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Fri, August 09 2013 16:54
The World Bank and Human Right to Water
From an Economic Good to a Human Right: The World Bank's Response to an Emergent Human Right to Water

by Eve Warburton

Introduction

At the 1992 International Conference on Water and the Environment, the United Nations adopted the Dublin Statement on Water and Sustainable Development. The Dublin Principles, as they came to be known, declared that, “water has an economic value in all its competing uses and should be recognized as an economic good.”  The World Bank played a key role in this conference, and its water experts advocated the premise of the Dublin Principles - that scarcity should be addressed by giving water a market value. World Bank policies and programming in the field of water management since the 1980s, exhibited most powerfully in its push for privatization of water and sanitation utilities, have been founded on the notion that water is a valuable commodity most efficiently distributed via market forces.

However, in 2004 a report by the World Bank’s Environmentally and Socially Sustainable Development office (ESSD), entitled The Human Right To Water: Legal and Policy Dimensions, concluded that there is “an incipient right to water evolving in public international law today.” Then six years later, in September 2010, the United Nations Human Rights Council passed a unanimous resolution bringing into force an independent human right to water. The emergence of an international norm recognizing the right to water presents an interesting challenge to the World Bank. Not only is the Bank historically ambivalent about becoming involved in the politics of human rights (Oestreich 2007), but a right to water would seem to undermine its status as a commercial, tradable, economic good, which has framed World Bank water policy for decades. How has this norm risen to become part of the international human rights regime, and how is the World Bank engaging with this norm, given its potentially significant impact on Bank policy interventions?

This paper examines The World Bank’s position on the human right to water. It asks how the Bank’s “knowledge networks” played a leading role in setting the international development agenda for treating water as an economic good; and explores the Bank’s response to an emerging normative and legal framework that articulates a human right to water. The evolution of the Bank’s approach to water is illustrative of how it counters and absorbs external pressures, including popular resistance to its policies – in this case efforts to impose privatization of water and sanitation utilities in borrowing countries.

This paper begins with a brief discussion of the dominant theoretical paradigms used to explain Bank behavior and its interaction with international normative frameworks – functionalism, neo-Marxism and critical constructivism. The second section explores the emergence of a human right to water, outlining key events, organizations and states that have propelled this nascent norm to the forefront of international development agendas. In the third section, the World Bank’s water programs, reports and its interactions with other water-related international bodies and civil society organizations are examined using a functionalist framework. The following section examines neo-Marxist interpretations of Bank water programming, and details the anti-water-privatization movement that has been integral to the emergence of a human right to water. The concluding section adopts a critical constructivist lens for explaining the nature of the Bank’s engagement with this new human rights norm, and with the anti-privatization movement that has advocated its recognition.
 

I argue the World Bank is an institution that perpetually but ambivalently engages with grassroots opposition in the Global North and Global South (Rajagopal 2003; Goldman 2006). The story of the Bank’s evolving approach to water sector interventions is best suited to a critical constructivist lens, which questions IOs as sites of objective or neutral knowledge, and gives agency to subaltern forces to influence the policy outcomes of international organizations such as the Bank. Thus far, however, the Bank has interpreted the right to water as an aspiration, an expression of what governments should do - which is distinct from its own apolitical, technical focus on water provision. The case of the human right to water is illustrative of how the Bank can manage and absorb external pressures, while expanding its programs in the Global South (Rajagopal 2000; 2003).

Explaining the World Bank’s approach to human rights: Functionalism, neo-Marxism and Critical Constructivism

The Bank has been the subject of numerous studies by scholars seeking to understand the machinations and contradictions of one of the world’s most powerful international organizations. Analysts have put forth various theoretical frameworks for explaining institutional change at the World Bank – a task deemed perpetually important given its ever-expanding intervention in the Global South. Since its inception, the Bank has evolved alongside an increasingly complex regime of international human rights treaties, soft law and advocacy NGOs. Initially the Bank saw no relationship between its role as the international agent for economic growth and stability, and the human rights movement (Oestreich 2007). However, over the past three decades, the Bank has expanded its understanding of economic development to encompass almost every aspect of “social reality” in the Third World – including health, education, and natural resource management (Rajagopal 2000). This expansion involves a complex interaction with normative and legal international human rights frameworks.

In explaining the development of international organizations such as the World Bank, functionalist accounts have traditionally dominated the literature. Indeed, the functional approach is, to a certain extent, how the Bank itself frames processes of policy and organizational evolution. This paradigm perceives IOs as repositories of knowledge and expertise that function in response to the complex needs of an integrated, interdependent international system. This position generally views policy evolution and normative change as a consequence of internal factors pertaining to the organization, whereby members of the team and strong leaders come to see that “adaptation will increase institutional effectiveness, [and is] ‘the right thing to do’ from an ethical perspective” (Oestreich 2000, 6). A functionalist would view the World Bank’s evolving strategy of water intervention as a consequence of internal experts’ identification of technically sound water programming, deemed to be an institutionally effective and ethical way of framing those programs. Over the past six years, the Bank has addressed the nascent norm of a right to water as an assertion of states’ responsibility to ensure citizens have equitable access to water – an assertion that is distinct from the role of the Bank’s ‘epistemic water community’, which is to address the pragmatic aspects of water provision. I borrow this term from Peter Haas (1992, 3) who describes an epistemic community as “a network of professionals with recognized expertise…and an authoritative claim to policy-relevant knowledge within a domain or issue-area.”

On the other hand, there are analysts that regard changes in Bank policy and it’s expanding development mandate as neither benign nor purely technical, but rather as a means of extending its power into new social arenas in developing countries (Barlow and Clarke 2002; Shiva 2004; Goldman 2007; Roberts 2008). Such observers reflect a neo-Marxist approach, whereby the Bank is perceived as a proxy for the interests of capital - powerful Western states and multinational private corporations (Shiva 2004; Goldman 2007; Haughton 2002). Expansion of the Bank’s ‘epistemic water communities’ is perceived to be a means of achieving consensus amongst powerful intergovernmental and private financial institutions on the role of privatization in water service and governance in the Global South. To the extent that activists and scholars from this position articulate a human right to water, it is a means of advocating state control and responsibility of water sources – rather than corporate control pushed by the Bank – because it is a public good to which all people have rights of access. From a neo-Marxist perspective, the Bank’s water programs serve the interests of private water corporations, and any shift toward a more human rights based approach is primarily cosmetic, masking the ongoing exploitation of a global underclass by global capitalist hegemons (Horta 2002; Barlow and Clarke 2002; Shiva 2002; Goldman 2007).

However, the functionalist rationale, and the neo-Marxian interpretation of Bank behavior are unable to capture the Bank’s complex engagement with external forces, particularly resistance movements, “albeit only within the parameters set by the institution” (Goldman 2005, 20). Rajagopal’s (2003) notion of international organizations as “terrains” of competing ideologies and North-South interests is an instructive framework for understanding the Bank’s evolving approach to human rights. According to Rajagopal, organizational change within the World Bank since the 1960s is a consequence of the need to address, moderate and contain Third World resistance; change cannot be explained purely by a “functionalist imperative or the genius of international institutional design” (2000, 577).  This approach is similar to that taken by Goldman (2005) in his ethnography of the Bank’s turn toward environmentally sustainable development. Both authors tend toward a critical constructivist approach, by scrutinizing the Bank’s claim to objective knowledge, and giving agency to subaltern forces to shape and change the norms that guide Bank Policy. This framework accounts for the influence of a transnational anti-water-privatization movement that has struggled for international recognition of a human right to water. However, both Goldman and Rajagopal argue that the grievances and goals of Third World resistance movements such as this have limited power to shift the ultimate trajectory of the Bank and its neoliberal foundations. Indeed, an examination of the goals of the campaign for a human right to water, and the Bank’s response to this nascent norm, are demonstrative of these limitations.

The Human Right To Water: a new international norm?
The debate over whether water should be considered an economic good or a human right has become a priority issue for international organizations over the past decade. Until recently, there was no independent universal human right to water recognized in international law. International institutions generally addressed access to water as “subordinate and necessary to achieve the primary human rights recognized directly by the international human rights agreements” such as the right to life or the right to health (Bluemel 2002, 968). Many of the rights embodied in the International Covenant on Economic, Cultural and Social Rights assume some level of equitable and affordable access to clean water, so the various UN bodies and the World Health Organization have historically treated it as an implicit rather than explicit part of the human rights legal framework. But a shift has taken place in the last ten to fifteen years. The following discussion briefly maps the evolution of this nascent norm, taking Sikkink and Finnemore’s (1998) conception of the “norm life cycle” as a central point of departure. Applying Sikkink and Finnemore’s theory of norm evolution, the human right to water can be understood to be approaching the “tipping point” of the “norm cascade.” At this stage “norm entrepreneurs”, via organizational platforms, bring the issue into an institutionalized framework (Sikkink and Finnemore 1998) – as evidenced by a majority of states voting for a legally binding right to water at the UN General Assembly. What this newly legalized human rights norm means in practice, however, is still being debated within international and legal spheres, and has not approached the stage of “norm internalization” where states and international organizations consistently adhere to its prescriptions. 

How did this norm emerge? Since the late eighties there has been growing concern amongst scientists and international development experts that communities across the world are experiencing an unprecedented water crisis. Changing weather patterns, rainfall, pollution and expanding populations are creating more and more water stressed regions. Consequently, international conferences, research reports and new institutions dealing with this issue have increased exponentially. For example, the World Health Organization initiated the International Drinking Water Supply and Sanitation Decade (1981-1990), in 1992 the first International Conference on Water and the Environment and a subsequent UN Conference in Rio De Janeiro established the influential Dublin Principles on water and sanitation, the UN Millennium Conference in 2000 made clean water and sanitation a global priority, the Johannesburg World Summit on Sustainable Development in 2002 addressed clean water and sustainable water resource management, and the tri-annual World Water Forums beginning in 2000 bring together a range of stakeholders to develop global solutions to water stress. International financial institutions, development organizations and businesses collaborate on water-related initiatives via the World Water Council and the Global Water Partnership, both of which were established in 1996 with assistance from the World Bank and United Nations Development Program (UNDP). In 2006 the UNDP released a Human Development Report, Beyond Scarcity: Power, Poverty and the Global Water Crisis, which called for a global plan of action to address water scarcity in the Global South. According to Conca (2006), the problem of water access and water governance has, via these institutions, been elevated to an international development priority, leading to a range of expert policy forums and interventions in developing countries.

Out of this increasing focus on the scarcity and management of water resources has grown a global campaign arguing for recognition of a human right to water. This campaign is made up of a broad, loosely affiliated coalition of “…development-focused aid watchdogs (such as the UK’s World Development Movement), mainstream international organizations (such as the World Health Organization), [and] human-rights organizations (notably Amnesty International)” (Bakker 2010, 146). These organizational platforms served to facilitate the efforts of norm entrepreneurs and put the issue of a right to water on the international agenda. This campaign, in tandem with the growing urgency expressed by scientists and other international ‘water experts’, has influenced the position of the United Nations. In 2002 the UN Committee on Economic, Social and Cultural Rights released General Comment 15, which recommended water be recognized in international law as an independent human right, and that states be legally accountable for supplying “sufficient, safe, acceptable, physically accessible, and affordable water” (General Comment 15, November 2002). The UN Economic and Social Council has argued that the social and cultural, not just economic, value of water be taken into account, expressing concern that “the price mechanism fails to guarantee that basic human and ecosystem needs will be met in a fair and affordable manner” (Conca 2006, 217). Then, in December of 2003, the General Assembly proclaimed the “Water for Life Decade 2005-2015”, as a means of promoting the fulfillment of international water commitments by 2015.

These initiatives were followed up in 2007 with a report by the Human Rights Council in which the High Commissioner stated, “it is now time to consider access to safe drinking water and sanitation as a human right” (Human Rights Council 2007, 26). This study held a consultative session with representatives from countries such as Belgium, that recognizes “water as a human right” in its domestic law; intergovernmental organizations including UNDP and WHO; private sector actors such as Aquafed and the World Business Council for Sustainable Development; NGOs such as Amnesty International, Corporate Accountability International, Council of South America Indigenous Peoples and Nations Coalition, and International Environmental Law Research Center. Subsequently, the UN appointed Ms Christina Albuquerque as the independent expert on the right to water, with the task of assessing states’ obligations and responsibilities pertaining to this emergent norm. 

The governments of particular countries also acted as norm entrepreneurs in this process, with Bolivia playing a leadership role in compiling the text of the human right to water for a vote in the General Assembly. Co-sponsoring countries of the text included Latin American nations, such as Dominica, El Salvador, Nicaragua and Paraguay, and some African nations including Burundi, Congo, and the Central African Republic.  In 2010 the UNHRC passed a resolution on the human right to water with 112 countries voting in favor, none against, and 41 abstentions.    When examined using the framework of Sikkink and Finnemore (1998), the human right to water can be understood as being at the cusp of a “norm cascade.” This is the stage where states and international institutions – most prominently the UN in this case – act to socialize and institutionalize the norm, promoting and persuading other agents to adhere.

