February 28, 2013
Special Rapporteur on the human right to safe drinking water and sanitation, Ms. Catarina de Albuquerque:
Corporate Accountability International welcomes the opportunity to input into the Special Rapporteur’s
upcoming report on Non-retrogression and Sustainability. We welcomed the legal recognition of the human
right to water and sanitation at the UN in 2010 and were encouraged to see the Special Rapporteur’s mandate
extended in 2011. We look forward to continuing to work with Special Rapporteur and her team to advance the
human right to water and sanitation at the UN.
Corporate Accountability International is a membership organization running strategic campaigns to protect
people from dangerous and irresponsible corporate actions around the world. Since 2006 we have been active in
working to protect people’s access to clean safe drinking water from corporate abuse. Organizationally we have
been active in protecting human rights at the international level for decades and were a principal actor in the
creation of the Framework Convention on Tobacco Control (FCTC) under the WHO, known as the world’s first
public health treaty. One of the most groundbreaking and critical elements of the FCTC is it’s recognition of the
inherent conflict of interest posed by the tobacco industry in promoting and protecting public health.
In working to realize the human rights to water and sanitation, it is this same conflict of interest that poses the
greatest threat to these rights. Unfortunately over the past few years despite strong public opposition1,
international financial institutions and governments are using the debt crisis as a means to increase private
sector control over public water systems. The austerity measures promoted as solutions to the debt crisis often
require the partial or total sale of public utilities, including water, to private corporations. Corporate
Accountability International’s response to the Special Rapporteur’s request for input regarding sustainability
and non-retrogression will focus on European austerity measures and the resulting impacts on the human right
to water2.
Specifically this response will bring forward examples from Greece, Portugal, Italy, Spain and Bulgaria,
highlighting rate increases, employee lay-offs, reduced water quality and access for marginalized populations,
the shutting off of unauthorized connections and lack of transparency. Austerity measures additionally have a
broader impact on the sustainability of water utilities and the financing needing to properly invest in
infrastructure. In the cases where these measures are dictated to governments through ‘rescue packages’
international financial institutions are failing to respect national and local decision making processes with
regards to water. In the cases where governments are using the debt crisis as an excuse to increase private sector
control over water systems these states are failing to meet their human rights obligations.
In addition to discussing current austerity measures’ threats to the human right to water and sanitation this
submission will context these threats within the even broader threat posed by the World Bank’s on-going
ideological promotion of water privatization. As the largest external source of funding for developing countries
the World Bank’s fixation on privatizing water has had a devastating effect on people’s rights to clean safe
drinking water and sanitation. Corporate Accountability International, in its recent report: Shutting the Spigot on
Graeme Wearden “Eurozone Crisis as it happened: Austerity Strike in Greece, as Bulgaria’s government falls,” the Guardian,
February 20, 2013, http://www.guardian.co.uk/business/2013/feb/20/eurozone-crisis-greek-workers-austerity-strike (accessed
February 20, 2013).
2
“Greek austerity measures could violate human rights, UN expert says,” UN News Centre, June 30, 2011
http://www.un.org/apps/news/story.asp?NewsID=38901&Cr=austerity&Cr1#.US4cNzBBOQt (accessed February 27, 2013).
1
Private Water: The Case for the World Bank to Divest, has detailed the systematic ways in which private sector
control of water utilities results in tariff hikes, job losses, decreased transparency and accountability, the
shutting off of unpaid or unauthorized connections, and the lack of investment in critical infrastructure.
Austerity Measures and the Push for Water Privatization
The response from many governments, especially in Europe, to the economic crisis which began in 2008 has
been severe austerity measures. These measures, whether specifically included in rescue packages or as a
general government response to the debt crisis, demand cuts in public spending and privatization of public
services, including water utilities. The rationale for these measures is that these cuts and privatizations are
needed to address the debt crisis. The money from the sales of these public services, it is argued, can go towards
paying down the national debt, while private corporations continue to provide the service. According to the UN
Department of Economic and Social Affairs, however, “there is strong recognition all over the world that fiscal
austerity pursued by many governments has been the main cause for the protracted economic downturn.”3 The
EC has further acknowledged that it is using the crisis to impose privatization of municipal water systems on
countries receiving rescue loans. 4 With both the effectiveness of austerity measures and the motivations behind
these responses in question, institutions and organizations concerned with the promotion of human rights rather
than corporate profits should be vigilant.
