tion processes in 1993, but from 1997 has faced a series of crises, including reg- ..... The water business is always political,â said Bernard Lafrogne, a Suez.
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Persistently Biased: The Devil Shift in Water Privatization in Jakarta Ching Leong Lee Kuan Yew School of Public Policy, National University of Singapore, Singapore Abstract This article operationalizes an underinvestigated element of the Advocacy Coalition Framework—the “devil shift”—on the controversial issue of water privatization. In doing so, it offers a methodological premise for investigating intractable opposition to policies that are politically salient and high in technical content. It uses the Q methodology on the case of Jakarta, Indonesia to uncover seven discourse coalitions within the anti-privatization groups. They confirm two key hypotheses within the devil shift, namely the underestimation of a coalition’s resources compared with their opponents and the exaggeration of opponents’ unreasonableness. Intriguingly, it finds that the “devil” is constructed in three different ways by this coalition—the profiteer, the Goliath, and the ineffectual governor. The narrative strength of the combination of these beliefs answers an apparent paradox in the devil shift viz that of rational actors persisting in unreasonable beliefs concerning their opponents. It also offers some specific solutions on how to deal with public hostility in water privatization in Jakarta. KEY WORDS: intractable policies, advocacy coalition framework, narratives, beliefs, institutional change, water privatization
Introduction
The devil shift is an intriguing but underexplored part of the Advocacy Coalition Framework (ACF) (Sabatier, 1988, 2007). The framework itself developed out of the need to study apparently intractable problems, where issues are normatively salient, conflicts tend to be entrenched, and where there is wide disagreement over goals and the interpretation of technical information. Here, where the policy stages heuristic becomes particularly limited as an explanatory vehicle for the policy process, the ACF posits beliefs as causal drivers of policy change, within the policy subsystem. The entire framework has three levels—the macrolevel of the socioeconomic and political environment, the microlevel of the individual actor and the mesolevel of community groups, which may be formal and organized, or loose and ad hoc. The ACF regards the different stakeholder groups as defined by their respective beliefs. The basic assumption is that policy participants specialize and seek to join coalitions in an effort to influence policy. These coalitions, in turn, “strive to translate components of their belief systems into actual policy before their opponents can do the same” (Sabatier, 2007, p. 196). In this, the ACF has a particular model of the individual—the actor is assumed to be a rational being, but bound by human limitations in terms of time, physical abilities, and emotion and psychological biases—including the distortion of stimuli and loss aversion (Munro et al., 2002; Quattrone & Tversky, 1988). These tendencies can often result in “devil shifts” where coalition members exaggerate the negative motives, behavior, and influence of opponents (Sabatier, Hunter, & McLaughlin, 1987). Review of Policy Research, Volume 32, Number 5 (2015) 10.1111/ropr.12138 C 2015 The Authors. Review of Policy Research published by Wiley Periodicals, Inc. on behalf of V
Policy Studies Organization. This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
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This article argues that advocacy coalitions in the ACF can be thought of as “story groups” or narrative compatriots. Beliefs are embedded in these story groups as story lines, built through particular frames or filters. The case of water privatization in Jakarta, Indonesia, provides a rich research subject for exploring the devil shift within this explicitly narrative conception of the ACF. Privatization of water utilities in developing countries has often been characterized as an economic necessity and social bane. Estimates from the World Bank indicate that developing countries need up to $60 billion for the water sector over the next 10 years (Haarmeyer & Coy, 2002); more recent studies put the figure closer to $200 billion (World Business Council for Sustainable Development, 2005). It is unlikely that governments in developing countries would be able to finance water infrastructure; in fact, it is expected that 23 percent of the world’s population would be served by private sector by 2015, compared with 7 percent in 2009 (Marin, 2009). However, privatization efforts have often been scuttled because of public hostility to these projects, a hostility located in the perceived clash of public interests with the profit motive of the private operators (Prasad, 2006; Spronk, 2007). World Bank data show that 8.7 percent of water and sanitation contracts signed between 1990 and 2010 in low- and middle-income countries were terminated, affecting 57 projects in all (Perard, 2012). Reasons for rocky implementation include controversial high price increases (Prasad, 2006) and problems of nonpayment by consumers (Harris, Hodges, & Schur, 2003). Such failures have obvious economic and social costs, but appear to garner great popular support with announcements of failed privatization efforts hailed by rhetoric such as “a great victory against IMF, the World Bank, globalization, and neo liberalism” (Hall, Lobina, & de la Motte, 2005). More curiously, other studies have found that antipathy against privatization persists even where economic assessments appear to be positive (Birdsall & Nellis, 2002). All these elements are present in the case of Jakarta, which began privatization processes in 1993, but from 1997 has faced a series of crises, including regulatory disputes, financial problems, and a recent lawsuit from a nongovernment organization (the Coalition of Jakarta Residents Opposing Water Privatization [KMMSAJ]) for its failure to deliver an adequate supply of potable water in Jakarta. The case is still ongoing at Central Jakarta District Court, while the government is now in the process of buying back the utility from the private operator, an exercise that is expected to cost about US$60 million (Wardhani & Elyda, 2015). But while ascribing failure to public hostility appears to be intuitively correct, doing so does not explain how such hostility can sometimes be overcome (as in cases of successful privatization). More importantly, this conception of pro- versus anti-privatization does not appear to describe the reality on the ground. Bakker (2007) points out that that anti-privatization narrative, by itself, appears to be rather thin, given the “limitations of the human right to water as a conceptual counterpoint to privatization, and as an activist strategy.” This article addresses these two gaps by exploring the issue of public hostility through the ACF; in particular, the extent to which the devil shift contributes to the intractability of privatization.
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Specifically, we ask the following: 1. Is the devil shift limited to the elites, or is it a cognitive and mental device employed more generally by members of the public in any intractable policy? 2. If the latter, can the devil shift be explained more generally too, as not just held by people who have a common ideology (as per the 1987 test), but by people holding a similar set of beliefs or a common narrative? 3. Does the “devil shift” harden over time—that is to say, does the opposing regime become more “evil” or does it soften, and under which conditions does either occur?
