US Representative Gwen Moore (D-WI) took the rare step of issuing a public letter to the president of the World Bank Group (WBG) raising concerns about its role in the water sector. In the letter, Rep. Moore calls on the Bank’s leaders to stop funding and promoting water privatization pending an independent review and congressional hearings on the glaring conflicts of interest created by its investments in water privatizers through its private investment arm, the International Finance Corporation (IFC).
Water privatization is looming in India too: A PPP project in Nagpur, India, also promoted as a success by the World Bank, has been widely characterized as a failure. Public unions and civil society groups recently concluded a series of mobilizations aimed at preventing similar projects from spreading across India as part of Prime Minister Narendra Modi’s urban development initiatives, which incorporate the World Bank-backed water privatization models from Manila and Nagpur. Nagpur’s privatized water utility is a joint venture of French water giant Veolia, in which the IFC held equity until 2014.
The letter, addressed to World Bank President Dr. Jim Yong Kim, with copies to U.S. Secretary of Treasury Jacob Lew and newly appointed IFC Executive Vice President and CEO Philippe Le Houérou, comes in the wake of the water crisis in Flint, Michigan, where an anti-democratic model of governing led to a public health catastrophe. The inquiry focuses on the WBG’s conflict of interest resulting from its multiple roles as advisor to governments, worldwide marketer of privatization models—such as public-private partnerships (PPPs)—and investor in private water corporations that benefit from the very projects it facilitates.
Moore—the Ranking Member of the Monetary Policy and Trade Subcommittee—has a key role overseeing the U.S.’s relationship with the WBG and other development institutions and has long been a champion of water access issues. Last year, the Congresswoman joined 22 other members of the Congressional Black Caucus in a letter of support to groups in Nigeria organizing to block a planned water privatization scheme and has recently expressed deep concern about Congress’s anemic response to the crisis in Flint.
“Water access is a fundamental human right no matter where you live,” said Rep. Moore. “Dr. Kim and his team have the responsibility to put the World Bank’s mission—alleviating global poverty—above the pursuit of profits. The institution must take that responsibility much more seriously, especially when it comes to water, or it will fail the very people it is supposed to be serving.”
Recent crises in Detroit and Flint, Michigan have raised the prominence of issues of water management and delivery across the U.S. A giant water transnational with a history of IFC investment, Veolia, attempted to capitalize on the water emergency in Detroit to generate business for itself and has been implicated in the Flint crisis.
“The World Bank is stacking the deck, dealing the cards and placing all the bets, putting profits above human need,” said Shayda Naficy, a water privatization expert at Corporate Accountability International. “For years it has ignored the concerns of those most affected by this blind pursuit, but with Congress asking questions, it can no longer pursue this path with impunity.”
Moore’s letter highlights the privatization of the water system in Manila, Philippines, which is the “success story” touted by the IFC in its public and behind-closed-door marketing around the world. The IFC advised the Philippines government to contract two private corporations to manage the city’s water system, which it did in 1997, hiring Maynilad and Manila Water Corporation (MWC).
The IFC then invested in MWC, the corporation that, following the IFC-brokered arrangement, assumed only 10 percent of the pre-existing utility’s debt and inherited better existing infrastructure compared to Maynilad. Since then, MWC has raised rates nearly 850 percent, and has brought the regulator and Philippines government into costly arbitration at two supranational dispute resolution venues.
As part owner of Manila Water, the IFC is in direct opposition to the government’s efforts to keep water affordable for its people. According to Corporate Accountability International’s calculations, the IFC has made $43 million from its initial investment.
Widespread opposition to the public private partnerships (PPPs) is making this form of privatization politically difficult, despite IFC’s active promotion of Manila as an exemplary PPP model for replication around the world. Recently, the World Bank abandoned its multimillion dollar effort to secure a water treatment PPP in Lagos, Nigeria. This reversal came after a year of protests from civil society and labor groups, including a summit in Lagos last August to chart the course for the city’s public water management.
For more information please refer to “Shutting the Spigot on Private Water” and “Behind the World Bank’s Spin,” 2012 and 2014 reports issued by Corporate Accountability International.
The human right to water was recognized by the United Nations (UN) Committee on Economic, Social and Cultural Rights in 2002, and by the UN General Assembly in 2010. The World Bank Group, an independent “specialized agency” associated with the UN, recognized the right in 2004.