Is the water privatisation tide finally turning?

21 September 2010

The EU's announced fund of 40 million Euros to support “non-profit partnerships” of water and sanitation utilities in Africa, the Caribbean and the Pacific is the latest evidence that the corporate push for water privatisation has been forced on to the back foot.


There is a photo of the Bolivian water war that is almost as iconic as the unknown hero who defied the tanks in Tiananmen Square. It shows a solitary indigenous woman, with plaited hair and pleated skirt, launching a slingshot against an implacable line of armed police.It symbolises the valiant resistance of the people of Cochabamba who succeeded in April 2000 in throwing out the Californian multinational company Bechtel that had privatised their water and pushed rates sky-high.

Yet it also captures the sense of the overwhelming power structures that resistance to water privatisation faced. For the year 2000 marked the height of a wave of water privatisation across the developing world, when almost  all institutions from the World Bank to the IMF to the European Union argued that only the private sector could hope to bring clean water to everyone.The revolt of Cochabamba was celebrated by social movements because it was the first blockage in a seemingly unstoppable tidal wave of privatisation.

Ten years after the Water War, with the benefit of hindsight, it increasingly looks like Bolivia's water war was not a solitary heroic act, but marked the very beginnings of a turning point on water privatisation. 

Privatisation roll-back

At the beginning of this year, Paris overturned water privatisation and remunicipalised its water utility. This was deeply symbolic as Europe's largest private water utilities are headquartered in France.Then in August, Bolivia succeeded in pushing through a UN resolution supporting water as a human right, which while it does not prevent privatisation does put the emphasis on water as a human right than a source of corporate profit. Then the latest evidence came this summer, as the EU announced a new fund of €40 million Euros to support “non-profit partnerships” of water and sanitation utilities in Africa, the Caribbean and the Pacific.

Olivier Hoedeman, a long time researcher and activist on water issues and member of TNI and Corporate European Observatory's Water Justice project explained the significance of the new ACP-EU Water Partnerships fund: “This fund sounds  innocuous, but it actually marks a huge departure from the water policy of the EU. For ten years, the  EU approach was dominated by the belief that only by involving private sector could you deliver any improvements in water sector in developing countries. The public sector was completely ignored as it was seen as old-fashioned, outdated and uninteresting, even though the public sector continued to be the predominant supplier of water and sanitation worldwide.”

Before 2010, the EU's deeply entrenched neoliberal view on water was evident in the launch of its water facility in 2003, which clearly stated its intention to expand the role of private sector involvement in water, and specifically to help EU private sector water companies expand into developing countries. EU Water commissioner, Louis Michel backed up these ideological convictions with considerable cash, investing one million Euros per year into the Public Private Infrastructure Advisory Facility (PPIAF) as well as setting up its European equivalent, the  Private Sector Enabling Environment Facility (PSEEF)  with a budget of 20 million Euros. At a state level, many European members conditioned aid to water projects on the involvement of the private sector.  

EU turn around

Against this background, setting up a scheme specifically to support non-profit partnerships marks new ground and a major shift of emphasis. Emanuele Lobina, researcher for the Public Services International Research Unit (PSIRU) based at the University of Greenwich, London says: “This is the first time that a major donor like the EU is ring-fencing a significant amount of money to fund capacity development exclusively in the water sector of a given region. Its insistence on supporting non-profit partnerships means that available financial and human resources devoted to capacity development in the ACP water and sanitation sector will not be diverted to pursue commercial gain”

Lobina also says that the money could have important catalytic effects. “The maximum grant is €1 million and the minimum €250,000 so there is great potential to create partnerships that didn't exist before. When we mapped existing Public-Public Partnerships (PUPs) in 2009, we came across over 130 in around 70 countries, which was far higher than Public-Private Partnerships (PPPs) in the water sector despite the support of the donor community for PPPs. Therefore the possibility of adding tens of new Public-Public Partnerships as a result of this funding is very significant.”