The World Bank has not been actively involved in recent deliberations or initiatives pertaining to a human right to water. In many ways this is not surprising given the Bank’s limited interest in engaging the human rights project, which is traditionally perceived as a political issue relating to states. Yet throughout the same period, water governance became a prominent feature of the Bank’s programming in the Global South. The following section examines World Bank water interventions through the lens of functionalism – a paradigm the Bank tends to invoke when framing its role in the international development sector. From this perspective, the human right to water is not immediately relevant to the Bank’s mandate of providing rational, apolitical and technical advice for the development and growth of the Global South.

An Economic Good and Human Need: Functionalist Explanations of World Bank Water Policy
The functionalist logic argues that growing concern amongst scientists about an unprecedented water crisis has prompted a response from international organizations such as the World Bank. This framework perceives the Bank as an institution designed to respond to the dynamic economic and social needs of international society, and its evolution is a product of the policy experts whose knowledge the Bank enlists. Studies of the Bank that adopt this perspective tend to emphasize the role of influential leaders and personalities in enabling change in the Bank’s organizational culture, structure and policy direction (Oestreich 2007). This paradigm perceives the Bank’s interventions in the world of water provision as the logical product of its mandate - to attend to the needs of countries with poor infrastructure and human development such that overall economic productivity can be improved. Bank programming in this sector is, therefore, designed and implemented based on the rational expert knowledge necessary for attending to a primary human need.

The World Bank’s involvement in lending for water supply projects in developing countries dates back to the late 1960s, when its team of experts began to promote the view that “investment in public utilities was a precondition for the development of the rest of the economy” (Bakker 2010, 65). These projects began, however, with the goal of generating revenue and did not fall under the Bank’s “social” mandate. Then throughout the 1970s, under the leadership of Robert McNamara, the Bank began to expand its activities to encompass more socially focused development projects – thus funding for water projects increased significantly (Bakker 2010, 67). The prevailing wisdom that has guided the Bank’s intervention in the supply of clean water since this time (and most other infrastructure projects) is decentralization and privatization, and the notion that water resources are most efficiently supplied and consumed through the market (Bakker 2010, 69).

Of recent international institutions, the Dublin Principles have had the most significant influence over the development of water policy within international organizations, confirming the economic value of water while also introducing the now ubiquitous notion of “sustainable development” into water resources management.   Allouche and Finger (2001, 43) argue that the World Bank “developed its own interpretation of the Dublin Principles”, emphasizing Principle 4, which described water as an “economic good”, and supported the Bank’s increasingly dominant policy of water privatization. The failure of public water utilities in developing countries is, according to the Bank, a consequence of inefficient governments whose politics prevent rational, economically sound decision making processes (Bakker 2010). As the Washington Consensus became hegemonic over the past 2-3 decades, Bank lending became increasingly focused on integrating private sector actors and full-cost recovery.  The Bank’s privatization policy was implemented on a growing scale throughout the 1990s, and by the turn of the century, the Bank made water a prominent feature of its programs, with 14% of total lending dedicated to water projects over the past 10 years (Sadoff et. al. 2006).

The Bank has been key in facilitating a convergence of water experts and stakeholders from the public and private sectors around “new approaches” to water management. For example, “the World Bank’s Rapid Response Unit, and Private-Public Infrastructure Advisory Facility…new water-focused NGOs with a premarket orientation such as Business Partners for Development (cosponsored by private water companies and the World Bank), the World Water Council (initiated by French private water companies)….the Global Water Partnership (originally chaired by a WB vice president and sponsor of the influential interministerial World Water Forums initiated in 1997)…and the rise to dominance of the World Water Forum meetings (organized outside the United Nations system by a private nongovernmental organization with close links to the World Bank)” are indicative of the Bank’s central role in establishing powerful, international policy-making networks whose business is water in the Global South (Bakker 2010, 75). In 2003, the Bank’s “Water Sector Strategy” referred to information published by the Global Water Partnership that predicted huge “public funding shortfall in water projects [and]…stressed the need for the World Bank” to assist in creating conducive political, regulatory and institutional arrangements for water investments from the private sector (Conca 2006, 2003). Through these “powerful transnational policy networks”, the Bank has campaigned for consensus on the need for a particular type of water reform that is based on the view that big government has failed and that the “state should regulate but not run the public service” of water (Goldman 2005, 268). The Bank’s networks of think tanks and technical specialists have, to a significant degree, set the international agenda for the governance of water in the Global South (Bakker 2010).

Throughout the evolution of Bank water policy, the notion of a human right to water features very little. In fact, I found no World Bank publications that address a “human right to water” until 2004, after which a small number of research papers and online documents make reference to debates on this issue. From a functionalist perspective, the Bank’s role as a source of technical development expertise means that it views water as a human need that must be met through improving subpar infrastructure and governance mechanisms in the Global South. The implications of an independent human right to water are beyond the technical realm of the Bank’s mandate. However, it is clear that from about 2004 onwards, the Bank felt compelled to address an emerging normative debate about the relationship between human rights and water provision.

The Bank commissioned a report that was published in 2004 by the Environmentally and Socially Sustainable Development and International Law Group, which outlined the policy implications of an “incipient” right to water in international law – motivated primarily by UN General Comment 15 discussed earlier. The authors argue that recognizing a human right to water offers “considerable legal and moral support” (World Bank 2004, 88) to global efforts to improve access to clean drinking water, and to bolster initiatives such as the Millennium Development Goals. They also believe that the General Comment may herald, “the emergence of a principle of international law on the human right to water” – which of course has since been realized (World Bank 2004, 89). However, the report also highlights the risk that a human right to water could undermine water pricing, which the Bank considers key for establishing more effective provision and usage.

The Bank’s position on the human right to water is reiterated in a 2006 publication Global Issues for Global Citizens under the chapter, “Calming Global Waters: Managing a Finite Resource in a Growing World”. The authors emphasize the Bank’s technical expertise and rational approach to the problems of water provision, describing water as a “driver of sustainable, responsible growth….[requiring] sound infrastructure and sound institutions….[including] management capacity and a commitment to good governance” (Sadoff et al. 2006, 3-4). It also emphasized that private investment is integral for enabling a more “pragmatic and principled approach” to water provision (emphasis in original). There was, however, a more significant focus on the need for defining clearer “water use rights…(not a right to own water)” in order to avoid tensions over the ownership of water resources (Sadoff et al. 2006, 5). The Bank argued that water should be de-politicized, by highlighting that “It is the service not the provider that matters” (emphasis in the original) (Sadoff et al. 2006, 7).

However, other observers have not interpreted Bank water policies as the product of an apolitical and pragmatic agenda, but rather as a means of enabling the further accumulation of public goods by private, for-profit corporations and capitalist interests. The global anti-water-privatization movement that opposes World Bank water programs articulates this neo-Marxist perspective. The following section discusses this movements’ interpretation of the Bank’s intervention in the water sector of poor countries, and how it has coalesced under the banner of a human right to water in order to try and prevent the privatization of public water sources.

“Water is a right, not a privilege”: Neo-Marxist Interpretations of Bank Policy and the Anti-water-privatization campaign:
According to Conca (2006, 238) an important source of “normative evolution…has been the conflictual politics surrounding water privatization specifically and water marketization more generally.” The campaign against privatization is made up of a diverse range of interest groups, from indigenous rights organizations, women’s groups, and trade unions – but their common struggle is against what they see as greedy, unaccountable and undemocratic private companies accumulating control over more and more public water supplies. For these antagonists, “public goods are inviolably collective”, water is “the public good par excellence”, and access is a fundamental human right (Bakker 2010, 138). This movement to stop privatization of water utilities embodies broader anti-globalization campaigns the world around.

The global campaign to have water recognized as a human right has featured “radical anti-privatization and alter-globalization groups” (Bakker 2010, 146). Large scale demonstrations and organized resistance emerged in developed and developing countries around the world over the past decade and a half in response to the sale of public water utilities. According to Conca, (2006, 238) “anti-marketization activists have begun to find one another, come together, exchange information, coordinate activities, and build a shared set of symbolic frames about water.” Prominent radical scientist and activist, Vandana Shiva (2002, 89-92), has been an important figure in the transnationalizing of the anti-water privatization movement. Shiva (2002), and the movement for which she speaks, maintain there is little evidence that privatization improves services; rather it jeopardizes the livelihoods of public employees, risks increased water prices, and reduces the accountability of the provider to the public.

A seminal moment for this resistance movement was the privatization of public water utilities in Cochabamba, Bolivia, which was initiated by a World Bank loan, and led to huge price increases that triggered public protests in 2000. The protests attracted a violent response from the Bolivian military, leaving 6 dead and hundreds injured. The Betchel corporation responsible for the price hikes was eventually expelled, and the Cochabamba story became one of tragedy, but also inspiration for anti-privatization activists around the world (Bond 2010, 459).  The protest leaders came together and released the now famous Cochabamba Declaration, which stated that, “Water is a fundamental human right and a public trust to be guarded by all levels of government, therefore it should not be commodified, privatized or traded for commercial purposes.” The Declaration illustrated that water is an emotional and inevitably political issue, and that many communities see water as a human right, rather than an economic good (Bluemel 2004, 967).

The World Bank was a key force behind this and other privatization efforts in the Global South, and is thus a principal target in anti-privatization campaigns. Goldman (2007, 790) argues, “since the mid-1990s, water privatization became a key green neoliberal project for the World Bank.” These projects have been generated through transnational policy networks, large development loans for privatization of water utilities, and conditionalities upon borrowing states. For those who harbor a neo-Marxist interpretation of this programmatic trend, the Bank’s agenda is neither neutral nor benign, but is highly influenced by powerful capitalist interests (Grusky 2002; Shrybman 2002; Bayliss and Hall 2003). The World Water Council, for example, maintains close connections with the World Business Council, who in 2002 released a report, “Water for the Poor” with the catch phrase, “No Water, No Sustainable Development!” According to Goldman (2007, 792), the Council’s “main policy prescriptions reflect a political rationality that weaves together the needs of corporations and public institutions with those of the poor.” As discussed earlier, the Bank has also facilitated the tri-annual World Water Forums, and played an important support role (often through funding) in the establishment of the “International Symposium on Water, the Global Panel on Financing Water Infrastructure, the Water Media Network, Water Utility Partnership- Africa, and a variety of other high-level networks which bring together state, private sector, NGO, and corporate officials by region, theme, and agenda…. [and] the Bank has trained more than 9000 professionals from 90 countries between 1994 and 2001” (Goldman 2007, 793). Goldman (2007, 793) argues that these networks are not simply sponsors of policy discussion and innovation, but are “self-referential” and “ideological advocates of water privatization” to the profit of Western corporations. A report by the anti-privatization NGO, Public Citizen, went as far as calling the Bank’s network of water partners a “well-managed public relations endeavor…to achieve the goals of de-regulation, commodification and privatization of water resources” (Grusky, No Date, 6).

Activists and scholars such as Shiva (2002) and Barlow and Clarke (2002) have also galvanized opposition around the Global Agreement on the Trade of Services (GATS) negotiations. GATS is presented as another example of how powerful intergovernmental financial institutions like the World Bank are able to construct consensus on “best practice” for service provision in the Global South. The agreement includes the possibility of reducing barriers for multinational corporations to obtain rights to provide public services such as electricity and water.  Critics claim that such measures aim to increase the market penetration and profits of European and American corporations at the expense of local economies. And while water remains relatively under-privatized at present (compared with telecommunications and transport) the potential for growth and an insatiable demand means water is an increasingly attractive investment. Shiva (2002, 93) argues that, “the World Bank is promoting privatization of water through structural adjustment programs and conditions, [while] the WTO is instituting water privatization via free-trade in services”. The resistance movement, of which Shiva is a leading figure, sees the World Bank as central to the growing privatization of water, whose neoliberal agenda threatens the human rights of the poorest communities across the globe. Barlow and Clarke (2002a), therefore, rally governments to “declare that water belongs to the earth and all species and is a fundamental human right….and [put] an end to World Bank and IMF-enforced water privatizations”.

The Bank as a “terrain”: critical constructivist interpretations of the Bank’s water interventions:
The Neo-marxist and Functionalist explanations represent starkly different interpretations of Bank water policies. One perceives the Bank as source of apolitical expertise that attends to the needs of underdeveloped nations; the other interprets the Bank as an ideologically driven institution that builds powerful networks through which it can pursue the interests of capital. And both ultimately do not see any meaningful engagement of the human right to water by the World Bank. Such depictions, however, are not sensitive to the complex ways in which the Bank’s mission has evolved in tandem with powerful external forces. Constructivsm, according to Barnett and Finnemore (2004, 3), perceives international organizations not purely as agents of powerful states or capitalist interests, but as autonomous institutions “with the ability to change the world around them”, and also the capacity to be changed by both internal and external forces. Critical constructivism treats IOs as dynamic institutions, but places more weight on how the relationship between “power” and the “subaltern” effects organizational change and the production of knowledge. This framework is particularly suited to an analysis of the World Bank’s involvement in poor countries’ water infrastructure.

