Financing Global Water Infrastructure

IRN Press Release, Tuesday March 4, 2003

BANKERS' PANEL ON WATER FINANCING STINKS OF SELF-INTEREST

Leaked Draft Shows Panel's Interest is Capturing Subsidies, Not Good
Water Management

IRN has obtained a draft summary of a report on Financing Global
Water Infrastructure to be released in Paris, Wednesday, 5 March. The
report was written by a panel chaired by former IMF Managing
Director, Michel Camdessus.

The key recommendations of the draft summary are for international
financial institutions to "resume lending for dams and other large
water storage and transfer schemes", and to increase guarantees and
other public subsidies for private investors in water infrastructure
and supply.

Patrick McCully, Campaigns Director of International Rivers Network says:

"The Camdessus Panel's recommendations have nothing to do with
solving the global crisis of water mismanagement - and everything to
do with justifying more business for the bankers and corporate chiefs
on the panel. This is pure pork-barrel self-interest."

The panel was put together by the Global Water Partnership and the
World Water Council.[1] Most of the 20 panel members are senior
officials from the world's major development banks, private lenders
and water companies.[2]

The panel will present its report for endorsement by the government
ministers who will attend the Third World Water Forum, to held in
Kyoto, March 16-23, 2003.[3] It is also to be presented at this
year's G8 meeting to be held in Evian, France.

The draft summary repeatedly calls for more aid money for large dams.
It makes no mention of the findings of the World Commission on Dams
about the poor performance of dams and the frequent availability of
better alternatives, nor does it mention the need for donors to
implement the WCD's recommendations on water and energy planning.[4]

Patrick McCully of IRN says:

"It is outrageous for an international panel on water infrastructure
to have ignored the WCD report, the most comprehensive and most
widely supported global review of water management."

Instead of calling for financial institutions to improve their
policies to prevent the repetition of past dam fiascoes, the panel
calls on them to "remove unnecessary internal brakes on their water
lending" and "resume serious lending for all major water projects."

The draft summary begins by noting the UN's goals of halving by 2015
the number of people without safe water and sanitation. Yet the
panel's recommendations would only make it more difficult to achieve
these goals.

Eighty percent of the world's people without decent access to safe
drinking water live in rural areas. The panel's draft summary does
not even mention rural areas. Its focus on promoting private
investment is largely irrelevant for the countryside where water
companies can rarely profit from supplying poor and dispersed
populations.

The draft report recognizes that "international commercial finance
and investment for water is low and has been falling." This should be
taken as evidence that the water supply privatization strategy pushed
by many of the panel members for the last decade has failed. Instead
it is used to argue for new forms of public subsidies to entice
nervous private investors.

Only 10% of people connected to a water supply are served by private
utilities. Even with a huge increase in foreign aid subsidies for
private companies, public opposition coupled with the low returns and
high risks of investing in private water systems in developing
countries mean it is unlikely that the proportion getting private
water will increase dramatically.[5]

Improving and expanding urban water supply thus requires support for
public utilities. Yet the Camdessus panel is dismissive of public
utilities and implies they should only receive public funds if they
open themselves up to private investment.

For further information:
Patrick McCully, IRN, Berkeley, California: +1 510 848 1155 (office)
510 847 0562 (mobile) 510 528 2930 (h)

Others available for interview about the Camdessus panel:

Shiney Varghese, Institute for Agriculture and Trade Policy,
Minneapolis+1 612 722 5373 svarghese@iatp.org
Shripad Dharmadhikary, Manthan Research Centre, India: +91 7290
224867 manthan_b@sancharnet.in
David Hall, Public Sector International Research Unit, University of
Greenwich, England: +44 208 331 9933 d.j.hall@gre.ac.uk
Tonje Folkestad, FIVAS, Norway: +47 22 98 93 25 / 22 98 93 00
tonje@fivas.org
Liane Greeff, Environmental Monitoring Group, South Africa: + 27 21
448 2881 liane@kingsley.co.za
Farhana Wagha, ActionAid, Pakistan farhana@actionaidpakistan.org
Gopal Siwakoti, Water and Energy Users' Federation-Nepal wafed@ntc.net.np


[1] The World Water Council is a Marseille-based lobby group with
more than 300 members, mainly engineering and construction companies,
water supply corporations, and government aid and water management
agencies (www.worldwatercouncil.org). The Stockholm-based Global
Water Partnership bills itself as "a working partnership among all
those involved in water management: government agencies, public
institutions, private companies, professional organizations,
multilateral development agencies and others" (www.gwpforum.org).

[2] See http://www.worldwatercouncil.org/financing_water_infra.shtml.
The panelists are:

CHAIR
Mr. Michel Camdessus, Former Managing Director of the IMF

INTERNATIONAL FINANCE INSTITUTIONS
Mr. Enrique Iglesias, President of the Inter-American Development
Bank, New York/ Mr. Antonio Vives, Deputy Manager Private Enterprise
and Financial Merkets, Sustainable Development Department.
Mr. Omar Kabbaj, President of the African Development Bank (AFDB),
Abidjan/ Mr. Bisi Ogunjobi, Director/Mr. Terefa Woudeneh, Water
Resources Manager, Central Operations.
Mr. Tadao Chino, President of the Asian Development Bank (ADB),
Manila/Mr. Hans-Juergen Springer, Special Councelor to the President
of ADB
Mr. Jean Lemierre, Prseident of the European Bank for Reconstruction
and Development (EBRD), London/ Mr. Ricardo Puliti, Deputy Director,
Municipa and Environmental Infrastructure
Mr. Petre Woicke, Executive President of the International Finance
Corporation  (IFC), Managing Director of the World Bank, Washington
DC/Mr. Benoit Loutrel, Investment Officer, Infrastructure Department

PRIVATE SECTOR
Mr. Alassane Outtara, former Prime Minister of Cote d'Ivoire
Mr. Onno Ruding, former Minister of Finance of The Netherlands,
vice-Chairman of Citibank, Brussels/Mr. Robert Welford, Director
Global Power, Citibank, London
Mr. Moeen Qureshi, former Prime Minister of Pakistan, Chairman
Emerging Markets Corporation, Washington DC
Mr. Angel Gurria, former Minister of Finance of Mexico, Advisor
Recoletos, Mexico
Mr. Makoto Utsumi, former vice-Minister of Finance of Japan, Chairman
of the Japan Center for International Finance
Mr. William Alexander, Group Chief Executive of Thames Water,
London/Ms. Linda Kemeny, Group Treasurer
Mr. Gerard Payen, Senior Executive vice-President, Water Affairs, Suez,
Paris

FINANCE AND GUARANTEE EXPERTS
Mr. Bertrand Badre, Director Lazard Freres, New York
Mr. James Harmon, former Chairman US Eximbank, President of Harmon
and Cie, New York
Mr. Ismail Serageldin, former Chair of the World Water Committee of
the 2nd World Water Forum at The Hague, 2000, President of the
Alexandria Library, Alexandria

NGOs
Mr. Petre Eigen, Chairman of Transparency International, Berlin/Mr.
Hansjoerg Elshoerst, Director Transparency International, Berlin
Mr. Raymond Jost, Secretary General of the International Secretariat
for water, Montreal
Mr. Ravi Narayanan, Director WaterAid, London.

[3] The World Water Forum is held every three years. Its main
organizer is the World Water Council (www.worldwaterforum.org).

[4] For more on the World Commission on Dams and follow up
initiatives see www.dams.org and www.unep-dams.org.

[5] For in-depth analyses of water supply privatization go to www.psiru.org.

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