The Policy of Indiscriminate Privatization* is a Grave Danger to Independence

By Rifat Afeef**

The current policy of the government to handover basic national infrastructure (health services, sea and air transport etc.) on 'commercial basis' to foreign companies is a grave threat to the future security of the country. I am not saying that 'commercial basis' per se is wrong. After all, the progress (in tourism and fisheries) we see today is the result of private enterprise on commercial basis. All I am saying is that if we hand over our basic infrastructure to foreign companies in the name of privatization we are likely to face its bitter consequences in the not too distant future. These consequences will escalate over the years, finally resulting in the loss of our independence.

Externalities~:

In analyzing why this will happen and why we will lose our independence, we must realize that in organizing and implementing any project there are two types of results. The first type includes result(s) one expects and plans for in the project. The second includes the unintended results of the project. This second type of result is called an 'externality' in economics. With few exceptions externalities are harmful. Thus 'externality' generality means the unintended harm from a project or an economic activity –something not accounted for in the project costing.

There are two main types of externalities. The first type includes physical effects that one could feel. The other includes intangible effects such as socio-political changes. Because socio-political externalities are difficult to perceive, we don't even realize their existence. It is this type of imperceptible externality, I am saying, would inevitably result from handing over basic national infrastructure to foreign companies in the name of privatization, affecting the nation's future. Today we can only speculate on things that could –over the years –have negative consequences. In my opinion, the easiest way to undertake such speculation is to take a look at the history of countries, which had experienced such pitfalls, either on their own or under external pressure. So let me take some examples of both types.

The case of Palestine:

Even though many people don't know it, the Palestine issue, which plagues the Muslim world today, is a consequence of mistakes made by Palestinians themselves. Lack of foresight on the part of Palestinians allowed Jews to displace them from their own land, though I must admit that the Jews also had laid a treacherous trap. But Palestinians fell into this trap on their own, voluntarily. Had the Palestinians themselves not sold their land for greed allowing Jews to settle there, there would have been no chance for western support for a Jewish state (in the form of Balfour Declaration) and no chance for Jews to take up arms and expel the natives. (It's wise to realize that citizens themselves bear a large part of the responsibility in destroying any nation.)

The Case of Hawaii:

The history of the fiftieth state of the United States in the nineteenth century is also a tragic saga of reaping the results of own mistakes. Kamehameha who united Hawaii allowed United States companies to acquire land for pineapple and sugarcane farming. The companies increased their influence and finally during the time of Queen Liliuokalani, the third ruler after Kamehameha, American forces entered the Hawaiian capital, house arrested the Queen and annexed Hawaii in 1887. It became the 50th state of the US in 1959. (Since history is written by the victors the details of this may not be found in western references.) Today native Hawaiians make up less than 1% of the population. More than 99% are the descendents of Chinese, Japanese and Pilipino immigrants brought by American companies to work in their farms (just like Africans brought to the southern states of the US) and Caucasians who colonized the islands. The native Hawaiians (a very small minority) are at the bottom rung of the socio- economic ladder in terms of income as well as imprisonment rates, for reasons related to the security of the state. (It must be admitted here that when Maldives was under British rule, it suffered less external threats than earlier.)

Attempts at Advocacy:

It has been ten years since I have been trying to bring to the attention of the elected rulers of Maldives the fallacies of some government policies. I made several attempts between 1999 and 2007 to bring to the attention of former President Maumoon some aspects related to development that may not be commonly realized. But the result was no better than drawing lines on the sea. When Uz. Maumoon ignored my pleas, in April 2005 I brought to the attention of individual members of the People's Majlis the dangers of some of the government policies and their possible consequences on national independence. But the result was zero. In 2007, approximately one and half years before the presidential election, I presented to MDP leader Mohammed Nasheed some of my writings on development policy. When I met him accidentally two weeks later he even said they were good. However since his election as president my attempts to get an appointment with him have been in vain.

Consequently the purpose of this article is to bring directly to the attention of the people, my 10-year long plea on the dangers facing the nation, a plea which has been ignored by elected leaders and representatives. I am doing it now because I feel that if the government goes ahead with its plans to hand over basic infrastructure to foreign companies in the name of privatization, it would jeopardize our independence. I want to convey to the people the consequences of what has happened till now and what is planned ahead, because things would go from bad to worse, leaving the nation in a bottomless pit.