Rajagopal (2000; 2003) offers an eloquent critique of dominant historiographies of change within the World Bank that reflects a critical constructivist approach.  He argues the Bank is neither a “simply benevolent vehicle for development, nor ineluctably exploitative mechanism of global capitalism; but rather a terrain on which multiple ideological and other forces intersect, thus producing the expansion” and evolution of its mandate (2000, 543). However, Rajagopal does not look upon this expansion as benign. Rather, he perceives it as a process of pacifying resistance, co-opting opposition, and maintaining power in such a way that key goals, approaches and ideologies underlying Bank policies can remain intact. Rajagopal’s approach to explaining how the Bank responds to external forces, most importantly resistance from its Third World subjects, is illuminating for understanding the Bank’s position on the human right to water.

At the second World Water Forum in 2000, the World Bank identified “two controversies standing in the way of global progress towards a sustainable water future: the polemical debate surrounding large dams and a linked set of increasingly contentious issues related to property rights, privatization, water exports, water pricing, and foreign investment and ownership in the water sector” (Conca 2006, 215). How has the Bank responded to these controversies? The World Bank acknowledges that an independent right to water has been developing in recent years. However, an analysis of scholarly literature and recent World Bank reports on this issue reveals how the Bank engages the language of rights, while sidestepping key grievances expressed by those who oppose its water privatization policies. The Bank’s approach to the right to water exemplifies its ability to “filter” the norms it internalizes, based on whether they are considered “good economics” (Finnemore and Sikkink 1998, 899). Sikkink and Finnemore (1998, 900) argue that, “the inability to quantify many costs and benefits associated with antipoverty and basic human needs norms” like the right to water, cannot be justified by the Bank “on the basis of ‘good economics’”. For Goldman (2007, 791), the Bank’s investments into international water-focused think tanks, such as the World Water Council, is a means of maintaining control over the production of knowledge, and ensuring consensus around its neoliberal agenda of privatization. Through filtering, negotiating and interpreting the terms of a human right to water, the Bank has “deradicalized” (Rajagopal 2000) its opposition and enabled an expansion of its mandate in water governance - without re-evaluating its fundamental agenda of privatization in the Global South.

Previous studies examine how and why the Bank began introducing internal review procedures and social safe-guard policies in the nineties (Oestreich 2007; Park 2010). While not directly addressing the issue of the human right to water per se, some of the most significant review policies were established to deal with the fall out of disastrous water-related projects. For example the Buky Report assessed the devastating effects of the World Bank’s Narmada Dam project on displaced villagers in India (Bakker 2010). The international condemnation of World Bank funded damn projects around the world forced the Bank to more rigorously consider the environmental and social risks of its policies. Allouche and Finger (2001, 45) demonstrate that the Bank’s policy framework of increased “sustainability” and “participation” in water projects that emerged in the nineties was, to a certain extent, informed by lessons of these past failures. This, the authors argue, is what gave birth to the now hegemonic concept of “integrated water resource management” (IWRM).  The strategy reframes the processes of marketization, “stressing partnerships and risk management” (Conca 2006, 254). In 2003, the Bank released a revised water strategy emphasizing that the financing of water infrastructure “increasingly…requires public private partnerships, both in investment and operation” (Conca 2006, 254). It also stated that while private sector investment must expand, it should not crowd out, “community-managed infrastructure and beneficiary participation in design and management of water systems” (cited in Conca 2006, 230). This retreat from an aggressive and explicit policy of private ownership is “a direct response to mounting anti-privatization activism” (Conca 2006, 233).

A functionalist approach would interpret this shift as demonstrative of the Bank’s ability, through its teams of experts, to respond to criticism, reflect on unsuccessful programs, and invest in the measures necessary to address new areas of human need (Oestreich 2007). On the other hand, the neo-Marxist position would maintain that such shifts are purely cosmetic, and that IWRM and public-private partnerships just “disguise the fact that [they]….entail public funds being made available for the privatization of public goods” (Shiva 2002, 89). However, the critical constructivist frame emphasizes the ongoing power structures in which these changes have occurred. The changes are real, not purely cosmetic – but are also not meaningful to the extent that the opposition would seek, because such changes are a means of pacifying or “deradicalizing” resistance (Rajagopal 2003).

This approach is apparent in the Bank’s 2006 publication, “Calming Global Waters: Managing a Finite Resource in a Growing World,” in which the authors address the rise of a “human right to water” via the UN ICESCR General Comment 15. The report recognizes that such a right “has the potential both to strengthen efforts to deliver water services to the poor and to increase transparency in this process” by holding governments responsible for progressively ensuring their citizens have access to clean water (Sadoff et al. 2006, 16). This is, however, distinguished from what the authors deem as the pragmatic and more urgent problem of making “sound political decisions, reforms and investments” into the water sector – the technical decision making advice that is the Bank’s repertoire. The publication states that:

“Debate has arisen because many have read the U.N. covenant as a call for free water for all, and thus to argue against measures seeking cost recovery for
water services. The text of the covenant, however, merely adds access to water to an existing list of “rights emanating from, and indispensable for, the realization of the right to an adequate standard of living”—a list that already included “adequate food, clothing and housing.” It therefore no more implies
free provision of water than it implies free provision of any of those other necessities.” (Sadoff et al. 2006, 16)

This divorces the Bank’s policies and its technical concern with water provision, from what it sees as the aspirational quality of the human rights discourse. This document also confirms that the UN statement itself does not enter into discussion about the nature of water provision, which is the mandate of the Bank as the source of pragmatic solutions to the world’s water crisis. A recent statement on the Bank’s website, “The Promise and Peril of Water” also demonstrates how the Bank responds to debates over the right to water:

The question of water cost is a hot political topic. “There is definitely a lot more awareness that water has a price and a value, and that customers have to pay for what they use,” says van den Berg. Nevertheless, there remains widespread global resistance to counting the costs of so-called “externalities” into the water price…The World Bank has adopted a pragmatic approach toward issues such as water pricing and the involvement of the private sector in water management programs. In 2008, nine low or middle-income countries implemented at least 65 water projects with private participation, involving investments of more than $3.1 billion”

Opposition is depicted as political, while the Bank’s approach is “pragmatic”, and the ongoing integration of private sector management is the most pragmatic way in which to solve the world’s water crisis. Thus the Bank recognizes that there are contentious debates over water pricing – though not over the moral and social consequences of privatization. Generally the Bank frames the water challenge as one of environmental and economic urgency, while continuing to reflect its broader mission of “reforming the state” - transferring control of public infrastructure and service provision from the state to the private sector (Allouche and Finger 2001, 44). The introduction of “participatory” water management schemes, and “public-private partnerships” demonstrate the Bank’s attempts to assuage opposition and create a less aggressive policy of privatization. This process of making “change around the edges” is what Rajagopal (2003) identifies as “mediating” the opposition.

Bakker (2010) argues, therefore, that the growing recognition of a human right to water by the UN and WHO, while “celebrated by advocates”, has had little effect on the trajectory of the institutions which are their target – the World Bank, IMF and multinational corporations. While the Bank’s ability to mediate opposition is one explanation for this trend, the other is the fundamental weakness of the human rights framework as a tool for protecting communities’ rights over water as a common pool resource. Advocates believe that recognition of water as a human right would make governments legally accountable for inadequate water provision, it would facilitate tangible targets for governments to meet, and many also believe it limits the responsibility of water governance to the state in such a way as to reduce private involvement (Bakker 2010, 147). However, Bakker (2010, 150) shows that a human right to water is entirely compatible with privatization. The human rights regime, while putting the responsibility on the state to ensure access, does not go so far as to delineate a preferred “political-economic model of provision” (Bakker 2010, 150). Bakker outlines how NGOs with close ties to multinational corporations and financial institutions – such as the World Water Council – were quick to adopt a supportive line on the human right to water following the 2003 Kyoto World Water Forum. The World Bank followed suit with their 2004 publication recognizing an, “incipient right to water” in international law.  Private companies also released a joint statement at the 2006 World Water Forum in Mexico, which Bakker (2010, 151) describes as a “diluted interpretation of the human right to water….in which private companies had an officially sanctioned role.”

The anti-water privatization movement is still incipient, and has not yet gained the publicity or success of the global anti-dam movement. However, “calls have been made to emulate the global stakeholder model of the World Commission on Dams to grapple with water marketization controversies” (Conca 2006, 219). Conca (2006, 219) argues that, “the emergence of the human right to water frame has been an important development within the anti-privatizations movement…[and] has created possibilities for a broader global water coalition linking anti-dam and anti-privatization activists.” But unlike popular opposition to the large dam projects supported by the World Bank, the anti-privatization movement is unable to target specific, tangible projects that have widespread and almost immediate negative impacts on people (Bakker 2010, 143). As a consequence, the campaign has thus far been less effective in prompting anything beyond ‘change around the edges’ in regards Bank policy.

Conclusion:
The emergence of a right to water is a product of “contentious politics, economic globalization, and transnational mobilization” (Conca 2006, 219). It grew out of an increasing awareness of water scarcity, the construction of an international “consensus” over a policy of privatization in the Global South, and the growth of a transnational social movement that resists corporate control over water resources. In all of these processes, the World Bank has loomed large.

While the United Nations has formally instituted an independent human right to water, this norm is being mobilized and interpreted in different ways by different groups and institutions, and is yet to reach a point of “internalization” within the international sphere. The global anti-privatization movement sees water as a fundamental human right that should be ensured, administered and protected by the governments that people elect. The campaign that “water is a right, not a privilege” is aimed at intergovernmental financial institutions, primarily the World Bank. Yet the World Bank has, thus far, managed to absorb these pressures by acknowledging the importance of a human right to water, while defining it as political and aspirational and, therefore, outside the Bank’s technical and pragmatic repertoire.

A functionalist explanation emphasizes the Bank’s ability to respond to an emergent water crisis by harnessing its network of policy experts, whose technical focus falls outside the realm of political debates about a human right to water. But neo-Marxists see the Bank’s water policies as anything but apolitical, rather they are driven by the interests of powerful states and multinational corporations who stand to benefit from increasing privatization of water sources and services. Both these approaches explain certain aspects of Bank behavior in the water sectors of poor countries, but are ultimately dismissive of its ability to engage an emerging human right to water. These paradigms, however, are unable to capture the more nuanced and complex ways in which the Bank’s approach to water has evolved alongside external forces, including an increasingly high profile anti-privatization movement.
Critical constructivism holds a microscope to the interplay of powerful capitalist interests, the World Bank’s construction of knowledge and “best practice”, and influential subaltern voices who have banded together to challenge the Bank’s hegemonic policy of privatization in the Global South. Resistance has not overthrown the Bank’s powerful network of international think tanks that push for private sector involvement in water; however, the anti-privatization movement and its call for a human right to water has achieved ‘change around the edges’ of Bank policy. The retreat from an aggressive policy of privatization toward one that recognizes a role for “partnerships” and “participation” may signal a more meaningful shift in World Bank approaches to public services in poor countries. While it remains to be seen how far this rhetoric will be translated on the ground in communities where Bank programs are being implemented, it is clear that outcomes are being closely watched by a network of human rights activists who now have a legal framework through which to pursue potential violations relating to water access. The case of the right to water demonstrates both the Bank’s ability to mediate new normative frameworks, and the power of civil resistance to pressure for change – even if only within narrow parameters.


Bibliography:

Bakker, Karen. 2010. Privatizing Water: Governance Failure and the World’s Urban Water Crisis.  Cornell University Press. Ithaca and London.

Barnett, Michael and Martha Finnemore. 2005. Rules for the World: International Organizations in Global Politics. Cornell University Press. Ithaca and London.

Barlow, Maude and Tony Clarke. 2002. Blue Gold: The Fight To Stop the Corporate Theft of the World’s Water. The New Press. New York.

__________________________2002a. Who Owns Water? http://www.thenation.com/docPrint.mhtml?i=20020902&s=barlow accessed on 4/5/2011. 

Bayliss, Kate, and David Hall. 2002. Unsustainable Conditions – the World Bank, Privatisation, Water and Energy. 2003. PSIRU. 01180027472200  18889626688

Bluemel, Erik. 2004. The Implications of Formulating a Human Right to Water. Ecology Law Quarterly, Vol. 31: 957-1007.

Bond, Patrick. 2004. Water commodification and decommodification narratives: pricing and policy debates from Johannesburg to Kyoto to Cancun and back. Capitalism, Nature, Socialism 15 (1), 7–25.

Goldman, Michael. 2005. Imperial Nature: The World Bank and Struggles for Social Justice in the Age of Globalization. Yale University Press. New Haven, CT.

________________ 2007. How “Water for All!” policy became hegemonic: The power of the World Bank and its transnational policy networks. Geoforum, Vol. 38. 786-800.

