Last Friday, European Union (EU) Commissioner for Internal Market and Services Michel Barnier announced the decision to exclude water and sanitation services from a planned Directive on concessions (contracts with private companies over the provision of public services). Water will be exempt, not because the EU believes it was a mistake to include it in its plans for private provision, but because the citizenry misunderstood the EU’s intentions.

Shining example of market-based water supply (with unclear prospects in Europe)

(Source: Stougard. CC Attribution-Share Alike 3.0)

The announcement came against a backdrop of protests in several countries against the privatisation of water, and the first “European Citizens’ Initiative” to reach quorum. Nearly 1.5 million EU citizens signed the petition (still open) to exclude water and sanitation from internal market rules and ensure the universal right to water; though participation was massively skewed towards one country, Germany.

The EU’s proposed Directive was and remains an ambitious plan: “Concessions are one of the most important areas of economic activity where the single market has yet to become a reality”. The aim is to grant “more business opportunities to all EU companies”, with a particular emphasis on “the mobilisation of private capital notably through Public-private partnerships”. These moves, Barnier argues, are especially necessary under tight budget conditions. Language and intent of the Directive “flash with market liberalism and neoliberalism,” as one commentator noted.

Pyrrhic victory over the internal market rules

The setback for the market-builders, at least for now, is that water (a price-inelastic, near-perfect monopoly good essential for human survival) will be excluded from the project. However, for all the fanfare (particularly in the German media) about the Commision’s withdrawal constituting a citizens’ victory led by Right2Water – a committee largely formed by representatives of public service trade unions – over the almighty EU, it is a pyrrhic one:

  • First, because the directive as a whole still stands, promising/threatening a “real opening up of the market” in municipal services including but not limited to “energy, transport and postal services” (p. 11).
  • Second, because while the campaign demonstrates that it is possible for European Citizens’ Initiatives (a new tool since 2012) to give voice to citizen concerns, practical consequences are extremely limited. The success of a Citizens’ Initiative means nothing more than to “invite the European Commission to present a piece of legislation” to the European Parliament and the Council of Ministers (p. 54 footnote 10 is worth reading).
  • Third, because the inititative was about more. Aside from preventing the marketisation of water and sanitation in the EU, the Right2Water campaign requests the EU to enshrine a universal right to water and sanitation, and do more to ensure everyone’s access to water in Europe and elsewhere. The Commissioner’s piecemeal withdrawal from one aspect addresses none of these concerns.

This blog has long argued that private models for the provision of water and sanitation face inherent problems and are programmed to exacerbate social injustices. Historically, almost all successful water and sanitation provision was driven by governments, not the private sector. Citizens from Bolivia to the United Kingdom have seen massive price increases combined with low or deteriorating quality thanks to privatisation and marketisation since the 1990s.

Common market means common marketisation

Asked last December by a German news programme about what changes would come thanks to the proposed Directive, Barnier said “everything will remain as it is”. As to why the Directive was needed at all, the Commissioner’s explanation was that municipalities would have the “choice of entrusting their water to a private partner” (which they actually already have) – the aim evidently, notwithstanding, being to privatise services wherever possible. The programme also revealed that the EU’s “Steering Group” of experts on water consisted mainly of representatives of the water industry and related industries.

How free municipalities really are (even without the Directive) is questionable, given that the EU/ECB/IMF Troika is already pressing Portugal and Greece (source: ARD) to sell public utilities to international bidders, despite public resistance. Furthermore, the European Commission doesn’t just legislate to impose the common market framework; it often also pursues the aim through courts, as in the case of public banks, which may happen the case of utilities, too, once the Directive is in place.

The EU has always maintained that no provisions would force municipalities to privatise water utilities. But it is anyone’s guess whether the decision of a municipality to emphasise social or environmental criteria in its tenders could be challenged in court, should a jilted contender feel discriminated against. At the very least, the planned Directive will make it more complicated and legally tenuous for municipal governments to keep their utilities under public stewardship.

Foolish citizens, enlightened officials?

Calls to sign the petition against the Directive went “viral” earlier this year, not mainly through campaign videos like this one, but through word-of-mouth; an unlikely social movement. I received a fair number of e-mails from un-usual suspects like co-workers and aunts, not political animals. Even Erwin Pelzig, the (fictional) host of one of Germany’s prime-time comedy shows (yes, they exist), rallied against the EU’s plans for “passing water” to the private market.

The view from Brussels remains that the citizens have been deceived by a misleading campaign, and Commissioner Barnier’s move is far from an admission that their concerns may be legitimate. Even in withdrawing, the EU belittles citizens for failing to understand the wisdom and complexity of its plans:

Despite repeated clarifications, the fact remains there is a widespread perception the Commission has been trying to push for such privatisations, in particular in the water sector. […] I fully understand why citizens are both angry and upset when they are told their water services might be privatised against their will. I would feel the same if there was such a risk. (source; emphasis added)

As one German commentator put it: “The plans are not being withdrawn because they were wrong, but because the stupid citizens misunderstood them.”