By Gustavo Capdevila
GENEVA, Sep 27 2002 (IPS)

The International Monetary Fund (IMF) and World Bank pressure developing countries to sell off their water services to a handful of transnational corporations as a condition for financial assistance, says the independent organisation One World Action.

The privatisation of potable water is practically obligatory in the developing South today because the IMF and World Bank make it a precondition for providing aid to water and sanitation programmes, says Gunnar Aegisson, author of the study published by the Britain-based One World Action.

The entities responsible for water services — extraction, purification and distribution — were part of the public domain nearly worldwide until the mid-1980s, when the two multilateral credit organisation began to spearhead the privatising effort.

In recent years, the international community has become increasingly aware that water is a limited resource. “Global freshwater consumption rose six-fold between 1900 and 1995 – more than twice the rate of population growth,” says the report titled “The Great Water Robbery”.

Currently, more than a billion people lack access to safe drinking water, says the report, warning that if immediate and massive investments are not made, by 2025 the population without water will reach 2.5 billion.

In that context, One World Action stresses that access to water is a human right, as was largely recognised in the debate at the World Summit on Sustainable Development, which ended Sep 4 in Johannesburg.

But in practice the notion that water is a basic human right, one that states should guarantee for its citizens, clashes with the view that water is an economic good, a commodity that should be subject to market forces, stated Aegisson.

In addition to this contrast, which is reflected in the options of public and private distribution services, there are other divergences of opinion about decision-making and management related to water services.

Aegisson, policy chief at One World Action, says the two should be placed “in the hands of the user communities themselves,” instead of concentrated in the public or private water service providers.

Water distribution in cities and town in developing countries are mostly limited to central areas, which are usually where the wealthier population lives.

Authorities have mostly failed to extend services to the poorer outlying areas, where the lack of potable water pipelines and sanitation and drainage services are considered a main cause of the high disease and infant mortality rates.

One of the reasons behind government ineffectiveness is that poor populations lack political influence in developing countries. As long as this situation remains, “their needs will continue to be ignored by the elite in power,” commented the activist.

Another obstacle for the South is the lack of capacity. “The debt crisis and the structural adjustment programmes imposed by the IMF in the past two decades have left many public services critically underfunded and institutionally weak,” states the report.

The IMF and World Bank, in this context, pushed for privatisation with the argument that open competition on a free market would lead to increased efficiency.

However, the report’s author objects to the competition justification saying that water distribution “is by its very nature a monopoly.”

The consumer cannot choose between suppliers so therefore does not enjoy the benefits of a competitive market, says Aegisson.

The fact is that privatised water services are the exception. Worldwide, only five percent are privately owned or managed.

France is an exception in the industrialised world, as an imperial decree in the mid-19th century established private administration of water services. In Great Britain, not only the management, but also the ownership of water sources were privatised more than a decade ago.

However, the author points out that in the two countries there are strong public administration systems that are capable of effectively regulating the private water companies.

In other industrialised countries, there are few signs of change away from public sector water management. As such, the pressure for privatisation has been focused on developing countries, where governments tend to be susceptible to those influences.

The One World Action report on water identifies ideological and profit-driven motives behind the privatising effort.

“The neo-liberal wave that swept the world in the 1980s deemed government intervention and management unhelpful: markets were supposed to be better at making decisions,” explains the report.

However, in spite of the fact that neo-liberalism has partially retracted, change at the IMF and World Bank are very slow, it adds.

The profit motive arises from the sheer magnitude of the water business, estimated by Fortune magazine in 2000 at 400 billion dollars a year. That sum equalled 40 percent of the oil industry and more than a third of the global pharmaceutical sector.

The World Bank has calculated that the global trade in water will soon reach a trillion dollars, with most of the predictions for expansion concentrated in the developing world.

The international water industry is dominated by a handful of transnational firms, with two French companies, Vivendi and Suez, the biggest by far, controlling 70 percent of the private water market.

The Aegisson study maintains that a large part of the financial success of the giant water companies is due to the backing they receive from international credit institutions, like the World Bank and regional development banks.

Ultimately, says the One World Action report, the responsibility for water services rests with the government, and requires a democratic and accountable system in order to ensure an equitable approach.

One World Action is active in Europe and in association with organisations from developing countries in efforts to fight poverty and promote democracy and respect for human rights.

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