Debate continues over services report

26 May 2003

As the window for consultation on the draft of the World Development Report 2004 (WDR), Making Services Work for the Poor, draws to a close, debate continues. In response to civil society criticism of the November outline, the March draft of the Report strikes a more nuanced tone on some of the more contentious issues.

The WDR team claim to have “noted” the importance of rights, changed the language of ‘client/policymaker’ to ‘citizen/politician’, and addressed more directly issues of political economy.

Not surprisingly, the role of the private sector still marks a key fault line. Critics contend that the Report posits privatisation as the default option when public services fail. Tim Kessler of the Citizen’s Network on Essential Services, argues that “non-radical reforms” should always be the first response to failing services.

The CEO of water multinational SAUR conceded to a World Bank audience in February 2002 that the water business cannot survive without subsidies and soft loans. “Unfortunately”, says Kessler, “the lending institutions have demonstrated a bias in favor of subsidies for private corporations, not public utilities.” The WDR team has responded that where the public sector is weak, private provision with appropriate regulatory oversight should be considered. Weak governments however, may find establishing regulatory institutions as difficult as providing the service itself.

In the electronic discussion on the WDR draft, a number of contributors have challenged the Report’s negative portrayal of public sector workers. Younous Mahadjir, a social and health workers’ union member in Chad: “Can I please have the names of those members of the Bank’s writing team who also have not been paid for long periods of time so that our members can approach them for advice on how to live if you are always at work but are not being paid?”

On the issue of decentralisation, it has been argued that the Report holds an overly optimistic view of local authorities and community-based service providers. Kessler challenges the draft’s assumption that local authorities are less prone to capture than central ones: “Some wealthier localities may well be cleaner than central government. But what about the poor and socially backward localities?” Belinda Calaguas of Water Aid has urged the WDR team to look more closely at ways to strengthen participatory democracy. The authors responded that they will attempt to do so.

The most glaring omission for many, however, is the failure to recognise structural limitations at work in global political economy. While governments, service providers and unions have to take some of the blame for public service failings, argues Calaguas “so does the World Bank.” “It is important for the WDR to look back at the history of adjustment, debt, etc. that forms the context for the failure of public services to serve the poor.”

Despite the broad appeal of the debates which this year’s WDR inspires, participation in the 6-week long e-discussion has been disappointing. Moderators of the discussion, Public World, had no opportunity to carry out advance publicity for the forum, having been drawn into a series of technical fiascoes.

e-discussion suffers from contracting-out of services

Private web developers working for the Bank were reluctant to make any changes without first re-negotiating contract specifics. Whether or not plans to outsource $10 million in World Bank IT work to India over the next twelve months will improve the situation is unknown. One such contractual oversight was apparently a multi-lingual translation facility, the provision of which had been agreed with the moderators from the outset. For non-English speakers this fact only compounded difficulties – translations of the overview of the draft were only available electronically in mid-May.

The draft will go to the Bank board in June and is scheduled for a 20 September global launch. The WDR team plans to solicit commentaries on the completed WDR to keep the debate going – interested individuals/organisations should contact the WDR team.

WDR: What about GATS?

Some observers are wondering if the WDR might amount to an academic flight of fancy if the ramifications of the General Agreement on Trade in Services (GATS) are not properly considered. Despite the issue being raised repeatedly in consultations with civil society, the WDR’s March draft was silent on the GATS issue.

Text for a box on GATS which had been written by Bank trade economist Aaditya Mattoo in January, was not released until late April. In it, Mattoo concludes that charges that GATS deprives governments of the freedom to pursue pro-poor policies are “unfounded”, arguing that government services are excluded from the scope of GATS and that the agreement does not prevent the pursuit of domestic policy objectives.

Peter Hardstaff of World Development Movement, rejected this analysis. “Locking-in liberalisation so that governments cannot change their policies in the future is the cornerstone of GATS. [This text] does not even address this issue. Instead, it caricatures NGO concerns, setting up straw men that are easily knocked down. It’s as if all our detailed analysis has simply been ignored.”

Mattoo concedes that the GATS negotiations “could lead to partial or inappropriately sequenced reform.” If market opening is induced in countries that have not developed regulatory frameworks and mechanisms to achieve basic social policy objectives, GATS “could conceivably make the poor worse off.”

WDR draft GATS text and comments