Highlighting costs of privatisation; mapping alternatives

Olivier Hoedeman explains the reasons for the European shift towards funding public-public water partnerships in three ways. First the European Union was forced to recognise the failures of privatisation as various flagship water privatisation projects in developing countries collapsed as water companies pulled out or were forced out by popular protest. “It was clear that the private sector was either unable or unwilling to extend water coverage to the poorest. The reality on the ground easily exposed the false promises of privatisation advocates.”

Alhassan Adam, a water activist from Ghana added that in recent years, “the private sector investment portfolio in water is taking a nose dive especially in Africa. Those who did venture into water are pulling out due to low returns and couple with civil society campaigns.”

Second, institutions like the European Commission faced increasing pressure from civil society, in terms of well-founded research on the poor record of water privatisation and in terms of popular resistance to many water privatisation projects, particularly in the South. At a global level, even at corporate-dominated forums such as the World Water Forum, the voices against privatisation became ever louder and harder to ignore 

Back at home, the EU couldn't ignore the mobilisations taking place in Brussels against water privatisation. Hoedeman recounts one example of a big demonstration on World Water Day in 2006 that brought together water activists and trade unionists, which symbolically linked the Commission Headquarters with Aquafed, the alliance of corporate water utilities. “It became very difficult for the European Commission to defend its approach especially when even the European Commission's own audit office showed that the EU's emphasis on public-private partnerships had proved to be ineffective and a bad use of taxpayers' money.”

Third, many anti-privatisation groups in recent years had put considerable resources into mapping existing alternatives and analysing how these could be scaled up. Many of these case studies were compiled in the extremely popular online book, Reclaiming Public Water - Achievements, Struggles and Visions from Around the World, co-published by TNI and Corporate European Observatory. Public Services International Research Unit (PSIRU) also carried out a large number of in depth publications on public water management reforms and Public Public Partnership that provided invaluable research that had hitherto not been collated. 

“We know from anecdotal evidence, that EU officials found these reports by googling, when the combination of civil society resistance and failing privatisation projects forced the European Commission to look around at alternatives,” says Hoedeman.

Battle continues

Hoedeman is cautious to say that the battle against water privatisation is not won yet. “There are reasons not to cheer too loudly. We know there was resistance even to this funding facility, by the French and UK government, and that there are various splits in the Commission. There is still deeply rooted ideologically-based resistance within the EU to these kind of approaches. The battle has to continue. We unfortunately can not lean back or think that things will continue to develop in this direction.”

The announcement by the World Bank's International Finance Corporation this September of  €100 million  Euros of financing to Veolia Voda to expand water privatization across Eastern Europe is proof of this. Alhassan Adam also warns that we still have some way to go to convince institutions and governments of the reality “that the private sector is inefficient and relies on public funding for their investments and that the private sector is not interested in people who do not have the money to pay for their services.”

Nevertheless, Hoedeman and Alhassan remain  optimistic about the initiative. Hoedeman comments:  “I believe this investment can show the real potential of public-public partnerships and spark an even bigger change. The key now is to expand it firstly to other regions, and to push for a similar approach in other institutions.” Alhassan Adam believes that it could provide a significant morale boost to the public sector: “Supporting Public Public partnerships can strengthen public sector morale which has gone down after the 1990s wave of privatisation. This would go a long to protect national assets, intellectual property and our commons.”

Perhaps most importantly, the initiative provides a useful model of what can be achieved if civil society coalitions are brought together, which combine resistance with developing effective workable alternatives. These lesson are particularly pertinent at a time when many governments are using the financial crisis to further undermine essential public services. Hoedeman believes that lessons from the water privatisation movement must be taken on board by all those defending public services: “We realise that this is one step in a long struggle, which will now have to be taken to defending all public services. But it is not enough to only resist and oppose. The only way to defend and reinvent public services so that they are people centred is to resist and build.”

Note to interested organisations:

Emanuele Lobina invites civil society organisations and trade unionists to encourage potential applicants and partners - i.e. water and sanitation utilities, local authorities and other water sector organisations in ACP and EU countries – to submit concept notes (maximum 4 pages) by 6 October 2010. Those who want to receive further information and advice, including assistance with finding partners, can register on the website and contact (+442083318476)