A Narrative Approach to Policy Sciences The possibility of building narratives into ACF is not novel; it has in fact been foreshadowed by three groups—the original ACF framers, critical choice theorists, and recent institutional scholars. The original version of the ACF held two key narrative elements—first, the notion of “perceptual filters” through which the actors of a system view the world; for example, in policy making on salient issues such as the privatization of water provision. In these cases, the same set of technical information can be perceived very differently by different people. ACF proponents further predict that these beliefs and behavior are embedded informal networks, which they call advocacy coalitions (Sabatier & Weible, 2007). This hypothesis, in its original form of raw beliefs as causal drivers of the policy process, has not gone unchallenged. For one, ACF has been criticized for being unable to explain why and how any particular change comes about. Fischer and Forester (1993), for example, accuse the ACF of making “contextless statements,” arguing that instead of actors in coalitions holding fairly stable beliefs, we observe actors saying very different things at different times. Rather than advocacy coalitions therefore, the authors argue for discourse coalitions where people share storylines rather than beliefs (Fischer & Forester, 1993). Fischer and Forester argue that beliefs can be located squarely in the domain of narratives of policy change in that it is not the knowledge in belief systems per se that holds the members of such coalitions together, but the “storylines” which distil facts and values basic to a coherent belief system (Fischer & Forester, 1993). Unlike beliefs, they argue, these storylines cannot be analyzed quantitatively but can only be understood qualitatively. This article disagrees fundamentally with this in the section on the Q Method. Second, narratives can possess a nonlogical structure. “Rather than a stable core of cognitive commitments and beliefs, they share story lines that often tend to be vague on particular points, and at times, contradictory on others.” Last, they are normatively constituted. “Storylines are not just about a given reality. While they typically give coalition members a normative orientation to a particular reality, they are as much about changing reality as they are about simply understanding and affirming it.” A narrative then is a reality that is constructed through a deliberative discourse.
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The updated form of ACF has met the second and third objections with a typology of beliefs—where core and policy beliefs are deeply held and fairly stable over a long period of time, and secondary beliefs are held to be more likely to change—given that they are narrower and perhaps less normatively demanding in nature, and are likely to be about such things as “detailed rules and budgetary applications within a specific programme” (Sabatier, 2007). This typology also accounts for the normative content of some beliefs, especially core beliefs such as values of equality and liberty. The notion of discourse coalitions so far appears to be complementary rather than competitive with the ACF. In fact, despite Fischer and Forester’s (1993) criticisms concerning ACF, a narrative understanding of the policy process can only make sense if it is located within the policy subsystem, the mesolevel, of a framework like the ACF. This theoretical “nesting” has been well tolerated by the pairing of ACF with other analytical approaches such as the Policy Analytical Capacity (Elgin & Weible, 2013), and the Narrative Policy Framework (NPF), first put forward in 2010 (Jones & McBeth, 2010), operationalizes this with an empirical investigation of narratives in the policy process, and the processes by which they influence policy outcomes. This article aligns itself with these two groups of scholars. Further, this paper is located within the larger theorizing work on narratives—discursive institutionalism (DI)—which argues that institutional change is the result of ideational change. Its key proponent, Schmidt (2008), writes that DI is a collective term for all “methodological approaches that take ideas and discourse seriously, by focusing on the substantive content of ideas and/or on the interactive processes that serve to generate those ideas and communicate them to the public” (Schmidt, 2002, 2006, 2008). Her work builds on past scholars who have thrown their weight behind the “ideational turn in policy” (Campbell & Pedersen, 2001; Hay, 2001, 2006). DI “explains change from the inside, by showing how real actors’ ideas in discursive interactions construct and reconstruct their choices and courses of actions” (Schmidt, 2008). It analyzes, not only cognitive and normative ideas (often in terms of explicit interests) but also internal motivations—that is, why people do what they do, the discourse resulting from communicative activities. This is an “internal,” actor-based point of view, much like ACF. With this internal point of view, DI no longer sees institutional change as being solely a product of exogenous events. Rather, it can account for change through ideational shifts, in collective conversations and “agents’ ideas concerning how they layer, reinterpret, or subvert those institutions and to the discursive interactions by which actors reach collective agreement” (Schmidt, 2008). This aligns with the ACF’s view that change can be accounted for by policy learning. In this article, I use a hermeneutic approach to argue that ideas impact the process of change in the way that they are interpreted by the policy community and embedded within existing narratives or frames (Lejano & Leong, 2012). The model of the individual in this article is the same as in ACF, a substantially different model from the rational choice theorists who postulate reasonable, rational humans, pursuing self-interested, utility-maximization goals (Schlager, 1995). ACF, however, makes explicit provisions for apparently nonrational behavior with a system of moral logic and normative core beliefs, as do scholars of social psychology, taking into account biases such as prospect theory of loss aversions (Harrison, 1976; Quattrone & Tversky, 1988).
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This model of the policy actor, as well as the foregoing discussion, has a special resonance for the devil shift. If we can accept narratives as a useful addition to the ACF, a natural puzzle arises—if indeed narratives are at the heart of the policy process, could the devil shift be a result of narrative choice? The review on private participation in water utilities above has shown us that public opinion is generally hostile toward operators; the poor outcomes in the case of Jakarta so far means the public perception is overwhelmingly hostile. This article locates itself within the anti-privatization coalition, testing to see if there are different coalitions within this large segment. If so, this study therefore informs the current debate in the water sector, challenging the crude division between the pro and anti-privatization coalitions. In the original formulation, the authors wrote: “political elites tend to see their opponents as ‘devils’, that is, as being more powerful and more ‘evil’ than they actually are” (Sabatier et al., 1987, p. 450). Meeting the falsifiability test, it has been presented as a collective of four hypotheses: Hypothesis 1: Actors will impugn the motives and/or reasonableness of their opponents while perceiving themselves to be reasonable people acting out of concern for the public welfare. Hypothesis 2: Actors will evaluate their opponents’ behavior in harsher terms than will most members of their policy community, while evaluating their own behavior in more favorable terms. Hypothesis 3: Actors will perceive their opponents to be more influential, and themselves to be less influential, than will most members of their policy community. Extent of distortion of influence and of belief varies with ideological distance. Hypothesis 4: The amount of distortion (or “devil shift”) is correlated with the distance between one’s beliefs and those of one’s opponents.
