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Under the influence of globalization many countries have been compelled to privatize the provision of a number of State and public services. This trend towards privatization has been met with skepticism from the human rights world. In this study, the privatization phenomenon is analyzed with the aim of establishing whether it can be reconciled with the human rights obligations of States. The dynamic nature of privatization and the role of the various actors involved in the privatization process are examined together with the legal obligations stemming from international and human rights law. The study addresses the issue of accountability for the conduct of entities exercising governmental functions and discusses the need for a new paradigm for holding privatized entities directly accountable for human rights abuses. It also focuses on two case studies involving privatization in two different sectors: the alleged abuses of contractors from two private military and security companies in Abu Ghraib, Iraq, and the privatization of water in the city of Buenos Aires, Argentina. This study offers a paradoxical insight. One of the goals of privatization is to reduce the size of the State. However, the concerns for privatization's effects on human rights may lead to reaffirming the need for an active role of the State through regulation.