Neo-liberal Development Policy in Asia Beyond the Post-Washington Consensus Toby Carroll

Neo-liberal Development Policy in Asia Beyond the Post-Washington Consensus

Toby Carroll

International NGO Forum on Indonesian Development

Neo-liberal Development Policy in Asia

Neo-liberal Development Policy in Asia Beyond the Post-Washington Consensus

TOBY CARROLL

Published by: INFID (International NGO Forum on Indonesian Development) Jl. Jati Padang Raya Kav. 3 No. 105 Pasar Minggu, Jakarta 12540 INDONESIA Email: infid@infid.org Website: www.infid.org Telp : +62 - 21- 7819734 Fax : +62-21-78844703

Table of content
Introduction: Neo-liberal Development Policy in Asia beyond the Post-Washington Consensus 7 Working on, through and around the State: the International Finance Corporation and the Deep Marketisation of Development in the Asia-Pacific 19 The New Politics of Development and Development Policys Big Private Sector Push as Response 53 Social Development as Neoliberal Trojan Horse: The World Bank and the Kecamatan Development Program in Indonesia 63

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Journal of Contemporary Asia Vol. 42, No. 3, August 2012, pp. 350358

Introduction: Neo-liberal Development Policy in Asia beyond the Post-Washington Consensus

TOBY CARROLL Centre on Asia and Globalisation, Lee Kuan Yew School of Public Policy, National University of Singapore, Singapore ABSTRACT This paper introduces a special issue on contemporary neo-liberal development policy in Asia. The paper contextualises the current state of neoliberal development policy as having moved beyond two earlier phases: one that intended to limit the state and unleash market forces and, subsequently, one that was oriented towards remaking the state in an idealised liberal market image. While building o its forebears, contemporary neo-liberal development policy what we describe as market building displays a new array of foci and modalities that not only continue to target the state as a site of reform (though often in novel ways) but which also regularly work around the state to directly cultivate private sector activity. Moreover, a product of its times, market building incorporates an increased emphasis upon risk and risk management, with risk to programme implementation and capital now central concerns within the neo-liberal agenda. However, just as with earlier phases of neo-liberalism, the market-building agenda is both subjected to and produces particular patterns of politics. As the papers in this special issue show, per-haps nowhere is this reality more interesting than in Asia, where new and emboldened patterns of accumulation are evident and, where too, nation-states are no longer as materially dependent on organisations such as the World Bank as before. KEY WORDS: Market building, neo-liberalism, post-Washington Consensus, Washington Consensus

This special issue of Journal of Contemporary Asia brings together six contributions that examine aspects of the latest neo-liberal eorts to instantiate market relations: attempts we refer to as market building.1 Each contribution looks at instances of market building in Asia by multilateral and bilateral agencies in the name of development. Each also takes seriously the notion that the various market-building measures are part of a new push towards constituting capitalist social relations, in a particular neo-liberal image, on a truly global scale, and,
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further, that this new push demands fresh critical analytical attention (see Cammack, 2009; Cammack, 2012; Carroll 2012). Operationalised via the institutionalisation of competitive market discipline to new locales and, where it is already present, to new degrees, market building is rapidly, though often surreptitiously, transforming notions of development. Here, the inculcation of pro-private sector regulatory consistency, the increasing importance placed upon the management of particular conceptions of risk, the broad-based advocacy of public-private partnerships, and the dramatic increase in the support of financial intermediaries to create micro-, small- and mediumenterprise sectors, all feature prominently within the market-building push. More than simply comprising reforms to let market forces work or build institutions for markets, the elements under the spotlight in this special issue demonstrate a more all-encompassing technocratic agenda being operationalised in the name of development. Crucially, despite some sounding the death knell of neo-liberalism of late, this new phase has only received increasing support within the present era of permanent economic emergency (Zizek, 2010). For those involved in market building in the name of development, the incomplete constitution of capitalism in a particular image requires energetic remedial attempts to push forms of knowledge (via technical assistance), build particular institutions and foster whole new spheres of private sector activity via risk mitigation and new instruments of financial support (often directly to the private sector). Not simply constrained to state-oriented (pro-market) reform, as in the not-too-distant past, these new eorts reflecting shifts in the global political economy and a concomitant new politics of development (discussed below) work variously on, through and around the state, with each reform component seemingly referencing and complementing the other. Crucially, while undeniably neo-liberal, new market-building eorts go much deeper than earlier phases of neo-liberal development policy a reality ill-suited to analyses stuck on simplistic state/non-state ways of understanding neo-liberalisms form and its influence. If the Washington Consensus and structural adjustment strategies of the 1980s were all about reducing the state to liberate the market, and the subsequent post-Washington Consensus of the 1990s-early 2000s was about bringing the state back in to support the market, market building as a development project under late capitalism is to play on an en vogue development notion a more whole of society approach that fuses the public and private within a heavily institutionalised pro-market order in which risk to capital is prioritised and mitigated, and where risk is increasingly shifted to communities and individuals. While this push is not simply diused from a transnational/suprana8 Toby Carroll

tional state to domestic settings in the underdeveloped world (politics makes realising the idealised end goals of market building impossible), a discernible and more complicated and contested reality is now coming into focus. This reality is redrawing the relationship between state and citizen and enmeshing both within a globalised profit-seeking/accumulative/ competitive logic that is sold on the basis of yielding improvements in objective material conditions but which actually yields highly uneven results. As a geographical and political space, Asia makes a perfect case for conceptualising and investigating processes of market building under late capitalism, not only because the elements under investigation are being deployed in the region but also because Asia plays host to 60% of the worlds population, the majority of the worlds poor, and simultaneously and relatedly is central within global production and consumption chains. Further, analysing market-building measures in the context of Asia also necessitates both implicit and explicit engagement with the various rise of Asia/multi-polar world theses that are now popular. On this last point, the various contributions to this issue demonstrate that while Asia may well be becoming an important pole within a new world, especially in terms of growth (Cammack, 2012), what this actually means (along with the concept of markets itself) needs to be unpacked to reveal the precise bases and dynamics of growth in the region, the operating patterns of governance and the struggles and outcomes associated with each of these. The processes and actors addressed by the set of papers in this special issue show well the way in which a massive upheaval is underway whereby structures of governance and social relations more broadly are deemed catalysts or impediments to deepening particular patterns of growth and accumulation a process which entails significant struggle as social forces variously resist, assist and/or capitalise upon market-building measures. Put another way, while the new market institutionalising modalities under investigation are the concrete outcomes of an idealised notion of the social, political, and economic order under late capitalism, the construction and function of these modalities is highly contested within jurisdictions, regularly yielding unstable and (for some) unanticipated and ersatz outcomes. Subsequently, this special issue draws together six critically-oriented articles that conceptualise and investigate empirically the new roles, processes and struggles associated with multilateral and bilateral organisations and market building in Asia. All contributors view the processes related to market building as a central analytical concern under late capitalism, with each author cognisant that the organisations under scrutiny here have been central in operationalising the market-building project and that states and non-state actors, such as nongovernmental organisations, have been both targets for new market-building
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reforms and instillers/enforcers of these. Also recognised across the contributions is that familiar neo-liberal organisations, such as the World Bank, are now playing somewhat unfamiliar roles in fostering development and that, indeed, the very idea of what constitutes development is being reinvented yet again. Here, the private sector support and risk-mitigating operations that multilateral agencies are advancing are particularly emblematic of the new approaches that public organisations like the World Bank are playing in building markets in a particular image in Asia. In many ways, the new market-building modalities under investigation stem from an emergent politics of development a politics that has encouraged familiar development actors to change the way they set about fostering state transforma-tion and other market-oriented interventions. This has been particularly necessary in a political sense for multilateral and bilateral agencies in an environment where development success stories resulting from neo-liberal reform have been ambiguous at best and where the leverage that organisations have with states has regularly been challenged by recent developments within the global political economy. Here, the rise (which must be put in a more sobering/less-hubris smothered context) of newly engaged states/emerging markets, such as the so-called BRICs (Brazil, Russia, India and China), as increasingly significant contributors to global growth, repositories of ocial foreign exchange reserves and participants in ocial development assistance-displacing activities changes things markedly for multilateral institutions and market-building reforms. This shift which has been described as a shift to multipolarity (Lin, 2011: xiii) is partly reflected in the new demands for greater representation by countries previously at the sidelines within decision making at the multilateral institutions. However, the change is also reflected in a shift in leverage in domestic settings, with these countries now in less need of multilateral financing than they once were. In fact, countries such as China are now often competitors with traditional ocial development sources in so much as they have become suppliers of financing and infrastructure in an environment where capital markets are also deeper and more globalised. This last fact has been crucial in shaping a new politics of development and new market-building measures, with these dovetailing with the reality of reduced profit opportunities for capital in many developed countries and the subsequent hunt for new yields elsewhere. To be sure though, for all the talk about multi-polarity and high growth (the latter is actually nothing new to many Asian countries), most countries in the region continue to face massive challenges in improving material conditions. While gross national income (GNI) in Organisation for Economic Cooperation and Development (OECD) member countries sits at around US$41 trillion (world GNI is just under US$60 trillion) or just under US$35,000 per capita, the
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GNI for all of East Asia and the Pacific is just under US$12.5 trillion or US$5953 per capita or around one-seventh that of the OECD countries. To some, these figures might seem high, but the numbers are a little deceptive and are brought into sharper relief if OECD members Japan and Korea are removed. Indeed, Japan and Korea account for only 176 million people or 8% in a region of 2.1 billion people but account for over US$6 trillion of the regional GNI. Removing these two economies drops the regional per capita income to around US$3334. Even this figure masks the much lower per capita incomes in, for example, Laos and Cambodia with per capita GNIs of US$880 and US$650, respectively).2 Of course, aggregate GNI figures paint a rather abstract picture which often remains unsatisfactory for those that are familiar with the qualitative conditions on the ground. Indeed, throughout Asia, development issues while sometimes shifting in the form they take have seemingly only increased in magnitude. For example, inequalities and their political and economic impacts (underconsumption and deprivation, social cohesion) abound. In China, the results of highly asymmetrical growth are evident not only in a rural-urban divide but also within an increasingly apparent urban/urban divide, with a new elite class capable of superconsumption and many workers (especially many of the migrant workers that sta the factories and building sites underpinning Chinas growth) relegated to underconsumption and a marginalised form of citizenship that only further entrenches the situation. Particularly indicative of this is Chinas rapidly increasing inequality, with the Gini coecient rising from 0.28 in 1983 to 0.473 in 2009 (Selden and Wu, 2011: 3, 6). Elsewhere in Asia this portrait of impressive growth with persisting and often deepening problems for many is evident in the desperate scramble for money in a Javanese family when a member requires medical care or the inability for many to recover after a natural disaster, such as the 2004 tsunami that devastated Aceh and other areas. The choked trac and vastly inadequate infrastructure that is part and parcel of life in mega-cities, such as Jakarta or Manila, not to forget the environmental degradation and alienation that have accompanied development in much of Asia, only embellish this picture. For many countries within the region and beyond, this reality has been made all the worse by the various crises of late capitalism, with capital flows temporarily freezing up and demand for exports faltering (a situation perhaps best characterised by the empty factories of China not long after the global economic crisis hit). Countries have also faced huge issues in relation to changing climatic conditions and soaring food prices, with these often rounding o a particularly odious concoction of speculation, hoarding, and land grabs/dispossession. On this last matter specifically, bio-fuel/export crops such as palm oil are now well known in the Asia for generating considerable wealth for a few on lands that were formerly tropical forests and/or
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often used by communities (on these issues, see Gellert, 2010 and Westra, 2011). All of this serves to both further influence the new politics of development introduced above and present an entry point for the novel responsive eorts emanating from the organisations that this special issue focuses on. As will be made clear, these responses continue an orientation towards market-led reform that in many cases has been directly and indirectly related to many of the problems highlighted above. However, rather than these problems fundamentally threatening neo-liberalism, the new market-building modalities under investigation in this issue demonstrate neo-liberalisms ability to evolve in the face of challenges to its legitimacy. Indeed, as many of the contributions to this issue make clear, the crises and contradictions of neo-liberalism and the patterns of capital accumulation that have accompanied it have produced strong pressures for an evolution in neo-liberal reform a reality reflected in contemporary marketbuilding measures. As briefly noted above, the term market building is used here and throughout this special issue as an umbrella term to denote a range of market institutionalising processes. These processes must be understood as part of the ongoing evolution of neo-liberalism and which have their immediate roots in the middle phase of neo-liberalism a phase often referred to as the post-Washington Consensus (PWC) (Carroll, 2010; Stiglitz, 2001). Prior to the PWC, the neo-liberalising measures attending structural adjustment and the Washington Consensus sought to curtail or roll back the state through privatisation, liberalisation, deregulation and fiscal austerity in a process that has been dubbed by critical political economists as roll back neo-liberalism (Brenner and Theodore, 2002: 26; Williamson, 1990; Williamson, 2000). In a departure from this, and very much a response from within neo-liberalism to the contradictions attending the Washington Consensus and the crisis to legitimacy that these generated, PWC proponents such as Joseph Stiglitz promoted a more expansive role for the state as a regulatory overseer of market activity, a crucial part of what some characterised as roll out neo-liberalism (Brenner and Theodore, 2002: 27; Carroll, 2010; Stiglitz, 2001). Emblematic of the PWC was the relentless specification by the World Bank of state form and function in a market-complementing manner, a tendency most visible in the organisations annual World Development Report series (see the 1997 and 2002 reports as examples). This specification of state form and function was accompanied by a raft of initiatives that were designed to target the state not as an antagonist to the market (as was the case with, for example, structural adjustment) but rather as a site of reform where the state needed to be rebuilt (the rolling out part) in a particular market-compatible image. Crucially, this image conceived in a highly technocratic manner demanded that the state, insulated from politics, provide the regulatory and other
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functions that markets were seen as requiring for transaction costs and information asymmetries to be reduced and market eciency realised. Given that the PWC implied a particular type of state what Jayasuriya (2000) and others have dubbed a regulatory state it followed that the PWC entailed significant repercussions for the relationship between state and citizen. While this process of reworking the relationship between state and citizen had manifested in a brutal form under structural adjustment (with the state often forced to abandon the supply of crucial services to people), the PWC entailed a much deeper constitution of the dictates of the market into the institutional apparatuses of the state. One result is that the outcomes for citizens were sometimes less immediately apparent than under structural adjustment. However, to be sure, this round of institution building part of what Gill (2000) captured eloquently in the concept of new constitu-tionalism required people to accept not only that the market and competitive social relations were the only option but that particular arrays of institutions were normatively good. Seen in this light, independent regulatory institutions that presided over private service delivery were particularly prized. However, somewhat captivating and distracting for some, was the inclusion of an emphasis upon social safety nets, basic healthcare and education, with the former two seen as crucial in safeguarding market reform and the latter important in increasing stocks of human capital. In summary, the PWC agenda developed and operationalised an emerging blueprint for what the state should and should not do, while also specifying the demands, expectations and rights that citizens would have in relation to this new and normatively good state. Here, citizens retained the right to be involved in building the new institutions of markets, with the various partnership and participatory processes of the PWC central in attempting the reworking of citizenship, building constituencies for reform and quarantining institutions from non-neo-liberal constituencies (see Jayasuriya and Hewison, 2004). In addition, citizens were, of course, further conceptualised as consumers, clients, labourers and producers within a competitive society. However, beyond this, with no institutional decisions to be made other than those pertaining to realising the market state, the boundaries of market citizenship were extremely narrow and technocratically conceived. Yet, as the various contributions to this issue make clear, neo-liberalism and market-building modalities have not remained static in their PWC regulatory state moment. Indeed, far from it. While much of the market building of the contemporary period extends the processes of earlier phases of neo-liberalism, for example by continuing patterns of marketisation through the promotion of public-private partnerships and the development of new legal codes for particular sectors, much has changed. As Paul Cammack demonstrates in the first
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contribution to this issue, market building must be viewed as a part of a much larger project, with its roots in Adam Smith and recognised by Marx and Engels (1978), to establish capitalism on a truly global scale. The most recent manifestations of this project, which has only gained in momentum, now place risk at the very centre of the strategy to create a global market. It is for this reason that Cammacks contribution to understanding market building makes the critical distinction between negative risks (risks that threaten market-building measures and the broader neo-liberal project) and positive risks (risks that marketbuilding measures seek to instil and encourage via the inculcation of competitive social relations). Cammack demonstrates how notions of risk are embedded in influential literatures on the political economy of reform and within the particular social risk management strategies of two core market builders: the Asian Development Bank and the World Bank. In significant consonance with Cammacks contribution to this issue, in the second article I detail how market-building measures now work on, through and around the state in the process of creating the global capitalist market and, importantly, shifting patterns of governance and accumulation in Asia. The paper emphasises that while earlier forms of neo-liberalism worked on and through the state, market constitution in a neo-liberal image now often goes direct to sector that is straight to the private sphere. I conceptualise the process that the World Banks private sector arm, the International Finance Corporation, and other private sector-funding public organisations are involved in as the deep marketisation of development. This emergent approach within mainstream development practice centres upon mitigating risk to capital in the pursuit of opening up and expanding spheres of accumulation. This mitigation of risk and the market creation that attends it involves new strategies and instruments being operationalised in the underdeveloped world, including the prioritising of new competitive benchmarking measures and the deployment of equity investments and lending to entities such as financial intermediaries. While these strategies are rapidly becoming the latest development fashion, I suggest that the returns from such initiatives will be low and that the potential for entrenching pernicious forms of governance and creating large economic bubbles high. In the third contribution, Shahar Hameiri demonstrates how state-building measures have used the notion of state failure as an entry point for deploying a series of measures aimed at building particular state capacities and, via the institutional structures that markets are seen as requiring, supporting liberal market development. Focusing on the Australian-led Regional Assistance Mission to Solomon Islands (RAMSI) intervention in Solomon Islands, Hameiri presents a nuanced analysis of how the technocratic logic of state building has been applied and how, subsequently, development trajectories have fared, with unintended
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outcomes regularly apparent. He makes clear that while the eorts associated with RAMSI have assisted in boosting economic activity, they have unwittingly acted to mitigate the risk to primitive accumulation, most prominently in the logging sector. Here, very real concerns exist that this pattern of economic activity is not only highly unsustainable in terms of a depleting core resource but that it could well serve as the basis for cultivating bottom-up forms of social conflict. The focus on natural resources and market building is also the theme for the fourth article in this special issue by Pascale Hatcher. Hatcher provides an account of the World Bank Groups (WBG) attempt, subsequent to the 2003 Extractive Industry Review, to remain heavily engaged in underdeveloped, yet highly resource-rich economies. Focusing upon the Philippines, Papua New Guinea and Lao PDR, three countries with massive natural resource endowments, Hatcher illustrates the manner in which the WBG is playing a pivotal role in reworking mining governance, attempting to build particular governance regimes for resource extraction. These regimes, which include social and environmental safeguards, are tasked, first and foremost, towards mitigating the risks to industry over and above those faced by domestic populations. However, while the new regimes assist the entry of capital into resource-rich countries, transforming notions of risk and responsibility, the local and national hostility that resource extraction generates is not so easily contained by the technocratic eorts of the WBG. As Hatcher makes clear, this reality may, indeed, mean that in the long run the WBGs eorts may not be tenable. In the fifth contribution, Andrew Rosser and Thomas Wanner continue the investigation of the relationship between risk and market building by providing a critical analysis of the work of the Australian Agency for International Development (AusAID). Identifying risk as a new focus in market-building measures, Rosser and Wanner show that this agenda emerges from particular political and social interests. They argue that while AusAID policies and guidelines are oriented towards managing a broad array of risks, the more important point is that risk management has been targeted towards the core challenges of building neoliberal markets and securing Australian foreign policy objectives more broadly. They show that AusAIDs risk-mitigating eorts have been to the detriment of poor constituents living in the countries in which it operates. Honing in on the Philippines-Australia Partnership for Economic Governance Reforms as a concrete manifestation of this fusion of risk management and market building in ocial development assistance, Rosser and Wanner call for much greater attention to be paid to issues of inclusion and civil society. In the sixth and final contribution to this special issue, Darryl Jarvis looks at the attempt to embed the regulatory state in Indonesia and, in particular, the
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governance of the electricity sector. As an instance of market building par excellence, Jarvis challenges development orthodoxy by asking whether, in any meaningful sense, regulatory states can exist in countries like Indonesia and whether, indeed, should we want them to. Here, Jarvis key concern is not only the feasibility of implementing the regulatory state but, crucially, the very logic of conflating regulatory states with improving social well-being. Jarvis unpacks the very notion of the regulatory state in both a critical and empirically-grounded sense, detailing that much of what constitutes good governance for the likes of the World Bank, in particular its promotion of a standardised set of institutions and roles to be adopted by the state, may actually assist in entrenching the reverse for underdeveloped countries. Each of the contributions in this special issue attempts to conceptualise often complicated and influx processes of marketisation in Asia and the politics of this both the politics which generates the new marketisation measures in the first place and that which the marketising measures, in turn, generate and encounter. In essence this group of papers collectively ask what neo-liberalism means under late capitalism and what, most importantly, it means in the worlds most dynamic region: Asia. Given the saliency of the focus of this special issue, it is hoped that the ideas and analyses presented in each of the contributions will serve as a staging point for a fresh round of analyses oriented towards understanding neo-liberalisms trajectory within a tumultuous global political economy and, in particular, its influence in economies and societies faced with massive development challenges.
Notes 1. The papers stem from a workshop held at the Lee Kuan Yew School of Public Policy at the National University of Singapore in April 2011. The workshop, part of a project entitled New Approaches to Building Markets in Asia, was funded by a Singapore Ministry of Education Tier 1 Academic Research Fund Grant of the same title. 2. The GNI figures arrived at here were manually calculated by the author using the World Banks World DataBank tool. The figures are for 2009, are in current US$ and were arrived at using the World Banks own list of countries within its East Asia and the Pacific (EAaP) regional demarcation. The sub-regional per capita incomes were calculated by taking the total GNI for each country that the Bank has data for in the EAaP and dividing this by the corresponding figure for population. For certain countries (e.g. Brunei, North Korea, Myanmar, Timor-Leste and Tuvalu) within the region there is either incomplete or no data within the World DataBank for the time period covered. Therefore, the figures for these countries are not included in the above calculations.