It is important to appreciate how apparently irrational the devil shift is—that people in highly adversarial situations choose to deliberately misrepresent their opponents in several ways rather than seeing them clearly without bias. Yet there are good psychological reasons for this misconception (Abelson, 1968; Festinger, 1957; Harrison, 1976, pp. 547–550; Wicklund & Brehm, 1976), among which are tendencies to paint oneself out to be the “good guys,” a reality incommensurate with the possibility of our opponents being equally good. Indeed, the longer they fail to be persuaded by our arguments, the more likely they are to be unsound and dangerous. As a result, in Sabatier et al. (1987), the devil shift predicts that actors will exaggerate the malicious motives, behaviors, and influence of opponents. Among the outcomes of the devil shift are polarized relations between rival coalitions, low communication levels, and intractable disagreements concerning major policies within the subsystem. While the devil shift offers high descriptive value and clearly falsifiable hypotheses, it has been largely overlooked as a research program (Weible, Sabatier, & McQueen, 2009). While this could be because of lack of interest on the part of scholars, another reason could be the lack of a formal theory incorporating the devil shift as a major factor within the ACF. A third could be the lack of a rigorous methodology to investigate narratives to the degree of falsifiability required. Recent developments allow us to address the latter two issues. First, there has been increasing use of narratives within the policy sciences, including the recent
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emergence of the NPF (Jones & McBeth, 2010) which works within the ACF tradition. This allows us to formally incorporate narratives and in particular the devil shift, into the ACF, as part of the collection of beliefs held by actors. Aside from its assertion that narratives must have a policy context or setting, the NPF has three structural qualities—it must have a plot or a story (as per Stone, 2001); it is populated by characters (villains, heroes, and victims); and it offers solutions as “moral of the story.” (See also Heikkila et al., 2014.) In this, the NPF fits naturally into the devil shift’s first three hypotheses: Hypothesis 1: Actors will impugn the motives and/or reasonableness of their opponents while perceiving themselves to be reasonable people acting out of concern for the public welfare (Hero Hypothesis). Hypothesis 2: Actors will evaluate their opponents’ behavior in harsher terms than will most members of their policy community, while evaluating their own behavior in more favorable terms (Villain Hypothesis). Hypothesis 3: Actors will perceive their opponents to be more influential, and themselves to be less influential, than will most members of their policy community. Extent of distortion of influence and of belief varies with ideological distance (Goliath Hypothesis).
NPF also asserts that narratives must be generalizable to be useful—the authors suggest nesting the belief systems within pre-existing theories such as Culture Theory (Thompson, Ellis, & Wildavsky, 1990) or as ACF’s original devil shift exploration did, in ideology (Barker & Tinnick, 2006; Sabatier et al., 1987). In this article, the investigation is nested in the large body of work on institutional change, in particular in DI, which argues that the interpretation of ideas is a causal factor in institutional change. The second development that informs this article is one of methodology. The traction gained by the Q methodology as a quantitative method for measuring subjective perceptions, allows us both to detect coalitions, as well as to analyze the discourses they hold. In this, we hold the different beliefs to be “discoverable” in the traditional sense of statements which people “strongly agree or disagree” with but also in a larger narrative sense—that these disparate beliefs can be grouped into different discourses which in turn illuminate the larger narratives held by different coalitions. In this article, coalitions are identified through the Q methodology. Because we are taking the original hypothesis which was about elite beliefs—and testing it against the general public—this is a new hypothesis that the devil shift could be a more general phenomenon than originally suspected—that it is not a bias suffered only by elite political actors but also by the public at large. If confirmed, this will move devil shift from the domain of elite beliefs to a more general assertion concerning policy communities. Second, we hope to unravel the paradox that had been identified by Sabatier et al. (1987)—viz, why do rational people persist in misperceiving their opponents, especially in such a way as to paint them to be more powerful than they really are? Earlier research argues that it could be a matter of ideological choice. Our narrative hypothesis builds on this to show that in addition to ideology and other normative beliefs, it is also a matter of hermeneutic choice. That is to say, the devil shift is a superior narrative form compared to the alternatives—of say, a reasonable, equally normatively defensible and worse, poorly armed opponent.