Since the beginning of the debt crisis, the European Union (EU), the European Central Bank (ECB) and the
International Monetary Fund (IMF), as well as individual government’s austerity measures have increased the
number of people being denied their human right to water. The World Bank and its response to the crisis
however represent an even larger missed opportunity to ensure people’s right to water. By continuing to
disproportionately fund the International Finance Corporation (IFC) and private sector participation, the World
Bank has missed a crucial opportunity to increase funding for public water systems. In times of recession when
economies are contracted, it is role of the World Bank and other financial institutions to alleviate debt and
budgetary uncertainty through its programs. Approximately, ninety percent of the world’s water systems are
publicly run, yet a quarter of World Bank funding goes directly to the private sector through IFC.5 In order to
ensure the financing needed to realize the human right to water the World Bank’s resources must be re-directed
towards supporting the public sector and investment in infrastructure.
Private Sector Management Leads to Increases in Tariffs
After examining 15 years of private sector participation in water, in 2007 the United Nations research Institute
for Social Development (UNRISD) stated “in most case studies, it is found that prices increase following PSP.”6
Thus is deeply worrying that governments are using the debt crisis to justify deep cuts in public spending and
the troika of the European Union (EU), the European Central Bank (ECB) and the International Monetary Fund
(IMF), are explicitly requiring the sale of public systems, including water utilities.
United Nations Department of Economic and Social Affairs, “World Economic Situation and Prospects 2012,” 2012
Transnational Institute, Democratising Europe, “EU Crisis Pocket Guide” November 2012
5
Per FY11 Audited Financial Statements, 22% of all funding and 29% of investments were disbursed through the World Bank’s
private sector entities, IFC and MIGA. International Finance Corporation, “IFC Financials and Projects 2011,”
http://www1.ifc.org/wps/wcm/connect/CORP_EXT_Content/IFC_External_Corporate_Site/Annual+Report/Financial+Reporting/?pre
sentationtemplate=ifc_ext_design/AlternatePresentationTemplate MIGA, “Annual Report 2011: Insuring Investments, Ensuring
Opportunities,” http://www.miga.org/documents/ 11ar_english.pdf (accessed March 7, 2012).
“World Bank Annual Report 2011,” The World Bank, (Accessed March 7 2012).
http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/EXTANNREP/EXTANNREP2011/0,,menuPK:8070643~pagePK:
4168427~piPK:64168435~theSitePK:8070617,00.html (Accessed March 7 2012).
6
Naren Prasad, “Privatisation Results: Private Sector Participation in Water Services After 15 Years,” Development Policy Review,
24, 2006, 675, http://www.sarpn.org/documents/d0002466/Privatisation_results_Prasad_2006.pdf.(accessed March 6, 2012).
3
4
In Greece, a condition of the government’s ‘rescue package’ from the troika specifically requires the sale of
state shares of water utilities in Athens and Thessaloniki.7 Since 2001, when the water utilities in Athens and
Thessaloniki were semi-privatized the price of services has risen between 250 and 300 per cent without
corresponding improvement in services or investment in infrastructure. The workforce has further been reduced
by 50 per cent with increasing work going to outside contractors for higher costs.8
In Portugal a signed memorandum with the troika includes the sale of Aquas de Portgual in addition to an IMF
imposed 15% cut in the operating budgets on public companies9 seriously undermining the financing needed to
realize the human rights to water and sanitation. As a result of the growing privatization of services, water rates
have increased in addition to growing surcharges and tax increases. When combined with the growing
unemployment in Portugal, the Lisbon based National Statistics Institute predicts 16.4% for 2013,10 this will
mean an increasing number of people unable to pay their bills.