References Brenner, N. and N. Theodore (2002) Cities and the Geographies of Actually Existing Neoliberalism, in N. Brenner and N. Theodore (eds), Spaces of Neoliberalism,
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Malden: Blackwell, pp. 132. Cammack, P. (2009) All Power to Global Capital!, http://e-space.openrepository. com/e-space/ bitstream/2173/67573/1/All%20Power%20to%20Global%20Capital. pdf, (downloaded 20 June 2011). Cammack, P. (2012) Risk, Social Protection and the World Market, Journal of Contemporary Asia, 42, 3, pp. 35977. Carroll, T. (2010) Delusions of Development: the World Bank and the post-Washington Consensus in Southeast Asia, London: Palgrave-MacMillan. Carroll, T. (2012) The Cutting Edge of Accumulation: Neoliberal Risk Mitigation, the Baku-Tbilisi- Ceyhan Pipeline and its Impact, Antipode, 44, 2, pp. 281302. Gellert, P. (2010) Rival Transnational Networks, Domestic Politics and Indonesian Timber, Journal of Contemporary Asia, 40, 4, pp. 53967. Gill, S. (2000) The Constitution of Global Capitalism, http://www.theglobalsite.ac.uk/ press/010gill.htm (downloaded 29 June 2011). Jayasuriya, K. (2000) Authoritarian Liberalism, Governance and the Emergence of the Regulatory State in Post-Crisis East Asia, in R. Robison, M. Beeson, K. Jayasuriya and H. R. Kim (eds), Politics and Markets in the Wake of the Asian Crisis, London: Routledge, pp. 31530. Jayasuriya, K. and K. Hewison (2004) The Antipolitics of Good Governance: From Global Social Policy to a Global Populism? Critical Asian Studies, 36, 4, pp. 571 90. Lin, J. (2011) Foreword, in World Bank, Global Development Horizons 2011 Multipolarity: The New Global Economy, Washington DC: World Bank, pp. xixiii. Marx, K. and F. Engels (1978) Manifesto of the Communist Party, in R. Tucker (ed.), The Marx-Engels Reader, New York: W.W. Norton, pp. 469500. Selden, M. and J. Wu (2011) The Chinese State, Incomplete Proletarianization and Structures of Inequality in Two Epochs, Japan Focus, http://www.japanfocus.org/Jieh_min-Wu/3480 (downloaded 29 June 2011). Stiglitz, J. (2001) More Instruments and Broader Goals: Moving Towards a PostWashington Consensus, in H.-J Chang (ed.), Joseph Stiglitz and the World Bank, The Rebel Within, London: Anthem Press, pp. 1756. Westra, R. (2011) Renewing Socialist Development in the Third World, Journal of Contemporary Asia, 41, 4, pp. 51943. Williamson, J. (1990) What Washington Means by Policy Reform, in J. Williamson (ed.), Latin American Adjustment: How Much has Happened?, Washington: Institute for International Economics, pp. 520. Williamson, J. (2000) What Should the World Bank Think About the Washington Consensus, The World Bank Research Observer, 15, 2, pp. 25164. Zizek, S. (2010) A Permanent Economic Emergency, New Left Review, 64, pp. 8595.

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Journal of Contemporary Asia Vol. 42, No. 3, August 2012

Working on, through and around the State: the International Finance Corporation and the Deep Marketisation of Development in the Asia-Pacific
TOBY CARROLL Centre on Asia and Globalisation, Lee Kuan Yew School of Public Policy, National University of Singapore ABSTRACT: This paper describes an important new push by international financial institutions towards broadening and deepening capitalist social relations in the underdeveloped world in ways well beyond Washington consensus structural adjustment or even post-Washington consensus (PWC) forms of institutionally-oriented participatory neoliberalism. Described here as the deep marketisation of development (or simply deep marketisation), this process is attracting increasing resources that are formally allocated directly to private actors around states, while also demanding and promoting shifts in state form and function that relate to cultivating enabling environments for capital and facilitating access to finance. The paper begins by conceptualising deep marketisation and placing it in historical and political context. The second section of the paper presents examples of deep marketisation in action in the work of the World Banks private sector arm, the International Finance Corporation, in the Asia-Pacific.1 The paper concludes by highlighting some serious concerns with the deep marketisation agenda. Key Words: Doing Business, enabling environment, International Finance Corporation, marketisation, public-private partnerships, risk

Despite Development practice having seemingly stalled on the state-oriented neoliberal reform of the post-Washington Consensus or PWC (see Carroll, 2012a), in this article I propose that change and, indeed, signicant expansion are actually evident within neo-liberal development policy, in particular within the work of private-sector-oriented organisations, such as World Banks private sector arm, the International Finance Corporation (IFC).1 This evolution should be viewed in relation to various core dynamics operating under late capitalism (including neoliberalisms impact) dynamics that have changed the landscape upon which Development operates. In particular, the shifting poles of global growth and the contradictions attending neo-liberal reform and late capitalism more broadly have provided the backdrop for the rapid growth in private sector
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support emanating from Development organisations, not to mention an accompanying increase in the number and form of Development modalities deployed. In the context of this expansion and evolution, the IFC must now be seen as a crucial protagonist not only within the World Bank Group but also within the broader neo-liberal project of establishing a world market, centred upon competitive social relations and accumulation (Cammack, 2009; Cammack, 2012; Gill, 2000). Indeed, the argument of this paper is that the IFC is now playing an important, though often unrecognised, role in deepening market activity around the state, while simultaneously fomenting shifts in the state that are seen as conducive to ideally-conceived patterns of capital accumulation. Or, to use now-popular Development vernacular, the IFC is a prominent actor engaged in establishing enabling [institutional] environments for capital and facilitating and providing access to finance for the extension of capital accumulation. In this respect, one part of the project that the IFC and others like it (such as the European Bank for Reconstruction and Development EBRD) are engaged in is much less technocratic and institutionally-oriented than earlier forms of neo-liberal Development policy, manifested in very instrumentalist and direct means (direct to sector, as it were). To be sure, other elements of this new eort which involve modalities that, like earlier phases of neo-liberal policy, work on and through the state continue to exhibit technocratic tendencies of the stateoriented building institutions for markets approach of the PWC, variously adding to and subtracting from it (Carroll, 2010; World Bank, 2002). However, unlike traditional modes of neo-liberal Development policy which are tied, very imperfectly, via conditionality to money allocation the new eorts of the likes of the IFC proceed without too much concern for PWC institution building, with accountability of individuals and organisations instead instantiated through the direct market discipline and the profitability (subject to codified social and environmental safeguards being applied) of a given investment. In sum, what is under investigation here is a new approach to fostering, expanding and deepening competitive social relations and, concomitantly, patterns of accumulation in a manner that relies less on working through the state as a site of reform and more on the cultivation of market activity. In this, rather as an aside, market activity is used to promote state transformation. Drawing upon historical materialist approaches to the constitution of late capitalism (see Cammack, 2003; Gill, 2000; Harvey, 2006), this article begins by situating the project of the IFC and others in historical and political context, while also outlining that projects core facets. It is argued that this push within neo-liberal Development policy the deep marketisation of development or deep market-isation for short has increased in prominence in response to a
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new politics of development. This new politics is characterised by the shifting patterns of accumulation particular to late capitalism and the integration with these patterns of the institutional interests of entities such as the World Bank Group and its member countries as donors and clients alike. Deep marketisation is neatly compatible with key material interests under late capitalism and the ideological interests supportive of these material interests, assisting in the constitution of new and deeper patterns of accumulation that political geographers describe as spatial fixes a spatial (or temporal) solution to impediments and crises of accumulation (Harvey, 2006: 415-19). These spatial fixes are in particularly acute demand in an environment where capital is hungry for returns and resources increasingly hard to find in the developed world and in which governments are desperate for solutions to persistent problems of infrastructure, service provision and underdevelopment more generally. To these material ends, deep marketisation modalities which include technical assistance (that relentlessly advocates public-private partnerships PPPs for example), new patterns of equity investment, the fostering of financial intermediaries for cultivating micro and small and medium enterprise sectors and competitive benchmarking are unsurprisingly targeted at underdeveloped, yet often fast-growing economies. However, not to be forgotten, deep marketisation also serves the institutional interests of Development organisations (material interests and interests of ideology and legitimacy) in that it avoids many of the immediate diculties faced by organisations such as the World Bank with good governance reform agendas that are significantly dependent upon working on and through the state. The second section of the paper presents three examples from the Asia-Pacific of deep marketisation as it is operationalised by its most important protagonist: the IFC. Each example demonstrates the dierent yet complementary ways in which deep marketisation works on, through and (quite distinctively) around the state in an attempt to extend the sphere of market relations. The first example focuses on the benchmarking/signal-setting/disciplinary qualities of the Doing Business report series and its operationalisation in Asia. The analysis demonstrates the manner in which Doing Business further concretises the IFC and the larger World Bank Group as quasi-ratings agencies of governments and of enabling environments for capital. This is no passive task, with Doing Business designed to enmesh countries and their citizens into a competitive dynamic that relates to their acceptance (or otherwise) of a particular state form in the interests, first and foremost, of private enterprise. This first example is very much a case of deep marketisations work on the state and shows much continuity with the PWC.
21

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The second example draws upon the commodification of water services in the Philippines capital of Manila. The case presents an example of an increasingly common approach promoted by the IFC to the privatisation of public services and utilities. While this case also owes much to the PWC it demonstrates important degrees of evolution and sophistication within neo-liberalism. Essentially, building upon the PWCs preference for the independently regulated private provision of utilities, this approach couples advisory services that advocate PPPs as a default policy prescription, often at the behest of technocrats and politicians clamouring for solutions to pressing service issues. However, this advocacy of PPPs is now twinned with the deployment of loans and equity to private providers to variously stabilise, sustain and expand the privatised arrangement, with loans and equity often made conditional upon a company listing upon a stock exchange, thus further deepening marketisation. This example demonstrates how deep marketisation works on, through and around the state to transform the relationship between state and citizen over time. The final examples of deep marketisation examine the new role that the IFC and others are playing in opening up new spheres of production and accumulation by working around the state from the outset. Here two quite dierent examples illustrate deep marketisation support to dierent fractions of capital (international and domestic). In the first instance, the critical risk-mitigating (securitising) roles that IFC plays for capital in the worlds mega-projects (the Baku-Tbilisi-Ceyhan oil pipeline is the case) in frontier and emerging markets are highlighted. In the second instance, we see how the IFC works through micro-finance organisations and other financial intermediaries as a key modality for instilling market discipline in countries such as Timor-Leste and Indonesia. The article concludes by suggesting that because deep marketisation hinges upon contradictory neo-liberal assumptions about the relationship between state and capital, the potential for this new approach to contribute to improving of material conditions for many will be low. This said, in the near future, business classes and bureaucratic and political facilitators and beneficiaries in both the developed and underdeveloped world will undoubtedly do well out of deep marketisation initiatives and the broader emerging/frontier market story that deep marketisation is an important sometimes even catalytic part of. Further, deep marketisation serves as both a legitimacy fix for neo-liberalism and a spatial fix for capital (Harvey, 2006: 415-19). However, the contradictions that inhere within both neo-liberalism and late capitalism itself (ersatz and unanticipated reform outcomes, crises of overproduction and so on) suggest that deep marketisation, as a core eort towards completing the world market, will likely play a role in more broadly distributing the impacts of capitalist crises, new forms of unequal social relations, and often pernicious patterns of govern22 Toby Carroll