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Jakarta’s Water: The Privatization Journey Jakarta is the capital city of Indonesia, with an area of 662 sq km and a population of 9.9 million. Since 1922, Perusahaan Daerah Air Minum DKI Jakarta, or PAM Jaya, the government’s water company, has operated the water supply system (Lanti, 2006). The outflow, or the resulting waste water and sanitation, is under the purview of PAL JAYA (Perusahaan Air Limbah, or Wastewater Management Company). The strain on its water supply system has been evident since the early days of urbanization, which has been characterized by poor service and high losses. By the late 1980s, these losses reached breaking point—service coverage ratio was 23 percent and nonrevenue water rate was 51 percent (JBIC, 2001). By the 1990s, Jakarta was a mega-city, with a population close to 10 million—but less than half received water from the public supply. Clearly, significant capital expenditure was needed to remedy the situation, but it was money which the government did not have (Tutuko, 2001). In 1995, the decision was made to privatize Jakarta’s water. The city was divided in half, and by 1998, the government had contracted Jakarta’s water services to Suez (from France) and RWE Thames (from the UK). Both were multinational companies, taking the western and eastern sectors respectively, with 25-year concession contracts. Despite the apparent commitment to regulatory reform and global business norms, the contracts were awarded based on negotiations rather than an open competitive tender. One of the companies which won the contract was Londonbased Thames Water Overseas Ltd, which had formed an alliance with Harjojudanto, the eldest son of the president, who held one-fifth of the company. Thames defended its decision in strategic terms. “At the time, any company dealing with Indonesia would have to deal with almost some element of the Suharto family because of the way the Government was set up,” said Peter Spillett, head of environment, quality and sustainability for Thames (Harsono, 2005a). The second company, Suez, selected the Salim Group, then the largest conglomerate in Indonesia whose founder, Sudono Salim, was a close ally of Suharto’s. “Access to politics is essential. The water business is always political,” said Bernard Lafrogne, a Suez representative in Jakarta (Harsono, 2005a). On 1 February 1998, the assets of PAM Jaya, including the network and treatment plants and equipment, were transferred to the private operators on the understanding that they would be returned to PAM Jaya at the end of the concession period on 1 February 2023 (PALYJA, 2005). The privatization effort was initially supported by the World Bank, but when it realized that the contracts were to be awarded on a noncompetitive basis, it dropped the case for a follow-up project (World Bank, 1997, p. 177). Andrew McLernon, an urban development consultant for the World Bank, had said that the project suffered from “birth defects”—a lack of transparency; the failure to raise rates prior to the privatization; and the lack, initially, of an independent regulator (Harsono, 2005b). The negotiations for privatization went on for two years, from 1995–1997, when the issue was then brought up to the attention of the president himself. Subsequently, the minister took over the negotiations himself, travelling to London to
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discuss the issue with Thames Water. He also formed a negotiation team with the two companies, the Jakarta administration, as well as PAM Jaya. PAM Jaya representatives remained reluctant but despite their reservations, the contract was signed on 7 June 1997. There were good reasons for the public servants’ reluctance. First, the contract provides for a “water charge” to be paid to the water companies by PAM Jaya. This water charge is calculated based on the projections done by the private companies of an Internal Rate of Return (IRR) of 22 percent for the duration of the contract. In effect, it provides a guarantee by the government of an IRR of 22 percent, and protects the businesses against the difficulties and uncertainties of raising water tariffs. The terms of payment also included a “management know-how” fee to the parent companies. PAM Jaya in turn was supposed to have paid for this water charge from the water tariff which is paid by the consumer. These tariffs are collected by the private companies and deposited into an escrow account. In theory, the monies would be sufficient to pay for the water charge, as well as pre-existing debts and payments to the city government. In practice, PAM Jaya was to find that the tariffs collected was not even sufficient to pay the water charge, partly because of the difficulties of raising tariff rates. As will be seen in the discussion on the rate rebasing exercises, it is no easy matter to decide on the quantum as well as the timing of tariff increases. As a result, the government got deeper and deeper in debt. Second, the currency hedge, or compensation for exchange rate fluctuations and interest rate variations, protects the companies from any risk from foreign exchange or interest rate movements. That is to say, all risks from external shocks were compensated for by the government. This was to be a high pressure point for the contract during the Asian financial crisis, which shall be discussed later. From these two conditions, we see that most economic benefits were to be reaped by the private operators, while the risks borne by the government. A third contractual provision made the contract even less tenable. The regulatory model adopted was the French one—which did not have a regulator. The assumption was that the contract itself was sufficient to guide the conduct of business. The lack of an independent regulator meant that there was no one body to arbitrate competing interests, including that of public consumers. We see then that the contract itself, the main instrument by which the process of privatization was to be institutionalized, was arrived at by a flawed process, which in turn produced an outcome that was severely lopsided. With an assured level of profits, an off loading of business risks to the public, and no regulatory authority to answer to, the private sector appeared to have emerged with a winning deal for itself. But it was to be a pyrrhic victory. A month after the contracts were signed, the Asian monetary crisis began to unravel the Southeast Asian economies, starting from Thailand’s baht followed shortly by the Indonesian rupiah. The rupiah to U.S. dollar exchange rate went from 2300 in July 1997 to more than 14,000 in February 1998. As a result, while the water charge levied by the private operators (in US dollars) increased dramatically, the revenue to the government (in rupiah) fell correspondingly (Bakker, 2006). There was widespread unhappiness with President Suharto, as well as the disproportionately wealthy Chinese minority. In May 1998, rioters burned many
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Chinese-owned buildings and killed more than 2500 people in Jakarta. With riots spreading across the country, President Suharto, in the seat of power since 1965, was finally forced to step down. In the aftermath, a popular backlash erupted against the water privatization projects. During the unrest, foreign operators fled Jakarta, leaving the water utilities unattended and PAM Jaya to fill the void (Bakker, 2006). At the time, operations were disrupted by strikes and violence by the employees. Given the political salience of water prices during this time, the government instructed PAM Jaya to hold tariffs steady for the first three years of the contract. In the meantime, inflation had spiraled to 120 percent. As a result, PAM Jaya was squeezed on both sides—unable to increase tariffs on the one hand, while having to make grossly increased payments to the private operators on the other. Finally, it broke with government policy and increased tariffs three times, that is, 1 April 2001 by 35 percent, 1 April 2003 another 40 percent, and 1 January 2004 by 30 percent. News reports at the time showed the public unrest and fears over the drinking water supply—officials feared that the Jakarta water network might be poisoned, others predicted a cholera outbreak (Harsono, 2005a). As the crisis subsided, the foreign operators returned. By that time, the contracts had been cancelled by the locals; in return, the operators called on their respective governments to put pressure on the federal government. Under the threat of lawsuits from the large MNCs, the contracts were duly revived, despite high antiprivatization public feelings. The Suharto-linked Indonesian partners, however, were bought out and the names of the companies changed from KTA to Thames PAM Jaya (TPJ), and from GDS to PAM Lyonnaise Jaya (PALYJA). Under the new contract, targets for coverage and leakage reduction were relaxed to levels so low they were even below those achieved by the local water utility pre-privatization. Meanwhile, three years into the contract, the price of water in Jakarta more than doubled. These are further discussed in the section below. On 22 October 2001, a new contract was signed between PAM Jaya and the private operators. Both Thames and Suez established new companies: Thames PAM Jaya and PAM Lyonnaise Jaya, 95 percent owned by their parent companies in London and Paris, with the shares held by the subcontractors of these international companies. Under the new contract, the multinational companies agreed to give PAM Jaya joint control of the bank accounts. At the same time, the five service standards and five technical targets monitored by the contract were reset. The new contract also provided for a regulatory body, the Jakarta Water Supply Regulator Body (JWSRB), which was designed after a study funded by NERA of Australia in June 1999. Its terms of reference were “to protect the interest of the consumers and also the interest of the Parties in the RCA between PAM Jaya and the two concessionaires” (PAM Jaya and PALYJA, 2001, p. 1; PAM Jaya and TPJ, 2001, p. 1). In real terms, the main roles of JWSRB are to review tariffs and make proposals to the governor, to monitor the performance of the companies, and to mediate disputes between the contractual parties and customers. After the first three-year term, the government strengthened the independence of the regulatory body by specifying that the chairman and members of the Board be independent from the government, and publicly recruited.
