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European Double Standards

By Olivier Hoedeman  Posted by Oscar Reyes (about the submitter)     Permalink
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Drinking water delivery in most EU countries is exclusively or predominantly run by public utilities, but internationally the EU advocates water privatisation. The problem lies in the European Commission’s strong tendency to identify itself with the interests of large EU-based corporations, argues Olivier Hoedeman.

Drinking water delivery in most countries of the European Union is exclusively or pre-dominantly run by public utilities. Public utilities in countries like Sweden, Austria and The Netherlands, to mention a few examples, are among the most efficient in the world. In terms of water quality, costs and leakage control, water supply in these countries is superior to that of France and the UK, the only EU countries where water is primarily managed by private companies. Why then is the European Union in the international arena mainly known as a promoter of a stronger role for the private sector in water delivery?

The EU is the main proponent of including the water sector under the rules of World Trade Organisation (WTO). In the last five years, the EU has put developing countries under pressure in the WTO’s services negotiations (GATS) to open up their water sectors for multinational water corporations. At the same, the EU excludes water and other sensitive public services within Europe from liberalization in those same negotiations. Civil society campaigners have tirelessly appealed to the EU to withdraw its GATS demands, highlighting the negative experiences with liberalisation and privatization and warning that water policies should not be determined through global trade negotiations. The European Commission, which plays a very strong role in EU trade policy-making and the actual negotiations, has stubbornly stuck to its liberalization agenda, even claiming that this approach is what developing countries really need.

A fundamental problem behind these flawed policies is the European Commission’s strong tendency to identify itself with the interests of large EU-based corporations. The global private water market is entirely dominated by European water giants and the European Commission sees it as its task to assist the further expansion of these corporations, apparently regardless of the impacts in developing countries. The Commission’s bias is consolidated through the intensive lobbying operations of water multinationals like Suez and Veolia, both in France and in EU capital Brussels. The corporate lobbying pressure is only getting stronger. In 2006, the International Federation of Private Water Operators (AquaFed) opened its office straight opposite of the European Commission headquarters in the Brussels EU quarter. AquaFed is a new pro-privatisation lobby group controlled by the French water multinationals.

The EU collectively is the largest water donor in the world, providing some €1.4 billion of development aid per year. Unfortunately, a range of European donor governments have over the last decade used a large share of their aid budgets to promote expansion of the private sector as the way forward for water delivery in developing countries. This might not be so surprising in the case of the French government: France is home of the world’s largest water corporations. But what to think of for instance the Dutch government’s enthusiasm for promoting the role of the private sector through public-private partnerships (PPPs)? The new Dutch water law rules out any role for private water operators in domestic water supply, but the government’s international water policies are based on the exact opposite principles. A similar hypocrisy exists in the policies of Germany, Sweden and Switzerland, where water is public. Rather than acknowledging the failure of the privatization experiment of the last years, these European governments continue to look for new ways for boost private sector expansion in water and sanitation. A disturbing example is the case of El Alto, Bolivia, where the government terminated the water concession of Suez, after seven years of privatisation (officially described as “public-private partnership”) had failed to deliver the promised improvements. Whereas the local population wants a public utility with citizens' participation, but German aid agency GTZ refused to provide loans unless Suez remains involved in the management.

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In international fora, the EU fails to use its influence within the World Bank and other international financial institutions to end the privatisation conditions that are too often linked to financial support. The sad reality is that the UK and several other European governments are among the main supporters of private-sector-only funding mechanisms that operate under the wings of the World Bank, such as the Public-Private Infrastructure Advisory Facility (PPIAF). Notwithstanding this low profile, the PPIAF has funded water privatisation processes in at least 37, mostly poor, countries from Afghanistan to Zambia. While PPIAF’s annual budget is relatively small, its political influence is strong, for instance by strategically funding work to ‘build consensus’ around the so-called benefits of water privatisation. PPIAF, by definition, only funds privatisation processes.