ance that benefit from these relations. Moreover, one should not devalue deep marketisations function in obfuscating key sources of underdevelopment and the politics of addressing these. Deep Marketisation and the New Politics of Development In this first brief section deep marketisation is placed in historical and political context and its core logic and modalities are detailed. I suggest that there is a particular politics to Development policy under late capitalism which, to some degree, explains why deep marketisation has expanded so rapidly of late. This undertaking deserves some space because the measures and interests behind deep marketisation have attracted less than their fair share of attention even within critical literature. Historically and politically, deep marketisation should be understood as the latest form of neo-liberal Development policy which, like earlier forms, is the significant product of dominant material and ideological interests of late capitalism and the eorts (variously) by those interests to respond to contradiction and the need to continue and expand patterns of accumulation. As such, deep marketisation is the most recent phase of three broad phases within neo-liberal Development policy that have attempted to instil competitive capitalist social relations on a truly global scale (see Cammack, 2012). The first phase, which targeted the state in often brutal ways, was embodied in the structural adjustment programmes of the IMF and World Bank of the 1980s and early 1990s and the policies of what later came to be termed the Washington consensus. Given the considerable scholarly attention given to this early phase of neo-liberal development policy, it is sucient here to simply say that this approach (part of what some have called roll back neoliberalism (Brenner and Theodore, 2002: 26)) entailed policies that were oriented towards a coarse curtailing and downsizing of the state (to let market forces work) via interventions that included privatisation, trade liberalisation and often abrupt austerity measures (Mosley et al., 1991; Williamson, 1990). These policies, which ascended from the early 1980s on, stemmed from a counter-revolution in development policy that meshed with the long run slowing of global growth, a massive debt crisis in the Third World and the incumbency in the UK, the USA and the Federal Republic of Germany of right-wing governments (Colclough, 1991: 5-6; Leys, 1996: 21; Mosley et al, 1991: 7; Toye, 1987: 23). However, by the early to mid-1990s the massive failures of the Washington Consensus were more than apparent, even within orthodoxy, with poor to downright egregious results particularly evident in Sub-Saharan Africa and former communist states. The hostility generated by reforms (coupled with the fallout from particular multilateral projects) and the legitimacy crisis that this
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brought about for the Bank and the IMF, gained considerable traction over time. Importantly, sustained struggle from activists of various shades (left, green and anarchist) was coupled with increasing scrutiny from conservatives in the USA perennially sceptical of multilateralism and public support for liberal development eorts generally (Carroll, 2010: 175-6; Pincus and Winters, 2002: 2, 4). For the World Bank as the leading neo-liberal Development policy institution and key generator of develop-ment knowledge to remain credible in the face of this massive legitimacy crisis and ensure regular injections of money from big member states for its soft-lending operations, at a minimum it had to exhibit a shift in the way it worked. Subsequently, still constrained by the pro-market and conservative politics that had generated the first phase of neo-liberal Development policy, the Bank placed considerable eorts not on shedding neo-liberalism but rather upon tackling the persistent problem of how to institutionalise competitive social relations and conquer issues of formal reform implementation the core focus of neo-liberal Development policys second phase (Cammack, 2009: 2-3; Carroll, 2010). For people engaged in developing these eorts, it was not a case of neoliberalism and capitalism being contradictory that explained Developments problems and, indeed, under-development itself. Rather, the key issue which would legitimise a whole raft of new interventions to be operationalised by a globally mobile cadre of highly paid technocratic experts was the manner in which the market was delivered and maintained in an institutional sense. For the technocratic cadre tasked with reorienting neo-liberal Development policy, the structural adjustment of the Washington Consensus had not only crassly proceeded without concern for building broad constituencies of support, it was also bereft of the critical regulatory and other structures (which often inhered in the maligned and ravaged state) that markets were now seen as requiring. Subsequently, World Development Reports and senior Bank ocials proclaimed the central importance of good governance essentially the establishment of a particular state that was conceived as depoliticised and politically insulated and deemed crucial to reducing transaction costs and information asymmetries (Stiglitz, 2001; World Bank, 1997; World Bank, 2002). Even social institutions seemingly so marginal to much of Development policy and the orthodox economics underpinning it attracted attention for their contribution to making the most out of markets and embedding and maintaining them (Carroll, 2010, 88-9, 109-13; Harriss, 2002: 76-96). This second phase, part of what has been described as roll out neoliberalism (Brenner and Theodore, 2002: 27) and which has dominated development discourse and practice for the last 15 years, constitutes what is often described as the post-Washington Consensus.
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Yet, roll out neo-liberalism has faced significant challenges too, with some suggesting (perhaps a little too eagerly) that neo-liberalism and the global political economy have reached a juncture that might fatally undermine neo-liberalisms legitimacy (Peck et al., 2009: 95). Without doubt, the global economic crisis that began with a global financial crisis in 2008, the economic stagnation and ballooning public and private debt experienced in the old core of the global economy, and the rapid rise of China and other emerging poles of highly asymmetrical growth, have all altered the balance of power within both the global political economy. However, rather than fundamentally challenging neo-liberal Development policy, these dynamics have perhaps more accurately led to a new politics of development a recasting of the demands and pressures that continue to shape neo-liberal Development policy and practice. That this new politics of development serves as a challenge for the state-oriented neo-liberalism of the PWC with high growth emerging markets graduating from over-dependence on lending from the likes of the World Bank and, in some cases, competing with multilateral organisations as sources of finance and finance-displacing activities is clear. For one, some so-called middle income countries which used to borrow from both the World Banks concessional and non-concessional windows the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD), respectively are less subjected to the leverage of multilateral organisations and their conditionality. This reality is reflected in declining net lending from IBRD over the decade leading up to the crisis (a reality particularly pronounced in East Asia and the Pacific, and Eastern Europe and Central Asia), a small drop in measured aid dependency in middle income countries overall, and a big downwards shift in total debt as a percentage of exports of goods and services in both low and middle income countries (World Bank, 2010: 392, 400-1, 408).2 This aggregate picture of a challenge to the leverage of Development organisations pursuing state-targeted/pro-liberal market reform is also countenanced by the large increase in public and private bonds issued from emerging markets since the late 1990s and the (narrow) but rapidly increasing flow of foreign direct investment (FDI) to emerging markets, which has risen from just under US$100 billion in 1995 to almost US$600 hundred billion in 2008. The percentage of FDI flows to emerging markets grew by 10% between 2007 and 2008 as developed countries took a hit with the crisis and capital went in search of alternative sources of surplus. Of course, much of this FDI was destined for the so-called super-performing BRICS of Brazil, Russia, India, China and South Africa, which accounted for over half of all FDI for the underdeveloped world (World Bank, 2010: 396-7; World Bank, 2011, 98). However, the numbers above
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do suggest diminished leverage for PWC institution-building organisations with some of their traditionally big clients. This situation has combined with the persistent challenge to the legitimacy of Development organisations in the form of serious implementation issues (reform rejection, the persistence of corruption and so on) and the reality that many of the development success stories circumventing the binds of conditionality countries such as China and Vietnam are hardly straightforward poster children for neo-liberal institution building and the merits of good governance (see Carroll, 2010: 167). While this new politics of development is undoubtedly a challenge for the legitimacy of the PWC and its endorsement of a particular institutional array as crucial to development, it also provides conditions ripe for organisations engaged in deep marketisation. This is because deep marketisation is tailored towards the interests of capital hungry for returns and resources increasingly unattainable in the developed world (the spatial fix element) and, seemingly, a solution to governments of the underdeveloped world facing persistent development dilemmas in the provision of infrastructure, services and access to finance. To be sure, deep marketisation builds upon and complements many of the themes of the PWC, for example incorporating its social and environmental impact assessments, processes of consultation and participation, and emphasis upon market-supporting institutions, the latter often encapsulated in PWCesque terms, such as the enabling state. However, more than a simple extension of the PWC, deep marketisation exudes the language and much of the concerns of the private sector and, in particular, that of finance emphasising risk mitigation and its relationship to mobilising capital or access to finance. Directly related, deep marketisation concentrates on creating enabling environments for capital ostensibly ideal institutional bundles (state forms) which are pitched as being specifically conducive to attracting capital (by reducing its risks and other costs) and, therefore, realising the benefits accorded to markets. Crucially, rather than simply being about the central relationship between multilateral public lender and sovereign borrower (member state), a relationship that incorporates programmatic conditions to promote the market, deep marketisation attempts to fuse the public and the private into a liberal market reality like never before, variously working on, through and around the state. In this endeavour, the approach deploys a variety of instruments, such as conditional private sector lending and equity investments, to gain lock-in and extend earlier PWC privatisation processes. Further, not as hamstrung by legitimacy and political interference issues as state-oriented neo-liberalism, in many cases deep marketisation eorts can proceed with or without evidence of even an embryonic enabling state. This is to say that, unlike the first two phases of neo-liberal development policy, institutional reform need not serve as
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a prerequisite for market cultivating measures to proceed. What often matters more within deep marketisation processes than with classic PWC reforms is not that key benchmarks are met on institutional reform but rather that the projects make immediate commercial sense and that certain central relationships between lender and borrower (regularly personal and institutional relationships separate to those cemented in contracts and legislation) are in place. Indeed, evidence suggests that this direct to sector approach is being used to realise neo-liberal state transformation from the other way around creating new constituencies of pro-private sector reform by first creating private sector activity itself (see below). Deep marketisation still deploys many of the instruments of state-oriented neo-liberal Development, such as loans, technical assistance, and monitoring, evaluation and benchmarking eorts (Carroll, 2010: 68-114). However, with deep market-isation, loans go to the private sector, with technical advice going simultaneously to both the public and private sectors. Moreover, much of the benchmarking eorts, such as those in the Doing Business series) are oriented specifically towards the state and its progress towards establishing conditions thought to be most conducive to the private sector a much narrower focus than the PWC. Further distinguishing deep marketisation from established Development practice is that, not just limited to state lending, it involves capital mobilising guarantees (informal and formal) and equity investments. Guarantees can be formal in so far as an organisation such as the IFC insures some risk (often political) attending a given project. Guarantees can also be informal, with the very presence of the IFC signalling reduced risk for capital, a result stemming from the Corporations status as a multilateral organisation that governments intent on attracting investment are reticent to upset. Crucially, equity, in stark contrast to state-oriented loans, allows deep marketisation organisations to take stakes in companies, to provide liquidity and promote the transition of companies along the marketisation path. In this manner, deep marketisation entails the securitising of risk for capital in the process of expanding patterns of capitalist accumulation. Importantly, deep marketisation also entails working through financial intermediaries (FIs) in cultivating new spheres of market activity around the state. The support of FIs, which include micro-finance organisations, private equity funds, and commercial banks, is becoming a major deep marketisation strategy in this regard, with multilateral equity and lending to FIs playing increasing roles in shoring up FI capitalisation to facilitate on-lending and the cultivation of the micro and small and medium enterprise sectors. Eusing much less timidity in the face of governance issues than state-oriented neo-liberal institutions, deep marketisation is in many ways a frontier
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project (IFC, 2009: 24), boldly deployed in transition and post-colonial environments famous for their institutional failures, governance issues and capacity deficits. Indeed, deep marketisation organisations are increasingly central players in forging new opportunities of accumulation in high-risk/high-return areas in extractive industries, financial services, and in water and energy, where political, social, economic and environmental factors cause concern but where significant opportunities for profit exist and where the profit motive can be pitched as an opportunity for improving governance and social conditions. In frontier and other risky settings for international capital, the involvement of deep marketisation organisations with sovereign relationships and financial backing provides the private sector (especially finance) with confidence that a particular project will encounter fewer problems such as nationalisation, expropriation, appropriation of profit and the like. Lowering such risks means that borrowing costs are reduced for private enterprise and margins are (potentially) increased. But more than this, deep marketisation requires that certain regulatory structures are (at least formally) established and safeguards applied by private sector actors, reducing risk (including reputational risk) to capital. Importantly, deep marketisation entwines the imperatives and interests of capital and, in particular, finance capital from the developed world with the underdeveloped world unlike ever before. As such, deep marketisation distributes some elements of the broader process of financialisation the term given to the switch from productive to financial forms of capital accumulation down to territories hitherto untouched by such pressures (Dumenil and Levy, 2011: 99-112; Foster and Magdo, 2009; Gunnoe and Gellert, 2010: 7). In this respect, an organisation, such as the IFC, regularly issues both dollar- and emerging market-denominated bonds which are bought by institutional and other investors (such as northern pension funds) to raise money to be deployed on profityielding IFC projects, such as those in micro-finance.3 Yet, more than this, the involvement of a deep marketisation organisation, such as the IFC, means not only that certain projects, including mega projects, go ahead that otherwise might not. They can attract more favourable financing from international finance, the latter being able to rest assured that certain safeguards are applied, their financial and reputational risks are somewhat mitigated and margins are protected and increased. When a foreign telecommunications corporation or multinational water company intent upon investing in a PPP in a frontier or emerging market is anxious about expropriation of profit or has doubts about how a particular regime in a host country might impact a given commercial undertaking, organisations, such as the IFC and EBRD, stand ready to place real money (made cheaper by their triple-A ratings), risk assessment and mitigation tools, plus sovereign relationships and global risk signal-setting
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capacities in the service of reducing the anxiety of capital.4 Deep marketisation organisations, such as the IFC and EBRD, make mobilising large amounts of capital easier whether they are acting as investor, advisor or, ideally, both. This reality occurs for a variety of reasons and these are worth fleshing out to make clearer what it is that deep marketisation is about. The IFC like other deep marketisation organisations often not only lends for a given project, but also regularly takes equity in it. This places these organisations in the rather unique position of being multilateral institutions that promote and invest in private enterprise. As such, they have strong connections, which are heavily leveraged o, with both host states and the big states from where international capital harks. Further, deep marketisation organisations also enjoy significant leverage by virtue of their position as expert organisations knowledgeable on sectoral and financing matters, and signal-setting organisations for capital and, in particular, for international capital. Few international organisations can give investors the confidence that a government or powerful domestic interest will not rent seek or upset a particular commercial project in the way that an organisation such as the IFC can. In short, the risks to capital are less making projects possible and impacting profitability. Deep marketisation organisations provide important roles for capital and can be thought of as multilateral lenders and insurance providers to the private sector, multilateral investors, ratings agencies, sector builders, and enforcers of market discipline! Capitalising on the new politics of development described above, these organisations are playing central roles in expanding new competitive sites of production and consumption and forging new regulatory and risk-mitigating arrangements. This is reflected in the massive expansion in the amount and geographical reach of deep marketisation eorts. Consider, for example, the rise of the IFC. Until relatively recently, the IFC lived somewhat in the shadows of IDA and IBRD (the traditional core World Bank institutions).5 Recently though, this situation has changed markedly, demonstrated by big increases in IFCs commitments and portfolio. Since FY2001, the IFCs cumulative portfolio has increased from US$10.9 billion to over US$42 billon, with annual new commitments for the same period rising from US$2.7 billion to around US$12.2 billion (see Figure 1), with more than a third of this amount being allocated to IDA countries. At the same time IFC has also increased its financial commitments and spatial reach, committing to new projects across 102 countries (up from 69 half a decade ago) (IFC 2011a: 9). IFCs biggest country exposures are overwhelmingly in the much fetishised new poles of global growth the BRICs which account for 27% of exposure (IFC 2011a: 12).

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Figure 1. IFCs annual commitment and cumulative portfolio commitment, FYs 2001-11 (US$ billions). Source: Compiled by the author from IFC annual report data (IFC, 2001; IFC, 2005; IFC, 2009; IFC, 2011a).

This push by IFC has been part of a trend that sees a massive increase in support for the private sector from multilateral and bilateral avenues which not including the impressive larger sums mobilised by these organisations has soared ten times over the last decade, from less than US$4 billion to over US$40 billion (Bretton Woods Project, 2010; IFC, 2009). Furthermore, in recent times deep marketisation has made possible many of the mega-projects occurring in the underdeveloped world projects such as the multi-billion dollar BakuTbilisi-Ceyhan pipeline (see below). Since the onset of the recent financial and economic crises this role has only increased, with the IFC, for example, now custodian for many of the initiatives deemed critical to sustaining reform and economic activity in the underdeveloped world.6 The IFC and Deep Marketisation in the Asia-Pacific Doing Business and Deep Marketisations Work on the State In this section I present several examples of deep marketisation in practice and the manner in which its modalities work on, through and around the state. The first example introduces a crucial pillar of the current IFC agenda and deep marketisation. This pillar relates to the benchmarking and ranking of countries in their pursuit of what is described as an enabling environment essentially the conditions seen as critical to attracting capital and ensuring expanding private sector activity. The Doing Business report series, which is a joint initiative between the IFC and the World Bank, is exemplary for its role in both advocating normative standards and assessing country adherence to these. On norma30 Toby Carroll

tive standards, it serves a similar role to that of the World Banks flagship annual publication, the thematically-oriented World Development Report, instalments of which have been critical in establishing the norms of Development practice, including demarcating the critical elements of the regulatory state and further perpetuating the lingua franca of development practice (Jayasuriya, 2000). However, in some contrast, the Doing Business series contains both an annual report complete with country ranking and a separate range of individual country reports, with the latter being specific on a particular states work towards establishing an enabling environment (on Indonesian in 2011, see below). In this way, bringing competitive pressure to bear on the state, Doing Business can be thought of as a continuation of the sorts of disciplinary neo-liberalism found in the Banks Country Policy and Institutional Assessment (Gill, 2000). That assessment challenges countries to gravitate to a particular normative institutional set by grading their adoption or otherwise of the regulatory state and tying this to the Banks Country Assistance Strategies and the allocation of resources associated with them (van Waeyenberge, 2006: 20; World Bank, 2003: 1). Doing Business also exhibits the fetish for development results and monitoring that became a key part not just of the PWC and the World Banks Comprehensive Development Framework but which was also evident in the aid eectiveness agendas of the Organisation for Economic Co-operation and Development (OECD) manifested in the Paris and Rome Declarations (Carroll, 2010: 99103). Like its benchmarking and monitoring siblings, Doing Business should be thought of as a paradigmatically constrained and interest-driven response to the contradictions of neo-liberal Development, with its nation-state-centricity (in terms of reform), its ideological fixation on the merits of the private over the public, its fetishising of a particular set of institutions as deliverers of development, its brash aggregations to justify particular institutional interventions, and its virtual erasing of divergent social relations and, in particular, class as crucial in understanding patterns of development. Crucially, rather than questioning the logic of neo-liberal development eorts, market society benchmarking exercises like Doing Business see accountability and discipline running one way towards that ill and recalcitrant entity: the poor country.7 Doing Business is run out of Washington with a sta of around 50 people. As of 2010, seven annual reports have been published, the latest of which comparatively assesses business-oriented regulation across 183 economies. The reports benchmark countries against each other in their regulatory friendliness for business in ten key areas across the business cycle: starting a business; dealing with construction permits; employing workers; registering property; getting credit; protecting investors; paying taxes; trading across borders; enforcing contracts; and closing a business (World Bank and IFC, 2009: iii, v).8 A quantitative
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assessment of a countrys standing in these areas as they apply to domestic small and medium enterprise is made in the interests of not only benchmarking countries across these areas but, crucially also, to make them reform.9 In this respect the report is designed to provide an objective basis for understanding and improving the regulatory environment for business (World Bank and IFC, 2009: v). As Doing Business 2010 makes clear:
A fundamental premise of Doing Business is that economic activity requires good rules. These include rules that establish and clarify property rights and reduce the costs of resolving disputes, rules that increase the predictability of economic interactions and rules that provide contractual partners with core protections against abuse. The objective: regulations designed to be ecient, to be accessible to all who need to use them and to be simple in their implementation. (World Bank and IFC, 2009: v.)