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An important duty of the JWSRB, as in most regulatory bodies, is to resolve conflicts and balance the interests of three main groups of stakeholders. This mediation is required in the regular rate rebasing exercise, needed to keep up with inflation, and appears to be prima facie straightforward since such increases are regular, automatic, and set out both in the original contract and the RCA. But the first rate rebasing exercise in November 2003 demonstrates how intractable the problem can become, and how little real power the regulatory body held. In preparation for the exercise, ministry officials set up an Independent Combined Expert (ICE) team, including the JWSRB. In mid-February 2004, the ICE presented its results, setting out the increases expected. Under its terms of reference, the JWSRB can recommend a certain level of tariff, but has no power to enforce it—the governor still needs to approve this increase (Iwanami & Nickson, 2008). Not surprisingly, the Jakarta governor declined to implement the increases. The Jakarta government then consulted with the Ministry of Public Works, and a joint team was formed to try and forge an agreement for new water charges. Again, this attempt ended in failure. Finally, both parties came to JWSRB and requested mediation. In December 2004, PAM JAYA and PALYJA reached an agreement for a new rebased water charge. TPJ, however, refused to sign on. There was no agreement until end of November 2005, more than three years after the 2002 deadline. It took a high executive meeting of the Jakarta provincial government chaired by the governor, before the first implementation of a supposedly automatic tariff adjustment. In January 2005, both parties finally accepted the opinion of JWSRB on the rate rebasing. At the time of writing, the water services in Jakarta remain poor. Only about 43 percent of Jakarta has water connections, and those that do have connections only have water two-thirds of the time. Nonrevenue water is at 50 percent and what water that reaches the tap must be boiled before it can be drunk. In North Jakarta, where some of the poorest city-dwellers live, there are frequent reports of public health problems such as cholera. In recent years, there have always been increasingly widespread complaints concerning the quality, quantity, and regularity of water supply in Jakarta (Platts’ Global Water Report, 2002). In 2003, opposition to water privatization was intensified with the introduction of a bill that critics argued would enable privatization throughout Indonesia. Empirically, it is clear that private companies have not been able to turn the water provision situation around. The companies have achieved a 31 percent increase in water connections, and over 33,000 additional connections in the “very modest” areas, in a city of 10 million, around half of which are slum dwellers. The majority of the poor in Jakarta continue to buy drinking water from street vendors, and about 70 percent still lack running water. Clearly, privatization of its water utility has not brought Jakarta any closer to the promises of higher efficiency, increased investments, and better services. Newspapers report that public hostility against the private operators is growing. The Anti-privatization Coalitions
In the analysis of the discourse of privatization and the developmental context of Indonesia, privatization was an exercise that promised much-needed investments for large infrastructure. But it was also regarded as a politically sensitive issue that
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Table 1. Tensions and Attractions Opposing Coalitions
Explanation
Private/public Foreign/local Efficiency/corruption
Juxtaposition of profits and social need Juxtaposition of uncaring MNCs and local interest groups Juxtaposition of rational knowledge and political interests
pits the social needs of people against the profit motive of private companies. The main tensions are presented in Table 1. Discourse Analysis: Q Methodology
Q methodology has been increasingly used by policy analysts in recent years for its ability to “uncover and represent stakeholder positions and their interrelations” (Durning, 1999; Lynn, 1999; Pelletier, Kraak, McCullum, Uusitalo, & Rich, 1999). Durning (1999) argues that Q methodology is primarily employed by postpositivists in their analysis, because it goes beyond the usual quantitative tool bag. In this case, Q methodology can be seen as a tool to capture qualitative responses quantitatively. The Q uses factor analysis to reveal groups of people and the views they hold— the advocacy coalitions in the ACF. In narrative analysis, this shows the number of viewpoints that could exist in any situation—that is, the unique stories that different groups of people tell themselves. This is an important difference from ordinary regressions, which works to the correlation of traits (or disembodied characteristics), with factors showing clusters of these traits. In the Q, the factors denote clusters of people (Steelman & Maguire, 1999)— that is to say, each factor is a particular interpretive community of shared beliefs. Also, a Q represents a typology of perceptions, rather than a prevalence of traits. That is to say, unlike normal regressions “Q-analysis does not yield statistically generalizable results. Instead the results produce an in-depth portrait of the typologies of perspectives that prevail in a given situation” (Steelman & Maguire, 1999). This is useful to us in investigating the specific coalitions within the members of the public. This method was picked primarily for this empirical investigation because it allows us to appreciate the particulars of the case, without losing the generalizations that policy analysis requires. As pointed out by van Eeten (2001): “Q methodology condenses the variation of views, opinions and ideas into a set of basic positions, problem definitions or dimensions underlying the debate.” This method is based on the assumption that subjective viewpoints, presented from a self-referent position, can be communicated, however imperfectly. As such perceptions can be the subject of objective, quantitative analysis. Last, a word about the sample size. In defending a relatively small sample size of about 25, Barry and Proops (1999, p. 339) refer to a “finite diversity” of a particular issue. According to Brown (1980), there are only a limited number of distinct viewpoints that can exist on different topics. If a Q sample is well-structured, it must represent all these viewpoints. This allows us a reasonable basis to examine the social construction of the water policy at hand. In any case, this is an