The false justification given for the push in austerity measures and cuts in support to public sectors and specific
plans for liberalizing and in certain cases outright complete privatization of water utilities are undermining the
both the financing needed to realize the human rights to water and sanitation and the rights themselves. In
addition to the changes in management and the resulting increase in tariffs, austerity measures are decreasing
access safe drinking water, increasing the number of disconnections and further marginalizing stigmatized
groups.
Austerity Measures Reduce Access and Increase Disconnections
A World Bank study conducted by the Public-Private Infrastructure Advisory Facility, reviewing 15 years of
public-private partnerships finds that the private sector’s achievements with respect to expanded access have
been “mixed” at best, with private utilities often failing to meet contractually agreed targets for expanded
access.”11 Investment in infrastructure is crucial for increasing access among marginalized populations and
more broadly. Austerity measures requiring increased private sector control do not address the need for
investment in infrastructure and with severe cuts to public budgets further reduce government’s ability to invest.
In Bulgaria, while not a direct result of conditions from the EU, ECB or IMF, the government is nevertheless
using the debt crisis to push through its own package of austerity measures, building on earlier waves of
privatization. In 2000 Sofia’s water and sanitation services were sold to United Utilities under a 25 year lease
agreement. The current debt crisis is again providing cover to push for more privatization throughout the water
sector. Reviewing the results of United Utilities and Veolia Voda’s management of Sofia’s water services
however demonstrates serious cause for concern, especially with regards to access.
The price of water in Sofia has increased 386% beyond the limit promised in the 2000 contract with United
Utilities. Veolia Voda, which bought out United Utilities in 2010, is now negotiating for a further increase of
10-12%.12 By the end of 2011 1,000 households were cut-off from water services13 and 5,000 households were
Blue Planet Project, Documents, “Our Right to Water: Case Studies on Austerity and Privatization in Europe,” Blue Planet Project,
March 2012 http://www.blueplanetproject.net/documents/RTW/RTW-Europe-1.pdf (accessed February 21, 2013).
8
Blue Planet Project, Documents, “Our Right to Water: Case Studies on Austerity and Privatization in Europe,” Blue Planet Project,
March 2012, pg. 10, http://www.blueplanetproject.net/documents/RTW/RTW-Europe-1.pdf (accessed February 21, 2013).
9
Blue Planet Project, Documents, “Our Right to Water: Case Studies on Austerity and Privatization in Europe,” Blue Planet Project,
March 2012, pg.12, http://www.blueplanetproject.net/documents/RTW/RTW-Europe-1.pdf (accessed February 21, 2013).
10
Joao Lima, “Portugal’s Unemployment Rate Rose 15.8% in the Third Quarter,” Bloomberg, November 2012,
http://www.bloomberg.com/news/2012-11-14/portugal-s-unemployment-rate-rose-to-15-8-in-the-third-quarter.html (accessed
February 21, 2013).
11
“Public Private Partnerships for Urban Water Utilities: A review of experiences in developing countries,” Public-Private
Infrastructure Advisory Facility, February 2009, http://www.ppiaf.org/ppiaf/sites/ppiaf.org/files/FINAL-PPPsforUrbanWaterUtilitiesPhMarin.pdf (accessed March 6, 2012).
12
“Sofia Water wishes price increase,” January 2012, http://fakti.bg/bulgaria/28929-i-sofiiska-voda-iska-uvelichenie-na-cenite
(accessed February 21, 2013).
7
put on trial over their inability to pay their fees.14 In addition there has been a lack of network extension with
water services failing to reach residents living in informal settlements on the outskirts of Sofia who are
primarily economically and socially stigmatized communities of Roma.15
Both the World Bank and the private sector now acknowledge that the private sector will not invest in
infrastructure and extending access to clean safe drinking water requires public investment.16 Further the private
sector’s focus on reducing “non-revenue” water through enforcing bill collections and cutting off unpaid or
unauthorized connections means corporations have little to no incentive to extend access to those users unable
to afford it.17 At the same time the Portuguese populations are seeing drops in personal income of up to 50%
water rates are rising and “private companies are blocking access to free public water supplies such as drinking
water fountains.”18 This inherent discrimination woven into the private sector model has a devastating impact
on the ability to reach and realize the human rights to water and sanitation for marginalized populations.