Like the World Development Report, the annual reports each have a thematic title the 2010 report is entitled Reforming through Dicult Times and use two core types of data: the first drawn from an analysis of laws and regulations and the second from time and motion indicators that assess progress towards particular regulatory achievements in the constitution of market society (World Bank and IFC, 2009). Important for our purposes here, Doing Business is also very clear about what it does not cover. For example not only does the series only focus on the formal sector (poor countries often have every large informal sectors replete with all manner of issues), Doing Business does not assess a countrys financial system or financial regulation. Importantly, even in the areas Doing Business does cover, there are significant omissions that reveal deep marketisations colours markedly. Particularly indicative of this, are the reports indicators for employing workers, which set aside benchmarking regulations addressing safety at work or right of collective bargaining (more below) (World Bank and IFC, 2009: iv). Interestingly, the inclusion in the 2010 report of initial findings . . . [on] the level of adoption in national legislation of aspects of the International Labour Organizations (ILO) core labor standards on child labor has come on the back of sustained criticism by civil society and union groups of the report series (World Bank and IFC, 2009: ix). However, if Doing Business appears somewhat modest by stating what it is not, this masks what is truly an ambitious agenda. Indeed, Doing Business 2010 sells itself as being akin to a cholesterol test for a country not revealing of everything pertaining to a patients health but still focusing on crucial indicators that put us on watch to change behaviors in ways that will improve not only
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our cholesterol rating but our overall health (World Bank and IFC, 2009: vi). Further, the 2010 report proudly states that Doing Business is on solid methodological ground given its robust correlations with other major economic benchmarks, such as the OECDs on product market regulation and The World Economic Forums Global Competitive-ness Index. Crucially, addressing the link between Doing Business and its relevance to poverty and development, the report also prominently points to the World Banks Voices of the Poor study and its identification of how the hopes of men and women rest above all on income from their own business or wages earned in employment (World Bank and IFC, 2009: vivii). In this respect, the report states that realising this requires both enabling growth and the participation of the poor in growths benefits. In the language of deep marketisation, enabling growth is seen as requiring the right regulatory environment what is increasingly described as an enabling environment. In essence, Doing Business outlines, measures and incentivises countries to adopt an enabling environment for the purposes of facilitating private sector activity. While there are concessions within Doing Business that reforming business regulation is not the be all and end all of development, Doing Business now constitutes a flagship eort incentivising business-oriented reform which is rapidly being conflated with development. In the annual report, tables of top performing reforming countries are presented with winners highlighted for victories in categories such as the number and impact of business reforms implemented (Rwanda was the 2010 winner). In the 2010 report Timor-Leste is held up as a top reformer in the area of paying taxes, Azerbaijan is highlighted for establishing a one stop shop for starting a business, with top position for ease of doing business going to Singapore. Doing Business also provides global snapshots of pro-business progress; pointing out that in 200809, 287 reforms made it easier to do business and 27 did the reverse, with the top and bottom performers in each area of reform named. Information about which country did what reform (and in which direction) is also presented, allowing cross-comparisons of progress toward establishing the-now central Development requirement: the enabling environment (World Bank and IFC, 2009: 2-7). Not surprisingly, the reforms preferred by Doing Business around the ten key areas noted above are mostly about cutting red tape and privileging the interests of employers and investors, with instructive examples of smart regulation presented. In this respect though, Doing Business is not simply an advocacy eort; it is both a justificatory and intervening tool that attempts to normalise the notion that a particular array of reforms that privilege the interests of business align with broader social interests, all in the name of development and poverty reduction.
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For example, in the area of Starting a Business, a countrys ranking is established from a composite of four sub-indicators: time, cost, procedures and paid in minimum capital. Subsequently, smart regulation for Doing Business includes cutting minimum capital requirements for starting a business, making business registration administrative (as opposed to involving entities such as the courts), centralising business registration and putting business registration services online (World Bank and IFC, 2009: 10-16). In terms of Employing Workers, an area where Doing Business has received consistent criticism from non-governmental organisations (NGOs) and the ILO, the report notes the tensions for governments in finding the right balance between labour market flexibility and worker protection. However, the sub-indicators used to rank a countrys position, seemingly based upon an understanding of the comparative advantage of most poor countries being their abundance of cheap labour, show no signs of ambiguity in promoting a framework that promotes labour regimes that enhance labour market flexibility one of the cornerstones of neo-liberal agendas. Here, a countrys ranking is determined by another set of sub-indicators rigidity of hours, diculty of hiring, diculty of redundancy, rigidity of employment, redundancy cost. Smart regulation in this domain entails flexibility in working hours, labour market flexibility more broadly and moving, for example, from severance pay (paid for by employers) to unemployment insurance regularly funded by workers (World Bank and IFC, 2009: 23-6, 83).10 Following from this privileging-the-private ostensibly in the interests of the public theme, the Doing Business country ranking for Protecting Investors, is assembled from indices claiming to measure the extent of disclosure, director liability and ease of shareholder suits. And, in the area of Paying Taxes, Doing Business focuses on the number and size of taxes levied against small and medium enterprises (SMEs) in addition to compliance costs. Smart regulation in this area thus involves broad-based taxation regimes (with flat rates) and electronic filing and payment systems (World Bank and IFC, 2009: 38-43). In all these areas and more Doing Business is extremely clear about what constitutes sensible policy and puts numbers on its adoption or otherwise. In addition to the annual Doing Business report, the individual Doing Business country reports are another element in the attempt to diuse the enabling environment of deep marketisation, via competitive benchmarking and signalsetting, down to new locales. A case in point is the Doing Business volume for Indonesia for 2011, which like that years overarching report is entitled Making a Dierence for Entrepreneurs (World Bank and IFC, 2010). The report expends significant space on setting Indonesia in sharp relief against other countries in relation to the ten key Doing Business reform areas. Overall, Indonesia
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is shown to be ranked a lowly 121 in its realisation of an enabling environment, set unfavourably yet strategically against its Southeast Asian peers of Singapore (ranked 1), Thailand (19) and Malaysia (21). The report emphasises Indonesias dire health in the various vitals of an enabling environment. For example, starting a business takes nine procedures and 47 days in Indonesia whereas good practice economies, such as New Zealand, take just one procedure and one day. Further, the costs and duration of each of the nine procedures involved in Indonesia are broken down and each process is described in detail (World Bank and IFC, 2010: 2, 6-14). A further example is presented in the section on Paying Taxes, where Indonesia is ranked 130. Here the worlds fourth most populous country is unproblematically set against high performers, such as the tiny Maldives, which has only three payments and a compliance time of 0 hours. Likewise, Timor-Leste formerly occupied by Indonesia is compared as favourable with its tiny average tax on profit of 0.2%. In contrast, Indonesia is said to require 51 payments and 266 hours of compliance and taxing, on average, 37.3% of profit. Achieving some of its worst results, Indonesias scores on Enforcing Contracts see it with 40 procedures, totalling 570 days and costing 122.7% of the amount claimed by a claimant under a particular contract figures set selectively against some its regional neighbours and global leaders (World Bank and IFC, 2009: 48-9, 61). The point here is not so much about numbers entertaining as some of these are as what is actually attempted through Doing Business. Taken together, the annual report and the country reports are a new attempt to establish neo-liberal patterns of governance by using name and shame methods and competitive benchmarking, with the latter judiciously setting countries against their regional counterparts and global reform leaders. Here, history, politics and geography not to mention case-specific analyses of what might actually be beneficial for business in a given environment (Hyland et al., 2008: 1) are swept aside in an exercise ostensibly linked to facilitating development via incentivising the adoption of a uniform institutional array. When comparisons are made with city-states and developed countries, it does not matter that Indonesia has a large population of 238 million, a per capita GNI at around US$1650, or a history whereby it was subjected to extractive colonialism followed, not long after, by the kleptocracy of the New Order regime (see Gordon, 2010; Robison, 2002: 106, 110-7). With Doing Business, what is good for one is good for all, and it is implied that adopting smart regulation can help a country move from underdeveloped to developed status by adopting the Doing Business regime. Of course, this discussion would be irrelevant if Doing Business was ignored by those that it seeks to influence. However, governments take these rankings
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seriously. While the number of ease of doing business reforms has increased quite markedly, this could, of course, be the result not just of Doing Business but the general diusion of neo-liberalism more broadly (which takes place through many channels, including World Bank projects and the education of bureaucrats at particular schools of government and economics). However, when the results of Doing Business 2006 came out and Timor-Leste was near the bottom, its government was unimpressed, making enquiries, firstly, as to how the results were arrived at and, secondly, which reforms could be adopted to improve the scores quickly (interview, anonymous informant, Dili, 15 February 2011). Likewise, the Malaysian government proudly proclaimed its intention to do whatever it takes to graduate to the Doing Business top-ten (Hyland et al., 2008: 1). What is clear is that, in an era of PWC reform weariness, Doing Business constitutes a new strategy of deep marketisation, working on the state to incentivise the adoption of an enabling environment for capital, the latter being legitimised on the basis of its contribution to addressing poverty and improving development outcomes. Working Through and Around the State Manilas Water Services If Doing Business constitutes an important new disciplining weapon in the arsenal of rolling out neo-liberalism and extending idealised capitalist social relations in the name of development, it is far from the only one. Indeed, the IFC, the regional Development banks and bilateral aid agencies (the latter often through trust funds placed with the multilaterals) have some crucial new tools related to transforming not only service delivery and infrastructure but with them the relationship between state and citizen. This section looks at one example the transformation of Manilas water services of how this takes place via deep marketisation eorts that work both through and around the state. The story here is fascinating and troubling, with the IFC playing a fomenting role in market extension first using technical assistance (working through the state) to shape essential service delivery and, secondly, working around the state, using investments and loans to highlight a PPP success story amidst failure, mitigate risks to capital and extend marketisation over time. In the 1990s, the IFC was brought in to provide technical assistance on the privatisation of metropolitan Manilas water services which, like many services in countries with large populations and per capita GNPs resting around US$1000 in the mid-1990s, were characterised by low pressure, low connectivity, high amounts of lost water through leakage and theft and poor water quality (Buenaventura and Palatto, 2004: 1; Esguerra, 2003: 10, 13). Also, not uncommon in both the developed and undeveloped world at the time, Manilas water
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services were provided by the state. Saddled with public debt a significant portion of it multilateral the governments options were constrained. This rather common reality is also important in understanding the interest and proliferation in PPPs (on a related process, see Jarvis, 2012). However, significant figures in the government (including then President Ramos) were already convinced of neo-liberalising measures as a fix-it to ailing state services and were impressed by the realisation that the IFC, as a public organisation that operated according to private sector rules, could provide the necessary technical assistance (Dumol, 2000: 4, 19, 27). What emerged from this relationship between the IFC and the Philippines government was a hybrid public-private arrangement (a PPP).11 PPPs are now front and centre in the toolkit of Development agency agendas and, in particular, the work of the IFC. Crucially, such arrangements are now pushed into some of the poorest countries, with the IFC newly charged with promoting its operations in countries that borrow from IDA (IFC, 2009). In conversations with IFC ocials, mention of PPPs and their central role in Development is never far away. Loosely speaking, a PPP can be any mix of public and private participation around the delivery of services and infrastructure. Typically though, the term now commonly connotes a division of labour, enmeshed in contractual arrangements, whereby private companies, subject to public regulation, deliver services ranging from electricity provision to welfare. The key characteristic of a PPP for Development is that the state regulates performing its duty as a regulatory state (Jayasuriya, 2000) and stays at arms length from service provision. In Manilas case the citys water services were divided into two separate concessions (an east zone and a west zone), a structure known as the Paris model. These concessions would be bid out in a competitive manner, with the winners being the parties able to supply water at the lowest cost while adhering to contractual obligations. In best practice regulatory state fashion, a new regulatory agency was created the Metropolitan Water and Sewerage Service Regulatory Oce to oversee the concessions. This oce would be the autonomous check on the concessions, assisting in realising the eciencies and popular benefits ostensibly derived from private participation. The logic here was centred on the idea that profit-oriented service providers, held to legal contracts, would expand service coverage, limit water loss and improve water quality. With property rights demarcated (to private players), the regulatory institution would be key in osetting information asymmetries, holding the contract-bound entities to their word, and ensuring the broad-based benefits regularly accorded by neoliberals to market eciency. To be sure, as a policy option generally, the PPP was a logical successor to the first rounds of privatisation where all manner of problems emerged relating
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to reconciling private interest with that of the public.12 By the time of Manilas water privatisation, Philippine ocials were well aware of the hostility towards privatisation seeing full-scale privatisation as politically untenable (Dumol, 2000: 14). Part-privatisa-tion would be the politically palatable answer, and an answer that the IFC could not only advise on but also, somewhat surreptitiously, push further as history progressed. For what occurred with the IFC and Manilas water services was more than just a short-term advisory relationship, with the IFC bringing important doses of expert advice and legitimacy derived from their independent position as a multilateral organisation something clearly in the mind of the bureaucrats that engaged the Corporation (Dumol, 2000: 27). Indeed, indicative of processes that have now become the norm, the IFC would be involved in shaping the nature of the PPP over time, in particular being crucial in amplifying the middle P in PPP. Here, the IFC would consciously play stabilising and market extending roles in the face of problems with the PPP arrangement with IFC project documents pointing to concerns over the need to support one of a limited number of success stories of privatisation in the water and sanitation sector in emerging markets (IFC, 2004).13 To this end, and in addition to advising on the PPP, the IFC engaged in supporting the less problematic eastern concession, run by a company known as Manila Water, an impressive fusion of the Ayala family and international capital.14 IFC support for the concession and the company would come in the form of loans and equity. What is important here is that in this case equity is not simply a capital contribution for expanding the company. While the loans and the equity shares were all categorised as important for supporting the company meet its obligations under the concession agreement, IFCs support was also made conditional upon the company pursuing an initial public oering (IPO) at the stock exchange in March 2005.15 Several months after the listing and some seven years after the start of the PPP, the IFC took a further shareholding in Manila Water, purchasing 176 million shares worth around US$15 million. IFC also approved a US$60 million loan package to the company in which it was now an important shareholder (Carroll, 2010: 130; Manila Water, n.d.: 4, 41). Here, what is evident is how a privatisation process that begins with technical assistance and a PPP given that an outright privatisation was politically inconceivable evolves over time, becoming more private, with the companys ownership further defrayed (with more owners) and subjected to the direct market discipline of the stock exchange. It is worthwhile noting that this makes renationalisation or even milder state regulatory interventions more dicult, with ownership spread further (including to oshore investors) via a stock exchange, the integrity of which would not easily be interfered with by government. Notably, Manila Waters IPO in March of 2005 saw 70% of shares bought by foreign
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investors (with almost two-thirds going to Asian investors and the remaining third going to Europe and the USA (Landingin, 2005). The IPO means that not only is water service provision further marketised, it is actually brought into global processes of financialisation, with service provider Manila Water now not simply answerable to clients and a regulator, but also to domestic and foreign shareholders who are interested in returns on capital deployed. Importantly, the support IFC provided Manila Water was crucial for particular reasons both ideological and material which point to the new roles that the Corporation is playing by taking equity in companies. On the ideological side, the task of bolstering a rare marketised success story is clearly part of the incentives driving the IFCs support, as the following document excerpt makes clear:
MWCI [Manila Water] stands out as one of a limited number of successful privatisations in the water and sanitation sector in emerging markets. The company has made good inroads into the poorer areas of its concession area. IFCs assistance to MWCI builds upon the earlier privatisation advisory work by supporting a concessionaire that has demonstrated the eciencies and client responsiveness that a private sector provider can introduce to the provision of public services. (IFC, 2004.)

