Water is a scarce resource with about 2 billion people living in areas that suffer from scarcity and additionally 1.6 billion people are facing water deficit due to a lack of infrastructure (Water sd). Therefore, water supply is a delicate topic that influences billions of the world’s populations. Several actors in the international sphere declare to have a solution to this problem. One of those actors is the World Bank (WB).
The WB describes itself as a “unique partnership” (Bank sd). It was founded in 1944 with the primary goal to rebuild countries that suffered under the Second World War. Over the years however, its focus shifted to development. The WB introduces policies to fight poverty and to stimulate economic growth (Bank sd). Those policies can also include the privatization of national water and sanitation systems. There has been criticism towards the WB claiming that they impose their views and values onto countries in order for them to receive a loan. Furthermore, there are critiques that question whether the WB is actually helping with their conditions for loans, or if they are, in some cases, worsening the situation.
Additionally, there has been a debate whether countries, who sign contracts with the WB in order to receive loans, are giving up some parts of their sovereignty. This debate usually arises when a condition to receive a loan revolves around water privatization.
One example is the urban water privatization in Ghana, including the water supply and the sanitation system. In order to give a more in-depth analysis, this paper will primarily focus on the water supply and not the sanitation system.
Ghana was confronted with outside pressure, exercised through international reports, the International Monetary Fund and the WB, to privatize at least parts of its water. After a long process of reports and consultations, the Government of Ghana (GoG) signed a management contract with the Dutch South African company ‘Aqua Vitens Rand Ltd’ (AVRL) for five years in order to improve the infrastructure. This contract was signed in 2006. However, it was not prolonged in 2011, primarily because the GoG claimed that the company did not fulfil its obligations laid down in the contract. (Bel Bene en Greyl 2016)
The above-mentioned factors and debates lead to the research question: To what extent did the World Bank influence the sovereignty of Ghana in regard to the privatization of water?
Even though Ghana has not fully privatized its water to this date, it is nevertheless a good case study. The role of the WB is clearly recognizable. Additionally, Ghana’s withdrawal from the contract adds to my research question, since it might show that, if Ghana ever lost parts of its sovereignty, it got it back.
This paper will display arguments why the WB, other International Organizations (IOs), companies and ultimately States consider water privatization as a solution for water scarcity. Afterwards the focus is on the WBs position towards water privatization. In order to use the concept of sovereignty two definitions will be offered. To apply the stated framework, the case study of Ghana’s urban water privatization will be introduced, and emphasis lays on the role of the WB. Finally, this paper will aim to answer the previously introduced research question.
2.1 Why privatize water?
Since water is a scarce resource it has “strategic political and territorial importance” (Bakker 2003, 329). At the same time companies are on the lookout for “economic growth and profits” (Swyngedouw 2005, 83). Those firms argue that water should be seen as an economic good and that therefore the “market is more efficient” (Bakker, 335) to deal with the distribution of water. Additionally, they claim that the public sector is corrupt and inefficient (Spronk 2010, 156) and does not charge the “true market price” (158) due to “political reasons” (158). The general idea is that the “profit motive” (160) for the private sector is a strong enough incentive to use its “source of finance” (158) in order to sufficiently provide water to everyone. Various actors follow this line of argument and therefore see water privatization as desirable.
2.2 The World Bank and its position to water privatization
The WB states on its website that it “doesn’t have a preference for public or private service” (The World Bank sd) there are however sources that suggests that the WB is actually preferring water privatization. The Bank itself states in one of its documents that it “is pursuing the use of guarantees to promote private sector involvement in water” (Bank 1997, 46). In fact, the WB is seen as a “key mediator” (Bakker 2003, 330) that does not just uses financial means but also seeks to influence “psychological factors” (Bakker, 330). This means creating assurances for the private sector in order for them to have confidence to invest into water. Providing water is also seen as a “business opportunity” (Goldman 2007, 792). In that context, the WB sets two requirements for water privatization to be successful. First, it has to be able to cover all expenses and secondly, before even being implemented, risks have to be determined and assigned to the parties, so the risks can be dealt with accordingly (Foshee, et al. 2008, 91). Goldman even claims that the World Bank is establishing a worldwide network in order to promote water privatization (Goldman 2007).
