EU Commission’s Insistence On Privatization Of Water Services Reveals Double Standards
Civil society groups everywhere in Europe are gearing up to fight the European Commission’s new attempts to privatize public water services. As a member of the Troika, the European Commission (with the European Central Bank and the International Monetary Fund) has been responsible for setting the conditions for Greece, Portugal and other countries to receive rescue loans in the context of the sovereign debt crisis.
These conditions are widely criticized because they comprise large-scale privatization of public services, including water, as part of cutting these countries’ public budgets. The argument of the Commission is that these measures will create income that can be used to repay government debt while the private sector continues to deliver the service. But civil society organizations believe this privatization conditionality is “unacceptable” and “seriously undermines the right to water.”
The episode is only the latest in a battle that has been raging for a decade against the EU’s attempts to privatize urban water systems as part of a larger plan of liberalization of public services.
According to the European Commission, this liberalization is justified by the necessity to ensure fair competition — one of the basic tenants of the European Economic Community and the Internal Market — to guarantee free circulation of goods and services. In the case of services such as transport, energy, postal services, telecommunications and electricity, the argument is that public services run as state monopolies lead to uneven quality and sometimes high prices.
By opening up these markets to international competition, consumers will be able to choose from a number of alternative service providers and products and, as a result of competition, quality would improve and prices would drop.
Opening water services to private sector companies
Liberalization of the water sector within the EU became a prominent goal of the Commission in its internal market strategy in 2003-2006. Then Internal-Market Commissioner Frits Bolkestein repeatedly declared that the Commission wanted to open public sector water services to competition. Since liberalization of water traditionally has been a most sensitive political issue, the plans of the Commission were met with stiff opposition from towns and municipalities as well as a wide variety of civil society organizations.
They protest the privatization of publicly owned companies delivering essential services such as drinking water because, they argue, it will lead to an increase in prices and may thus lead to water poverty, which is when people cannot afford the water they need for daily use. With water being essential for life and a limited natural resource, they consider that it should not be treated as a commodity but as a public good that must be safeguarded, not opened for competition.
These civil society organizations found support for their struggle on July 28, 2010 through Resolution 64/292 in which the United Nations General Assembly explicitly recognized the human right to water and sanitation and acknowledged that clean drinking water and sanitation are essential to the realization of all human rights.
The resolution also calls upon “states and international organizations to provide financial resources, help capacity-building and technology transfer to help countries, in particular developing countries, to provide safe, clean, accessible and affordable drinking water and sanitation for all.” This means that water and sanitation are no longer a matter of charity which a government can give and take away. They are human rights, which people can claim. States become more accountable.
The EU Commission’s repeated attempts to liberalize public water have been faced with strong resistance by civil society organizations; towns and municipalities; and the European Parliament.
Member states themselves are divided on the issue. Some, like France and the United Kingdom, have already privatized their water services and are actively seeking improved market access for their companies in other countries. Others are more keen to protect their own domestic economic interests against competition from other countries and do not want the sector to be liberalized.
As a consequence, the European Commission has never managed to table a general water privatization legislative proposal. Hence the accusations today that it is trying, via the bailout schemes, to do what it has not been able to achieve so far by other means.
The European Citizens’ Initiative
Supporters of public water companies — which include the utilities themselves, trade unions, consumer groups, environmentalists and human rights activists — have thus resumed their campaign against the European Commission’s attempts and are using a variety of tactics.
First, they have written a letter to the European Commissioner Olli Rehn responsible for Economic and Monetary Affairs in May to ask him to “stop demanding the privatization of municipal water systems in countries receiving rescue loans in the context of the sovereign debt crisis.
Following a very general answer by the European Commission, they sent a second letter last week, in which they strengthened the language: “Your response is astonishing. Not only does it confirm that the Commission has indeed imposed water privatization on these countries but it actually defends this as the Commission’s preferred general policy for the water sector, implying this policy will continue.”
In parallel, civil society and human rights groups in Europe are leading the first ever European Citizens’ Initiative, a new tool for participatory democracy in the EU that has been available since April 1. Through this tool, which involves collecting 1 million signatures from at least seven different EU member states, European citizens can put an issue on the European political and legislative agenda.
The initiative has been taken by a Committee largely formed by representatives of public service trade unions. They consider that “all citizens in the EU should have guaranteed water and sanitation services” because at the moment, “there are still around 2 million people in Europe that do not have proper water or sanitation.”
They ask the European Commission to “stop its constant push for liberalization of water and sanitation services.” And they consider that the “EU can do more and should do more to make sure that also in other parts of the world people can enjoy the human right to water and sanitation.”
The WTO, EU and water privitization
Indeed, the EU’s policy on privatization of water vis-à-vis developing countries has also called for a lot of criticism. The EU has been the main thriving force of further liberalization of trade in services at the international level — i.e., in the World Trade Organization (WTO).
It has tabled requests to 72 WTO member states to provide market access for water provision and waste water services to European companies, thereby actively promoting the business interests of the French and to a lesser extent, the German and English water multinationals. At the same time, it has succeeded in stepping up political pressure upon a wide range of mainly developing countries to surrender their water sectors to private companies.
Additionally, since the current WTO multilateral Doha round of trade negotiations has been stagnating for the last years, the major driving forces for services liberalization — i.e., the United States and the European Union — have recently shifted their efforts to bilateral trade negotiations.
The EU, for example, has often imposed water privatization as a condition for development aid. It also has been including water privatization as a condition to sign trade agreements with a number of developing countries. The risk is that, again, the poorest be excluded from water services they are no longer able to afford.
The so-called “Water War” that raged in Bolivia in the beginning of the year 2000 illustrates the point: After the privatization of the city’s municipal water supply company imposed by the World Bank, the new firm, Aguas del Tunari – a joint venture involving a subsidiary of the American Bechtel Corporation – dramatically increased water rates. This led to a series of protests in Cochabamba, Bolivia’s third largest city, culminating in tens of thousands marching downtown and battling police, obliging the Bolivian government to reverse the privatization.
Finding a one-size-fits-all solution is never easy, nor advisable for that matter, and situations should be examined on a case-by-case basis. But sovereign developing countries should be able to decide themselves on their water policies without any interference from abroad.
As for the European Union, it is clearly applying double standards. On one hand, it has not been able to apply liberal economic logic because some member states oppose it on political or commercial grounds. On the other hand, the Eu demands from developing or European countries in need for financial help to subsume to the same economic logic.
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