Of course, material interest is at play here too the IFC is after all a profitoriented organisation and prospective privatisations will no doubt be important elements in the Corporations portfolio. However, more than this there are the material interests of Manila Water itself. Prior to the IPO, Manila Water and its other prominent shareholders (Ayala, United Utilities, Bechtel and Mitsubishi) were keen to have IFC participation because of the confidence that a prestigious, signal sending institution would instil in prospective shareholders, together with the opportunities that IFC participation could bring in terms of access to finance at favourable terms in a complicated (for financing) emerging market setting (IFC, 2002). As we will see in the following section, these roles are seen as particularly vital when the IFC goes direct to sector, working around the state from the outset. Working Around the State: Risk Mitigation in Creating and Expanding Spaces of Accumulation As noted above, the role of mitigating risk is a vital focus of deep marketisation and is one of the key ways in which the IFC works around the state. As a deep marketisation organisation traversing the public-private divide, the IFC mitigates risks to capital in a manner that other types of institutions simply
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cannot. This role is of particular benefit to international capital operating in frontier and emerging markets, where political risks of rent seeking and prospects of wholesale expropriation can push financing costs up and reduce profitability and, indeed, project viability. In such environments there are other potential costs and liabilities that come, for example, from working with patrimonial regimes with poor environmental and human rights records, which from international capitals perspective can now be a serious liability that devalues a brand. Subsequently, the IFC now plays an often pivotal role for international capital in frontier markets, not only reducing risk through equity investments and formal (and informal) guarantees, but also via its deployment of safeguards and standards that insulate companies from culpability and legitimise sometimes controversial projects (see below). IFCs support for the Baku-Tbilisi-Ceyhan pipeline (BTC) traversing Azerbaijan, Georgia and Turkey is demonstrative of IFCs growing presence in mega projects in frontier settings and, in particular, the manner in which it has carved out a comparative advantage in risk mitigation to open up and extend spheres of accumulation.16 With BTC, a consortium led by global oil and gas company BP was interested in securing a key conduit for Caspian oil to the Mediterranean. The pipeline would be around 1760 km long and pass by various conflict zones not to mention constitute a major thorn in the side of an agitated Russia that saw the pipeline as increasing Western presence in its backyard and decreasing its leverage over several former Soviet republics. Further, Azerbaijans ruling regime family-based, authoritarian and known for both its disdain towards civil society and significant governance issues made BTC a risky project, especially in terms of reputational risk, for capital. However, with the potential to open up not just the fields o of the coast of Azerbaijan but also those further east in Kazakhstan, there was a lot that made BTC an attractive project. Realising this though would, of course, entail financial feasibility. This would depend on the price of oil and would require financing at favourable rates, especially for BPs consortium partners. Finally, it would require BP to protect itself from the sort of damage that it had attracted on projects in places like Colombia and Angola, projects that had seen the company subjected to heavy attack from human rights groups for its associations with pernicious regimes. With Azerbaijan set to earn big revenues for BTC some estimates place the total value of the oil projects associated with BTC at over US$20 billion there were obvious concerns about what the project would deliver in terms of actual social and political outcomes. Because of its perceived riskiness to private capital, BTC required massive injections of public financing and public-backed insurance. The IFC, teaming
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up with the EBRD, led a veritable whos who of export credit agencies and public financing institutions from the USA, the UK and Japan to do precisely this. The funding model proposed put up US$1.7 billion of public money for the project, in a 70/30 debt-equity structure (Lazard, 2005). While the IFC and EBRD put up only a reasonably modest US$125 million each, they were central in getting the project through in its final form. The involvement of the IFC and others was crucial for political risk mitigation generally and, in turn, securing private sector financing at cheaper terms than otherwise would have been possible. The IFC, which had invested in the early oil project that BTC built upon, and the EBRD came to the project armed with their multilateral status, direct connections with recipient governments and positions as custodians of important purse strings, giving some sense of assurance for capital vis-a`-vis host governments. Here, IFC and other public organisations played the much-underappreciated role of risk mitigators in the process of opening up the Caspians pickings, assisting in attracting Citibank, ABN Amro and SocieteGenerale to provide the remaining financing required. Yet, for IFC and its public sector partners, playing the role of mitigating risk on BTC entailed mitigating some risks of their own. This would involve the deployment of transparency and safeguards instruments elements that owe much to the PWC and the high-profile attacks that accompanied many large-scale multilateral infrastructure projects. As noted above, the World Bank Group (including the IFC) was no stranger to critical voices dissecting its operations, including its sponsorship of large-scale oil and gas projects. On this last point, one IFC staer who worked on BTC noted in an interview that the ChadCameroon pipeline an earlier project similar to BTC had been an influential learning exercise. Indeed, as a large-scale, transnational oil project involving countries with well-established track records of corruption and conflict, BTC had much in common with Chad-Cameroon. This raised concerns with people within the Corporation and other sections of the World Bank, which was simultaneously undertaking its Extractive Industries Review, an assessment exercise to respond to stakeholder concerns with regard to resource extraction and its connection to human rights and the environment. No doubt adding additional anxiety, BTCs development was also accompanied by a concerted international campaign from NGOs from London to Baku. Letters regarding concerns over BTC were variously written by these NGOs to the World Banks President James Wolfensohn and to core personnel at the IFC and EBRD. Interestingly, despite the IFCs board becoming anxious, key personnel argued that this was precisely the sort of project IFC should be involved with (interview, multilateral staer, Istanbul, 9 June 2008).
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IFCs approach to BTC was also shaped by its involvement with the early oil project in Azerbaijan, which the organisation had provided finance for in 1998, and the experience of other multilaterals in the country (IFC, 2003: 3). The IMF had earlier made the receipt of an Enhanced Structural Adjustment Facility loan conditional upon the establishment of a formal oil fund with explicit operating, investment and expenditure rules (Bagirov et al., 2003: 107-8). Without this in place the IFC would have been reticent to participate in BTC. However, with the fund in place, IFCs approach to BTC paid significant attention to addressing other potentially problematic areas within the existing projects structure, in particular expending considerable eort upon issues of disclosure. The organisation did two years of due diligence on the project and made BP and its aliates produce a Regional Review that would complement and supplement the environmental and social impact assessments, addressing issues that had not been addressed such as the background of the pipelines controversial route. It also demanded the release of an Environmental and Social Action Plan, Resettlement Action Plan and disclosed its ongoing dialogue with NGOs concerned about the project (IFC, 2003). The organisation insisted on the releasing of the Host Government Agreements and the Inter-government Agreement the core governing legal frameworks for the project. With the EBRD, it convened six multi-stakeholder meetings (two in each of the aected countries) prior to signing-o on BTC (CDR Associates on behalf of IFC and EBRD, 2003). IFC also demanded a commitment register and action plan to govern the responsibilities of contractors. Finally, the Corporation partnered with BP and others to establish the Small and Medium Enterprise Linkage Program, echoing similar eorts with the Chad-Cameroon pipeline, which sought to assist local companies realise benefits from the BTC project.17 Taken together, the risk-mitigating eorts made by IFC highlighted above were important in legitimising both the Corporations own involvement and that of its clients, in turn, opening up a new sphere of accumulation for international capital by working around the state.18 Importantly, this is far from an isolated case. Indeed, the IFCs involvement with BTC is indicative of how the IFC and other organisations such as EBRD are both carving out their comparative advantage globally and assisting in the creation of a world market that leaves few locales untouched. Working Around the State: Financial Intermediaries and Micro, Small and Medium Enterprise Sectors The second manner in which the IFC works around the state is through its support for FIs, such as banks and micro-finance organisations. At the domestic level, the IFC and other deep marketisation organisations are aggressively
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supporting FIs in the interests of providing access to finance for creating and nurturing micro, small and medium enterprise sectors (MSMEs) in the underdeveloped world. Indicative of this, in 2009 the IFC expected to contribute an extra US$1 billion to MSMEs through FIs in the form of loans and equity in East Asia and the Pacific, with over 1.5 million loans to be provided by its clients. The 2009 IFC Annual Report claims that in 2008 the IFCs clients provided US$41.3 billion to 486,550 enterprises and US$ 4.5 billion to five million microfinance enterprises (IFC, 2009: 93). In Vietnam and China alone IFC claims that its support has seen partner institutions deliver US$9.6 billion in finance to the MSME sector, with recent indications suggesting that these figures are set to rise substantially (IFC, 2009: 60-1). The loans and investments made by IFC are designed to bolster FI capitalisation in the interests of opening new opportunities for FIs to expand lending and attract more capital. For example, in Indonesia, where IFC identifies MSMEs as employing 97.3% of the population, the Corporation has committed to supporting PT Bank Tabungan Pensiunan Nasional Tbk to the tune of US$70 million, with nearly US$16 million to be a loan convertible into equity for the IFC and the remainder being a senior loan, and a commitment to helping the bank raise further capital (IFC, 2011b; IFC, 2011c). The bank serves 64,000 customers, most of whom are small traders and kiosk owners, and IFCs support is seen as facilitating an increased expansion of financial services. Likewise, the Corporation has funded 20% of Bank Andara Indonesias first wholesale micro-finance organisation, which services lower-level micro-finance organisations (IFC, 2011c). Despite much well-reasoned scepticism with respect to micro-finance and its links with development (see Bateman and Chang, 2009; Chang, 2009: 7-9; Weber, 2010), many of IFCs FI commitments, both financial and advisory, are oriented towards expanding and normalising micro-finances reach. Indeed, IFC is normalising and re-legitimising micro-finance as a Development fix-it. In this respect IFC is not only attempting to enlist new members into the congregation of micro-finance but also promoting and assisting micro-finance NGOs to transition towards becoming deposit-taking banks and commercial borrowers that do not have to rely on traditional development modalities. As with some the modalities covered earlier, these processes are part and parcel of instilling market discipline in new locales. The launch of the Pacific Microfinance Initiative (PMI), an A$12.3 million partnership between the Corporation and the Australian Government, is indicative of IFCs micro-finance push. The PMI is specifically targeted towards supplying financial services via performance-based grants and advice to Papua New Guinea, Timor-Leste and the Pacific Islands (IFC, 2010: 1). More specifiToby Carroll 43

cally, through the PMI, IFC is providing grants and business advice to bank and nonbank financial institutions to strengthen their capacity to undertake sustainable lending and tailor their products to better service hard-to-reach communities that lack access to credit, savings, and other retail and banking services.
As part of the program, banks and other participating organizations in the initiative agree to reach a set of targets, such as an increased number of clients. Once targets have been met, they are given grant funding. (IFC, 2010: 2, emphasis added.)

And the demand for sustainable lending, given the lack of development in the targeted countries and the contingent and often temporary nature of donor support, is no doubt quite strong, with receptivity on the part of key actors for the IFC push. Take for example, Tuba Rai Metin (TRM) a micro-finance NGO in Timor-Leste that was originally part of Save the Children and which was later transferred to the Catholic Relief Service. TRM, located in a run-down building in a laneway next to the Chinese embassy in Dili, currently has branches in five districts. The NGO has approximately 65 credit ocers, around 6500 customers, having recently increased its client base signicantly, and is the second largest micro-nance organisation in the country. Not surprisingly, given Timor-Lestes highly underdeveloped condition, TRM issues modest (though high interestbearing) short- to medium-term loans, ranging from US$50 to US$3000, to both individuals and groups (MCRI, 2010: 1; TRM, 2010: 5-6). As of FY2010, TRM (n.d.) posted a prot of US$116,000. However, after struggling with nancial sustainability, plans are in place for expansion of services and the organisation is currently looking to raise US$1.5-2 million from investors and, in the process, gain a particular level of nancial license from regulators that would allow the NGO to transition to a deposit-taking bank. The business plan centres on capturing some of the opportunities oered by a country where 70% of the population live on US$2 a day or less. To put these opportunities in perspective, the chase is on to capture an untapped micro-nance market estimated to be US$50 million in size (the current serviced market is estimated at US$29.5 million) or around US$50 per person (TRM, 2010: 3). TRM management clearly wants to stabilise and expand operations. This is reasonable given the NGOs past reliance upon support from donors and the need to increase material conditions in Timor-Leste (interview, TRM staer, Dili, 17 February 2011; see MCRI, 2010: 10). Notably, when discussing stabilisation plans TRMs management point to the IFCs ongoing role in this process, in particular the regular contact that the IFC ocer in Dili makes with the NGO
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and the support that the Corporation provides in the form of advice and oce equipment. According to TRM management the recommendations emanating from IFC are unambiguous TRM should be turned into a private bank, which is also TRM managements position. The prospects for this, perhaps even with support from the PMI, appear likely. At least one assessment places TRM in a positive position to raise funds commercially and the NGO has put in requests to IFC and the Australian Government, among other public and private players, for support, although as of December 2010, had yet to take on borrowings at commercial rates of interest (MCRI, 2010: 11). Of course, countries such as Indonesia and Timor-Leste do have huge development challenges and most of their populations need a dramatic increase in the objective material conditions. However, tackling such conditions with microlending based upon commercial borrowings is a questionable practice. It seems at best palliative care and at worst another element in substituting agendas derived of ideology and the constraints of short-term material interest for methods that actually have substantively raised living conditions in the past. While the broader implications of the IFCs support of the MSME sector via FIs requires more analysis, ongoing experiments in this domain such as those above or the more famous Grameen Bank, seem unlikely to yield conditions that Development practitioners would themselves describe as developed if they had to live them. This said, Development practitioners concentrate on building portfolios of projects bound by ideology and material interest (the results of which are quantied in narrow measures of development outcome: x number of loans; x number of clients). Given the alignment of interests at play here and their interface with few current alternatives, we can only expect these various modes of deep marketisation that work around the state to increase in the coming years. Conclusion This article has provided an introduction to the deep marketisation of development a late neo-liberal private sector push being signicantly driven by IFC that is transforming both notions of development and, indeed, the underdeveloped world. The article has made the case that deep marketisation stems from a new politics of development emanating from the contradictions and contestation surrounding neo-liberalism and late capitalism. If Washington Consensus structural adjustment was deeply suspicious of the state, attempting to aggressively circumscribe and, indeed, decimate it in various ways, and the PWC brought the state back in as a regulatory state central to the constitution of idealised capitalist social relations, deep marketisation should be thought of as a central element in the next step of extending this push and establishing a global
Toby Carroll 45

market (see Cammack, 2012). In many ways deep marketisation is itself a public-private hybrid in that it variously works on, through and around the state. However, like the very PPPs that deep marketisation readily recommends to the global south, it is a project that privileges contradictorily private interest as being in the interest of the broader public. Good critical literature has outlined the problems with this understanding of the relationship between the public and the private under the PWC, problems which can be divided variously into liberal concerns over capacity in poor countries and those more deeply sceptical of the reconcilability demanded by technocratic agendas of the interests of elites and non-elites under capitalism a sentiment that tends to become more pronounced in the very countries where deep marketisation is proceeding apace. However, the rise of deep marketisation in the face of no well-organised alternative based around a repoliticisation of development, suggests that deep marketisation has quite a way to go, with the IFC and other others set to preside over expanding portfolios and play increasingly important roles in the tumultuous global political economy. This said, more work needs to be done by scholars and activists oriented towards understanding deep marketisations logic, the interventions that this underpins and the actual results of these interventions. This last point demands a greater understanding of the relationship between deep marketisation and particular material interests in particular dierent factions of capital in the constitution of a world market. Finally and crucially, this work needs to be set against alternative examples of how material conditions have actually been substantively improved under late capitalism. Here, the development stories of countries such as South Korea and, much more modestly and recently, Vietnam, are obvious candidates for fresh analysis. Yet this analysis should not fetishise the stories concerned in some process oriented towards distilling technocratic policy sets that are destined to fail. Rather, these cases should provide new lenses upon which to esh out the truly historical, political and ideological aspects of what actually made certain development narratives possible. Remaining cognisant of the contradictions and achievements within these stories, not to mention the broader system within which they occurred, would be a good start in tackling the spurious project that is deep marketisation and, more importantly, repoliticising development.
Acknowledgement A draft of this article was rst presented at the Public Organisations and New Approaches to Building Markets in Asia workshop at the Lee Kuan Yew School of Public Policy, National University of Singapore, April 2011. The author would like to thank Stuart Shields, Paul Gellert, Shahar Hameiri,
46 Toby Carroll

Darryl Jarvis and two anonymous reviewers for comments and conversations that assisted in revising the piece for publication. The usual disclaimers apply. Notes 1. Drawing upon David Craig and Doug Porters use of the word, I use Development with a capital D to distinguish between the work of organisations such as the World Bank and what is popularly understood by the word development an improvement of material conditions akin to that experienced by developed countries. See Craig and Porter (2006). 2. It should be noted that lending by IDA to the poorest countries has increased over the same period, pointing to a split emerging in the underdeveloped world (World Bank, 2010: 401). 3. The prots from some of these projects are handed over to the IDA for soft-lending operations. 4. As is made evident below, this use of equity can be used as a tool to encourage further marketisation over time. 5. The IFC was formed in 1956. This means that it actually precedes the establishment of the IDA the section of the World Bank Group that works with the poorest countries on Earth by four years. The IBRD was established in late 1945 after ratication of agreements at the Bretton Woods conference of 1944. 6. These initiatives include the Infrastructure Crisis Facility, the Micronance Enhancement Facility and the Capitalization Fund. 7. As we will see below, the analogy of health is not mine but indeed one that Doing Business propagates. 8. In the 2010 report, research in two new areas getting electricity and worker protection has been added to the methodology. 9. The methodology of Doing Business also includes drawing heavily upon responses from legal practitioners and professionals apparently at the coalface of relevant transactions. 10. Some interesting assumptions about both workers and business are made in the calculations. See World Bank and IFC (2009: 82). Indeed, the methodology and assumptions of Doing Business have been shown to be highly problematic on many levels. See, for example, Marais (2006), Bath (2007) and McCleod (2007). This said, in this paper I accept that the current approach is operational and inuential and deserves scrutiny not just for its methodology but for its role in a broader particular political agenda. 11. Finger has detailed some of these dierent manifestations in the water sector (Finger, 2004: 286). 12. The problems were perhaps most famous in Russia, where privatisation eciently transferred massive amounts of public resources (often through rather unsavoury practices) to a few oligarchs (Hedlund, 2001: 213). 13. Within a short time of the awarding of the concessions, serious diculties emerged in the western concession a reality variously put down to the Asian crisis and currency uctuations, problems with the tendering process, not to mention the bad management of the concessionaire. This concession was temporarily taken back by the state in a rather protracted process that spoke volumes about the assumptions by PPP proponents about the divisions between state and capital and was then bid out to a new concessionaire (see Carroll, 2010: 126-9). 14. The Ayalas are known for their property holdings, and have very large real estate interests in the water concession which Manila Water holds. They are also known as one of the oligarchic families that constitute something of a ruling class. It should be noted that Manila Water is also partly owned by Bechtel and Mitsubishi. 15. The listing was the rst international public oer by a Philippines issuer since 1997 (Manila Water, n.d. 4, 41).
Toby Carroll 47

16. This section presents revised material from Carroll (2012b). Readers interested in a deeper investigation of the BTC project should consult this reference. 17. BTC was also the rst signicant test for the new Equator Principles, another set of voluntary principles, this time signed by private nancial organisations and developed in consultation the World Bank. 18. The risks that these projects and their repercussions bring to domestic populations are often huge. I have presented these in signicant detail in relation to BTC elsewhere (Carroll, 2012b).