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exploratory study, and a small sample size of about 25—the norm for the Q (Barry & Proops, 1990), was taken to be sufficient. The Q starts with some 189 raw statements from the years 1997 to 2008 that were gathered from online media, local newspapers, and documents. These were then reduced to 50, after culling the statements that were very close in meaning or repeats. These statements were then used for a Q sort by 25 water users from both sides of Jakarta (25 from west and 25 from the east). The responses to the 50 statements were correlated in a 50 by 50 matrix. The matrix was factor analyzed using the PQMETHOD software. The initial factor loadings were determined automatically by PQMETHOD, which extracted eight principal component factors. Varimax rotation was used and resulted in seven identifiable factors. Of the 50 respondents, 14 clustered on factor A, 5 on factor B, 5 on factor C, 3 on factor D1, 3 on factor D, 2 on factor E1, and 4 on factor E2. Factor loadings with eigenvalues greater than 1.00 were considered significant. A total of eight factors had eigenvalues greater than 1.00 (21.3806, 4.7781, 3.9960, 3.4338, 1.1989, 2.3122, 1.7617, and 1.4887). The Q sort of the first survey yielded seven factors, and the statements which support each factor are listed in Table 2. The factors are summarized in one sentence which captures the general discourse elements. Analysis of Key Factors: The Three Faces of the Devil Shift 1. The Profiteer: Factors: Privatization of its water supply cannot succeed for Jakarta (1) Rules are poorly designed (3)
Here the “devil” is painted as a grasping profiteer, and is clearly directed at the private operators. They were lambasted for not only failing to capture efficiencies but also for introducing new costs. There was a litany of dissatisfaction, with interviewees saying they “strongly agree” with the statements below: There is no one to complain to about poor water service because operators and PAM Jaya are blaming each other (45) The (PPP) agreements has resulted in 150 thousand Jakarta residents paying monthly bills without getting any clean water (47) Because of poor regulations and patronage between the investors and the government, the consumers must bear the cost of poor performance (48)
Empirically, we see that the contracts were to capture private sector efficiencies in two key ways—price and competition. The first was to have been captured through the process of selection of the operator, and through the use of key performance indicators and benchmarking to a competition. Because of the poor process of selection, the possibility of efficiencies at that stage had been foregone. There was also little pressure from the regulators for failure to keep to the performance indicators. Because water is such a politically salient issue, the narrative of the Greedy Profiteer is a compelling one. The devil shift hypothesis however has to do with whether the malice of the devil is exaggerated, that is, whether the devil is painted blacker than his due—we see some evidence that this is so.
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Table 2. Factors from Survey Factor Factor Factor Factor
1 2 3 4
Factor 5 Factor 6 Factor 7
Privatization of its water supply cannot succeed for Jakarta The government is partly responsible this failure Rules and institutions are poorly designed The private companies are concerned about profits rather than the demands of residents The government does not have the capacity to provide good water service to all residents Residents have to find ways to cope with the water crisis on their own Money or higher tariffs has not solved the problem
Factor Scores for factor 1 Factor 1: Privatization of its water supply cannot succeed for Jakarta Statements (Original statement numbering in parentheses) 1. Jakarta is a water impoverished city (16) 2. Rather than complaining about there not enough water, residents who do not have water from the pipes should start stocking up as much as possible so it is enough for one day (30) 3. The water distribution contract between 2 foreign companies is responsible for the bad quality of Jakarta’s water (17) 4. The public is bearing the burden of PAM Jaya’s debt to the private companies (42) 5. Privatization of water in Jakarta for the past 13 years has ignored the public’s right to water in Jakarta (41) 6. Both private companies have not kept their promises to improve performance (29) 7. The (PPP) agreements has resulted in 150 thousand Jakarta residents paying monthly bills without getting any clean water (47) 8. The quality of water service provided by the private operators is worse than PAM Jaya back then (4) Factor Scores for factor 2 Factor 2: The government is partly responsible this failure Statements (Original statement numbering in parentheses) 1. If the water service does not improve, there will be a big demonstration by the residents (33) 2. The government should take back the management of water from the private operators (38) 3. The blame does not lie with the operators alone but with the corruption within the management (39) 4. The Jakarta government and clean water operators should change the pricing structure so that it can reduce the tariff this essential commodity (28)
Factor 1
2
3
4
5
6
7
2 2
0 22
0 1
1 21
21 1
21 2
1 2
2
0
0
0
0
0
1
2
1
0
22
1
2
1
2
21
0
1
1
2
1
2
0
0
1
21
1
1
1
0
2
0
2
1
0
1
0
1
0
2
21
2
1
2
3
4
5
6
7
0
2
1
0
0
0
0
1
2
1
21
0
2
0
22
2
1
1
0
0
0
22
2
22
21
22
22
22
Factor
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Table 2. Continued 5. Private operators are diligent when it comes to asking the bill even though the water does not come out of the pipes (8) 6. Private operators have more technical and financial capabilities compared to PAM Jaya to make the water service as good as the level of service in developed countries (6)
0
2
21
0
21
21
1
21
2
22
1
0
22
22
Factor Scores for factor 3
Factor 1
2
3
4
5
6
7
0
0
2
0
0
2
0
1
0
2
0
2
1
0
0
1
2
0
2
21
22
1 0
1 22
2 2
1 1
1 21
1 1
21 21
1
22
2
21
1
1
21
22
2
1
1
0
0
0
21
22
1
0
0
0
0
1
2
3
4
5
6
7
1
1
0
2
0
1
1
0
1
21
2
2
1
2
21
21
0
2
2
21
22
22
21
0
2
0
0
0
0
22
0
2
0
21
0
22
22
21
2
0
0
21
Factor 3: Rules and institutions are poorly designed Statements (Original statement numbering in parentheses) 1. There is no one to complain to about poor water service because operators and PAM Jaya are blaming each other (45) 2. The (PPP) agreements has resulted in 150 thousand Jakarta residents paying monthly bills without getting any clean water (47) 3. Because of poor regulations and patronage between the investors and the government, the consumers must bear the cost of poor performance (48) 4. PPP in Jakarta is a failure (49) 5. The government and the operators should cooperate to improve the situation (46) 6. The contract gives excessive protection to the two private companies while consumer’s interests are ignored (50) 7. The blame does not lie with the operators alone but with the corruption within the management (39) 8. The conflict between PAM Jaya and the 2 private operators is becoming more confusing to customers (40) Factor Scores for factor 4 Factor 4: The private companies are concerned about profits rather than the demands of residents Statements (Original statement numbering in parentheses) 1. Private operators always ask for increases in water tariff (2) 2. Private operators cannot fulfil the water demands of Jakarta citizens (3) 3. Government does not want to be responsible for providing water to its citizens (9) 4. The subsidy for water is an excuse for the government to privatize water resources (11) 5. Water companies are profit-oriented and only financially-abled citizens are able to access clean water (13) 6. The private sector is a useful partner because the government has limited money for investment, the private sector is more efficient and can bring in new technology (18)