Grusky, Sara. No date. The IMF, the World Bank and the Global Water Companies: A Shared Agenda. Public Citizen. Washington, DC.

Haughton, Graham. 2002. Market Making: internationalization and global water markets. Environment and Planning, Vol. 34, pp791-807.

Horta, Korinna. 2002. Rhetoric and Reality: Human Rights and the World Bank. Harvard Human Rights Journal Vol. 15 pp. 227-243

Kincheloe, Joe L. 2005. Chapter 1: From Constructivism to Critical Constructivism, in Critical Constructivism Primer. Peter Lang Publishing. New York.

Oestreich, Joel E. 2007. Power and Principle: Human Rights Programming in International Organizations. Georgetown University Press. Washington.

Park, Susan. 2010. The World Bank’s global safeguard norm?, in Owning Development: Creating Policy Norms in the IMF and the World Bank. Cambridge University Press. Cambridge.

Roberts, Adrienne Roberts. 2008. Privatizing Social Reproduction: The Primitive Accumulation of Water in an Era of Neoliberalism. Antipode, Vol. 40 No. 4. 535-560.

Rajagopal, Balakrishnan. 2000. From Resistance to Renewal: The Third World, Social Movements, and the Expansion of International Institutions. Harvard International Law Journal, Vol 14, Number 2, Spring.

___________________ 2003. International Law From Below: Development, Social Movements, and Third World Resistance. Cambridge University Press. Cambridge.

Salaman, M.A. and Siobhan McInerney-Lankford. 2004. The Human Right To Water: Legal and Policy Dimensions. World Bank: Law Justice and Development Series. Washington D.C.

Sadoff, Claudia, Karin Kemper and David Grey. 2006. Calming Global Waters: Managing a Finite Resource in a Growing World, in Global Issues for Global Citizens: An Introduction to Key Development Challenges, Vinay K. Bhargava (ed). The World Bank. Washington D.C.

Shrybman, Steven. 2002. Thirst For Control: New Rules in the Global Water Grab (Prepared for the Council of Canadians). The Blue Planet Project. Ottawa.

Shiva, Vandana. 2002. Water Wars: Privatization, Pollution and Profit: South End Press. Cambridge.

Sikkink, Kathryn and Martha Finnemore. 1998. International Norm Dynamics and Political Change. International Organization, Vol. 52, No. 4. 887-917.

United Nations Committee on Economic, Social and Cultural Rights. General Comment No. 15: The right to water. Twenty-Ninth Session, Geneva, 11-29 November 2002.

United Nations General Assembly: A/HRC/6/4. 16 August 2007. Human Rights Council. “Report of the United Nations High Commissioner for Human Rights on the scope and content of the relevant human rights obligations related to equitable access to safe drinking water and sanitation under international human rights instruments.”’

United Nations General Assembly Plenary, GA/10967, 108th Meeting, accessible at http://www.un.org/News/Press/docs/2010/ga10967.doc.htm

Human Development Report. 2006. Beyond Scarcity – Power, poverty and the global water crisis. United Nations Development Fund.

Wade, Robert. 1998. The Greening of the World Bank: A Lesson in Bureaucratic Survival, in The World Bank: its first half century. Devesh Kapur, John P. Lewis and Richard Webb (eds). The Bookings Institution. Washington D.C.

 

Wed, July 04 2012 16:39
Questioning Jakarta! [the scandalous water deal]

Questioning Jakarta!
[the scandalous water deal]

Jakarta’s water privatization was a decision made based on the myth that foreign investment was required. Thus, the country that was built with the spirit of anti-exploitation, and a Just and civilized humanity principle has violated its own vow by applying the World Bank’s plan. This plan allows powerful multinational corporations to freely exploit powerless people despite the fact the government supported the UN Resolution on the Right to Water and Sanitation.

In 1991, PAM Jaya was in dire need of restructuring, and funding to pay off debts and increase the supply and quality of water. With a $92 million loan, the World Bank started to push Indonesia’s government to apply a privatization scheme to water. The process started with a letter from President Suharto in 1995, followed by two giant water companies being awarded a 25-year privatization contract without public tender, which goes against Indonesian law.

Under (PPP) scheme the city was divided into two “concession areas.” The concession of the west area was granted to PT Garuda Dipta Semesta (GDS), and the east area was granted to PT Kekar Thames Airindo (KTA). At the commencement of the contracts on February 1, 1998, the assets of PAM Jaya (e.g. water treatment plants, water networks, equipment, offices and inventories) were transferred to the custody of the private operators (PALYJA, 2005).

The corruption in this process was visible in the original share allocations. The British firm Thames Water allocated shares to a firm owned by the son of the president. The French company Suez Lyonnaise des Eaux allocated shares to a firm owned by a crony of Suharto, Salim. After the fall of Suharto in 1998, these allocations were rapidly reduced.

Following the 1998 overthrow of President Suharto in the aftermath of the East Asian Crisis, this original contract was renegotiated. The major currency devaluation had hindered the implementation of the agreed investment plans because the companies depended on foreign loans to finance investment.

The renegotiated contract, known as the Restated Cooperation Agreement (RCA) was signed on October 22, 2001 by PAM Jaya and the private consortium, which had changed its name from KTA to PT Thames PAM Jaya (TPJ). Acuatico Pte. Ltd and PT. Alberta Utilities took over the company in 2007, and the name “TPJ” was changed to Aetra Air Jakarta or Aetra. In 2011, Acuatico, a consortium of Indonesia’s ReCapital Advisory and Glendale Partners, resold its shares to a lesser-known Philippines-based company. While, GDS changed to PT PAM Lyonnaise Jaya (PALYJA), a Suez subsidiary company. After July 2006, the ownership belonged to Suez Environment (majority shares) and PT. Astratel Nusantara (Astra International subsidiary).The five service standards and five technical targets that are monitored in the contract were also reset.

Fourteen Years of the Most Expensive Dirty Water
The contracts signed with the companies that provide water on behalf of the city-owned utility PAM Jaya had a number of weaknesses that favoured the private companies. The companies are paid according to their costs, protected against inflation, interest rates, foreign exchange rate and even tax changes. These include a “know-how” fee and management fee, which are typical of water concessions. In addition, the charge is calculated to provide a guaranteed return on capital of 22%.The tariffs paid by customers are effectively determined by these charges, so that if these tariffs are held down to make them affordable, the deficit has to be covered by the public authorities, not by the operators. (Hall)

PAM Jaya’s has a rapidly mounting debt — more than Rp 600 billion ($67 million USD) at last count — that it owes the operators. The debt stems from a discrepancy in the water tariff and the contractual “water charge,” which is what PAM Jaya must pay the operators for their services.

The water charge goes up automatically every six months, but in 2008, after a public outcry over poor service and high prices, the Governor of Jakarta started refusing to allow any more water tariff hikes. A deficit then began to accumulate.

The full cost recovery mechanism in the privatization of PAM Jaya means that 100% of the project’s financing will be borne by customers through increased rates (water tariffs). And the hundreds of billions of IDR lost due to PAM Jaya’s obligation to pay the private operators (water charges), plus the hundreds of millions of dollars in profit pocketed by Palyja and Aetra, MUST be borne PAM Jaya service users through rates.

And the poor have to bear the losses doubly: as customers of PAM Jaya, they were never a priority because they pay low rates and as a result they are forced to buy water from street vendors, while still being forced to pay a bill for water that never flowed.

Where were the people?
There have been many efforts by various groups to question the scandalous water deal in Jakarta, at least after the fall of President Suharto’s dictatorship in 1998.Those were followed with many policy adjustments in favour of private interests.

After 2000, Indonesia’s civil societies were debating how to find a comprehensive solution for the country following 32 years of repressive which was followed by a shocking transition. This was the time when “free market globalization” emerged in public discourse. A national network of peasant, labour, youth movements, academics and others began to look at the role of the State in the era of liberalization and life marketization.

KRuHA formed as a coalition in 2002 in response to the loan from the World Bank and the decision to adjust Indonesia’s water resources policy (WATSAL) to be in line with its “IWRM” model, which dictates the economic value of water should be maximized in order to address the water crisis. The coalition decided to take the case of illegitimate debt to the newly established Constitutional Court, arguing that the loan violated the national constitution. This was also the first time Jakarta’s case was brought to the court as evidence of how water is being treated as a commodity (not the full subject of the case).

However, since the mandate of the Constitutional Court was to guard the 1945 Indonesia constitution, the laws outside of the constitution are not under its jurisdiction. But the court’s interpretation about how the economic functions of water should be regulated, and what principles should be applied in public water companies, has provided the guidelines for civil society to argue that the government’s policies that allowed the privatization of water services in Jakarta are against the law.

The Constitutional Court noted that:
“The principle of ‘water users shall pay the service charges for water resources management’ treats water not as the object attached with prices in economic respect; this is in accordance with the status of water as “res commune.” With this principle, water users should pay less than when water is considered as an economic good; when users have to pay not only the price of water but also the cost of production beside the profit of the water management.

PDAM, the public water company, has to position itself as the State’s operational unit to realize the State’s obligation as stipulated in Article 5 of the Water Resources Law, and not as a company that is economically profit-oriented. Although the existence of Article 80, paragraph 1 of the Water Resources Law states that in order to meet their daily basic needs and for people’s smallholdings, water resource users shall be exempted from the service charge for water resources management, this provision is applicable insofar as to fulfil the daily basic needs and the people’s smallholdings are obtained directly from water resources. It means that if the water for daily basic needs and the people’s smallholdings is obtained from distribution channels, the aforementioned principle of ‘water users shall pay the service charges for water resources management’ is applicable. However, this matter cannot be used as the basis to apply expensive costs for citizens whose fulfilment of their daily basic needs depend on PDAM through the distribution channel.

The amount of water resources management service charges has to be transparent and must involve the community in its calculation. Due to the fact that water is vital and directly related to human rights, the implementing regulations of the Water Resources Law must contain the obligation of the Regional Government to allocate the budget for the financing the water resources management in its Regional Revenues and Expenditures Budget (APBD).”

Taking Back Public Water
In June 2011, the PUBLIC PETITION "TAKING BACK PUBLIC WATER"  was released, demanding cessation of the contract of Private Public Partnership between PAM Jaya (as the public utility under Governor’s control) with the private operators; PAM Lyonnaise Jaya (PALYJA) and Aetra Air Jakarta (Aetra). The petition was signed by 592 people representing 35 local non-government organizations (NGOs), 55 international NGOs and 502 individuals. In commemoration of 14 years old privatization contract, groups and individuals who support the petition, citizens, women, urban poor, youth, customers, Jakarta Water Labour Union (SP PAM Jaya) formed a new coalition named KMMSAJ ( people’s coalition against privatization of Jakarta water)- held a rally and submitted a petition to the Governor of Jakarta to end the privatization of water services.  During the rally, the protesters met government officials who agreed that the current water services need to be evaluated.

A large public meeting on the fourteenth anniversary of the privatization of Jakarta water was organized by Amrta Institute, People’s Coalition for the Rights to Water (KRuHA) and the Transnational Institute. Most stakeholders were there, including PAM Jaya, two private operators, affected communities, CSOs, board of public auditor, international financial institutions, and other institutions. This was the first time these stakeholders had gathered together, and each of them had urgent issues to convey. PAM Jaya described the financial loss and damages they are suffering, the private operators claimed the improvements, and the affected communities complained about the insufficient water services they have had over a long period from private operators. The meeting was tense.

Two months earlier, the Jakarta Water Labour Union also held a major strike and demonstrations. In April 2011, seconded employees at Palyja refused to work, computers in billing counters were shut down and cars were lined up with protest boards on them. The workers also marched on Palyja’s office at Sentral Senayan and demanded, among other things, a basic salary increase which they have not had since 2003.

The newly people’s campaign responded by a first public official’s acknowledgement (Director of PAM Jaya) that the contract is full with problems and need to be amended. There are more than sufficient reasons for PAM Jaya to renegotiate the contract. Unfortunately, by early 2012 the discussions have made little progress. They are, in fact, possibly stalled following the peculiar removal of the director of PAM Jaya, Maurits Napitupulu, in December 2011. Comments in the media suggest this removal is a political intervention in the renegotiation process. Hidayat A.R. Yasin, a member of provincial parliament, states in the Indopos newspaper (5/1) that Maurits’s removal illustrates how weak the provincial government is compared with the private operators.

A report in Tempo magazine (January 9-15) contains a story about the removal. In June 2011, the chairman and chief executive of GDF Suez, Gerard Mestrallet, wrote to the Indonesian Minister of Economic Affairs asking for help with the serious difficulty experienced by Palyja in the renegotiation process with PAM Jaya. GDF Suez, a French energy company, is the largest shareholder of Suez Environment, a water company that is the largest shareholder of Palyja.

Palyja’s proposal, as mentioned in Tempo, was also on the agenda of a meeting between French Prime Minister, Francois Fillon, and Indonesian President Susilo Bambang Yudhoyono in July 2011. The Governor of Jakarta is under huge pressure to intervene in the renegotiation process.