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Chang, H.-J. (2009) Hamlet Without the Prince of Denmark: How Development has Disappeared from Todays Development Discourse, http://www.econ.cam.ac.uk/ faculty/chang/pubs/HamletwithoutthePrinceofDenmark-revised.pdf (downloaded 10 April 2011). Colclough, C. (1991) Structuralism versus Neo-liberalism, in C. Colclough and J. Manor, (eds), States or Markets: Neoliberalism and the Development Policy Debate, Oxford: Clarendon Press, pp. 1-25. Craig, D. and Porter, D. (2006) Development Beyond Neoliberalism - Governance, Poverty Reduction and Political Economy, New York: Routledge. Dumnil, G. and Lvy, D. (2011) The Crisis of Neoliberalism, Cambridge, Massachusetts Harvard University Press. Dumol, M. (2000) The Manila Water Concession, Washington: World Bank. Esguerra, J. (2003) The Corporate Muddle of Manilas Water Concessions: How the Worlds Biggest and most Successful Privatisation Turned into a Failure, http:// www.servicesforall.org/html/WaterPolicy/Esguerra-Corporate%20Muddle%20 Manila.pdf (downloaded 7 February 2007). Finger, M. (2004) The New Water Paradigm: The Privatization of Governance and the Instrumentalization of the State, in D. Levy and P. Newell (eds), The Business of Global Environmental Governance, Cambridge, Mass. and London: MIT Press, pp. 275-304. Foster, J. B. and Magdo, F. (2009) The Great Financial Crisis, New York: Monthly Review Press. Gill, S. (2000) The Constitution of Global Capitalism, http://www.theglobalsite.ac.uk/ press/010gill.htm (downloaded 29 June 2011). Gunnoe, A. and Gellert, P. K. (2010) Financialization, Shareholder Value, and the Transformation of Timberland Ownership in the USA, Critical Sociology, 37, 2, pp. 1-24. Harriss, J. (2002) Depoliticizing Development, London: Anthem Press. Harvey, D. (2006) Spaces of Global Capitalism, London and New York: Verso. Hedlund, S. (2001) Property without Rights: Dimensions of Russian Privatization, Europe-Asia Studies, 53, 2, pp. 213-237. Hyland, B., Moene, K. and Willumsen, F. (2008) Be Careful When Doing Business, available at: http://www.ifiwatchnet.org/sites/ifiwatchnet.org/files/Doing%20Business_ESOPanalysis.pdf (downloaded 19 November 2010). International Finance Corporation (2001) Annual Report, Washington D.C.: IFC. International Finance Corporation. (2002) Summary of Project Information, http:// ifcln1.ifc.org/ifcext/eastasia.nsf/Content/SelectedProject?OpenDocument&UNID =B934D24FDD48B15785256BB300740406 (downloaded 5 May 2005). International Finance Corporation (2003) BTC Pipeline and ACG Phase 1 Projects Environmental and Social Documentation: IFC Response to Submissions Received During the 120-day Public Comment Period, http://www.ifc.org/ifcext/ btc.nsf/AttachmentsByTitle/ESIAPublicCommentsResponse/$FILE/BTC++IFC+Reply+to+comments.pdf (downloaded 16 September 2010). International Finance Corporation (2004) Summary of Project Information - MWC II,
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http://www.ifc.org/ifcext/spiwebsite1.nsf/2bc34f011b506e85256a5500731c/e8 87f06d8637e6b485256e67007f0017?OpenDocument (downloaded 10 June 2005). International Finance Corporation (2005) Investing in Progress - Annual Report, Washington D.C.: IFC. International Finance Corporation (2009) Creating Opportunity Where it is Needed Most - IFC 2009 Annual Report, Washington D.C.: IFC. International Finance Corporation (2010) The Pacific Microfinance Initiative, http://www1.ifc.org/wps/wcm/connect/cc83298047116344862fd7b2572104ea/ PMI+Factsheet.pdf?MOD=AJPERES (downloaded 26 November 2011). International Finance Corporation (2011a) Annual Report - I am Opportunity . Washington D.C. International Finance Corporation. (2011b) Increasing Access to Finance for Low-income Indonesian Households and Enterprises, http://www.ifc.org/ifcext/eastasia. nsf/Content/BTPN (downloaded 9 April 2011). International Finance Corporation. (2011c) Mainstreaming Microfinance-Bank Andara, available at: http://www.ifc.org/ifcext/eastasia.nsf/Content/Indonesia_ project_andara (downloaded 9 April 2011). Jayasuriya, K. (2000) Authoritarian Liberalism, Governance and the Emergence of the Regulatory State in Post-Crisis East Asia, in R. Robison, M. Beeson, K. Jayasuriya and H.-R. Kim (eds), Politics and Markets in the Wake of the Asian Crisis, London and New York: Routledge, pp. 315-330. Landingin, R. (2005) Foreign Investors Ensure Strong Manila Water Debut, FT.com: http://www.ft.com/cms/s/0/948b7fc4-99ae-11d9-ae69-00000e2511c8. html#axzz1Iux6idOj (downloaded 7 July 2011). Lazard. (2005) Financing large Scale Pipeline Projects In and Out of Russia: Past Experiences and Challenges for the Future, http://www.eng.rpi-inc.ru/materials/1/ Doklad/PrChavarotEn.pdf (downloaded 2 March 2009). Leys, C. (1996) The Rise and Fall of Development Theory, London: James Curry Press. McLeod, R., H. (2007) Doing Business in Indonesia: Legal and Bureaucratic Constraints, available at: http://www.gip-recherche-justice.fr/aed/publications/working-papers-sydney/03-McLeod.pdf (downloaded 28 November 2010). Manila Water. (n.d.) Manila Water 2004 Annual Report, available at: http://www.manilawater.com/downloads/annual_report_2004.pdf (downloaded 7 July 2011). Marais, B. (2006) Methodological Limits of Doing Business Reports, available at: http://www.gip-recherche-justice.fr/aed/publications/WP-AEDDuMaraisMethodologicalLimitsDB_EN09-09-06.pdf (downloaded 23 November 2010). Marx, K. and Engels, F. (1888) Manifesto of the Communist Party, in R.C. Tucker (ed.), The Marx-Engels Reader, New York and London: W.W. Norton and Company, pp. 469-500. Micro Credit Ratings International Ltd. (MCRI). (2010) Tuba Rai Metin, http://www. tubaraimetin.com/download/mcrilrep.pdf (downloaded 25 November 2011). Mosley, P., Harrigan, J. and Toye, J. (1991) Aid and Power. The World Bank and Policybased Lending, Volume 1, Analysis and Proposals, London: Routledge.
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Peck, J., Theodore, N. and Brenner, N. (2009) Postneoliberalism and its Malcontents, Antipode, 41, S1, pp. 94-116. Pincus, J. and Winters, J. (2002) Reinventing the World Bank, in J. Pincus and J. Winters (eds), Reinventing the World Bank, Ithaca: Cornell University Press, pp. 1-25. Stiglitz, J. (2001a) Redefining the Role of the State, in H.-J. Chang (ed.), Joseph Stiglitz and the World Bank: The Rebel Within, London: Anthem, pp. 94-126. Stiglitz, J. (2001b) Towards a New Paradigm for Development: Strategies Polices and Processes, in H.-J. Chang (ed.), Joseph Stiglitz and the World Bank. The Rebel Within, London: Anthem, pp. 57-93. Toye, J. (1987) Dilemmas of Development, Oxford: Basil Blackwell Ltd. Tuba Rai Metin. (n.d.) Financial services to unreached families in Timor-Leste, http:// www.tubaraimetin.com/download/abttrm.pdf (downloaded 25 November 2011). Tuba Rai Metin (2010) Investment Opportunity: Taking Financial Services to Excluded Families in Timor-Leste, Dili: TRM. Van Waeyenberge, E. (2006) The Missing Piece: Country Policy and Institutional Assessments at the Bank, http://www2.warwick.ac.uk/fac/soc/csgr/activitiesnews/ workshops/2006ws/world_bank/papers/van_waeyenberge.pdf (downloaded 5 January 2007). Weber, H. (2010) Politics of Global Social Relations: Organising Everyday Lived Experiences of Development and Destitution, Australian Journal of International Affairs, 64, 1, pp. 105-122. Williamson, J. (1990) What Washington Means by Policy Reform, in J. Williamson, (ed.), Latin American Adjustment: How Much has Happened?, Washington: Institute for International Economics, pp. 5-20. World Bank (1990) World Development Report 1990, New York: Oxford University Press. World Bank (1993) The East Asian Miracle: Economic Growth and Public Policy, Oxford: Oxford University Press. World Bank (1997) The State in a Changing World, World Development Report 1997, Washington: Oxford University Press. World Bank (2002) World Development Report 2002, Building Institutions for Markets, Washington: Oxford University Press. World Bank (IDA). (2003) Allocating Funds Based upon Performance, http://siteresources.worldbank.org/IDA/Resources/PBAAR4.pdf (downloaded 3 January 2007). World Bank (2010) 2010 World Development Indicators, Washington D.C.: The World Bank. World Bank (2011) Multipolarity: The New Global Economy, Washington D.C.: The World Bank. World Bank and International Finance Corporation (2009) Doing Business 2010. Reforming Through Dicult Times, Washington D.C.: World Bank. World Bank and International Finance Corporation (2010) Doing Business in Indonesia 2010, Subnational Series. Washington D.C.: World Bank.
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52

Toby Carroll

Indo-Pacific Governance Research Centre: Policy Brief Issue No. 3 June 2011

The New Politics of Development and Development Policys Big Private Sector Push as Response
Toby Carroll
A Senior Research Fellow at the Centre on Asia and Globalisation, Lee Kuan Yew School of Public Policy, National University of Singapore.

A new politics of development has given rise to a new pro-private sector push within development practice. The push involves new modalities that work on, through and around the state The approach brings with it some very real risks in terms of implementation and impact

Key Points

Introduction

Over the last decade or more a new mode of development practice has emerged that both complements and, in many ways, transforms the agendas of organisations tasked with facilitating development. This policy brief details the characteristics of what is now this seasons colours for many development practitioners a collection of new development modalities deployed by multilateral and bilateral agencies to cultivate private sector support in the underdeveloped world. Promoted most prominently by the World Banks private sector arm the Inter-national Finance Corporation (IFC), this pro-private secIPGRC POLICY BRIEFS IPGRC Policy Briefs present policy-relevant research to issues of govern-ance within and beyond the Indo-Pacific region. The papers are written by members of the IPGRC and their research associates and are designed to contribute to public discussion and debate on crucial issues of global governance. The opinions expressed in this p olicy brief are those of the authors and do not necessarily reflect the views of IPGRC or the University of Adelaide. Contact: Email: ipgrc@adelaide.edu.au http://www.adelaide.edu.au/indo-pacific-governance/policy/ Toby Carroll 53

tor push extends much of what was previously known as the post-Washington consensus (PWC). However, in many ways the eorts of the IFC and others represent a qualitative shift in the drive to promote market-led development, pointing to both a recognition within development circles that state-oriented market reform has serious limitations and, importantly, that a new politics of development now operates. This IPGRC policy brief begins by detailing the political roots of this new push a push I call the financialisation of development or FoD. FoDs political roots are crucial to understanding its logic and the instruments that both embody and operationalise this logic. Subsequent to the detailing of FoDs political roots, the brief then details the precise form and modalities of FoD, with the latter including pro-private sector technical assistance, direct-to-sector equity investments and lending, and the benchmarking and monitoring of states in their promotion of an enabling environment for fostering private sector activity. I conclude by highlighting some examples of how the approach is unfolding in the Asia-Pacific and point to the very real problems and risks associated with the deployment of FoD in what are now described as frontier and emerging markets. The Financialisation of Development the Big New Push in Development Practice Since the middle of the last decade, the work of the World Bank and other multilateral and bila teral aid agencies has been heavily built around the foundations of the so-called post-Washington consensus (PWC) shorthand for an ensemble of state targeted/market-oriented institutional reforms seen as crucial to reducing transaction costs and information asymmetries orthodox economics speak for impediments to market expansion and eciency. The identification by the Bank and others of the need to reduce transaction costs and information asymmetries to facilitate market-led development has led to mainstream develop-ment practitioners welcoming the state back in a significant switch following structural adjustments (in)famous ideological and material assault on the state. Emblematic of this substan-tive reincorporation of the state back into development practice, the Banks influential annual World Development Report has placed significant store in building particular institutions to make markets work and charting the states central role/position in this. Importantly, the PWC has seen a raft of new projects and programmes rolled out in poor countries. These interventions often broadly located under the umbrella term good governance have been designed to bolster rule of law, secure property rights and establish semi-autonomous regulatory entities in the interests of creating more ecient and more equitable patterns of market-led
54 Toby Carroll

development. Not surprisingly, most PWC programmes have been targeted directly at the state as a site of reform. Although, some of the trendiest PWC projects have attempted to facilitate market-oriented institutional change from the bottom up, through social and community driven development programmes designed to incentivise communities to demand good governance from those up on high. This said, the state-targeted/institutionally-oriented reforms of the PWC have met with significant problems, many of which faithfully echo those that earlier development interventions faced. Here the politics of project implementation (reform rejection/distortion, corruption etc.) and project outcome, coupled with the often unwieldy and erratic trajectory of the global political economy under late capitalism, have been central. The overarching result of this has been that proponents of the PWC have few unambiguously attributable success stories to lay claim to, especially in the shadow of big poverty reducers such as China and Viet-nam two countries that hardly constitute poster-children for the PWC. Further adding salt to the wounds of the state-targeted/pro-market agenda of the PWC, is the entry of new development actors. These comprise new internationally-engaged states (such as China) and their sovereign wealth funds, private foundations and microfinance organisations and, crucially, the interests of transnational capital (the latter looking in the underdeveloped world for the sorts of returns increasingly hard to find in OECD countries). All of these actors have played pivotal roles in re-crafting the development landscape, in many cases diminishing the leverage multilateral organisations have in implementing state-targeted reforms (sometimes rather prominently in the big middle income countries that have tradi-tionally been significant clients of the Bank and others). This new politics of development has meant that despite ongoing crises hitting the underdeveloped world and despite multilateral organisations subsequently seeing large in-creases in their operations, said organisations are present, yet peripheralised in many of the countries in which they work countries which still face huge challenges in addressing imme-diate political and economic demands and social needs. Not unrelated, in tough economic times, these organisations also continue to face hard questions from developed countries with straining budgets about the utility and prudence of funding ongoing PWC operations that have few tangible results and which often attract considerable criticism from conservatives and the left alike. Yet while the state-oriented market-led PWC agenda is seemingly in stasis, policy innovation and expansion has been evident in the form an expansion in number and nature of eorts broadly related to promoting private sector activity in the underdeveloped world a process that I have dubbed the financialisaToby Carroll 55

tion of development or FoD. In much of the criti-cal social science literature, financialisation refers to the transformation of society in accordance with the predilections and concerns of finance. In consonance with this, FoD operationalises finances core interests such as being profit oriented and focused upon calculating and securitising risk in this endeavour in the name of fostering development. Undoubtedly a result of the new politics of development described above, FoD initia-tives have expanded significantly over the last decade. At the vanguard of this expansion is the IFC the worlds leading multilateral supporter of the private sector. In the last ten years the IFC has seen its annual project approvals more than double, investment commitments quintuple (from US$3.9 billion to US$18 billion), and investment disbursements triple. Indeed, since 1990, support from the likes of the IFC to the private sector not including the vastly larger sums mobilised by such organisations has soared ten times, from less than US$4 billion to over US$40 billion. Yet, perhaps more important for those interested in the shifting terrain of mainstream development policy than the political motivations behind FoD and the change in the amounts of money allocated and mobilised by organisations such as the IFC, are the new modalities that come with FoD. Indeed, here we see precisely how organisations are attempting to grapple Further adding salt to with the new politics of development by repothe wounds of the statesitioning themselves and, simultaneously, the targeted, market agenda notion of what constitutes mainstream develof the PWC, is the entry of new development opment practice. actors, comprising new Principally, FoD organisations are trumpetinternationally-engaged ing and exploiting their ability to bridge the states (such as China) public-private divide to securitise the interests and their sovereign of domestic and foreign capital, all the while wealth funds, private extending the sphere of competitive market foundations and microrelations in the name of development. On the finance organisations back of providing these functions, FoD organinot to forget the interests sations are also attempting state transformation of transnational capital, by both creating new constituencies interested the latter looking in the underdeveloped world in securing pro-private sector institutional refor the sorts of returns form and benchmarking the implementation increasingly hard to find of this. To this end, FoD entails a whole host of in OECD countries. tools to secure and expand private sector activity in emerging and frontier markets tools which demonstrate FoDs approach of various56 Toby Carroll

ly working on, through and around the state. Many of these tools, such as technical assistance, project lending, competitive bench-marking, monitoring and evaluation, would be familiar to scholars and policy makers of the PWC. However, the FoD incarnations of these instruments have their own important tweaks and modifications that are specifically aimed at dealing with the new politics of development and charting the FoD comparative advantage within this politics. For example, FoD organisations now not only provide o the shelf advice for poor countries on how to organise a par-ticular sector and commit state-oriented lending to that sector (things that the World Bank has long done), they actually promote public-private partnerships (PPPs) and lend to and take equity in the private concessionaires within PPPs. This last initiative is specifically intended to both free up the flow of risk-averse capital to risk-prone poor countries while also locking in and extending competitive market reforms. Further, not only do FoD organisations assess a countrys adoption of a particular set of institutions (in the way that the World Banks Country Policy and Institutional Assessment does), they assess and competitively benchmark countries on their adoption of a particular enabling environment (ideal institutional arrangement) for private sector activity. This last endeavour, most famously realised in the form of the IFC/World Bank Doing Business report series, is designed to both allow the private sector to assess the risk and opportunity of a particular investment in a given country and incentivise domestic interests, public and private, to pursue pro-private sector reform. Finally, like traditional multilateral operations, FoD involves the use of discrete pro-ject lending. However, with FoD, rather than the loans going to states, with reform conditionality tied into the bargain, FoD lending goes to private companies and, increasingly, private financial intermediaries (such as domestic banks and micro-finance institutions). As with PPPs, FoD organisations will also often take equity in financial intermediaries, assisting by their very presence in raising capital and mitigating political risk. Importantly, lending and investments to financial intermediaries are designated to be onlent to micro and other entrepreneurs in the interests of fostering new and expanded SME sectors. Put another way, FoD organisations are attempting to engineer whole new sectors of commerce. And FoD organisations and their modalities are well placed to achieve, at least in terms of formal implementation, much of the above. In frontier and other risky settings for international capital, the involvement of FoD organisations with sovereign relationships and financial backing, provides the private sector (especially private sector finance) with confidence that a particular project will encounter fewer problems (renationalisation, expropriation/appropriation of
Toby Carroll 57

profit etc.) than would otherwise be the case. Lowering these risks means that borrowing costs are reduced for private enterprise and margins look better. Indeed, in the underdeveloped world, mobilising capital (especially large amounts) often becomes much easier if an FoD organisation is onboard, either as an investor, advisor or both. FoD organisations also enjoy significant leverage by virtue of their position as expert organisations knowledgeable on sectoral and financing matters and performing signalling roles (e.g. this country/piece of legislation is a liability this one is not) that are taken seriously by both states and the private sector. Furthermore, that FoD brings with it a host of environmental and social safeguards to be fulfilled also means that investors can rest a little more at ease much of the due diligence and safeguard work having been done by standard setters such as the IFC with corporate investments, branding and legitimacy less susceptible to accusations from civil society. In sum, FoD organisations can be thought of as lenders, investors, insurance providers, enforcers, ratings agencies, sector designers and builders all rolled into one! Within the new politics of development, these roles are seen to be especially useful, both for states (interested in revenue streams and cheap solutions to service provision) and to the private sector (the latter in search of profit in environments where risks must be mitigated and finance accessed at rates as low as possible).
Furthermore, that FoD brings with it a host of environmental and social safeguards to be fulfilled also means that investors can rest a little more at ease much of the due diligence and safeguard work having been done by standard setters such as the IFC with corporate investments, branding and legitimacy less susceptible to accusations from civil society.