Factor
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Table 2. Continued Factor Scores for factor 5 Factor 5: The Government does not have the capacity to provide good water service to all residents Statements (Original statement numbering in parentheses) 1. Private operators cannot fulfil the water demands of Jakarta citizens (3) 2. Government does not want to be responsible for providing water to its citizens (9) 3. The (PPP) agreements has resulted in 150 thousand Jakarta residents paying monthly bills without getting any clean water (47) 3. Because of poor regulations and patronage between the investors and the government, the consumers must bear the cost of poor performance (48) 4. The private operators’ performance is disappointing (5) 5. The quality of water service provided by the private operators is worse than PAM Jaya back then (4) 6. Rather than complaining about there not enough water, residents who do not have water from the pipes should start stocking up as much as possible so it is enough for one day (30) 7. Cooperation with private operators have caused PAM Jaya (the public water utility) to lose money (1) Factor Scores for factor 6 Factor 6: Residents have to find ways to cope with the water crisis on their own Statements (Original statement numbering in parentheses) 1. Cooperation with private operators have caused PAM Jaya (the public water utility) to lose money (1) 2. Rather than complaining about there not enough water, residents who do not have water from the pipes should start stocking up as much as possible so it is enough for one day (30) 3. The government should take back the management of water from the private operators (38) 4. Privatization of water in Jakarta for the past 13 years has ignored the public’s right to water in Jakarta (41) 5. The public is bearing the burden of PAM Jaya’s debt to the private companies (42) 6. There is no one to complain to about poor water service because operators and PAM Jaya are blaming each other (45) Factor Scores for factor 7 Factor 7: Money or higher tariffs has not solved the problem Statements (Original statement numbering in parentheses) 1. The quality of water service provided by the private operators is worse than PAM Jaya back then (4)
Factor 1
2
3
4
5
6
7
0
1
21
2
2
1
2
21
21
0
2
2
21
22
1
0
2
0
2
1
0
0
1
2
0
2
21
22
1
0
0
0
2
1
2
1
0
1
0
2
21
2
2
22
1
21
1
2
2
0
0
21
0
1
2
2
1
2
3
4
5
6
7
0
0
21
0
1
2
2
2
22
1
21
1
2
2
1
2
1
21
0
2
0
2
21
0
1
1
2
1
2
1
0
22
1
2
1
0
0
2
0
0
2
0
1
2
3
4
5
6
7
1
0
1
0
2
21
2
Factor
Factor
615
Persistently Biased
Table 2. Continued 2. Rather than complaining about there not enough water, residents who do not have water from the pipes should start stocking up as much as possible so it is enough for one day (30) 3. The private operators’ performance is disappointing (5) 4. Cooperation with private operators have caused PAM Jaya (the public water utility) to lose money (1) 5. There is a water crisis in Jakarta (35) 6. Private operators cannot fulfil the water demands of Jakarta citizens (3) 7. The water distribution contract between 2 foreign companies is responsible for the bad quality of Jakarta’s water (17)
2
22
1
21
1
2
2
1
0
0
0
2
1
2
0
0
21
0
1
2
2
1 0
22 1
1 21
0 2
21 2
0 1
2 2
2
0
0
0
0
0
1
First, we see that cost reduction has been unevenly obtained, across countries. A review of all published econometric studies of water and waste production since 1970 (Bel & Warner, 2008), found that there is little support for the idea that privatization leads to cost savings. So, in a sense, the lack of cost savings is not unexpected. Second, it is not at all clear that the costs are borne by consumers alone. In 2010, the Jakarta Government already owed Rp 580 billion (US$65.54 million) to one of the private operators PALYJA. By 2022, the debt could possibly swell to Rp 18.2 trillion. The money is owed to the private operators, but given the unsustainable nature of this debt, and the increasingly unlikely prospect of recovering such debts, the private sector itself may see the need to change. As Hutchcroft points out, there is an increasing lack of tolerance for uncertainty among private operators. He writes: “Private sector interest nurtured within them are more likely to tire of the uncertainties of rents and see their interests increasingly in markets defined by general systems of rules and regulation” (Hout & Robison, 2009, p. 48). So this perception is misconceived because the private operators are bearing the risk and indeed are in debt to the tune of billions. Moreover, it is not clear whether this is due entirely to poor performance—we recall that the tariffs had not been raised as per the contracts—in this, the private operators would not be able to make the investments necessary to meet the key performance indicators (KPIs). But there is no recognition of this in the narrative of the Greedy Profiteer. 2. The Goliath Factor 4: The private companies are more concerned about profits rather than the demands of residents Factor 6: Residents have to find ways to cope with the water crisis on their own Factor 7: Money or higher tariffs have not solved the problem
One of the key reasons for privatization was that of fiscal prudence—the expectation that entry of a private operator would shift the burden of both investments and operational attention from the public sector. In the case of Jakarta, the government was still bearing some of the cost of water provision. Again, from a review of literature
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concerning water privatization, this conclusion is not unexpected—market-building efforts in the water sector are notoriously difficult (Finger & Allouche, 2002; Johnstone & Wood, 2001; Laurie & Marvin, 1999; Swyngedouw, 2005). Granted, the privatization argument becomes hard to sustain in the face of an operator that has not demonstrated its ability to reduce tariffs or achieve significant improvements in customer service. Here, the “Uncaring Goliath” could be a mix of big business and government elites. For example, Factor 4: “Private companies are more concerned about profits than the demands of residents” is not unreasonable, given the empirical reality pointed out above—tariffs have gone up, while service levels are still below what was contractually agreed upon. Residents, especially the urban poor, have had to find their own solutions, including digging wells and contriving illegal connections. The Goliath could also be the government—the statements which were “strongly agreed” include: Factor 4: The Government does not want to be responsible for providing water to its citizens (9) Factor 6: Cooperation with private operator have caused PAM Jaya (the public water utility) to lose money (1) Factor 6: Rather than complaining about there being not enough water, residents who do not have water from the pipes should start stocking up as much as possible so it is enough for one day (30) Factor 7: The quality of water service provided by the private operators is worse than PAM Jaya back then (4)