In addition to this tension, the current cooperation is also the focus of a legal case. District attorneys in Jakarta have conducted two preliminary investigations, one in November 2011 and the other in January 2012, related to allegations that Palyja transferred PAM Jaya’s assets worth IDR 3 billion (USD 326,000) (Koran Tempo 13/1). Because of increasing fears about the corruptive use of state asset, concerned civil society organizations (CSOs) encouraged the involvement of the Corruption Eradication Commission.

Table

 The expatriate expenses those are not related to the project but included within the water charge (within operating expenditure)

Expenses Total (IDR)
School Fee For Children     1.207.824.829
House Hold 8.633.000
Expense Claim
366.220.039
Fiscal & Airport tax Personal Travelling 79.346.787
Personal Travel
119.754.486
Rent House & flood Insurance 2.083.706.143
Total (IDR) 3.865.485.2

Source: investigation report by National Auditor Body on the Income and Charges of PT Palyja 2007 and 2008

Another meeting was held in August 2011 attended by KMMSAJ (people’s coalition against privatization of Jakarta water). In this meeting, it was announced that a lawsuit against the Government and the concessionaires was being initiated. The state is accused of negligence in its duty to provide people’s rights to water, which is a violation of the Constitution.

The public is demanding for a fair and transparent renegotiation, and if it does not happen then more protests should be expected. With the protests, rallies and petition, the message from public has been clear: the water service in Jakarta should be re-municipalized, if it is to be saved from financial ruin and the water service from a profit-oriented private sector. This is a global trend and needs international solidarity to prevent citizens of the world from a privatized and inaccessible water service.


Resources:

  • Jacobson, P., Down the drain Jakarta's disastrous water privatization deal has left the city drowning in debt.
  • Water privatization in Jakarta: Wikipedia http://en.wikipedia.org/wiki/Water_privatization_in_Jakarta
  • KRuHA: submission to the UN Independent Expert on the Right to Water and Sanitation  www.ohchr.org/Documents/Issues/Water/ContributionsPSP/KRuHA.pdf
  • In Jakarta, a Fight Over Money and Water http://www.thejakartaglobe.com/home/in-jakarta-a-fight-over-money-and-water/487216
  • Workers and Jakarta Water Privatization, May 31 2011. http://www.waterjustice.org/?mi=1&res_id=305
  • No Pro-Poor Agenda in Jakarta Water Concession, Oct 21 2010. http://www.waterjustice.org/?mi=1&res_id=285
  • http://www.remunicipalisation.org/cases#Jakarta
  • Public Petition, Jakarta, April 2011. http://www.kruha.org/page/en/dinamic_detil/40/183/Get_Involved/PUBLIC_PETITION__TAKING_BACK_PUBLIC_WATER_.html
  • Indonesia: Jakarta’s Water Agreement muddied by lack of transparency http://www.article19.org/resources.php/resource/2957/en/indonesia:-jakarta%E2%80%99s-water-agreement-muddied-by-lack-of-transparency
  • Hall, D., Lobina, E., Corral, V. (2010) Replacing failed private water contracts.

 


Wed, April 11 2012 23:27
OUR RIGHT TO WATER
AN EXPOSE ON FOREIGN PRESSURE TO DERAIL THE HUMAN RIGHT TO WATER IN INDONESIA

Indonesia voted in favor of the UN resolution for the right to water and sanitation. However policies implemented by the government have been dominated by market mechanisms that violate people’s right to water.

Even though Indonesia is one of the richest countries in the world in terms of water supply, it faces huge problems when it comes to water distribution, which remains inequitable.

Under the pressure of the World Bank, Indonesia has developed a regulatory framework that promotes the commercialization of water services. During conflicts between local communities and corporations around access to water resources or water services, the government of Indonesia often supports the interests of corporations, arguing that it is securing foreign investments.

This report will show how the practices surrounding access and distribution of water services in Indonesia are in conflict with the constitution and the UN resolution on the human right to water and sanitation. Secondly, this report will examine how water policy in Indonesia has been dominated by international financial institutions like the World Bank and Asian Development Bank, and explain how KRuHA has learned from communities’ advocacy for their right to water in various regions in Indonesia.

The struggles against the commodification of water in Banten where the community is fighting to stop a DANONE bottling plant, and Jakarta, where a private water company has cut millions of people from their drinking water services, provides evidence of the contradictions between Indonesia’s Constitution, the UN resolution and Indonesia’s water policy.

This report is organized into five sections: (1) Water in the Constitution of Indonesia (2) the condition of water resources in Indonesia, including the status of community access to the water (3) the dominant policy in compliance with right to water in Indonesia (4) communities’ fights to fulfill the right to water (and advocacy experience in some areas), (5) conclusions and recommendations.



Water in the Constitution of Indonesia
Water is a human right and Constitutional right

The 1945 Constitution of Indonesia departs radically from traditional constitutions by giving explicit recognition to a range of socio-economic rights in addition to civil and political rights. Prior to the 1948 Universal Declaration on Human Rights, Indonesia’s 1945 Constitution introduced the rights of citizens, although it was not the same as the human rights that were recognized later on.

Article 33, paragraph 2 of Indonesia’s 1945 Constitution stated that “all vital sources of production those essential for the lives of the people must be controlled by the state.” Paragraph 3 stated that “the land and the water as well as the natural riches therein are to be controlled by the state to be used to the greatest benefit of the people.”

Right to Water in the Indonesian 1945 Constitution

Article 27, Para (2)

Every citizen has the right to work and to live in human dignity.

Article 28A

Every person shall have the right to live and to defend his/her life and existence.

Article 28C   

(1)Every person shall have the right to develop him/herself through the fulfillment of his/her basic needs (…) for the purpose of improving the quality of his/her life and for the welfare of the human race.

(2) Every person shall have the right to improve him/herself through collective struggle for his/her rights to develop his/her society, nation and state.


Article 28H 

(1) Every person shall have the right to live in physical and spiritual prosperity, to have a home and to enjoy a good and healthy environment, and shall have the right to obtain medical care.

(2) Every person shall have the right to receive facilitation and special treatment to have the same opportunity and benefit in order to achieve equality and fairness.

(3) Every person shall have the right to social security in order to develop oneself fully as a dignified human being.

Article 33

(2) Sectors of production which are important for the country and affect the life of the people shall be under the powers of the State.
(3) The land, the waters and the natural resources within shall be under the powers of the State and shall be used to the greatest benefit of the people.

 
The human rights regime was only recently incorporated into law. In 1999 the Indonesian government issued the Human Rights Law no 39/1999.Most of the rights acknowledged in the 1948 Universal Declaration of Human Rights were also included in Indonesia’s Human Rights Law.

In the fifth chapter of the Human Rights Law, article 71 on government duties and obligations states: “as laid down in this act, other legislation, and international law concerning human rights ratified by the Republic of Indonesia. The duties and responsibilities of the government referred to in Article 71 include measures for effective implementation in law, politics, economics, social and cultural aspects, state security and other areas (article 72).

Thus, the fulfillment of the right to water is the responsibility of the State. The State is obligated to respect, to protect, and to fulfill the rights of its population to meet the needs of present need and future generations. Thus, the State must also be actively involved in the planning of water resources management.

The Human Right Law was followed by the Human Rights Court Law no.26/2000, which granted Indonesians the right to file complaints against the State for human rights abuses or violation of the law that prohibits serious and massive crimes against humanity. The approval of Parliament is needed to determine whether human rights violations fall within the scope of serious and massive crimes against humanity. The basic requirements for this evaluation are (1) it is done purposely; (2) there is a pattern to the method of violation; and (3) there are many victims of the violation.

Not all human rights violations occurring in Indonesia can be put before the Human Rights Court. Consequently, other human rights violations that are not considered as serious and massive crimes against humanity should be examined through other judicial mechanisms such as regular court, or if the violations are related to the enactment of a new Law, they might be submitted to the Constitutional Court. Regardless, this new human rights regime will provide a sphere for civil society to build a path for promoting and pursuing the realization of the rights. (Benny D Setianto, the Right to Water in Indonesia: A Promising Failure).

Some UN Covenant, Conventions ratified by Indonesia

United Nations

Indonesia

The Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) 

1980, signed the convention
1984 ratified by Law no.7
2004, Law no.23


Convention Against Torture (CAT) 

1998, Law no.5
2006, Law no.13

Convention on the Rights of the Child (CROC)

1999, Presidential Decree no 36
1979, Law no.4
2002, Law no.23

Convention on the Elimination of All Forms of Racial Discrimination (CERD)

1999, Law no.29
2008, Law no.40

International Covenant on Civil and Political Rights (ICCPR)

2005, Law no.12

International Covenant on Economic, Social and Cultural Rights (ICESCR)

2005, Law no.11

Other Relevant Law:
Law no.39/1999 on Human Rights
Law no.26/2000 on the Establishment of Human Rights Court
Law no.27/2004 on the Truth and Reconciliation Commissio


Water Resources Law No.7 of 2004 as a landmark of water commodification
In 2004, the Government of Indonesia passed Law No.7 on Water Resources, which was more market friendly than Law No.11 of 1974.The new law was imposed at the request of the World Bank through the Sector Adjustment Loan for Water Resources of 1999, amounting to $300 million USD. One of the requirements of the third loan disbursement was the replacement of water resources law with a water resources policy and implementation plan in accordance with the World Bank, and based on the principle of Dublin (World Bank, 1993), which states that water has an economic value in all its competing uses and should be recognized as an economic good (World Bank, 1999).A more detailed explanation about the World Bank’s policy can be found in the Matrix of Policy Reform Program Implementation Plan for Water Resources and Irrigation (see letter from Boediono as Minister of Development Planning / Chairman of the National Planning Board, dated April, 23, 1999 2565/MK4/1999 to James D.Wolfensohn as President of the World Bank). (Hadipuro, W.2010. Indonesia’s water supply regulatory framework: Between commercialization and public service? Water Alternatives 3(3): 475-491).

 This new World Bank-imposed water law is inconsistent with Indonesia’s historic stand on water. Article 5 of the Indonesia Water Law No.7/2004 stated that: “Every Indonesian has the right to water” and it is protected by the rule of Indonesia, but there is no other article on how the right should be respected, protected and fulfilled. On the contrary, the law regulated many aspects on corporations’ (which, in this case, means water), outlining how these rights can be obtained, or even transferred by corporations.
The launch of the new Law on Water Resources also gave rise to the civil society movement in the water sector, which became possible after the fall of former Indonesian President Suharto. Since 2000, discussions, seminars, demonstrations, and public debate on the law echoed in public spaces. In 2004 and 2005 three NGOs: the Indonesian Forum for the Environment (WALHI), the People’s Coalition for the Right to Water (KRuHA), and the Jakarta Water Consumers Community led the call for a judicial review of the Law No.7 of 2004 in the Constitutional Court of Indonesia.

Civil society organizations and thousands of individuals argued the Water Law contradicted the 1945 Constitution; would turn water into a profit-oriented business, and possibly threaten people’s access to water. On July 19, 2005, the Indonesia Constitutional Court upheld the constitutionality of the new water law, which provides for the decentralization of control over Indonesia’s water resources to regional entities and water-user associations, and contains provisions allowing for private sectors involvement.

Water as “res commune”
The results of the judicial review of Law No.7/2004 were also considered phenomenal because this is the first time the Constitutional Court gave an article-by-article interpretation of the Law. The decisions of the Constitutional Court are conditionally constitutional, meaning that the implementing regulations of the law should be based on the court’s interpretation and if the implementing regulations of the law are against the Constitutional Court interpretation, people can demand another judicial review.

On the conflicting interpretation regarding the status of water as an economic good or a public good, the court affirmed that water is a public good with social and economic functions.

“Considering whereas water is res commune, and therefore that has to be subject to the provision of Article 33 Paragraph 3 of the 1945 Constitution, so that the management of water has to be included in the public legal system which cannot be made as the object of ownership in the concept of civil law.” (The Constitutional Court interpretation on Water Law No.7).

Indonesia’s Water Resources and People’s Access
According to Indonesia’s Millennium Development Goals report issued by , the National Planning Agency (Bappenas) (2010), 47.71 per cent of households had access to adequate water and 51.19 per cent had access to sanitation. The country is looking to a target of 68.87 per cent of the population to have access to clean water and 62.41 per cent of the population to have access to sanitation. The table below shows Indonesia’s achievements with access to water.