A Good Seller in the Asia-Pacific Beyond the big numbers noted above, its not too dicult to find evidence of FoDs uptake. For example, within the Asia-Pacific, the IFC has played an evolving role in the transformation of Manilas water services, deploying many of the FoD modalities described earlier. The Cor-poration was initially brought in during the nineties to provide technical assistance on a PPP to tackle Manilas ailing water services. However, much more than this, the IFC has subsequently extended loans and taken equity in one of the water concessionaire companies in Manila, with the express purpose of
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supporting what the Corporation describes as one of a limited number of success stories in water privatisation. Moreover, this investment has been made conditional on the concessionaire company listing on the stock exchange. Here we see how FoD organisations are not only playing central roles in advising on sector reform up front but are also central actors in extending and transforming the marketisation/reform process over time. It goes without saying that this has serious implications for state-society relations. Following on from this theme of IPGRC Research Mission transformation of development modalities and their implications, FoDs burA primary focus of our research geoning influence on microfinance is agenda is on political dynamics also becoming clearer in countries such of governance and institutional as Timor Leste and Indonesia. Workinnovations in the provision of ing through NGOs and microfinance public goods and regulation wholesalers, this push within a push espe-cially as it relates to ecoinvolves various strategies. In some innomic and social development stances FoD organisations are variously in the region. persuading and incentivising NGOs This will address issues relating to transition from not-for-profit/coto the organisation of markets operative entities to profit-oriented/deand politics, and their effectiveposit-taking banks. In other cases, FoD ness and fairness in addressing organisations are bolstering the capicom-plex economic and social talisation of microfinance wholesalers prob-lems. It will also include to expand operations and on-lend to an exami-nation of the transother financial intermediaries and endformations of political organiuse borrowers. sation and author-ity at various Finally, the assessment and comscales global, national, and petitive benchmarking elements of regional which have a bearing on the complex multilevel FoD are also becoming prevalent in governance of the delivery of the Asia-Pacific with bureaucrats and public goods and regulations. politicians in countries rang-ing from Timor Leste to Malaysia increasingly The centre has a particular foconcerned with improving both their cus on the global and regional Dong Business rankings and their indichal-lenges arising from the vidual country reports. shifting tectonic plates of ecoImportantly, cases of FoD, such as nomic and political power to those above, are rapidly increasing in the Indo-Pacific region. number in the region and beyond. InToby Carroll 59

deed, FoD is moving to centre stage, attractive as it is to cash hungry states and companies in search of profit. However, on paper and in practice FoD gives serious cause for concern the theme of the concluding section of this policy brief. Conclusion FoDs risky prospects for the underdeveloped world Concerns over FoD can be grouped into two categories, the first being concerns for policy makers over implementation a perennial problem for development policy practitioners and the second being concerns relating to impact. Readers will note that these were the two core problems that plagued the PWC (indeed both have plagued earlier development pushes too). On both counts, the trajectory of many PPPs, the gains of FoDs technical assistance and benchmarking, and the limited substantive potential of financial intermediaries suggest that FoD is heading the same way as the various agendas that preceded it. That is to say, FoDs implementation will be highly uneven, resulting in unintended, undesirable and contradictory outcomes. To be sure, FoDs role in the entrenchment of pernicious elites, the reproduction of other socially and environmentally unsustainable activities, and obfuscation of alternative agendas that could realise positive change, is already evident, with nascent analytical eorts conceptualising and charting these processes. This reality stems from FoDs political origins, first and foremost, as both a devel-opment fix (to a stagnant mode of development practice) and what political geographers might describe as a spatial fix for capital. Built around modes of development practice that are significantly oriented towards freeing up circuits of capital and opening up new spaces of accumulation under late capitalism, while displaying strong technocratic tendencies endemic within mainstream development practice, the prospects for FoD to generate the sort of development experienced by the likes of Korea, China or Vietnam seems fanciful. This is not to say the patterns of development experienced by these countries have been unproblematic far from it. However, the few large-scale examples of post-Second World War development should serve warts and all as empirical starting points for understanding the politics of development under late capitalism. This requires analysts to shed both hubristic nationalist and/or developmental statist readings of development and neoliberal assump-tions too, and truly grapple with the political-historical/domestic/transnational production of development and underdevelopment. This is not something that is easily done with existing nation-state/state centred theories, especially those that discount the role of class. This said, until the passive revolution that FoD is part of is challenged by

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serious political alternatives, we can be sure that FoDs modalities will remain in vogue for some time to come, crucial as they are for certain interests within the new politics of development.

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Social Development as Neoliberal Trojan Horse: The World Bank and the Kecamatan Development Program in Indonesia*
Toby Carroll ABSTRACT This article seeks to reconceptualize the post-Washington consensus (PWC) by focusing not simply upon the institutional structures and ideology promoted by it, but the manner in which these are promoted on the ground. The aim is to reveal a central distinction between the Washington consensus and the PWC that has been somewhat neglected: their diverging approaches to implementation. The author focuses on the World Bank-funded Kecamatan Development Program (KDP) in Indonesia, a project that is viewed by some as being somewhat unorthodox. He argues that in addition to its promotion of the latest round of institutional reforms, what is really dierent about KDP, compared with older approaches to market-led development typical of the Washington consensus, is the manner in which it delivers its mix of neolib- eralism. What is radical about a programme like KDP is that it constitutes a new Trojan horse for embedding market-centred norms and practices.1 In general, this is demonstrative of a key dierence between the Washington consensus and the PWC that has been undervalued in many analyses of the dominant development paradigm: the methods used to embed and sustain liberal markets.

INTRODUCTION People interested in and associated with market-led development have been talking about a post-Washington consensus since the late 1990s. The term postWashington consensus (PWC) has been commonly used to refer to the dominant paradigm conditioning current development practice, and specifi- cally the approach developed and disseminated by the World Bank (see, for example, Fine, 2003a; Fine and Rose, 2003; Fine et al., 2003; Pincus and Winters, 2002; Stiglitz, 2001a, 2001b, 2001c, 2004). This said, contemporary understandings of
* I would like to thank Garry Rodan, Kanishka Jayasuriya, Teresita del Rosario, Shahar Hameiri and two anonymous reviewers for their comments on earlier versions of this article. Any errors or omissions are of course my own. Development and Change 40(3): 447466 (2009). OC Institute of Social Studies 2009. Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St., Malden, MA 02148, USA
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the PWC, including critical ones, tell us little about how it has played out in the field, and thus, what it actually is. Orthodox propo- nents of the PWC have defined it in contrast to the market-fundamentalism of the Washington consensus (Stiglitz, 2001a, 2001b, 2001c). Critics of the PWC, in turn, have been predominantly concerned with the prescriptive utterances of PWC proponents, often drawing upon documents such as the World Banks annual World Development Report, to both define and assess the latest incarnation of market-led development (Cammack, 2004; Fine et al, 2003; Pincus and Winters, 2002). Such sources have provided valuable insights to assist us in disentangling the PWC or the new develop- ment paradigm.2 However, the focus upon prescriptions has detracted from comprehending some of the PWCs most important distinguishing charac- teristics. This is particularly the case for those elements central to the new development agenda that are designed to tackle neoliberalisms great frus- tration the impediments to implementing and sustaining liberal market reform.3 This article draws upon many of the contributions of the authors cited above as a starting point for comprehending the PWC in action. However, rather than focusing squarely upon prescriptions as being synonymous with the PWC, it argues that the PWC promotes a new form of neoliberal devel- opment governance what I call socio-institutional neoliberalism (SIN) which is both a bundle of prescriptions and a set of methods and mecha- nisms to shape the political terrain in the underdeveloped world towards the establishment and sustenance of liberal market societies. The utility of such a conception of the PWC is revealed when we interro- gate some of the new types of projects emanating from it. This is because it helps us to understand what precisely has changed, beyond just the insti- tutional focus, in the shift from Washington consensus to the PWC. Indeed, such an analysis is particularly important for those social projects that appeared to be such a departure from the crude structural adjustment of the Washington consensus. The World Bank-funded Kecamatan Develop- ment Program (KDP) in Indonesia, with its emphasis upon local villager participation and choice in the allocation of funds, is an excellent case in point. On one level KDP represents a substantial departure from earlier ne- oliberal approaches to development. However, what is radical about it is the manner in which neoliberal reform is delivered, in essence attempting to rebuild citizenship, from the bottom up, in a liberal market compatible man- ner, using the provision of debt-based funding for productive economic and social infrastructure as an incentive. Put another way, KDP, drawing upon the political technology of participatory development, constitutes a distinctly dierent and temporarily eective delivery device for extending capitalist social relations and the institutions that the development orthodoxy posits should accompany such
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relations. That the US$ 1.6 billion KDP gets around many of the political impediments that plagued the implementation of earlier forms of neoliberal inter- vention warrants critical attention. For the heavily debt-funded programme pursues the reduction of poverty within Indonesia a country with a per capita GNI of US$ 1,280 (World Bank, 2006: 288) within the liberal market, without engaging with the paradigmatic liberal blind spots relating to ownership of the modes of production and class struggle more broadly. Indeed, the project conflates the task of poverty reduction with a technical process designed to create new competitive market citizens, empowered with transparency and accountability the new institutional fixes central to KDP. In this respect, the programme sits comfortably within the acceptable boundaries of the Banks work and the paradigm to which it is wed, which Cammack (2004) has argued promotes the proletarianization of the worlds poor.4 We begin the case for broadening our understanding of the PWC by outlining SINs central elements, and in particular those pieces that I argue have received less attention than they deserve (the methods and mechanisms directed towards engineering market citizenship). With this grounding, we then turn to the KDP as an operating example of SIN, to demonstrate the utility of evaluating the PWC beyond its prescriptive content. THE ANTI-POLITICS OF SOCIO-INSTITUTIONAL NEOLIBERALISM AND THE KDP AS AN EXAMPLE SIN evolved out of the legitimacy crisis that plagued earlier forms of neolib- eral development policy (Carroll, 2007; Carroll and Hameiri, 2007: 413). It exhibits considerable new prescriptive content, underpinned as it is by new institutional economics (NIE), with its emphasis on the relationship between institutions and transaction costs (North, 1990, 1994). This insti- tutional emphasis alters some of the policies of the Washington consensus, such as privatization, deregulation and liberalization (Williamson, 1990), grounding the focus of the development industry in the importance of particular institutional matrices for market operation (understood in orthodox parlance as good governance). Notably, this institutional push has even included apportioning roles to social institutions and harnessing their stocks of social capital (Fine, 2002, 2003b; Harriss, 2002). Crucially though, a good deal of SINs form relates to the very methods and mechanisms directed towards achieving the deep implementation of market society and constituting what Jayasuriya (2005: 5) has dubbed market citizenship where the rights and obligations of citizens in relation to the state are
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fundamentally conditioned by market imperatives. At the centre of SINs architecture are newly minted delivery devices devices that package up SINs new institutional prescriptive content. Here the Poverty Reduction Strategy Papers, Country Assistance Strategies, Country Development Partnerships and targeted projects and programmes of the Bank are exemplary. These delivery devices are both delivered by and incorporate forms of political technology, such as participatory processes and consultation exercises. Such technologies are charged with managing potentially hostile claims of political representation in order to achieve a mono-political society, which is to comprise a strong market state (that makes up for mar- ket failures and supplies part of the markets required institutional matrix) and a politically pliant congregation of market participants whose only demand should be equality of market access (Robison, 2006: 5). For example, participatory processes, which constitute key political technologies within SIN, are related to both harnessing coalitions of support for reform and, by way of blocking the input of inimical positions, the marginalization of opposition (Carroll, 2009). They also play an important ideological role in disseminating the Banks ideas on development what the organization often dubs knowledge transfer. The crucial point here is that the concern of overcoming impediments to implementing and sustaining liberal markets is at the heart of SIN. Indeed, along with the overt influence of NIE, it is SINs delivery devices and political technologies which most distinguish it from earlier forms of neoliberal development policy. The combination of SINs delivery devices and political technologies plays a central function in both attempting to recraft state and society along neoliberal lines and the liberal pursuit of poverty reduction. Crucially, this approach avoids paradigmatic blind spots such as class and a countrys his- torical location within the global political economy as analytically important in programme and project design, while simultaneously attempting an exten- sion of capitalist social relations. Consequently, Cammack (2004: 190) has qualified the Banks commitment to poverty reduction (embodied in SIN) as real within limits, yet conditional upon, and secondary to, a broader goal: the perpetuation of the institutional and other infrastructure required for global capitalist accumulation and the transformation of social relations (proletarianization) that this entails. Despite repeated calls within academia and elsewhere to see an organization like the World Bank as non-monolithic, even the most progressive wings of the organization demonstrate a consistent adherence to the strictures of SIN and the liberal market extension project. This is not to say that the Bank is internally free of some intellectual diversity and contestation. However, those that choose to work within the organizations realm of the acceptable, regardless of their per66 Toby Carroll

