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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 Frameworkthe
devil shifton 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 coalitions 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 coalitionthe 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 levelsthe
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 individualthe actor is assumed to
be a rational being, but bound by human limitations in terms of time, physical abilities,
and emotion and psychological biasesincluding 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 worlds 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 timethat 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 groupsthe original ACF framers, critical choice theorists, and
recent institutional scholars.
The original version of the ACF held two key narrative elementsfirst, 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 beliefswhere 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 changegiven
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 Foresters (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 narrativesdiscursive 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 motivationsthat 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 ACFs 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 arisesif 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 ones beliefs and those of ones opponents.

It is important to appreciate how apparently irrational the devil shift isthat

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. 547550; 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 qualitiesit 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 shifts 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 usefulthe authors

suggest nesting the belief systems within pre-existing theories such as Culture
Theory (Thompson, Ellis, & Wildavsky, 1990) or as ACFs 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 sensethat 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 beliefsand testing it
against the general publicthis is a new hypothesis that the devil shift could be a
more general phenomenon than originally suspectedthat 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 alternativesof say, a reasonable, equally
normatively defensible and worse, poorly armed opponent.

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Jakartas 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 governments 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 pointservice 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 millionbut 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 Jakartas water. The city was divided
in half, and by 1998, the government had contracted Jakartas 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 Suhartos. 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 defectsa 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 19951997, 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 onewhich 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 Thailands 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 sidesunable 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 supplyofficials 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 itthe 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 situationthat 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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611

exploratory study, and a small sample size of about 25the 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 waysprice 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 duewe see some evidence that this is so.

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Ching Leong

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 Jakartas water (17)
4. The public is bearing the burden
of PAM Jayas debt to the private
companies (42)
5. Privatization of water in Jakarta for
the past 13 years has ignored the
publics 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
2

0
22

0
1

1
21

21
1

21
2

1
2

22

21

21

21

21

22

22

22

21

22

22

22

Factor

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Persistently Biased

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)

21

21

21

21

22

22

22

Factor Scores for factor 3

Factor
1

21

22

1
0

1
22

2
2

1
1

1
21

1
1

21
21

22

21

21

22

21

22

21

21

21

21

22

22

21

22

21

22

22

21

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
consumers 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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Ching Leong

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
publics right to water in Jakarta (41)
5. The public is bearing the burden
of PAM Jayas 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

21

21

21

21

22

21

22

21

22

21

21

21

22

21

21

21

22

21

Factor

Factor

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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 Jakartas water (17)

22

21

21

1
0

22
1

1
21

0
2

21
2

0
1

2
2

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 performancewe recall that the tariffs had not been
raised as per the contractsin 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 prudencethe 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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Ching Leong

concerning water privatization, this conclusion is not unexpectedmarket-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 abovetariffs 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 governmentthe 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

Persistently Biased

617

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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Ching Leong

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 subcoalitionswith 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 secondaryand this
is a possible quick future research projectto 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 alternativethat 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 factorsin 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 biashence 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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619

About the Author

Ching Leong works on water policies at the Lee Kuan Yew School of Public Policy,
National University of Singapore.
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