Hence, it comes as no surprise that the World Bank is using water privatization as a condition for loans. In fact, Goldman even argues that nowadays “a highly … indebted country cannot borrow capital … without water privatization … as a pre-condition” (Goldman, 790). This statement is supported by the fact that water privatization is becoming “an increasingly common policy recommendation” (Grusky 2001, 14) since some countries are seen as “too poor and too indebted” (Grusky, 14) to provide water for its citizens. Furthermore, the World Bank is stressing the “important role for public and private participation” (Damhaug, et al. 1996)
2.3 Sovereignty as a developing concept
Following a social constructivist view, the definition of sovereignty is subject to constant research and accordingly also to change. This change does not stand for a violation of sovereignty as realists might put it. (Bolt 2013) The general consensus is that the concept of sovereignty was first established with the peace of Westphalia in 1648. Its focus was mainly on autonomy and the inclusion of the “non-intervention norm” (Bolt 2013). Over the last centuries, and especially in the previous one, the notion of sovereignty and what it entails changed. R. H. Jackson (Jackson 1991) divides sovereignty in negative and positive sovereignty, whereas the negative sovereignty follows the Westphalian approach focusing on the “freedom from outside interference” (p.27). Negative sovereignty is “a formal-legal condition” (p.27) while positive “is always a matter of degree” (p.30). This is due to the fact that positive sovereignty is, partly, the possession of the “wherewithal to provide political goods for its citizens” (p.29). It is therefore more a “political attribute” (p.29) than a legal one. Following Jackson’s line of argument, it can therefore be said that sovereignty has an “internal and external” (Bolt 2013) dimension.
J. E. Thomson offers another definition of sovereignty (Thomson 1995). She focuses partly on “state authority” (214) which includes the power to delegate issues to other realms such as the economic one. At the same time, Thomson poses the question whether the “ultimate political authority has shifted from the state to nonstate actors or institutions” (216). Thomson suggests that four criteria can be used as an indication that sovereignty is transforming “to something else” (229). The first criteria contains “a change in the authority” that is entitled to identify sovereignty. Secondly, she refers to a “meta-political authority” (229). This authority decides which issues are part of state authority and non-state authority. Thomson states that sovereignty permits the state to carry out this authority. In order for sovereignty to change, the meta-political authority would have to diffuse to “alternative institutions” that are not part of state-actors (229). Thirdly, the state would have to lose its “monopoly on coercion” (229).
The last point Thomson emphasizes is “the deterritorialization of the state authority claims” (229).
3. Case Study: Ghana
3.1 Ghana’s process of water privatization
In the 1980’s Ghana started to look towards external orientation in order to increase its development, clearly reflecting a “colonial mindset” (Yeboah 2006, 52). Due to the outside pressure Ghana implemented some changes in their water provision which ultimately lead to an increase in water tariffs. After the elections in 2001 a WB-friendly government came into power. Talks about water privatization began and contracts were drawn up. However, the public pressure to not privatize was strong and the government only signed a five-year contract with AVRL in 2006. This was a “short-term management contract” (Agyeman 2007, 530) separating the “difficult and expensive task of extending water networks” (Yeboah, 55) on the states side from AVRL and leaving the “relatively easier task of producing, distributing, maintaining systems and billing” (Yeboah, 55) to AVRL. Yet, this contract was not prolonged once it ended in 2011, because the GoG was not satisfied with the results. According to them AVRL did not accomplish to, for example, “decrease non-revenue water and to increase the production of water” (Bel Bene en Greyl 2016) However, it is still unclear if this was a general ‘no’ to water privatization or only to this firm. (Bel Bene en Greyl)
3.2 Application of sovereignty concepts
Referring back to Thomson’s four criteria (Thomson 1995) of sovereignty change, they are applicable to Ghana’s process of water privatization.
Considering the first criteria, Yeboah states in his article (Yeboah 2006) that Ghana relied on “foreign expertise” (p.54) in their decision-making process and furthermore, that “foreign capital financed…the whole water privatization effort” (p.55), hence Ghana lost its “self-reliance” (p.54). The authority that is identifying the sovereignty therefore shifted from the GoG to international capital.
Thomson’s “meta-political authority” (Thomson, 229) can be found within the “politics of deciding” (Thomson, 223). This is the decision about what falls inside the economic or political realm. In this case it refers to the decision that water should be treated as an economic good with profit as an incentive to supply water to all. Even though it was the GoG who signed the contract it should not be disregarded that their decision was based on a decision-making-process that was hugely influenced by “foreign capital” (Yeboah, 55).
At the same time the state is losing its monopoly on enforcement. Since the decision power over the water supply is no longer with the government, this makes it “impossible” (Agyeman 2007, 531) for the public to participate. They do not have a checks and balances system regarding private cooperation’s, which is welcomed by some actors. As a high member of the WB staff, Menahem Libhaber, put it: “the private sector is not replaced every three years” (Spronk 2010, 169) and therefore does not have to answer to the public but only to “market imperatives” (Spronk, 169). Regardless of whether this feature is being welcomed or not, it nevertheless influences the third criteria given by Thomson.
