Implementing privatisation programmes in the Gulf states is accelerating year after another. It started in the first decade of the twenty-first century, after they had introduced new economic visions, in which they sought to promote and increase the role of the private sector to drive the national economy forward by supporting economic competitiveness and market opening, along with attracting foreign investments and curbing governmental expenditure.
They also intend to change the role of the government, who plays the administrator in a rentier economy based only on recycling oil revenues, into a regulator of an economy led by the private sector, with various sources of income that focus on non-oil sectors and reduce the role of governments in backstopping the economy, in addition to implementing a tax regime that contributes to fiscal balance.
The impact of such governmental policies and privatisation programmes on the economy, society and the social contract has always been controversial.
In that regard, Muwatin interviewed a group of Gulf researchers and politicians who participated in the conference “Social impact of Privatisation in the Gulf Countries: Health and Education as an Example” held last November in Bahrain’s capital, Manama.
Private or public services? Which choice is better?
Bahraini economist Dr. Jassim Hussein believes that the privatisation of the pharmaceutical sector is one successful model, since it has contributed to the spread of pharmacies and facilitated people’s access to them.
“One of the many problems of governmental services is the absence of accountability in case things go sideways,” he added, “for instance, if municipalities offer poor services, would we be able to hold the government accountable? In the case of privatisation, companies under contract to the government are held responsible before both the society and the government at once, because they wouldn’t risk losing their profitable contracts.”
Whereas Dr. Ali Fakhro, the former Bahraini Minister of Health and Education, felt that “privatisation programmes helped establish a concept where anything private is good and anything related to the government is not,” as he put it.
“The government is responsible of preserving rights and providing essential services that cannot be compromised like education, health, housing, and employment,” he added, “the problem lies with governments not paying enough attention to service improvement but are rather concerned with security, defense and foreign policy only, while anything otherwise is handed over to the private sector, and the welfare state whose job was to provide decent work, housing and education no longer exists.”
Privatisation programmes helped establish a concept where anything private is good and anything related to the government is not
However, the public sector has been accused of corruption occasionally because of the absence of transparency, accountability and widespread nepotism.
“Corruption of the public sector is one of the many pretexts used to justify privatisation policies, but if we take a closer look, the corruption in the public sector is a result of the private sector’s attempts to benefit from the public one through bidding and facilitating corrupt transactions,” said the Former Secretary General of the “Kuwaiti Progressive Movement,” Ahmad Al Deyain, disagreeing with these allegations.
“The private sector is the true incubator of corruption. The public sector is nothing but an instrument to pass on the traders’ interests and privatisation will only lead to greater poverty, concentration of wealth in the hands of the oligarchy, and abandonment of the government’s social responsibilities towards society,” he added.
Reforming public services through promoting accountability and popular control
Citizens and residents of the Gulf states have been increasingly complaining in recent years about the poor governmental services, trying to reach out to government officials through social media and official channels.
However, the government doesn’t always respond to them. So could administrative reforms be a solution to the issues of public services, such as inefficiency? Or is privatisation the best way to overcome them?
“The private sector is characterised by a greater margin of accountability, since profit is the only indicator for measuring the efficiency of their services. In that respect, privatisation may come useful, but in other fields like education and health, it may cause problems, since real competition that would achieve the purpose behind privatisation, would be absent, not to mention that it creates inequality in society,” said the expert in administrative reform, Dr. Mohammad Al Kuwaiti.
He also emphasised that the absence of political accountability for administrative and financial infringements and corruption is the real challenge we need to focus on, in order to improve services provided by the government.
The issue of “political accountability” and “popular control” was frequently mentioned during an interview that Muwatin did with the conference parties, as researcher Mais Al-Farsi had stressed the need for a regulatory legislative institution capable of ensuring that privatisation programmes are carried out in the interest of society and that violators are held accountable.
“It is extremely dangerous to discuss privatisation in the absence of popular control and freedom of information, since privatisation programmes usually have a negative impact on marginalised groups, like people with low-income, individuals laid off from work, and poor segments,” stated Al-Farsi.
Privatisation as an instrument of inequality in society
Privatisation of services, and especially social services, such as education and health, often commoditises these services and turns them into profit-oriented projects, where the rich and powerful in society receive the largest share of resources and privileges, while the poor struggle to advance socially and economically in the absence of mechanisms that ensure equal opportunities among groups in society.
In Muwatin’s recent chat with the parties involved on the sidelines of “Social impact of Privatisation in the Gulf Countries: Health and Education as an Example”, Women and the working class stood out as the most vulnerable groups to privatisation policies among others who criticise these policies.
“According to global experience, the most significant effect of privatisation is the harm it will cause to the labour force when eliminating excess labourers; thus, by adopting privatisation, Bahraini women workers are expected to be the most vulnerable, especially that their unemployment rates are the highest reaching 86%, which means an increased rate of poverty among women,” said the social and political researcher Dr. Mona Abbas Fadel.
By adopting privatisation, Bahraini women workers are expected to be the most vulnerable, especially that their unemployment rates are the highest reaching 86%, which means an increased rate of poverty among women
Fadel also noted that the increase of poverty among women will weaken their competitiveness in the labour market on the level of training, skills acquisition and accumulating them on the long-term.
For his part, Dr. Ali Fakhro cited that the welfare state which should focus on providing decent work, housing, education, and health “no longer exists,” and that poor families are beginning to “sell all their properties just to get their children into private schools,” which puts them under great financial, social and psychological stress that rich families do not usually face.
The traditional social contract between the fixed and the variable
Privatisation policies also have political aspects that affect the political culture and the current social contract. The Gulf’s attempt to grant the private sector a greater role in the development of economy and the removal of subsidies on goods and services has raised further questions about the viability of the social contract, which is based on the power monopoly of central decision-making in exchange with distributing oil rents to the citizens in the form of salaries, services, and economic privileges that keeps them from engaging in politics.
The rentier system is rather a political decision than an economic one. However, adopting privatisation and taxation policies by the governments in the Gulf calls on the observers to question the sustainability of previous political “understandings” of how power and wealth are shared, and the rise of a general political culture which seeks to enshrine the principles of political partnership and democracy based on the notion of “no taxes without political representation.”
According to political and economic researcher Alawi Al-Mashhour, privatisation programmes “signify a shift in the current social contract between the governing and the governed in the Gulf, changing the previous understandings that revolved around the establishment of the “patriarchal state”, as he put it.
“Citizens in the Gulf today, are no longer living the decent life they used to live before; they are no longer able to secure their rights, or even gain access to decent work. They are starting to believe their government is obliging them to pay taxes while privatising services for the benefit of large traders and operators, without consulting the people. Today, we notice a growing awareness among citizens, of their rights under the slogan “no taxes without representation,” which in turn will accelerate the demands for political reforms and active participation in oversight, legislation and governmental representation,” he added.
For his part, the secretary-general of the Kuwaiti Progressive Movement, Dr. Hamad Al-Ansari confirmed that political culture is affected by privatisation projects, even in the countries that witness active political movement, such as Kuwait. He noted that privatisation has led to the “elimination of national employment.”
He also added that political culture among the labour force particularly, might witness shifts that will change the labourers’ mindsets from a culture yearning to make a change, to a culture seeking to consume. Thus, silencing the workers on any political corruption going on and turning them into mere employees who work and get paid only.
“The government’s job is to ensure that graduating students acknowledge their duty of citizenship, and not the need to work in this or that company,” said Dr. Ali Fakhro commenting on the political culture and the government’s role in formulating it.