MDGs Report 2010 (Bappenas)

   Progress on Drinking Water and Sanitation 2008 (UNICEF, WHO)

Progress on Drinking Water and Sanitation 2010 (UNICEF, WHO)

       Achieving the MDGs in an Era of Global Uncertainty 2010 (UNESCAP, ADB, UNDP)

Urban (%)  

 Rural (%)


   Piped Water (%) 

Protected Water Resources (%)

Piped Water (%) 

Protected Water Resources (%)

Water Total   

Sanitation Total

49.82 

45.72

  20

60

23

57

Slow 

Slo

                                                                                                 Various sources

Mismanaged water
One of the main constraints in managing the water and sanitation sector in Indonesia is the availability of raw water. Generally, Indonesia is one of the few countries in the world to have abundant water resources. Various reports on the condition of Indonesia’s water balance shows that Indonesia is still experiencing a surplus of water. Nevertheless, there are several islands in Indonesia that have experienced water deficit, as seen in table 1 below.

Based on table 1, the islands of Java and Bali have experienced water deficit since 2000.While the islands of Sulawesi and East Nusa Tenggara (NTT) will experience a water deficit in the year 2015.It is necessary also to emphasize that the availability of water on each island has been in decline, with the assumption that the rate of deforestation in Indonesia in 2000-2005 is an average of 1,089,560 ha / year (table 2).This condition is further worsened by the fact there is an increase in the amount of damaged watersheds – from 62 at the end of the 1990s to 64 in 2009.

Today, Indonesia’s population is estimated at 234.2 million, in comparison to 205.1 million in 2000.Indonesia has become the fourth largest population in the world, after China (1.33 billion), India (1.16 billion), and the United States (309.2 million).

In 2010, 60.1 per cent of the population, or about 121 million people, were living in Java. This makes Java the densest island with 103 people per km2.Massive development, extensive land use changes during the era of and the continuous expansion of extractive industries have had put huge pressure on the island’s water balance to the point that Java Island is now experiencing a water deficit.

These facts illustrate that the water crisis in Indonesia is not due to water scarcity, but rather it is due to the inability of countries to manage water resources.

Table 1

Water balance on each Island in Indonesia


Island

Water Availability (million/m3/year) 

Water Demand (million/m3/year)

Water Surplus (million/m3/year)




2000

2015

2000

2015


Sumatra

11.077,7

25.297,5

49.583,2

85.780,2

61.494,5


Java

30.569,2

83.378,2

164.672,0

-52.809,0

-134.102,8


Kalimantan

140.005,6

8.203,6

23.093,3 

131.802,0  

116.912,3


Sulawesi

34.787,6

25.555,5

77.305,3

9.232,1

-42.517,7


Bali

1.067,3 

8.598,5

28.719,0

-7.531,2  

-27.651,7


NTB

3.508,6

1.832,2

  2.519,3

1.676,4

989,3


NTT

4.251,2

 2.908,1

8,797,1

  1.343,1

-4.545,9


Maluku

15.457,7

  305,2

575,4

15.152,5 

14.882,3


Papua

350.569,7

283,4

1.310,6

350.306,3

349.279,1


INDONESIA

691.314,6 

156.362,2

356.575,2

534.952,4

334.739,4


Sources: DR.Sutopo Purwo Nugroho, 2010 (Ministry of Environment, 2005)

In watershed management, there are a variety of challenges ranging from the complexity of governance, weak enforcement of environmental laws, lack of community participation, and so on. All of these problems stem from one issue: that water resource development has not become central to the political agenda.

The Dominant Policy Approach on The Right to Water
Currently, there is a growing tendency toward water commodification through the privatization of water services.

In an attempt to stave off public criticism, corporations like Suez, however attempt to dissociate the privatization of water services from the commodification of water. “Water is a common good, one of the basic public goods. At Suez, we are opposed to the private ownership of water resources precisely because, in our eyes, water is not a commodity. We do not trade in water. We do not sell a product. We provide a service, the service of making clean water continuously available to all, and returning water to the natural habitat once it has been treated. It is the price of that service that is billed, not the price of water as raw material”. In reality, however, people have to pay for obtaining water. They have to pay based on the volume of water they use.

Globally, the prospect of water privatization is increasing. It is predicted that over the next decade, more than 1 billion people will use and consume “private” water. The most important markets for “private” water are in developing countries in Asia, Africa and South America.

Water resource management will always be affected directly or indirectly by governments, business entities, and civil society, and even by international development agencies such as the World Bank, the Asian Development Bank and others. Whether water governance prioritizes common needs, or is an effort to generate profit, will greatly depend on the policies that govern the management of water resources.

In Indonesia, water resource management has been through many changes as a result of macro-economic changes and other interests in the utilization of water resources.

Despite open resistance from many people, since the 1980s the Government of Indonesia has followed World Bank policy. The World Bank can exert its influence on the Indonesian water sector through conditions attached to its loans. The involvement of the private sector in urban water provision and water commoditization are two World Bank principles that have been adopted in the new Indonesian water law, which acted as a starting point for ideological change in managing water supply in the country. What makes Law No.7/2004 on Water Resources different from the superseded Law No.11/1974, is that the new law gives more room to the private sector through Article 9 on commercial water rights and Article 40, clause 3 on participation in water supply delivery. According to the old law, water supply should be in public hands, or at least managed by an institution in a cooperative spirit.

Administration of water rights has the potential to marginalize the traditional users and create administrative problems. Adopting the concept of full cost recovery has made water resource managers prefer to allocate water to the industrial sector and to water companies that cover transaction costs in their operations. The agricultural community and the citizens who utilize the watershed for drinking water will be neglected.

The Fights for the Right to Water
The central claim that KRuHA makes is that water is indispensible for human life and should, therefore, be stewarded by government in the best interests of its citizens. The commercialization of water, according to KRuHA, is morally unjust; it represents the ongoing accumulation of public goods for private (and often foreign) profit, and violates a fundamental human right.

Banten: Local people’s movement versus DANONE’s lobby
“It’s sure that the state takes the side of the industry! In fact, up to this moment, Taufik (the Regent of Serang) is still determined to defend Aqua by refusing to revoke the document that gave permission to build the plant in Padarincang. The government has never bothered to listen to us, despite the fact that we have repeatedly demanded that they close down the Aqua drilling site.” - Azis (a local leader) who spoke during the mobilization, December 5, 2010

Padarincang is a sub-district in Serang District, Banten Province. Villagers are mostly small-scale farmers who work in paddy fields and peasants who work on their neighbors’ land. The beauty of this environment is the blessing of its location, which is above the underground water basin and not far from the swampy lake of Rawadano.

PT Tirta Investama, the largest Indonesian bottled water company has the majority of its shares (99.79 per cent) owned by PT Aqua Golden Mississippi Tbk (AQUA), 74 per cent of which are held by PT.Danone Asia Pte Ltd, which just delisted from the Indonesia Stock Exchange and became a private company (Kontan, 23/12/2010).

Aqua Golden Mississippi was established in 1973 with its first water bottling plant in the Bekasi region of West Java. The company expanded significantly over the next few decades. On September 4, 1998, Aqua Golden Mississippi sold its shares to French company DANONE, a company best known for producing processed dairy foods. With all the confidence that a majority (74 per cent) ownership a stable European company brought to Aqua, it soon released a new product called Aqua DANONE and promptly began surveying for suitable springs to expand its activities. In 2007, Aqua DANONE set its sights on the Ground Water Basin of Rawadano and in 2008, the company began exploration. After getting permission from the Banten provincial government, the company has taken steps to ensure its interests in the area were secured (See also .Eve Warburton).

In Curug-Gong, where the company chose to build the new plant, people use the spring water from the waterfall for their daily needs. The water also supplies hundreds of hectares of paddy fields and other plantations.

Communities living in the villages surrounding the water fought construction plans for years, and the plan was postponed. However, the company continued to approach the local government until the plans were approved, and operations began in 2010.One of the ways the company promoted their plan was by taking the regent of Serang (the capital of Padarincang) and the governor of Banten Province on a tour to Paris, France where DANONE’s central office located.

DANONE also has a very strong lobby within The Investment Coordinating Board (BKPM – Badan Koordinasi Penanaman Modal) and Coordinating Ministry of Economic Affairs. One complaint from DANONE is enough for these two government ministries to act on behalf of the “investors,” even if it goes against Indonesia’s doctrine on water as “res commune.” (See Hatta and Wirawan’s statements in http://bataviase.co.id/node/582493)

Locals’ fears of drought over the exploitation of this water are not without merit. They have seen the experiences of other regions such as Sukabumi and Klaten, where the water wells dried up, and the volume of water in the watershed reduced drastically.

In the village of Kuta, Sukabumi, residents now have to dig wells to a depth of 18 meters, whereas before the existence of bottled water industries, people used to dig only 10 meters deep.

In Klaten, in Central Java, farmers have to pump from deep groundwater in order to have water for agriculture. The water that used to flow naturally from the springs of Kapilaler and Sigedang used to be sufficient for agricultural irrigation. This water no longer flows.

In addition, there is no doubt that the exploitation of ground water in large quantities simultaneously will lead to the deterioration of the land (land subsidence). And a decrease in soil in the underground water basin will have dire consequences since it is where all of the processes of hydro-geological recharge, drainage, and ground water discharge occur naturally.

Simple Calculation; One company’s profit vs people’s lost income

The amount of water to be extracted by Aqua-DANONE would reach 63 liters/second, equivalent to 5.443.200 liters water a day. While Aqua costs 3000 IDR for a 1 liter bottle of water, this means that Aqua will profit more than 16 billion IDR (or $1.8 million USD) each day from their operation in Cirahab, Padarincang–Banten alone.

There are more than 6,000 hectares of paddy field in Padarincang. One hectare can produce about 2.000 kgs of rice every 4 months or 6,000 kgs of rice each year. With the assumption of the cost of rice being 4000 IDR/kg, the total income lost for farmers will be 12 billion IDR/month (approximately $1.3 million USD).

The spirit of local resistance to ground water extraction and commoditization is based on local traditional beliefs that water is not just a source of life, but also a gift from God. It must be protected from any form of destruction, and any attempt to privatize the water must be resisted.
While the people’s movement against the Aqua DANONE in Padarincang began in 2008, effective and well-organized events started in 2010.The communities organized various actions against the plant’s construction, including discussions, actions, movie screenings and more. Three parallel advocacy approaches have been taken: (i) Micro level approaches; the routine training and village discussion on the Right to Water, (ii) Mezzo level: engaging local cultural and religious leaders as cultural mediators, and (iii) Macro level: networking with other national organizations to increase the pressures on the national authorities, including mobilizations in front of France’s Embassy.

One of the most prominent activities against Aqua-DANONE construction plans was the people’s protest rally around the Aqua DANONE plant, which took place on December 5, 2010.This rally, was attended by thousands of residents. The lack of response from government and start of construction on the plant, which was guarded by machete champions (militia), led to a deep sense of injustice amongst citizens. People’s concern and anger led to arson and vandalism at the site.

In February 2011, through various news media, PT.Tirta Investama announced that it had cancelled its plans to exploit water resources in the Cirahab-Padarincang district.

Jakarta’s Hidden Water Privatization
Jakarta’s water privatization was a decision made based on the myth that foreign investment was required. Thus, the country that was built with the spirit of anti-exploitation,  and with the principles of a Just and civilized humanity has violated its own vow by applying the World Bank’s plan. This plan allows powerful multinational corporations to freely exploit powerless people despite the fact the government supported the UN Resolution on the Right to Water and Sanitation.

In 1991, PAM Jaya was in dire need of restructuring, and funding to pay off debts and increase the supply and quality of water. With a $92 million loan, the World Bank started to push Indonesia’s government to apply a privatization scheme to water. The process started with a letter from President Suharto in 1995, followed by two giant water companies being awarded a 25-year privatization contract without public tender, which goes against Indonesian law.

Under (PPP) scheme the city was divided into two “concession areas.” The concession of the west area was granted to PT Garuda Dipta Semesta (GDS), and PT Kekar Thames Airindo (KTA) was granted the east area. At the commencement of the contracts on February 1, 1998, the assets of PAM Jaya (e.g. water treatment plants, water networks, equipment, offices and inventories) were transferred to the custody of the private operators (PALYJA, 2005).

The corruption in this process was visible in the original share allocations. The British firm Thames Water allocated shares to a firm owned by the son of the president. The French company Suez Lyonnaise des Eaux allocated shares to a firm owned by a crony of Suharto, Salim. After the fall of Suharto in 1998, these allocations were rapidly reduced.

Following the 1998 overthrow of President Suharto in the aftermath of the East Asian Crisis, this original contract was renegotiated. The major currency devaluation had hindered the implementation of the agreed investment plans because the companies depended on foreign loans to finance investment.

The renegotiated contract, known as the Restated Cooperation Agreement (RCA) was signed on October 22, 2001 by PAM Jaya and the private consortium, which had changed its name from KTA to PT Thames PAM Jaya (TPJ). Acuatico Pte. Ltd and PT. Alberta Utilities took over the company in 2007, and the name “TPJ” was changed to Aetra Air Jakarta or Aetra. In 2011, Acuatico, a consortium of Indonesia’s ReCapital Advisory and Glendale Partners, resold its shares to a lesser-known Philippines-based company. While, GDS changed to PT PAM Lyonnaise Jaya (PALYJA), a Suez subsidiary company. After July 2006, the ownership belonged to Suez Environment (majority shares) and PT. Astratel Nusantara (Astra International subsidiary).The five service standards and five technical targets that are monitored in the contract were also reset.

