Interview: Fighting water privatization in Pakistan

Aly Ercelawn of Citizens' Alliance in Reforms for Efficient and Equitable Development (CREED) on opposing the privatization of Karachi's water supply. This article was edited by Yumna Siddiqi, from a taped interview of Mr. Ercelawn by the editor of the Upstream Journal.

Water is one of the most basic needs of people, yet clean piped water only reaches a fraction of Karachi's inhabitants. Many do not have access to proper wastewater collection and disposal. A few years ago the World Bank and the government decided in favor of privatizing water as part of a larger push to privatize services, without paying any attention to what citizens might want. My friends and I wanted to publicize the fact that the government was going to privatize water even though people did not know what the ramifications would be: what tariffs would be involved, what would happen to workers, or what would happen to delivery of services in the public sector. We had already seen a gradual decline in public education and health services, and it seemed water was the next step. So we came together and created CREED. CREED volunteers have regular jobs, however we contribute to CREED in whatever way we can, some in terms of time and others resources. There are many experienced and specialized CREED members from journalists and urban planners to doctors.

To briefly fill you in on the past few years: when we got to know the details and made a public fuss about water privatization, the Bank and the government backed off. But very recently we were leaked a memo by a visiting Asian Development bank mission that called again for water privatization as a condition for extending further financial assistance to Pakistan, not just in the water sector, but generally. Banks have this thing called cross–conditionality, so if you don't go by what they're saying, for example in the water sector, they won't give you money for, say, use in the health sector, and so on. We believe that both the World Bank and the Asian Development Bank, which work in tandem, are back again pushing hard to privatize water and other utilities. We understand that a North American firm is negotiating seriously with the city government to take over solid waste. Now if they were to do a good job at a decent price, there is nothing wrong with that. But if it is anything like the water privatization, it is going to be in a sense state privatization: we will pay through our nose and get nothing of the efficiency of the so'called private sector. There won't be equity either, so rich neighborhoods will obviously get their garbage collected and poor neighborhoods will be left as before. The electric company runs into massive losses every year, partly due to theft, partly due to people not paying their bills and so on, and that's high on the agenda of privatization. Now one particular reason that we are worried is that there is an increasing obsession on the part of the government with privatization and a constant tirade against the supposedly corrupt, completely inefficient public sector. Privatization is a magic wand: all these multinationals will descend into Pakistan and turn it into a kind of heaven, at least for the privileged. The Bank wants the irrigation system to be privatized, the Bank wants the health system to be privatized even further, and it wants to privatize the power sector in general.

What the government is doing with oil and gas drilling shows how reckless it is. It has given a long term concession to multinationals to drill for oil and gas. This concession is smack in the middle of a protective natural park, protected in the sense that is on the list of parks that the United Nations had been notified of. By law, nothing is supposed to happen in terms of commercial activity inside the park. When CREED, amongst others, went to court against Shell and other companies involved in this and the government, the government simply changed the law. The judicial system did not respond to this infraction by saying 'no– no you do not do this sort of thing, you don't change things in midstream'. The government doesn't care really, despite protests from the ICU, protests from other environmental agencies.

Why I say this is an illustration of a reckless obsession with privatization is perhaps best seen from yet another example: fisheries. The government recently decided that they would open the coasts again. The wastage from industrial fishing is enormously high; they'll keep a kilo and throw away four kilos of perfectly edible fish, well suited for the local market. The government has decided that it wants to earn foreign exchange and industrial fishing is all multinational fishing. Local fisherfolk don't have those sort of boats or that capacity to ravage the seas. Canada won't be involved in this because Canada doesn't come this far. But we will be seeing a lot of Spanish boats––they are one of the worst poachers––and the North and South Koreans, and the Chinese. The Chinese are very keen on expanding their fishing industries in Pakistan. In fact, they are going to build a boat that will give them a virtual monopoly over the coasts for many years. So fishing property is basically what we will see due to privatization in Pakistan.

Unfortunately, all of this is done behind closed doors, without public debate. We'll have to heat things up again, but now with a military regime there are many more restrictions on progressive action than there were a few years ago. We still have a relatively free press but assembly is totally banned which means that we can't have demonstrations against what is happening. CREED still managed to raise a bit of a fuss at a recent so-called consultative meeting organized by the World Bank on Pakistan development strategy, but that is not going to make a difference as long as the government is keen to accept the agenda of the World Bank. One particular reason that I am worried about my own city Karachi is that the minister of finance for the province, an old colleague of mine from the university, came here directly from a very senior position in the privatization department at the World Bank, and he is holier–than–the–pope about privatization. The elite in countries like Pakistan stand to gain the most from privatization because either they are going to have direct contacts or they are going to be consultants or in some way be involved in the plunder and squander. Then there are people like my colleague whom I just mentioned––he is evangelical about privatization.

The government points to the massive losses that the public sector makes; and the World Bank stresses quite correctly that it is the poor who bear the burden of these public sector losses because we have a very regressive taxation system. So far so good. But I don't believe in the next step of their logic: that the only thing that we can do is to bring in the private sector, and basically substitute private profit for public corruption. We have a military government, and the army believes that all civilians are totally corrupt. I don't know why they don't extend the same argument to people who speak a different language. I mean a French firm, or a Brit firm, or a Canadian firm is somehow thought to have a degree of honesty working in Pakistan that Pakistanis never could have. I don't believe that anyone is more honest or less honest, it is just the environment that people have to work in. In the absence of any kind of political or economic accountability to the citizens, anyone who comes in behaves the same way.

We'll end up with fake privatization. Privatization is supposed to give more choices and reduce prices. Think again about the water privatization proposal. The World Bank proposed that the government guarantee a profit to a private company to do the job. If you guarantee profits, you are not creating an efficient private sector, you are just rewarding a monopoly. The World Bank consultant said that no one would come to Pakistan unless you promised them a profit, so the government agreed. Now if you guarantee those kind of profits and salaries to the public sector, they would do very well too. Our main problem is a lack of public funding and the reason for that is that an enormous share of the budget, over 1/3 of it, goes to the military. Another 1/3 or more goes to debt servicing and of course what you have left is for running the government. Here's where the bank's logic comes in: if you need money, the only way you can get that money is through the private sector.

To summarize what's involved here, there is the government, which is very insecure about it's own capacity for reform, and the citizens, who are incredibly cynical about the public sector. A lot of poor people whom we wanted to join us would say 'well things couldn't get worse under privatization,' referring to how corrupt the private sector was. That degree of cynicism comes from dealing daily with massive injustice, and I use that word very carefully because I have been working on understanding the scale and the intensity of forced labor in Pakistan. I have spent almost an entire year working with people who were chained and abused in various ways and this has been happening to millions of people for decades. All these injustices in Pakistan make people cynical about reform, which is a challenge for us and makes working for CREED interesting.

I'm glad to talk with you because you represent the social justice movement and we are very much with you. Social justice if not today, then tomorrow. If not tomorrow, then for our grandchildren.