A Member of Congress Issued a Warning to the World Bank: 'Stop Privatizing Water'
Around the globe, people’s access to water is being threatened every day by one of the most powerful institutions on the globe—the World Bank. Under the guise of development, the World Bank and its investment arm, the International Finance Corporation, invest hundreds of millions in water privatization schemes that reduce access to water, increase costs and have a devastating impact on people. What’s worse is that the IFC often positions itself to profit from these projects, creating an irreconcilable conflict of interest.
But one congresswoman just took a stand against this threat that could mean the beginning of the end of the World Bank’s harmful water-for-profit pursuits. In a letter, Representative Gwen Moore (D-WI) demanded the World Bank cease all promotion and financing of these projects pending an external review and congressional hearings on conflicts of interest. Because Moore is the ranking member of a subcommittee with direct World Bank oversight, it has no choice but to listen.
The letter, addressed to World Bank President Jim Yong Kim, describes the failure of a World Bank-backed water privatization project in Manila, Philippines—the “success story” the IFC uses in marketing around the world—as the foundation of her concern. In Manila, the IFC advised the government to contract with two private corporations to manage the city’s water system, which it did in 1997 in a concession deal that favored one corporation, Manila Water Company, with less debt and better infrastructure. The IFC subsequently took part ownership in MWC only.
Since taking over, MWC has raised rates nearly 850 percent, and has even brought the Manila regulator—and the Philippines Department of Finance—into arbitration in an attempt to hike the cost of water even higher.
As part owner of MWC, the IFC is now in direct opposition to the government’s efforts to keep water affordable for its people. And while the IFC has stood by MWC, it has made $43 million from its initial investment.
Regrettably, these shady dealings aren’t unique to Manila. Recently, as adviser to the government in Kigali, Rwanda, the IFC awarded a 27-year public-private partnership contract to a subsidiary of Metito—in which IFC also has an ownership stake. As if that weren’t enough, it also approved a $14 million loan to the corporation as part of the deal.
These deals create a perverse incentive for the World Bank to try to squeeze money out of the very people it’s supposed to be helping.
Thanks to organizing and powerful leaders like Moore, the World Bank’s course could be changing. In the face of campaigning and public scrutiny, the IFC divested its ownership stake in global water privatizer Veolia in 2014. And in Lagos, Nigeria, a popular movement against a proposed privatization project has brought the World Bank to its knees, forcing it to drop its goal of securing a private sector contract for the water system in that city.
Moore’s intervention wasn’t only inspired by the struggles for water outside of the United States. People in her home state of Wisconsin successfully blocked a bill that would have fast-tracked water privatization by removing a public-vote requirement. Just last month, Moore traveled to Flint to hear firsthand from families affected by the lead contamination caused by corrupt management of that city.
The situation in Flint, Moore says, "demands swift and effective action from federal, state, and local stakeholders.” But as Moore explains, “It also begs of us in positions of influence to take a broader look at the world around us to help identify similar problems.”
Globally, access to water is threatened when those in power treat water as a business, not a public right. The IFC openly markets such an approach to water delivery, using various buzzwords like privatization, “public-private partnerships” and “full-cost recovery.” But, regardless of how they spin it, the results are the same: people lose.
Rep. Gwen Moore’s bold stance this week will likely compel others to take action and demand answers. Ultimately, given that the lives and well-being of millions around the world are at stake, there is no other option. If we are to ensure that everyone has access to water, the World Bank must not only address this conflict of interest, it must abandon its blind pursuit of water privatization and other models that undermine democratic control.