The World Bank’s Role in Undermining the Human Right to Water
The role of Veolia Voda, the Eastern European subsidiary of French owned TNC Veolia, in denying residents in
Sofia their human rights to water and sanitation is even more troubling due to the role the IFC played in
bringing Sofia’s water company under its control. In 2010 the IFC purchased $100M in Veolia Voda with the
express intent of supporting the company’s expansion throughout Eastern Europe and to promote public private
partnerships.19 This direct equity support from the IFC facilitated Veolia Voda’s purchase of United Utilities
that same year and the continuation of the same failed contract terms.
Since 1993 the IFC has invested $1.4 billion in private water corporations and aims to increase that commitment
to $1 billion in annual investments from 2013 onwards (emphasis added).20 While the current debt crisis has
provided the opportunity for the EU, IMF, and ECB to impose cuts to the public sector and privatize water
utilities the World Bank promotes private sector participation on an on-going and often unjustified basis. The
World Bank’s own Internal Evaluation Group, in an evaluation of World Bank research from 1998-2005, found
a tendency to “jump to policy conclusions that were not well-supported by the evidence.”21 This conclusion is
extremely worrying for an institution able to leverage significant power through its knowledge production and
“1000 Sofia residents without water because of debts over 1500 lev,” Dnes.bg, November 2011,
http://www.dnes.bg/sofia/2011/11/15/1000-stolichani-bez-voda-zaradi-dylgove-ot-nad-1500-lv.133982 (accessed February 21, 2013).
14
Blue Planet Project, Documents, “Our Right to Water: Case Studies on Austerity and Privatization in Europe,” Blue Planet Project,
March 2012, http://www.blueplanetproject.net/documents/RTW/RTW-Europe-1.pdf (accessed February 21, 2013).
15
Blue Planet Project, Documents, “Our Right to Water: Case Studies on Austerity and Privatization in Europe,” Blue Planet Project,
March 2012, pg.9, http://www.blueplanetproject.net/documents/RTW/RTW-Europe-1.pdf (accessed February 21, 2013).
16
Corporate Accountability International, Resources, “Shutting the Spigot on Private Water: The case for the World Bank to divest,”
Corporate Accountability International, April 2012, pg. 12,
http://www.stopcorporateabuse.org/sites/default/files/resources/shutting_the_spigot_on_private_water_corporateaccountabilityinternat
ional.pdf (accessed February 21, 2013).
17
Corporate Accountability International, Resources, “Shutting the Spigot on Private Water: The case for the World Bank to divest,”
Corporate Accountability International, April 2012, pg. 15,
http://www.stopcorporateabuse.org/sites/default/files/resources/shutting_the_spigot_on_private_water_corporateaccountabilityinternat
ional.pdf (accessed February 21, 2013).
18
Blue Planet Project, Documents, “Our Right to Water: Case Studies on Austerity and Privatization in Europe,” Blue Planet Project,
March 2012, pg.5, http://www.blueplanetproject.net/documents/RTW/RTW-Europe-1.pdf (accessed February 21, 2013).
19
International Finance Corporation Projects, “Veolia Voda, Summary of Proposed Investment,” International Finance Corporation,
http://www.ifc.org/ifcext/spiwebsite1.nsf/ProjectDisplay/SPI_DP27973 (accessed February 21, 2013) . While the project proposal
states only 50M was intended for the project Corporate Accountability International was able to confirm with Veolia directly that
actually 100M was purchased by the IFC, adding an additional question surrounding IFC transparency levels.
20
International Finance Corporation Issue Brief, “IFC and Water,” International Finance Corporation, March 2012,
http://www1.ifc.org/wps/wcm/connect/afb11c00486a8fa8bfeefff995bd23db/SM12_IFCIssueBrief_Water.pdf?MOD=AJPERES
(accessed February 21, 2013).
21
Abhijit Banerjee, et al, “An Evaluation of WB Research, 1998-2005,” World Bank, Data & Research, September 24, 2006,
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/0,,contentMDK:21165468~pagePK:64165401~piPK:64165026~theSiteP
K:469372,00.html (accessed March 7, 2010).