Fourteen Years of the Most Expensive Dirty Water
The contracts signed with the companies that provide water on behalf of the city-owned utility PAM Jaya had a number of weaknesses that favored the private companies. The companies are paid according to their costs, protected against inflation, interest rates, foreign exchange rate and even tax changes. These include a “know-how” fee, or management fee, which is typical of water concessions. In addition, the charge is calculated to provide a guaranteed return on capital of 22%.The tariffs paid by customers are effectively determined by these charges, so that if these tariffs are held down to make them affordable, the deficit has to be covered by the public authorities, not by the operators. (Hall)

PAM Jaya’s has a rapidly mounting debt — more than Rp 600 billion ($67 million USD) at last count — that it owes the operators. The debt stems from a discrepancy in the water tariff and the contractual “water charge,” which is what PAM Jaya must pay the operators for their services.

The water charge goes up automatically every six months, but in 2008, after a public outcry over poor service and high prices, the Governor of Jakarta started refusing to allow any more water tariff hikes. A deficit then began to accumulate.

The full cost recovery mechanism in the privatization of PAM Jaya means that 100% of the project’s financing will be borne by customers through increased rates (water tariffs). And the hundreds of billions of IDR lost due to PAM Jaya’s obligation to pay the private operators (water charges), plus the hundreds of millions of dollars in profit pocketed by Palyja and Aetra, MUST be borne PAM Jaya service users through rates.

And the poor have to bear the losses doubly: as customers of PAM Jaya, they were never a priority because they pay low rates and as a result they are forced to buy water from street vendors, while still being forced to pay a bill for water that never flowed.

Table X
The expatriate expenses those are not related to the project but included within the water charge

Expenses 

Total (IDR)

School Fee For Children

1.207.824.829

House Hold

 8.633.000

Expense Claim

 366.220.039

Fiscal & Airport tax Personal Travelling

 79.346.787

Personal Travel/Biaya Perjalanan 

119.754.486

Rent House & flood Insurance

 2.083.706.143

Total (IDR) 

3.865.485.2

Source: investigation report by National Auditor Body on the Income and Charges of PT Palyja 2007 and 2008

Where were the people?
There have been many efforts by various groups to question the scandalous water deal in Jakarta, at least after the fall of President Suharto’s dictatorship in 1998.Those were followed with many policy adjustments in favor of private interests.

After 2000, Indonesia’s civil societies were debating how to find a comprehensive solution for the country following 32 years of repressive which was followed by a shocking transition. This was the time when “free market globalization” emerged in public discourse. A national network of peasant, labor, youth movements, academics and others began to look at the role of the State in the era of liberalization and life marketization.

KRuHA formed as a coalition in 2002 in response to the loan from the World Bank and the decision to adjust Indonesia’s water resources policy (WATSAL) to be in line with its “IWRM” model, which dictates the economic value of water should be maximized in order to address the water crisis. The coalition decided to take the case of illegitimate debt to the newly established Constitutional Court, arguing that the loan violated the national constitution. This was also the first time Jakarta’s case was brought to the court as evidence of how water is being treated as a commodity (not the full subject of the case).

However, since the mandate of the Constitutional Court was to guard the 1945 Indonesia constitution, the laws outside of the constitution are not under its jurisdiction. But the court’s interpretation about how the economic functions of water should be regulated, and what principles should be applied in public water companies, has provided the guidelines for civil society to argue that the government’s policies that allowed the privatization of water services in Jakarta are against the law.

The Constitutional Court noted that:
“The principle of ‘water users shall pay the service charges for water resources management’ treats water not as the object attached with prices in economic respect, this is in accordance with the status of water as “res commune.” With this principle, water users should pay less than when water is considered as an economic good; when users have to pay not only the price of water but also the cost of production beside the profit of the water management.

PDAM, the public water company, has to position itself as the State’s operational unit to realize the State’s obligation as stipulated in Article 5 of the Water Resources Law, and not as a company that is economically profit-oriented. Although the existence of Article 80, paragraph 1 of the Water Resources Law states that in order to meet their daily basic needs and for people’s smallholdings, water resource users shall be exempted from the service charge for water resources management, this provision is applicable insofar as to fulfill the daily basic needs and the people’s smallholdings are obtained directly from water resources. It means that if the water for daily basic needs and the people’s smallholdings is obtained from distribution channels, the aforementioned principle of ‘water users shall pay the service charges for water resources management’ is applicable. However, this matter cannot be used as the basis to apply expensive costs for citizens whose fulfillment of their daily basic needs depend on PDAM through the distribution channel.

The amount of water resources management service charges has to be transparent and must involve the community in its calculation. Due to the fact that water is vital and directly related to human rights, the implementing regulations of the Water Resources Law must contain the obligation of the Regional Government to allocate the budget for the financing the water resources management in its Regional Revenues and Expenditures Budget (APBD).”


Conclusions and Recommendations
Indonesia has been implementing privatization policies in a number of areas, including basic services such as communication, education, housing, food, and water supply. Access to these services is directly linked to the enjoyment of basic rights including economic, social, and cultural rights, and the human rights to water, health, and housing.

Early indications clearly suggest that privatization has been unsuccessful in securing these basic services for all Indonesians.

In Indonesia, the critical question in analyzing the privatization of essential services is whether the policy is consistent with constitutional imperatives — especially those relating to socio-economic rights. Commodification and water privatization have limited the enjoyment of the right to water.

The Right to Water and Sanitation is guaranteed in the constitution. The State is obligated to take legislative and other measures within available resources to ensure the progressive realization of these rights. The constitutionality of privatization will depend on whether it contributes to the progressive realization of relevant socio-economic rights. Failure to satisfy either of these demands would mean that the policy is unconstitutional, and that the State is in violation of its constitutional obligations.

Privatization has become a dominant economic policy prescribed by financial institutions and other decision makers. It has been incorporated in various multilateral trade agreements with promises of improved efficiency in the delivery of and, ultimately, enhanced access to basic services. Similarly, private actors involved in providing services relating to socio-economic rights are obliged to ensure that they do not interfere arbitrarily with the enjoyment of the relevant rights. The possibility of holding such actors directly responsible by a court of law exists under the constitution.

For a developing country like Indonesia, where policies are dominated by the interests of multinational companies and supported by the international financial institutions, the State has became both a guardian and an enemy of its own people. There is a gap between texts of the constitution and the realization of citizen’s rights as the majority of democratic institutions and procedures continue to be more easily influenced by corporate lobbies.

Indonesia needs an alternative – and not just increased regulation. It is not enough to rearrange the system; transformation of the system is needed. Transformation can begin by adopting the perspective of the victim of the prevailing system, which will enable victims to understand and face reality, expressing confidence, and find an alternative articulation of political citizenship.

It is necessary to transform the current “Water Development” hegemony into water democratization by channeling the “issue” through political processes, and by sensitizing political institutions to the emergency of acknowledging water and sanitation as a human right.

Civil society organizations should work hand in hand to collect evidence that (1) the violation of the rights are done purposefully by showing that alternatives to avoiding the violation are available; (2) that there are patterns to be found in several instances of the violations of the right to water; and (3) many people are victims of these violations.

By doing so, civil society organizations might urge the Parliament to recognize that there have been serious and massive crimes against humanity so that cases can be brought before Human Rights Court.
Without doing so, lack of access to water, or even draught, are seen as natural problems or disasters. The incapability of the State to solve the problem will then be seen as technical problem, or at most as economic problem, which does not have any relation to the political will of the government, let alone the human rights of citizen.



References

Hadipuro, W.2010.Indonesia’s water supply regulatory framework: Between commercialization and public service? Water Alternatives 3(3): 475-491)

http://hrli.alrc.net/mainfile.php/indonleg/133/

http://www.mahkamahkonstitusi.go.id/putusan/putusan_sidang_eng_Putusan%20058-059-063%20PUU-II-2004.%20008-PUU-III-2005%20%28UU%20SDA%29.pdf

Benny D Setianto, the Right to Water in Indonesia: A Promising Failure)

Eve Warburton: http://tinyurl.com/82ny6cw

Preliminary Study: Water Exploitation by Bottled Water Companies in Sukabumi/Studi Awal Eksploitasi Air Oleh Perusahaan AMDK di Sukabumi: http://www.kruha.org/page/id/document_list/2/paper.html)

(1) Every person shall have the right to live in physical and spiritual prosperity, to have a home and to enjoy a good and healthy environment, and shall have the right to obtain medical care.

(2) Every person shall have the right to receive facilitation and special treatment to have the same opportunity and benefit in order to achieve equality and fairness.

(3) Every person shall have the right to social security in order to develop oneself fully as a dignified human being.


Tue, February 07 2012 12:09
Down the drain
Jakarta's disastrous water privatization deal has left the city drowning in debt.

Monday, February 06, 2012 -by Philip Jacobson

Jakarta is not exactly a modern masterpiece. Dirty and polluted, there is trash everywhere, and garbage floats about in open-air sewers. Overpopulated and congested, it regularly places highly on lists of cities with the worst traffic. Between the roadways are strange half-built pylons, constructed for an abandoned monorail project, rising up like metallic trees.

Perhaps nothing is more emblematic of Jakarta’s dysfunction than water. Since 1998, the final year of Suharto’s decades-long military dictatorship, the city’s water system, which is of notoriously poor quality, has been run by two private companies.

They are Palyja, which is a subsidiary of Suez International, a French utility company, and Aetra, which is held by a Singapore-based consortium called Acuatico. Aetra used to be owned by Britain’s Thames Water, which sold it to Acuatico in 2006.

Since Suez and Thames took over from  Pam Jaya, the public water authority, there have been calls to redraw or otherwise terminate their contract, which is said to be unfair. Non-governmental organisations have held protests and challenged the deal in constitutional court; officials have appealed to the companies themselves.

They have little to show for their efforts. To change anything in the contract, said Mauritz Napitupulu, who up until recently was  Pam Jaya’s president director, the two sides must “agree together”. Since the operators want to “maintain their advantage”, there has been “not much change”.

Currently, however,  Pam Jaya, with possibly more government backing than ever before, is making a renewed push to renegotiate, and it could be that this time around unprecedented changes are made. At play is a huge, rapidly mounting debt owed by Pam Jaya to the operators.

The debt can be traced back to 2007, which is the last time the water tariff, the amount Jakartans pay for piped water, was raised. Not long after that, Jakarta Governor Fauzi Bowo, responding to a public outcry against high prices, poor service and the prospect of yet another tariff increase, began refusing to allow any more rate hikes.

Prices have remained the same ever since. But only on the ground – the water charge, which is what  Pam Jaya is supposed to pay the operators for their services, kept going up as per the contract. Because the overall system is based on ‘full-cost recovery’, which means it must pay for itself entirely through fees collected from customers, a deficit, the so-called ‘shortfall’, began to arise.

At last count the shortfall was the rupiah equivalent of nearly $70m. If it continues at the current rate, it will reach nearly $2 billion by 2022, the year the contract ends. Jakarta’s annual budget is only slightly more than that.

The untenability of the situation for all involved – the operators want their money, and city officials don’t want to lose all of theirs – has spurred new talks. With Aetra,  Pam Jaya is close to a new deal. Last year the two signed a memorandum of understanding that saw Aetra agree to no more tariff increases, a reconfigured water charge and new performance targets.

Aetra can meet those targets,  Pam Jaya’s debt could be eliminated as early as 2016, according to projections, without Jakartans having to pay more. The idea is that Aetra, cut off from its lifeline of endless tariff hikes, would have no choice but to boost revenue by being more efficient.

“The main problem is mismanagement,” said Mauritz Napitupulu, who up until recently was  Pam Jaya’s president director. “The operators cannot control their organisation, and they want to compensate by increasing the tariff.”

With Palyja, however, talks have reached a stalemate. Palyja claims Aetra’s deal is too one-sided and says it cannot agree to something similar. Philippe Folliasson, Palyja’s president director, has said the only solution is for the tariff to be raised or for the government to subsidise the system, which it has always been unwilling to do.

Complicating things is that Mauritz, a career civil engineer who had been particularly outspoken against the deal and had used words and phrases like ‘pirate’ and ‘state within a state’ to describe Palyja, was recently and very suddenly fired by the city.

The more reserved Sri Kedari, who had served as  Pam Jaya’s technical director and worked closely with Mauritz, replaced him. Why Mauritz was removed remains unclear.

Officials in the governor’s office said it was business as usual, but Mauritz, who was brought on in 2010, still had several years left in his term, and others, such as Firdhaus Ali, the chairman of the Jakarta Water Supply Regulatory Body (JWSRB), have suggested the move was politically motivated. Mauritz himself said he did not know why he was dismissed.

