A misguided push for more privatisation of the number one public good

In a rather scary article, published in New Europe and his blog, journalist David Cronin describes how a strong pro-privatisation view in the  European Commission (the administrative body of the European Union that churns out most draft regulations), which favours the privatisation of water systems in Europe and beyond, is maintained by heavy lobbying and industry interests. Cronin concludes:

Despite the abundant evidence that water privatisation is immoral and impractical, the EU’s power brokers remain committed to it. Before Italy was taken over by an unelected prime minister last year, it was told by the similarly anti-democratic European Central Bank to undertake “large-scale privatisations” to local services. As part of the counterproductive shock therapy being introduced in Greece, the water provider in Thessaloniki, EYATH, has been targeted for sale by this coming September.

We should not be under any illusions about the effects of these measures. Some services are too important to be run by fickle entrepreneurs; that is why they must be kept in public hands, even though they are expensive to run. When put at the whim of market forces, the quality of those services inevitably declines, prices go up and human rights are denied. Why should corporations control every aspect of our lives?

This is particularly worrying, considering that water is now a human right. Most countries in the world accept that water is not a commodity but a necessity, something that should not be withheld from anyone – and the EU, usually at least verbally always on the frontlines of human rights will back away from it? In case you are wondering, there are plenty of cases of water privatisation that proved disastrous, this happened all around the world, from Tanzania and India to core EU countries. In general most scholars seem to agree that water privatisation is a bad thing and usually failed. Such as this study from a Singaporean scholar, aptly titled “The failure of water utilities privatization: Synthesis of evidence, analysis and implications”:

Two major conclusions can be drawn from the preceding review of the literature.

First, contrary to expectations, privatization has not relieved governments of the burden of investment financing and that private finance is unlikely to play an important role in achieving water and sanitation targets of the Millenium Development Goals. [...] In addition, in most privatization contracts, public finance and/or guarantees from government governments or development banks are of central importance in delivering actual investment on the ground, particularly in connecting poor households. Furthermore, private water companies do not bring in new sources and vol umes of investment finance – they rely heavily on the same sources that are available to the public sector.

Second, the efficiency claims of privatization is ambiguous as indicated by numerous case studies and econometric tests [...] These findings now appear to be the consensus view as even the main proponents of privatization such as the IMF and the WB have also admitted as much (Wall Street Journal, 2003).

In short: There is no reason whatsoever to support water privatisation. Historically it has proved disastrous, the private sector has neither intention nor reason to invest in the sector, and the general opinion among scholars and experts and even such otherwise market-oriented organisations as the International Monetary Fund and the World Bank agree that it is a horrible idea. Why does the European Commission still favour privatisation? Lobbying by the usual money-stuffed suspects, the likes of Nestle, Veolia and Suez. As Cronin writes, when the UN voted to make acces to water a human right only 41 countries did not vote in favour, of those 18 were EU countries. They should know better.

Multinational corporations are the number one threat to democracy and, in some cases, like with the access to water, they not just threaten democracy, but also lives. While no EU citizen will die from lack of access to water, if the EU sets an example and keeps pushing for more privatisation, many more might be killed. And considering that water is seen by many as one of the main causes of future conflicts within and among nations, efforts should be made to keep water a public good and not an expensive product.

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