In this version, which pits an overweening Goliath against the man in the street, we see most clearly that the issue of privatization cannot be framed as a binary one of pro versus anti-privatization. There are at least three different sets of interests, no one of which is completely antithetical to another of the others; instead, there are numerous and complex ways by which they interact and intersect. In the devil shift however, the interests of the private operators (including the right to fair returns on investment) have almost been totally ignored. Additionally, the members of the public are painted to be “victims” as predicted by the NPF framework, hapless consumers who have to fend for themselves. 3. The Ineffectual Governor The government is partly responsible for this failure (2) The government does not have the capacity to provide good water service to all residents (5)
The statements which underwrite these factors include: If the water service does not improve, there will be a big demonstration by the residents (33) The government should take back the management of water from the private operators (38) The blame does not lie with the operators alone but with the corruption within the management (39)
This collection of statements identifies the government as the devil, and shows clearly that the costs of failure are clearly political. Corruption is highlighted as a
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Figure 1. Advocacy Coalition Framework for Jakarta
key factor. At the same time, the collection of factors in Factor 5 displays a wry recognition that the government lacks capacity to effect change on its own. Factor 5: Private operators cannot fulfil the water demands of Jakarta citizens (3) Government does not want to be responsible for providing water to its citizens (9) The (PPP) agreements has resulted in 150 thousand Jakarta residents paying monthly bills without getting any clean water (47) Because of poor regulations and patronage between the investors and the government, the consumers must bear the cost of poor performance (48)
This series of four statements captures perfectly the haplessness of the consumer coupled with the difficulty of realizing the original aims of the contract (Figure 1). Conclusion This article investigates the devil shift among the anti-privatization coalition of the water users of Jakarta, specifically testing the Hero, Villain, and Goliath hypotheses (H1-3; Sabatier et al., 1987). We confirmed all three in this empirical investigation, lending weight to the existence of discourse coalitions as well as validating the use of the Q methodology as a means of testing the ACF. Unsurprisingly, given the poor performance of the water utilities over such a long period of time (15 years), we did not find any coalition among the water users surveyed who were supportive of the operators. We found first that collectively, the
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anti-privatization coalition did commit a devil shift; second, that the devil appeared in different guises to different groups within the coalition. That is to say, the antiprivatization coalition itself has further subcoalitions—with the Q sort, we see that the devil presents as the Profiteer, the Goliath, and the Ineffectual Governor. Each of these was supported by different discourse coalition, which share a common set of beliefs. We did not test which of these were core, policy, or secondary—and this is a possible quick future research project—to review the typology and pervasiveness of each type of beliefs across the different coalitions. But the finding that the anti-privatization coalition sees the “devil” differently is an intriguing insight. As has already been pointed out by Bakker (2007) framing privatization as a binary concept (pro or anti), appears to be rather thin, given the limitations both of the human right to water as a counterpoint to privatization, and as an activist strategy. Our investigation presents an alternative—that the issue is one of different coalitions even within the anti-privatization camp. One obvious policy question would be: in which of the three personas is the devil most useful to policy makers who want a negotiated path to policy change? We have made some preliminary observations in the above section, arguing that the devil shift occurs most weakly (here, we mean narratively weak, rather than strength of conviction) in the “Goliath” collection of factors—in this guise, there is some allowance made both for the need for private sector funds, as well as the limited capacity of the government. This “devil” therefore holds the most links to a pro-privatization coalition. This holds some promise for breaking the deadlock between the pro and antiwater privatization coalitions. This finding need not be mere surmise. On July 2014, Indonesia elected a new president in the form of former Jakarta governor Joko Widodo (Vaswani, 2014). In Jakarta, the government is now considering taking back the water utilities under public ownership. The new governor of Jakarta is Basuki Tjahaja Purnama, who is a close ally of the president (Kapoor & Arvirianty, 2014). Under the ACF, we see that this change represents an external shock and will likely lead to policy change. Whatever ownership form Jakarta chooses however, this investigation into the devil shift will be useful in planning the way forward in reframing the “Goliath” narrative into one that is more hospitable to private-sector interests. Overall, this article has made two contributions to the devil shift hypothesis. First, it shows that the devil shift is not limited to political elites; since the original arguments draw from psychology there is no reason why this hypothesis should not apply more generally, but this article is the first to give empirical weight to this idea. Second, it also confirms the relative stability of the devil shift bias—hence the original hypothesis that the devil shift increases the intractability of issues. Conducting the same survey after a four-year interval, we show the devil shift of the private operator has persisted. Methodologically, we have shown how the Q method provides a useful empirical tool for both ACF and NPF scholars, as well as institutional theorists at large, to investigate narratives. Hopefully, further testing will allow us to place the devil shift more formally into the ACF, allowing a systematic study of the role of narratives in intractable policies.
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