It is a messy situation. But such water privatisation fiascoes are not limited to Jakarta. Throughout the world, the notion that the public’s water can be run by private interests has stirred heated debates. Proponents argue it can bring much-needed investment and spur efficiency; critics say profit-seeking companies put the bottom line above all else, which can be disastrous for the public good.

Among the former are international lending institutions like the World Bank and the International Monetary Fund, which have pushed privatisation and full-cost recovery through loan conditions to developing countries, including Indonesia.

The situation in Jakarta is among the more extreme cases of conflict over water privatisation, but it is not the only one where people have organised against it. High-profile privatisations in Manila, Buenos Aires, Atlanta and elsewhere have been ardently opposed.

The most-well known case of resistance happened in Cochabamba, Bolivia. In 2000, following a takeover of the city’s water works involving the giant American firm Bechtel, price hikes spurred a popular revolt, turning mass protests into violent clashes with police; there were rubber bullets and tear gas, stones thrown and Molotov cocktails, injuries and even death.

Many countries have no private water companies, and some, such as Uruguay and the Netherlands, have passed laws banning them. Others, such as Britain, have made privatisation a national policy. Most recently, in July 2011, Italian citizens voted overwhelmingly to overturn laws promoting the arrangement. One of those laws had stated that the price of water services would be decided on a guaranteed return on investment.

“This meant,” the non-governmental Food & Water Watch said in a statement, “that the private water companies could then charge as much as they wanted to guarantee a higher profit and further their view of water as an economic good instead of a common good.”

Indeed, a city’s water system is a natural monopoly, meaning that whoever controls it is not subject to normal market forces.

For companies like Aetra and Palyja, which enjoy sole dominion over the eastern and western parts of Jakarta, respectively, there is no competition, and thus no natural incentive to keep prices down or spend for better quality. That is why proper regulation is crucial. Without it, the operators could charge as much as they wanted.

Initially in Jakarta, there was no regulatory body. There was also no legal tender process for picking the operators, which was ostensibly necessary to ensure Jakartans reaped the benefits of the free market, the stated reason for privatisation.

Instead, wrote journalist Andreas Harsono in 2003, the privatisation of Jakarta’s water was “the story of powerful multinationals that deftly used the World Bank and a compliant dictatorship to grab control of a major city’s waterworks.In alliance with the Suharto family and Suharto cronies, Thames and Suez won favorable concessions without public consultation or bidding.”

The contract was later reworked somewhat following the aftermath of the Asian Financial Crisis, which caused the Indonesian rupiah to tank. In 2001 an independent regulatory body, the JWSRB, was set up.

Its role, however, was limited to making suggestions and providing mediation; it had no authority to force the operators or the city to accept its recommendations. Furthermore, its ability to monitor the companies’ finances was severely hamstrung by the fact that the operators were made immune from transparency laws that public companies must follow.

The contract also includes performance targets, but these have been changed over the course of the deal.

The most recent instance was in 2008, when unmet technical targets were made far less stringent. “They cannot do their job, so they make a lobby, and change the targets,” Mauritz said. The operators, for their part, claim the economic crisis and currency devaluation make it impossible to live up to the original terms.

Despite all this, outright termination is unlikely; the original contract was drawn up to include a $327 million penalty on the city for such an action, which it could hardly pay. More broadly, government officials fear taking the operators to court may scare off foreign investors.

That, perhaps, is the biggest difference between Mauritz and Sri; while Mauritz announced to the media that he would not hesitate to take Palyja to court, Sri speaks diplomatically of “sitting down together” and reaching a “solution through talking”. If that doesn’t work, he said, it will be up to the governor, who is entering an election year, to decide what to do.

Whatever happens, it seems, will depend on how hard Indonesia’s government is willing to push.


Wed, May 18 2011 16:06
WATER PRIVATIZATION IN INDONESIA AND THE CHANCE OF PuPs AS ALTERNATIVES

Hamong Santono*

Water Privatization in Indonesia
Drinking water supply (especially for urban areas) in Indonesia has been run since Dutch colonial era. For example, PDAM** of Semarang City was established in 1911, PDAM of Solo City was found in 1929, while in Jakarta, drinking water supply has been established since 1843. Initially, PDAM’s service coverage was still limited, only served some certain parts of a City. In the early of independence era, PDAM had been part of Public Works Department, and just newly in 1960s, PDAM had changed into Municipal Company.

In the early of New Order period, Indonesian development policy focused on agriculture sector and its supporting infrastructures such as irrigation networks and dams. By focusing on building infrastructures that supported agriculture sector, it directly decreased the budget used for developing clean water infrastructures, which most of them still relied on old infrastructures left by Dutch colonial era. It can be seen from total asset value of water infrastructure until the end of 2002 was Rp 346.49 trilion consisted of Rp 273.46 trillion (78.92%) for irrigation, Rp 63,48 trillion (18.32%) for dams, rubber dams, Rp 9.21 trillion (2.66%) for flood control and  beach preservation and Rp 0.34 trillion (0.1%) for raw water***.

Water resources policy in Indonesia is closely tied to the role of International Finance Institutions (IFIs).  Since the end of 1960s, International Financial Institutions (IFIs) have been playing significant roles in water resources and irrigation sector in Indonesia. The World Bank's first loan to the Government of Indonesia in this sector was the Irrigation and Rehabilitation Project worth US$ 5 million approved on September 3, 1968. Ever since that day for almost 34 years, there have been at least 23 irrigation projects funded by the World Bank. The largest amount was US$ 234 million for Irrigation Sub sector Loan Project approved in October 1987.

The role of the World Bank has been even more significant in urban water treatment sector. Starting with the Urban Development Project and Five Cities Water Supply Project, which were approved on September and October 1974, respectively, for 28 years the World Bank has funded 29 water supply projects in Indonesian cities. Even the Indonesia Urban Water Supply Sector Strategy, completed in 1997, was made by the World Bank team. 

Considering that the World Bank has put in total of US$ 2,870.9 million in the water sector projects, it has been interfering with Indonesia's water management, irrigation and urban water supply in every area possible. The concept of cost recovery was explicitly stated in the Second Water Supply Project, the main component of which was the construction of water supply facilities in several cities in Indonesia. This project was approved in 1979 and finished in 1986, and soon the concept of cost recovery was also used by other territorial financial institutions. To encourage the application of commercialization, comodification, and privatization, the World Bank is conducting an interesting role together with other institutions like the Asian Development Bank (ADB).

The absence of adequate investment in clean water sector and due to the poor management are some problems have caused the poor quality of supplying clean water in Indonesia. The failure of PDAM in supplying clean water has made the society, jointly or individually, supply their need for clean water themselves. Most of them who do not served by PDAM already used superficial wells to satisfy their need for clean water. Keeping pace with technology development, superficial wells later on mostly used by poor community, while other richer community choose to use deep wells to fulfill their need of clean water. As a result, indeed, poor community will use superficial wells that gradually getting worse in their water quality. If there is any other choice or if this poor community want to deserve better quality of drinking water, thus they perforce to buy from various alternative sources such as from water peddlers, in which they should pay tens or thousands times higher than the price for PDAM’s water.

This PDAM’s failure has two-side impacts: poor community should pay more to get clean water, and on the other hand, richer community are in race to exploit the ground water, where it should be a common good, common thing that should not be overexploited. Deep wells used by many richer communities have caused the emergence of externalities and it also has removed the opportunity for the government through its PDAM in giving cross subsidy. Ironically, to overcome this problem, PDAM is being offered to private sector (privatization) as a part of plan to make it as investment field that benefits many private investors.

Since the beginning of 1990s, private sectors have been involved in water supply in Indonesia. For example, BOO Bekasi in 1993, Batam Concession in 1996, and Jakarta Concession in 1997. Started from 1997, after the multi-dimensional crisis, the role of central government has decreased and also the ability in delivering drinking water supply to its people. In this period, there was a strong opinion that private sector has proper role in supplying drinking water to public.

Pressure from the World Bank with its terms and conditions proposed for loan given to Indonesian through Water Resources Sector Adjustment Loan (WATSAL) program resulted in a new water resources act that gives more legitimacy for the role of private sector in urban drinking water supply. Law No. 7, 2004 on Water Resources that replaced the Law No. 11, 1974 has harvested numbers of protests and ended by the objection of effort to improve or change this law by Constitutional Court followed by Government Regulation No. 16, 2005 on Drinking Water Supply System Development that has been expected by the government will smooth the entry way for private investments in drinking water sector in Indonesia.

Other pressure is, which has encouraged water privatization in Indonesia, the challenge to achieve 10 targets of Millenium Development Goals (MDGs) in 2015. To minimize half numbers of people who have not received drinking water service thus needs investment of Rp 23 trillion, while the government’s ability is only Rp 400 million/year. With private sector involvement, the financing gap to reach 10 targets of MDGs hopefully will be achieved.


Alternative for Water Privatization in Indonesia
Even though private sector has been taken part in water supply in Indonesia since 1993, but it did not mean that the water supply in Indonesia is becoming better. By looking at PDAM condition of having partnership with private sectors, does not show real evidence that privatization or even private sector participation (PSP) could improve PDAM’s performance.

Therefore, the search for alternatives for water privatization in Indonesia is highly important to be done. Some alternatives can be conducted towards water privatization are:

1. Public Management through strict control from society
Many weaknesses in water supply  given by public, in this case is the government, have been signaled due to the lack of control from society towards this management. Therefore, in some places, has been developed urban water supply model for public with large control from society, as being implemented, for example, in Cape Town, South Africa, and also Public-Collective Partnership in Cochabamba, Bolivia. In Indonesia, this model is feasibly possible. Within the PDAM’s organization chart, there is a Supervisory Body, which one of them is the society itself. Unfortunately, this mechanism has not or even does not used as well as possible by the society.

2. Ownership and Management Separation
This model is also known as functional fragmentation. In this functional fragmentation, local government only has limited responsibility, where basic service functions are delegated to autonomous local agencies. One characteristic of this functional fragmentation that has been fully applied is the service delivery totally separated from political interferes. This service supplier has total responsibility for the issue of financing and delivering this service.
By this model, fund collected by PDAM will be an enterprise fund, that is a fund used for the interest of this PDAM itself. In Indonesia, although PDAM has been a municipal company, in practice, funds collected by PDAM becomes general fund that can be used for any kind of interests in accordance with the demand of Local Government as the owner of PDAM.

3. Public-Public Partnerships (PuPs)
This model is widely campaigned by NGO groups as an alternative for water privatization. In many reports mention that this PuPs model has been held in Indonesia (North Sumatera), where PDAM Tirtanadi (Medan) in cooperation with some PDAMs of many residence in North Sumatera Province through Operation Partnership and Management Partnership. On 17 July, 1999 had been signed a partnership agreement draft between PDAM TirtaNadi and some PDAMs in Residence Deli Serdang, Simalungun, Toba Samosir, Mandailing Natal, Tapanuli Tengah, Nias and Tapanuli Selatan. This Operational Partnership will be run for 25 years. Other form of partnership between PDAM Tirtanadi and many PDAMs in many residence of North Sumatera Province is Management Partnership that has been conducted with PDAM in residence Labuan Batu and Dairi. Nevertheless, this model implemented in North Sumatera should be further overseen, because the public entity that becomes a partner (PDAM Tirtanadi) has role as a private company both in profit making and also to keep its little partner as a dependence of PDAM Tirtanadi.

Within this PuPs context, KRuHA tries to improve the Government’s understanding on PuPs. This effort is undertaken by preparing briefing paper on PuPs and then insisting the Government of Indonesia to insert this PuPs mechanism into their policies****.

4. Community-Public Partnerships
Basically, this model is also part of PuPs model. This type of model has been implemented by PDAM Solo (Central Java), where PDAM Solo supplies clean water infrastructure to public in form of water hydrants, and then public (the society) manage those hydrants comunally. This model sufficiently significant in helping poor community to get the access for clean water.


Conclusion
Globalization, budget limitness, poor quality of service, are some factors that leading water privatization in Indonesia. Nevertheless, this water privatization does not make problems of clean water in Indonesia being resolved. Water privatization does not proved significanly for improving better water service supply quality. Even in some Indonesian cities such as Jakarta and Batam, water privatization are decreasing in their quality.

Therefore, other management models as alernatives for water privatization must be developed. In the Indonesian context, there are some models that can be developed such as PuPs, Community-Public Partnerships, ownership and management separation, and service management through strict control from society. It is believed that these alternative models should not be exactly the same for each regions/cities in Indonesia becuase it would be highly depended on the public’s awareness, government policies both central and local and also political situtaions in each regions and cities.

_____________________________________________________

*     Coordinator of People’s Coalition for the Right to Water/KRuHA, Indonesia

**    PDAM is Municipal Public Water Company

***   Roestam Sjarief in Infrastruktur Indonesia, Sebelum, Selama, dan Pasca Krisis, BAPPENAS 2003

 **** The Government of Indonesia now is preparing National Policy on Drinking Water Development, where KruHA is striving through intervention by inserting PuPs mechanism as an alternative model for drinking water development in Indonesia.



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