Mr. Marcel Massé

Executive Director for Canada

The World Bank

1818 H Street, N.W.
Washington, DC 20433 U.S.A.

                                                            May 12, 2003

Dear Mr. Massé,

On behalf of Halifax Initiative, I’d like to thank you for the opportunity to meet with you to discuss issues of common concern during last month’s Spring meetings. At such a busy time, your efforts to make yourself available to us are especially appreciated.

Thank you also for forwarding the statement you made to the Board on December 3, 2002 on the Bank’s Water Resources Sector Strategy paper. We commend you on your assertion that water is a fundamental right and that its commodification puts the poor at risk. The concerns raised in your statement mirror many of ours including the affordability of and access to water for the poorest as well as particular shortcomings in the Bank’s strategy including: the lack of linkage to the PRSP process, governance weaknesses, overemphasis on middle income countries and private-public partnerships, fragmented approach to water issues overall, inconsistencies with the World Commission on Dams recommendations and the absence of ongoing supervision and evaluation plans. We would be very interested to know how Bank staff has responded to your statement and where support for your concerns resides among other Board members.

In response to your query regarding the conflict of interest inherent in the Bank funding both the promotion of water privatization and the privatization itself, I refer you to research conducted by Nancy Alexander of Citizens’ Network on Essential Services:

For instance, the Bank’s private sector affiliate, the IFC, is introducing private water supply services in Nigeria’s Lagos State. Lagos State has about 96% non-revenue water (NRW), so the question is not whether reform is needed, but rather what kind of decision-making should steer the process of reform.

DevComm (the Bank’s Development Communications Unit) worked with the Mobilization and Publicity Unit of the Lagos State Water Corporation to develop an IDA-financed $500,000 public communication strategy, which is being implemented from February 2001 to January 2003 to create “a political environment supportive of private sector participation among key political stakeholders” – first among government departments and then among the public. (“Public Communication Program for the Lagos State Water Supply Private Sector Participation Project,” Case Study, World Bank, May 2002.) Posters declare “Let’s Join Hands to Make Private Sector Participation Work for Us.”

By being party to these loans, the people of Nigeria borrow from one part of the World Bank Group (IDA) to convince themselves of the virtues of private water supply facilitated by another part of the World Bank Group (IFC).

It is unusual that the Bank’s Board has not declared this kind of arrangement as a conflict of interest. The Bank’s role is explicitly that of marketing a particular outcome (of which the Bank, itself, is a beneficiary) rather than fostering a genuine public debate about how urgently needed services can be improved.

I have attached the full paper, “Who Governs Water Resources in Developing Countries? A Critique of the World Bank’s Approach to Water Resources Management” (June 2002) for your information and would be very interested in following up with your office on the issues raised by it.

We have also become aware, through the International Consortium for Investigative Journalists (ICIJ) (http://www.icij.org/dtaweb/water/), of the Buenos Aires water privatization in which a senior World Bank water manager was seconded to a French water consortium to negotiate rate increases in Buenos Aires while continuing to receive a Bank salary. Upon his return to the Bank, he became senior water and sanitation specialist for Latin America and team leader for a $30 million loan to Argentina. We would appreciate any further information you are able to gather on this potential conflict of interest.

In closing, I would note that the ICIJ research contributed to the recent CBC Radio special series “Water for Profit” (http://www.cbc.ca/news/features/water/index.html) and underscore the extent of public awareness and increasing concern regarding the role of the World Bank in the privatization of water globally. Water is a key issue at the Evian G8 Summit in June and its privatization a key concern for Canadians who will participate in Halifax Initiative’s upcoming cross-Canada tour “Private Interests vs. Public Goods”.  The right to water is a deeply held belief among all citizens, and one that will not easily be dissuaded by corporate interests.

We are very encouraged by your critical interest in water at the World Bank and look forward to Canadian leadership at the Board to address the concerns we share about the Bank’s role in water privatization.

Sincerely,

Robin Round

Policy Analyst