Change of course?

When Louis Michel took over the post as European Commissioner for Development in late 2004, there seemed to be reason for optimism about a possible change of course being underway. At his first appearance in the European Parliament the new Commissioner was asked what he thought of the pressure of EU on developing countries to liberalise water, education, healthcare and other sensitive sectors in the framework of the GATS negotiations. Michel responded that he shares the concerns and stated: "I am with those who don’t think that everything should become a commodity, and these services should be exempt from market pressures." The new Commissioner also underlined the important role of public services to meet basic needs of the population and that this role should be even stronger in developing countries than in Europe.

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The optimism soon proved to be unfounded, as the European Commission’s response to a letter from a civil society coalition less than six months later showed. The NGO’s had congratulated Commission Michel with his statements in the European Parliament but also pointed out that “there are key EU policies that need to be assessed and redirected” if his words were to become reality. The unfriendly response from the Commission simply ignored the constructive proposals made in the civil society letter, such as the call for EU support for not-for-profit public-public partnerships, involving European public water utilities. Instead the Commission stated that “the EU's position on provision of water services is misunderstood” by the NGOs.

Halfway in his term as Commissioner, it must be concluded that Mr. Michel has failed to act on the promises made to the European Parliament. Common EU water funding programs like the EU Water initiative (EUWI) and the EU Water Facility (EUWF), in which the European Commission plays a coordinating role, suffer from a very problematic pre-occupation with private sector expansion. In a critical assessment published in 2006, the NGO WaterAid concludes that the EUWI has been a failure, not the least because of its misjudged "focus on attracting private financing despite the proven disinterest of international investors in financing water and sanitation projects in developing countries." In 2006, civil society campaigners discovered - much to their horror - that the European Commission had decided to start funding the PPIAF.

The European Commission has, despite severe critique of its attempts to use WTO negotiations to force developing governments to liberalise drinking water supply, not moved an inch. Rather than re-assessing these policies, Trade Commissioner Mandelson has brought in the same irresponsible demands in a range of other free trade negotiations, ranging from the so-called Economic Partnership Agreement (EPA) talks with former colonies in Africa to new free trade talks the ASEAN countries in South East Asia.

EU opposes right to water

The EU’s failure to provide progressive leadership showed very clearly during the negotiations about the Ministerial Declaration of the Fourth World Water Forum in Mexico City (March 2006). The Bolivian government proposed to include support for “water as a fundamental human right” and “excluding water from trade agreements”. At one point during these talks, ten governments appeared to support the recognition of the right to water in the Ministerial Declaration. Due to strong opposition from the governments like the UK, The Netherlands, France and the US, the “human right to water” was eventually excluded from the final declaration, causing Bolivia, Cuba, Venezuela and Uruguay to table a “Complementary Declaration.” The role of the European Union was remarkable, especially since the European Parliament, in a resolution adopted just before the Forum, had called for the European Commission and EU governments to secure the recognition of access to water as a human right. The EU’s position in Mexico City, however, was that water “a primary human need,” but not a right.

Despite the deeply disappointing performance by the EU at such occasions, pressure for a shift in policies is growing. The many failed privatisation experiments have caused a certain degree of confusion among governments and opened the debate that used to be closed and one-dimensional. European civil society groups are increasingly effective in voicing their critique and advocating different approaches, such as Public-Public Partnerships (PUPs) in the water and sanitation sector (not-for-profit exchanges between different public utilities, and other stakeholders). In February 2007, Norway (not a member of the EU) was the first European donor to withdraw its funding for the PPIAF, a decision that puts EU member states and the European Commission under stronger pressure to do the same.

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Olivier Hoedeman (Dutch/Danish, MA Political Science), is the research and campaign co-ordinator at Corporate Europe Observatory (CEO), an Amsterdam-based civil society group targeting the threats to democracy, equity, social justice and the environment posed by the economic and political power of corporations and their lobby groups.

 

 

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