World Water Day

Briefing No. 112 March 2005

Introduction

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 services.

Context

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 Scotland.

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 needs".

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 regarding:

• Water as a human right as has been argued by the United Nations Committee on Economic, Social and Cultural Rights, November 2002;
• Drinking and waste water services are part of public health policy;
• 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 d.watson@unison.co.uk @P&I Team 14 West Campbell Street GLASGOW G2 6RX Tel: 0845 355 0845 Fax: 0141 307 2572