The last point is not as easily applicable since it refers to the territory of a state. Companies that plan to privatize water do not plan to take over any of the territory. However, Thomson offers an alternative approach referring to the “politics between the north and south as being characterized by heteronomy” (p.227). Even though this refers to states it can also be applied to a state-company/IO relation, mainly because the companies battling over the water privatization contracts are western and the WB is dominated by western countries, Canada, the United States, Japan, Germany, France and the United Kingdom share 38.49% of the vote (Gunter 2017). The market is dominated only “by a very small number of companies” (Bakker 2003, 229) whereby the two French companies, ONDEO/Suez Lyonnaise des Eaux and Vivendi/Générale des Eaux, control around 70% of it. (Bakker 2003). In the case of Ghana, the process led to the participation of foreign companies rather than local or even African companies (Yeboah 2006).
Jacksons approach to sovereignty can likewise be applied to the Ghanaian case. He focuses the aspect of negative sovereignty on a state-state relation. However, it can as well be applied to a state-company/IOs relation. During the process of water privatization, Ghana was not free of foreign intervention. Even though Ghana’s territory was not invaded, their decision-making-process was heavily influenced, mainly by the WB who used water privatization as condition for loans (Grusky 2001).
Likewise, Jacksons positive sovereignty approach can be applied. The responsibility of providing goods, in this case water, shifts to companies and away from the government. Thus, water turns into a component “of the strategic checkerboard of global companies” (Swyngedouw 2005, 87).
Using the two given approaches to sovereignty, the process of water privatization in Ghana was accompanied with at least some sort of loss of sovereignty.
3.3 The role of the World Bank
The WB played a pivotal role in the process. The overall goal was to make the Ghanaian water sector “more lucrative” (Grusky 2001, 15) and to achieve this goal the WB made water privatization a condition for loans. Additionally, it acted as an intermediator who gives credibility to the process (Foshee, et al. 2008) and provides the companies with guarantees of reimbursement (Swyngedouw 2005). While at the same time, the WB allures states with “the carrot of debt relief” (Goldman 2007, 794) who are exposed to “tremendous pressure” (Goldman, 794) due to their debts. Furthermore, the WB argues that a relaxed “government’s grip…unlocks opportunities for private sector development” (Bank 1997).
In the case of Ghana, this means that the government was left with not much choice but to follow the WBs conditions in order to qualify for loans or Structural Adjustment Programs (SAPs) (Grusky 2001). If Ghana would have not agreed to privatize its water, there was a risk of not receiving loans or SAPs. When Ghana did not prolong the management contract in 2011, the WB was “wrong footed” (Bel Bene en Greyl 2016).
Ghana is not the only country that faces such pressure since the WB regularly introduces policies that are either prerequisites for water privatization or, one step further, water privatization itself. However, this is based on educated assumptions since the WBs conditions for SAPs are usually not published (Grusky 2001) (Yeboah 2006).
In regard to the question, whether the WB influences Ghana’s sovereignty or not, it can be concluded that the country’s sovereignty has been influenced to some extent. The WB does not state whether they want to influence a countries’ sovereignty, its actions however can be interpreted as such. Using water privatization as a condition for loans leaves countries, that are depending on those loans, with no other choice but to accept such conditions. Whether this ultimately leads to an influence of sovereignty depends on the definition of sovereignty one uses. This paper offers two definitions that approach sovereignty from different aspects: non-intervention in combination with a state’s responsibility to “provide political goods” (Jackson 1991, 29) and state authority with the power to delegate issues. Despite their differences, both are still applicable to the Ghanaian process of water privatization and both imply a loss in sovereignty.
Nevertheless, sovereignty can be seen as a constantly changing concept adapting to the transformations in the world. Whether this is a positive or negative transformation again depends on someone’s view and can be a foundation for further research.
Ghana did reverse its course regarding water privatization, not prolonging the contract with AVRL. Opponents of water privatization in Ghana see this as a victory for public participation since the pressure to not privatize water was very high within Ghana. This can also be seen as a retrieval of sovereignty since the government no longer hands over the power of a vital resource to a foreign organization.
Ghana is not the only case where the process of water privatization was reversed but it is also not the rule.
The World Bank’s role in such processes continues to be an important one since it actively pursues policies in favor of water privatization. There are no signs that its role will decrease in the upcoming years, because it continues to impose water privatization as a condition for loans and states will continue to accept such conditions.
The debate about water privatization will most likely continue until there is a satisfactory solution for the abolishment of water scarcity.