Briefing No. 112 March 2005
Tuesday 22 March 2005 is World Water Day. Trade
unions and NGOs are using this day to call for a change of course
in the European Union's approach to the crisis in access to clean
water and sanitation in Europe and developing countries. There
is a growing coalition of civil society groups concerned about
the way in which European aid money and political influence is
being used to promote water privatisation, rather than meeting
real development needs in water and sanitation. This is replicated
by competition policy that is driving the privatisation of water
in European countries, such as Scotland, that maintain public
Water privatisation in the last decade has failed.
Experiences in developing countries have shown that multinational
water corporations are ill-equipped to deliver clean and affordable
water to the poor. Even the companies themselves have acknowledged
that their need to make profit means they only invest in the larger,
richer cities. Private sector investment has not brought the expected
financing for water and sanitation for the poor.
A recent report published by the World Development
Movement highlighted the following failures:
- Privatisation results in major price hikes - due to higher
borrowing, profit margins and foreign exchange risk.
- Privatisation routinely fails to extends networks to the poor
- through high connection tariffs, metering and huge price increases.
- Requiring developing countries to provide the finance and
handouts to private companies.
- Privatisation encourages 'cherry picking' - placing low risk
and profitability above need.
Rather than developing new policies based on
what works - European governments and international financial
institutions are devising new mechanisms for attracting the private
sector into water and sanitation. This ignores the private sector's
failure and the fact that public utilities continue to supply
water to an overwhelming majority of those with access to water
in developing countries and of course in European countries including
In contrast working public water delivery options
range from reform of existing public utilities to community-based
management schemes. Donors ignore these examples. Faced by experiences
of what works combined with the failure of the global private
sector, the time has come to refocus the global water debate to
the key question: how to improve and expand public water delivery
around the world?
European Union Development policy
The European Parliament's September 2003 resolution
on the EU's approach to water in developing country's sets out
a better approach. It insisted on "the need for local public authorities
to be given support in their efforts towards establishing an innovative,
participatory, democratic system of public water management that
is efficient, transparent and regulated and that respects the
objectives of sustainable development in order to meet the population's
This approach requires funding without
blatant political conditions. The UK's Department for International
Development (DfID) has recently been accused of using its aid
budget to pursue privatisation through funding 'water privatisation
consultants', and promoting private-sector-only funding mechanisms.
The EU Water Initiative process is overly pre-occupied with private
sector expansion and should be re-orientated to co-ordinate joint
EU efforts to support water policy that has been shown to work.
EU governments and the European Commission must boost their support
for public water delivery; politically, technically, financially
and in other ways.
Internationally, the EU must stop exercising
pressure on developing countries to liberalise water services
through trade negotiations within the World Trade Organisation
as well as various bilateral/regional trade talks with developing
countries. Instead, the EU should promote the human right to water
and champion a different approach to water and sanitation in Europe
and developing countries.
European Union Competition Policy
The Internal Market Strategy 2003-2006 and a
recent article on competition in water services published in the
EU's Competition newsletter indicates that the EU is promoting
water privatisation within the EU. This could undermine Scotland's
public water and sewage system.
Whilst there is support for a comprehensive overview
of EU policies regarding water, the concern is with the focus
on promoting competition especially as there are no clear EU policies
- Water as a human right as has been argued by the United Nations
Committee on Economic, Social and Cultural Rights, November
- Drinking and waste water services are part of public health
- Water services should be covered by a legal framework on Services
of General Interest.
Providing safe and clean drinking water and waste
water treatment services is expensive. These services will have
to be paid for. The way in which this is done should entirely
be left to the Member States in the absence of EU policies that
recognise the predominant social characteristics of water.
The focus on competition is therefore not appropriate
for water services. Water is not a commodity for trade, and neither
are water services. This approach has been rejected by the European
Parliament and civic society responses to the Green Paper on Services
of General Interest. The economic advantages of competition in
water services have not been proven. An extensive body of research
now exists that underlines this. In contrast research for the
Commission (December 2003) has been strongly criticised for its
one-sided approach. Promoting more competition is to the advantage
of a very small number of large companies.
No one is against modernisation of water services.
This is important to provide Europe's citizens with high quality
water services and ensure long-term sustainability. Scotland and
the Netherlands have rejected privatisation of water services
while at the same time engaging the water authorities in a modernisation
exercise that has resulted in improved efficiency. The EU Commission
is promoting competition in water services for theoretical or
ideological reasons - competition for competition's sake without
due regard for the implications on citizens.
For further Information:
EU access to developing countries water services http://euobserver.com/?aid=18673&rk=1
Reclaiming Public Water http://www.tni.org/books/publicwater.htm
Public Services International www.psiru.org
Dirty Aid, Dirty Water - World Development Movement www.wdm.org.uk
Contacts list: Dave Watson email@example.com @P&I Team 14
West Campbell Street GLASGOW G2 6RX Tel: 0845 355 0845 Fax: 0141
Executive | Scottish Parliament | Briefings Home