The theme of this article is that development policy is broad and interrelated. This article gives only a very brief glimpse of this. More details are given elsewhere in my writings, the most comprehensive of which is a letter I wrote to members of the People's Majlis on 1st April 2005. These writings may be obtained by visiting my website: www.rifatafeef.com.

Notes:

*Original Dhivehi article uses the term 'viyafaari usoolu' here.

**Translated from original article by Rifat Afeef, well-known development consultant.

~Side headings inserted by translator.

Privatizing Schools

Ministry of Education and Invest Maldives have announced opportunities for private investors in Maldivian schools. They told a group of 19 potential investors that four schools are up for grabs including Ameeru Ahmed and Ghiyaasuddin in Male, Afeefuddin in Kulhudhuffushi and Muhibbudin in Hithadhoo.

These four could evolve into elitist private schools like Eton or Doon Valley School, as Education Ministry hopes. But they could also flop like EPS, MES, Ameeru Ahmed and Nooraanee School, which were doing extremely well some years back. Do we know what went wrong with them and how to prevent such mishaps in the future ventures? The following are some issues worth pondering:

Affordability: Many parents pay as much as Rf 1500 rufiyaa per month per subject for private tuition. So they could afford higher school fees. That is the good news. The bad news is when it comes to paying school fees many parents consider even Rf 200 very high.

Quality: One has to pay good salaries to get good teachers. This can only happen if adequate fees are charged.

Government interference: Many private schools failed in the past because of government interference. Can the government resist the temptation to meddle in the new private schools, particularly when they would be operating in government buildings?

Discipline: This is the main problem with government schools. Can the private schools enforce discipline especially when many of their pupils will be the spoilt kids of rich parents?

Islamic Ministry to Privatize Friday Prayer Leading

In a revolutionary move, Ministry of Islamic Affairs has announced it will outsource Friday Prayer and Eid Prayer leading on contract basis. Up to now these prayers were conducted by imams employed by the Ministry, who have now been given notice.

The Ministry has not revealed the details of the bidding procedure, or how the bids will be evaluated. However it is likely that the Ministry will employ a prequalification process. Permanent Secretary Mohammed Didi indicated this when he said 'capable' imams will be selected. Even though Didi did not spell out what he meant by 'capable,' Shaikh Ibrahim Fareed should not be very surprised if he does not find his name in the list of 'capable' people.

As of now it is unclear whether the bidding is open to foreign imams from countries like Saudi Arabia and Egypt, who will face difficulty in reading the Dhivehi parts of the sermons. However, this should not preclude them totally, as it can be circumvented by using Arabic transliteration. With transliteration they would do considerably better than Maldivian imams of the Latin Khutuba era.

For those not familiar with 'Latin Khutuba,' a little explanation may be in order. During the 1970s President Ibrahim Nasir abolished Thaana script and replaced it with Latin script (basically the English alphabet.) As a consequence, Friday sermons were also changed to Latin script. Old imams had difficulty reading the sermons and some could not finish even by Asuru Prayer.

[For details of the news in Dhivehi click here]

Privatization: A Panacea for Poverty?

Can anyone think of any failed government enterprise that was privatized and became a success story in the Maldives? Dhiraagu? MWSC? Maldive Gas? Not many people agree that these companies were privatized in the first place. Further, on closer look the success of such organizations may not be related to privatization at all.

A former board member of Dhiraagu says the success of the company was mainly due to the management expertise of the foreign partner, which also had the advantage of a signed agreement with the government through which they were able to control government interference to a minimum. The exclusive monopoly on telephony also helped of course. It’s the same story basically with MWSC.

Will privatization help a company such as STO? A former STO board member doubts it. According to him the main problem with STO during his time was government interference, particularly from relatives of the former president. It was particularly difficult when two very close relatives were vying for influence and giving conflicting commands to STO.

From these examples it appears that the remedy for poor performance is reducing government interference, not privatization. This is exactly what Deng Xiaoping did in China. He did not privatize the village factories, which were the engine of the growth of the rural economy. In fact, they were almost all owned by local governments in Deng’s China. In the cities too, reforms in industry didn’t include privatization at all. What Deng did was cutting government influence from the factories and open them up to market forces. Perhaps we can learn something from his policies.

“It does not matter what color a cat is as long as it catches mice.” –Deng Xiaoping