13
advisory services. Services which help open the door for government openness to private sector participation in
water services but where according to the World Bank’s own data 34% of all private water contracts entered
into between 2000 and 2010 are in distress, four times the failure rate of comparable infrastructure projects in
the electric and transportation sectors.22 The combination of European Austerity measures and the World
Bank’s continued emphasis on private sector participation not only threaten the realization of the human right to
water
Lack of Transparency and Challenges for Participation in Decision Making Processes
Lack of transparency has made public participation and opposition to this most recent wave of privatization
efforts more difficult. In Spain, the plans to privatize Madrid’s Canal Isabel II, were not released to the public,
discussed in the assembly nor have papers justifying the privatization been provided to the President of the
Tagus River Basin or unions both of which are on the board of Canal Isabel II, or any other municipalities that
the company works for.23 In Bulgaria, United Utility and now Veolia Voda’s contracts and external audits have
not been publicly disclosed and when, in 2008 the National Committee for the Improvement of the Quality of
water demanded access to the information it was denied. Even after taking the case to court and winning, the
National Committee has been unable to access the relevant information.24
Lack of transparency is systematic problem with private sector participation. “Accountability in a public system
resides with officials who answer to the public. Corporations consider information to be ‘proprietary’ or ‘trade
secrets’, where a profit advantage for the private operator takes precedence over public security and
planning.”25 The World Bank’s funding to the IFC gives even more cause for concern on this account as the
IFC’s increasing use of financial intermediaries to move money goes around the World Bank’s own safeguards
and removes accountability.
Despite these challenges citizens continue to mobilize to protect their human rights to water and sanitation. In
Spain, Bulgaria, Italy, Greece and Portugal there are national citizens’ campaigns fighting back against austerity
and privatization efforts.26 More broadly groups from throughout the EU have come together to form the
European Citizens ‘Water is a Human Right’ Initiative which on February 11th became the first ECI to collect 1
million signatures, calling on the European Commission to propose legislation recognizing the human rights to
water and sanitation.27
In order to truly realize the human rights to water and sanitation we must recognize the inherent conflict
between these rights and the interest private water corporations, stop the current privatization efforts led by the
EU, IMF and ECB and re-direct the World Bank’s massive resources both financial and knowledge based
towards promoting investments in the public sector. We therefore urge the Special Rapporteur to recognize the
threat current austerity measures pose to the human right to water in her report and call on the World Bank to
re-direct both its financial and knowledge production resources towards supporting public water systems.
22
Sector Updates, World Bank Private Participation in Infrastructure database,The World Bank Group and Public-Private
Infrastructure Advisory Facility, http://ppi.worldbank.org/explore/ppi_exploreSector.aspx? (accessed March 6, 2012).
23
Blue Planet Project, Documents, “Our Right to Water: Case Studies on Austerity and Privatization in Europe,” Blue Planet Project,
March 2012 http://www.blueplanetproject.net/documents/RTW/RTW-Europe-1.pdf (accessed February 21, 2013).
24
National Committee for improving water supply in Bulgaria against the Metropolitan Municipality, “Decision report,”
http://www.aip-bg.org/library/dela/del77.htm (accessed February 21, 2013).
25
Corporate Accountability International, Resources, “Shutting the Spigot on Private Water: The case for the World Bank to divest,”
Corporate Accountability International, April 2012, pg.33,
http://www.stopcorporateabuse.org/sites/default/files/resources/shutting_the_spigot_on_private_water_corporateaccountabilityinternat
ional.pdf (accessed February 21, 2013).
26
Blue Planet Project, Documents, “Our Right to Water: Case Studies on Austerity and Privatization in Europe,” Blue Planet Project,
March 2012 http://www.blueplanetproject.net/documents/RTW/RTW-Europe-1.pdf (accessed February 21, 2013).
27
Water is a Human Right, “ECI Initiative reaches 1 million signatures,” http://www.right2water.eu/ (accessed February 21, 2013).