Throughout the world the privatisation of public services is being rejected because it has led to under-investment, price hikes, profit taking and inefficiency. However, undoing privatisation when it involves foreign ownership can run into serious problems.
Tucked into numerous international trade treaties are “Investor Protection” provisions that give foreign companies the ability to sue the government when trying to “take back control”. This type of thing is known as investor-state dispute settlement (ISDS) and can result in sky high claims for compensation. It makes it difficult to return privatised agencies to local, public control. In public control energy, water or transport agencies tend to make profits which can be reinvested in the community via improved employment and infrastructure instead of private profits. Public services also tend to outperform private ones in many areas.
This investment protection gives privileges to foreign investors with no enforceable obligations (creating jobs, protecting worker’s rights, upholding environmental protections, universal access). The ISDS tribunals usually consist of 3 for-profit arbitrators who put private investor rights above public interest and where governments cannot appeal a verdict. Consequently governments who sign these loose their democratic rights to regulate and control. ISDS therefore, is an assault on democracy, violates numerous civil, political, economic, social and cultural rights and subverts the rule of law.
Governments may be prevented to take action to bring these agencies back into their control due to worries over the size of any claim.
There are grassroots movements growing against these deals being agreed, like the fuss over TTIP recently. These movements help provide a vision of the future, of socially and environmentally just trade regimes where public services are controlled by democratic, not for profit institutions, citizens and workers.