf

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Public Citizen is a national nonprofit consumer advocacy organisation 
based in Washington, D.C. For more info visit www.citizen.org