sonal politics, have to fit snugly within its confines. Such agents (understood in contemporary parlance as norm entrepreneurs or change agents) must necessarily adhere to the world of acceptable statements and utterances within which they live (Ferguson, 1990: 18), conditioned as this world is by the well-defined boundaries of the hegemonic ideology. Further to this, Bank projects must be neatly compartmentalized country-bound entities, focused upon intervening in specific areas identified as requiring reform, running for set periods of time and having palatable funding structures. In short, the Bank despite some eclecticism in its sta is responsible for projects and programmes that exhibit a consistent adherence to a particular ideology (neoliberalism) and which invariably retain certain other rigidities in their design. The Bank-funded KDP, associated with the World Banks social development unit based in Jakarta, is particularly illustrative of this. Notably, KDP has drawn high-profile attention for its apparent dierence as a Bank project a quality which is in no small way attributed to the eorts of those at the centre of the project (see, for example, Mallaby, 2004: 2026). Yet to those critically interested in neoliberal modes of development, there is much that appears eerily familiar in the programme. Indeed, despite appearances to the contrary, in reality KDP puts many of SINs institutionalist emphases such as social capital and governance into practice. Echoing this point, Tania Li has described the World Banks social de- velopment team in Jakarta as pioneers in turning concepts into a program of intervention (Li, 2006: 1). Following Nikolas Rose, and indelibly influenced by Foucault, Li (2007: 23069) has looked at KDP as an example of government through community; a notion that she argues harbours significant compatibilities with neoliberalism. From this perspective, KDP is seen as an example of a development programme that presents community as a solution to particular problems albeit a solution requiring the carefully calculated intervention of elite experts in order to cultivate and harvest communitys apparent benefits (ibid.: 232). In the case of KDP, Li argues that the experts placed community at the centre of a massive and expensive programme designed to rectify planning inadequacies and governance failures in Indonesia, while neglecting the unequal relations of production and appropriation (ibid.: 2389). As will become evident, the analysis of KDP presented here has signifi- cant sympathies with Lis critique of the programme, which follows firmly in the tradition of Ferguson and others. In particular, it sees the importance of identifying KDP as an intervention designed by particular experts operating within specific operational and ideational boundaries. However, this take on KDP is conditioned more by specific lineages within historical materialism5 than by Foucault,
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shifting the focus towards understanding the programme as an example of the ongoing political evolution of neoliberalism. In short, this article emphasizes how the eorts of experts are actually conditioned in a substantive manner by ideology and structure, generating a programme that is in fact a massive and innovative delivery mechanism for extending capitalist social relations and the infrastructure (hard and soft) that these are thought to require. It places neoliberalism (as a project driven by the interests of capital) and not the experts at centre stage in the analysis. In this regard, KDP seeks to change patterns of behaviour at various levels of society (attempting to normalize transparency and accountability and deepen competition) by using the provision of funds for infrastructure related to productive activity and microcredit at the local level as an incentive. The changes sought are classic SIN concerns. However, it is KDPs approach to delivering reform that really sets it apart from the majority of the projects that the Bank is typically associated with (in particular its highly inclusive nature, granting decision-making power to the village level and ensuring a high level of participation by women). Thus, rather than seeing KDP as some aberrant anomaly within neoliberalism, or just broadly compatible with it, this analysis sees KDP vying for a position at its vanguard, a project that, in the short term at least, actually tackles neoliberalisms most persistent problem: implementation. Indonesian government agencies describe the KDP as a project that aims to alleviate poverty and improve local-level governance in rural Indonesia (Ministry of Home Aairs, 2002: 8). For the Bank, which classes KDP as a community empowerment/social protection project, the programme is described in a more formal manner as supporting participatory planning, and development management in villages, through a broad programme of social and economic infrastructure, [which] will also strengthen the local formal, and informal institutions, through greater inclusion, and accountability of basic development needs (World Bank, 2001a, 2003a: 38). KDP has gone through several phases, each one significantly expanding upon the previous in size. Its pilot version, in 1997, covered twenty-five villages, its first major phase (KDP 1) reached 15,000 villages and it now reaches over half of all the villages (around 38,000) in Indonesia (Guggenheim et al., 2004; World Bank, n.d. a, 2005). A version of it was used by the Bank in Aceh and North Sumatra to assist in the post-tsunami environment and similar projects have been recreated in Afghanistan, East Timor and the Philippines (Li, 2006: 2; World Bank, n.d. b). It is the biggest community development project in Southeast Asia (Guggenheim, 2004b: 2) and has been a major example of what the Bank has called scaling up the rapid increase in the size of new programmes to reduce poverty.
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Importantly, it is seen (in particular by people closely associated with it) as being substantively dierent from standard development projects (Guggenheim, 2004b: 46).6 A brief overview of KDPs structure illustrates where much of this perceived dierence stems from. Here, the nature of reform delivery is key. KDP provides funds (block grants of US$ 50,000150,000) to the kecamatan or sub-district level (World Bank, n.d. a). The broad list of what KDP can finance is long and wide-ranging. However, there is a distinct emphasis placed upon infrastructure (economic and social) that can facilitate productive output within the market (Guggenheim et al.,2004: 8). In this respect, the Bank advertises KDP as having high internal rates of return derived largely from its role in facilitating new economic activity and the harnessing of suppressed/latent production capacity that was finally able to be channeled to local markets (World Bank, n.d. a). In particular, the programme is highlighted by the Bank for its capacity to produce cost-eective infrastructure (which is claimed to have generated 39 million workdays and facilitated the expansion of business opportunities) and the 751,000 loan beneficiaries and entrepreneurs participating in KDP credit & business activities (ibid.). Crucially, KDP incorporates a process of socialization, informing people of the project and detailing the way in which it operates (Guggenheim et al., 2004: 8). This is seen as critical to the project, illustrating the importance of its simple (yet firm) rules and the central role of facilitators in the projects operation. The socialization stage of KDP is seen as a vital elementary stage to support the success of the processes and activities implemented in the following stages (World Bank, 2004: 16). Various forums are important in this process (ibid.: 16). Initially, word about KDP is spread through workshops at the provincial, district and subdistrict levels to disseminate information and popularize the program (Guggenheim et al., 2004: 7). These workshops involve community leaders, local government ocials, local press, universities and NGOs (ibid.). Village, subvillage and group meetings are also held to further spread information about KDP and encourage people to propose ideas for KDP support (ibid.). Planning meetings are then conducted at the sub-village and village levels. Here, facilitators are involved, from the village and sub-district level, to spread information about KDP procedures and to encourage the submission of ideas for KDP funding. At this stage, women also hold their own meetings in order to decide upon womens proposals (ibid.). A subsequent village meeting is then held, where the respective proposals of the villagers are discussed, with some selected to be put forward to the sub-district (inter-village) forum. Each village submits up to three proposals to the inter-village forum, with one of these proposals coming from village women and a second from a womens savings and loan group (ibid.). These are then discussed at the inter-village level. A process
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verifying the fulfilment of the technical requirements of each proposal prior to project selection also takes place. This is to assess the economic and technical feasibility of a given project, the number of people who will benefit from the project, the planning for maintenance or loan repayment (where loans are involved), the level of participation by people in the idea proposal process, and the local community contribution. Proposals are then discussed at a second intervillage meeting to determine priority rankings. After this, one more meeting of the villages occurs, proposals are selected and a grant agreement is drafted for the successful proposals (ibid.: 9). Importantly, competition between individual proposals is a central feature of KDP. Where a strong consensus cannot be reached, villagers are given criteria in order to prioritize particular proposals, often with the assistance of a facilitator (discussed further below).7 Interestingly, this competitive ele- ment was highlighted in a meeting of villagers in West Java as an undesirable facet of the project that should be eliminated.8 One particular person also noted that the prioritization of projects is dicult, with each village ranking itself highest, and with bargaining processes taking place between villages (meeting in West Java, 2005). For Scott Guggenheim (the programmes former team leader), however, conflict within KDP is not a major factor (interview with Scott Guggenheim, 2005). One of Guggenheims aliates is perhaps a little more cautious, stating that consensus at the village level is generally met although there are some conflicts (interview with Victor Bottini, 2005). That said, it is unsurprising that facilitators and consultants (almost entirely Indonesian) are vital to the management and operation of KDP a point corroborated by numerous other people associated with the programme (interview with Victor Bottini; interview with Tatag Wiranto; interview with Richard Gnagey and Prabowo Ekasusanto, 2005). Indeed, a veritable army of private consultants (4,200 in KDP II) is involved at all levels down to the sub-district level to implement the technical aspects of the project (Guggenheim et al., 2004: 9). Further to this, two or three fa- cilitators (at least one male and one female) are elected for every village participating in KDP (ibid.). All of this is managed at the national level by the Community Development Agency within the countrys Ministry of Home Aairs (MOF) which is responsible for the management of KDP on a day-to-day basis and is, for World Bank purposes, the implementing agency. Other ministries are represented by government coordination teams, which also assist with the management of KDP, and there is also a role played by province and district levels.9 The majority of the project is financed by the World Bank. It is crucial to understand the financing structure for KDP, in particular because the programme constitutes an approach to poverty reduction that relies upon debt, in a country where, in 2002, 50 per cent of the countrys population lived on less than US$
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2 a day (World Bank, 2006: 288, 290) and where, in 2006, over 6 per cent of the governments US$ 144 billion debt was owed to the Bank (World Bank, n.d. b). At the level of the World Bank and the Government of Indonesia (GOI), KDP is a combination of credits (non-interest bearing loans) and interest bearing loans.10 This point itself is seen as a problem by various people, from a senior bureaucrat who was previously involved with KDP to NGOs associated with the project (interview with Gunawan Sumodiningrat, 2005; interview with Rahadi Wiratama, 2005). KDP II, III and IIIb have drawn upon both the interest-bearing International Bank for Reconstruction and Development (IBRD) funds and non-interest bearing International Development Association (IDA) funds of the Bank, with varying grace periods of five to ten years (World Bank, n.d. b, 2000, 2001a, 2001b, 2003b, 2005). National government contributions to KDP are essentially zero, although local government and community contributions are counted as GOI contributions (interview with Scott Guggenheim, 2005). Under the existing structure, Bank money for KDP is transferred into a special account at the Bank of Indonesia (the Indonesian central bank), then through the State Treasury Oce as block grants down to collective accounts for the villages within each kecamatan. Instalments are then paid out of that account to villages in three tranches (40 per cent, 40 per cent and a final amount of 20 per cent), with the final amount only released once a process of certification has occurred (Guggenheim et al., 2004: 9). Additionally, after each tranche has been utilized, villages have to report to their community to explain how the funds were used. Community contributions to KDP are also high (ibid.: 12). KDPs uniqueness in particular its structure that allows villages to choose in a competitive environment, what they want to spend money on should be more than evident to those with even a cursory knowledge of the development industry. Furthermore, it circumvents a lot of government, which is unusual for a large World Bank project (national governments are after all the clients of the Bank). Essentially much of what makes the programme so dierent relates to reform delivery. While there are several other features that distinguish KDP from other World Bank projects (see below), it is important to be aware of the manner in which the programme fits very comfortably within the reproduction of neoliberalism and the re- production of capitalist relations more generally. THE PURPOSE OF KDP We have seen how KDP operates; this explains much of what is dierent about it in comparison to other World Bank-funded projects and programmes. It is also important to emphasize what exactly the purpose of KDP is. This is esToby Carroll 71

pecially relevant in demonstrating how the KDP falls within SIN.11 On one level the KDP appears to be largely about cost-eective infrastructure provision (and more) for villages. Yet it is vastly more ambitious and political than that. The KDP in essence is a project that exudes the SIN market-extension foci on governance, social capital and decentralization and delivers its reform via participatory development and the incentive/leverage of the provision of infrastructure and other goods. Put another way, KDP attempts to deliver the productive infrastructure required of an agricultural economy and an institutional fix designed to facilitate the more ecient and equitable function of such an economy. The KDP is both political and ambitious, in that it is designed to create certain institutional structures in the post-New Order12 environment. In this regard, the programme is associated with reworking notions of citizenship, in part by creating demand for behavioural change (that is, attempting to instil norms of transparency and accountability), using incentives/leverage to drive the process. In this regard, improving governance, more than producing cost- eective infrastructure, is the KDPs primary output. Tania Li, writing on the Banks social development team in Indonesia (which is closely associated with the KDP), noted this fetish for governance over other issues:
Although the Banks social development team did not suggest that inadequate planning and failures of governance were the only source of poverty, they were the only sources taken up as the basis for the teams very large and expensive anti-poverty program. The exclusion of refractory relations unequal relations of production and appropriation foremost among them was intrinsic to the construction of communities as sites of intervention. (Li, 2006: 9)

Importantly, in relation to this governance obsession, the KDP works around much of government. As one Bank staer noted to me, while the programme is sold to the government as a poverty reduction initiative (which the government is happy with), it actually circumvents government (interview with World Bank staer, 2005). Somewhat telling here is the manner in which the projects design uses the kecamatans to bypass existing political institutions to create or rebuild absent social and political institu- tions. A quote from Guggenheim explains just why the kecamatan level was chosen as a focus for the project:
Kecamatans seemed advantageous for some additional reasons above and beyond their accessibility to villagers. Because they were not a fully autonomous unit of government, they had no budget and contracting powers of their own. This meant that the collection of commercial and political interests that had a stronghold over government in the districts was much weaker in the subdistricts. Kecamatans also had a requirement to coordinate village development
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through a kecamatan council that included all of the village heads, but because the kecamatan had no budget of its own to invest, most of these councils only met once or twice a year. And last, having villagers compete for KDP funds in kecamatan meetings would, we hoped, encourage the kinds of direct negotiations and cooperation that would provide a basis for rebuilding the supra-village horizontal institutions destroyed or neglected by the New Order. (Guggenheim, 2004b: 21)

The updated project information document (PID) for the KDP III also reveals the programmes focus upon governance and where it stems from, particularly the influence of neoliberal notions of social capital. Community Empowerment and Local Governance is the first key section covered in the document; it refers back to a series of studies carried out by the World Bank and various government agencies that had an indelible impact upon the KDPs form (Li, 2006: 14). According to the PID, the Local Level Institution (LLI) studies identified a gap in local governance that exists in the large majority of Indonesian rural villages (World Bank, 2003c: 1). The incorporation of insights derived from these studies into the PID emphasizes a lack of trust and dialogue, as unproblematically connected to the present development situation and impediments to economic efficiency. The PID also displays a concern for implementation, a pervasive theme in SIN, and some of the neoliberal attention to social capital:
This gap usually translates into a lack of trust, apathy and a low-quality dialogue about development. Externally induced development models that do not recognize the core problem of the local governance divide limit their own likelihood of success. Evidence of this root problem can be seen in the universally reported problem of poor public infrastructure construction standards and poorer maintenance in Indonesian villages, clear signs of little local ownership. As a result, social and economic resources are not as well used as they could be, particularly with respect to rural poverty reduction. (ibid.)

Here the implication is that poor governance leads to a lack of social capital (in this case a lack of trust) which is, in turn, seen as explaining poor infrastructure. This lack of trust and the problems of corruption in the post-New Order environment (which are dramatically real) are used to justify a corrective program of governance, perceived as if it were the root cause of Indonesias situation (Li, 2006: 9). Notably, in relation to the link between social capital and the KDP, the LLI studies, which identified the governance gap and which were influential forerunners to the KDP, were part of a broader multi-country study on social capital and the ideas of Robert Putnaman influential figure who gave social capital
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wings in a way that became more pronounced in the World Bank as the PWC gained traction in the mid- to late-1990s (Bebbington et al., 2006: 16; Guggenheim, 2004b: 17). The LLI studies had other specific findings that emphasized the potential within communities, the results of which can be seen as influencing the KDP and which euse a certain fondness for Putnams incarnation of social capital. For example, one finding demonstrated that community-owned projects performed better than government or NGO projects, had greater levels of participation of the poor and women, in addition to more significant input from villagers. Another finding demonstrated the multi-purpose focus of long-lasting community organizations in comparison to temporary development project organizations. A further finding pointed to disconnection between community organizing capacities and government and yet another illustrated the benefit to communities of strong leadership and somebody who could play a facilitating role to share information, invoke dispute resolution procedures, and help villagers find external assistance when that was needed (Guggenheim, 2004b: 18). The resonance between such findings and the KDP is obvious. In short, what transpired was the diagnosis of a particular problem (via the LLI studies), with a particular technical cure (the institutional fix of KDP) a cure that omits from view the larger political economy of poverty in Indonesia. SOCIAL CAPITAL AS A TROJAN HORSE OF SOCIAL DEVELOPMENT OR SOCIAL DEVELOPMENT AS A TROJAN HORSE OF NEOLIBERALISM? We should be careful, however, not to illustrate the presence of social capital in the KDP as just another functional extension of the Banks work. Indeed, the relationship between social capital, the KDP and the World Bank needs to be characterized in a more nuanced fashion, which reveals much about the Banks internal politics and how neoliberal conformity is produced. For Guggenheim, social capital (the term and the concept) was particularly use- ful for people working in social development within the Bank to talk to the Banks power group the economists despite his own personal scepticism vis-a` -vis the concept (interview with Scott Guggenheim, 2005).13 In an environment dominated by a particular power group within the Bank (the economists), a particular language helped the social development unit personnel to realize their goals, which may have met more resistance without it. Interestingly, this use of social capital marries up with Harrisss description of the way in which some development practitioners see the concept as a Trojan horse, to change the neoliberal development agenda from the inside (Harriss, 2002: 81).
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Talking to people within the social development unit of the World Bank in Indonesia, one gets a definite impression that there is a push to create change within the Bank. The question is, what is so dierent about the project that these people are involved with (the KDP)? In essence, the answer here relates to policy delivery, which brings us back to SINs attention to implementation and also demonstrates the constraints of changing neoliberalism from within. While the governance element within the KDP exhibits a broader focus (mostly outside of ocial documents) upon citizenship than typical World Bank usage, Harriss points out that such a conception still remains compatible with the World Banks broader project, especially within the discourse of social capital and its attendant language of community development, empowerment and participation. It is worth quoting Harriss summation of this relationship at length because it really does pertain to the question whether the KDP is dierent as a governance project:
The point, for the purposes of the present discussion, is that current thinking about development is greatly concerned with good government, which is held to mean government that is transparent and accountable, working within a clear and consistent legal framework, such as will provide the conditions for eective and ecient markets. It is in this context that the ideas about civil society, decentralization, participation and latterly in some senses the queen of them all social capital have acquired such currency. The basic idea is that through participation in voluntary local associations (which may be confused with non-governmental organizations) people are empowered in civil society (defined as the sphere of voluntary rather than ascriptive association, that lies outside the state and the family and kinship). A vibrant civil society ... acts both as a vital check upon the activities and the agencies of the state, and as a kind of conduit between the people and the government. A strong civil society should contain the expansion of the state ... and will make for good government (that is, democratic, meaning responsive, accountable and transparent government). It is expected, too, that in the context of such a strong civil society people be broadly supportive of the market-led orientation of economic policy. ... The whole set of ideas is pitched specifically against the old top-down development, which is seen as having failed. It is an extension to the old Washington consensus rather than a radical rethinking of it (post Washington consensus, perhaps, but not past). (Harriss, 2002: 789)

Consequently, KDP should be thought of more as poster child at the vanguard of SIN, rather than some radical anomaly within it. This sentiment is further countenanced when looking at the foci upon supervision and monitoring built into the project, important elements for generating a local-level form of
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transparent market discipline. What is attempted within KDP is the creation of market citizenship; that is the market participation of individuals within a system of surveillance and monitoring to instil a more idyllic market where returning to the two branches of new institutional economics transaction costs are low and information flows freely.14 There are both internal and external monitoring aspects to the KDP. The internal monitoring is based around a Management Information System, which is maintained by a national oversight team which compiles information on the KDP and reports on its progress (World Bank, 2003c: 201). Externally, the Indonesian Association of Independent Journalists (AJI) and independent provincial NGOs are contracted to monitor the KDP, with the AJI contract allowing for the visiting of KDP sites by journalists in order for them to write articles in regional and national newspapers on the project (interview with Rahadi T. Wiratama, 2005).15 In this arrangement the journalists are seen as a conduit for airing the monitoring activities of NGOs and other civil society groups (World Bank, 2003c: 20). Additionally, the many village meetings and the scrutiny of procurement of materials is also important in this regard. This emphasis upon transparency and monitoring, and indeed the KDPs governance focus more broadly, are clearly related to dealing with corruption. Corruption is of course pervasive in Indonesia, both for the World Bank and more generally (Transparency International, 2005).16 The way KDP deals with corruption within the actual programme is something Guggenheim is clearly keen to point out, especially in relation to how it measures up against other development projects previously run by the Bank (interview with Scott Guggenheim, 2005). Elsewhere, he has been more abrupt, stat- ing that design principles for community-driven development projects (like KDP) need to be simple and enforcement needs to be strict: Tough love is the only way to stop a few small mistakes becoming pervasive damage to a large-scale development project (Guggenheim, 2004a). This isnt just tough talk Guggenheim oers the example of corruption in North Sumatra, where rather than doing better next time, the district was dropped from the project (ibid.). Neoliberal conditionality, then, has moved down from the national level to the local (Li, 2006: 11). However, despite the monitoring and surveillance aspects of KDP, from the point of view of some villagers, corruption was undoubtedly still a problem in KDP and facilitators were highlighted as potential perpetrators at the village level (meeting in West Java, 2005). That said, compared to other projects it seems to have a much better reputation in terms of levels of corruption (interview with Tatag Wiranto, 2005; meeting in West Java, 2005). Yet an obvious issue here is whether a neoliberalstyled governance intervention at the local level, coupled with market extension,
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should be one of the main pushes to address poverty. Furthermore, the question remains as to what extent it is possible to engender and sustain significant shifts in governance in environments of massive economic and political asymmetry (especially once financing of programmes like the KDP ends and the debt remains). Crucially, on this very question of reform sustenance and the KDP, Guggenheim concedes that the projects achievements can be overturned (interview with Scott Guggenheim, 2005). Beyond the issue of corruption, yet still related to it in several ways, KDP seeks to support governance in relation to another important SIN area decentralization, which the World Bank has supported for some time now (Hadiz, 2004: 706). Hadiz, like Harriss, has noted the relationship between decentralization and the sort of social development associated with KDP: Significantly, decentralization has become, along with civil society, social capital and good governance, an integral part of the contemporary neo-institutionalist lexicon, especially for those aspects which are intended to draw greater attention to social development (Hadiz, 2004: 700). KDPs citizenship focus is important especially those elements of it that attempt to instil particular behavioural norms and demands to assist in filling the institutional vacuum left by the departure of the centralized New Order. When asked about KDPs potential to influence citizenship and the subsequent possibilities for political change at higher levels, Guggenheim is keen to reveal that this is the projects defining intent:
Well, thats the sort of guiding idea behind it, right [influencing types of citizenship and facilitating political change]? Its not that it can do it by itself, but in a big agricultural country, the standard model of political reform is very topdown: you get a constitution, then you get a parliament, then they start to roll out a series of regulations, eventually they get to the provinces and then somewhere down the line they hit the villages.... In ... East Timor, Indonesia and Afghanistan, I think theres absolutely no question that the bottom-up model is already influencing national politics. (Interview with Scott Guggenheim, 2005)

Indeed, one of KDPs key roles is to strengthen local government and community institutions to support the improvement of governance in post-New Order Indonesia. Here, participation and empowerment two important features of KDP and SIN more generally are intended to play definitive roles. Participation here means more than it does in most World Bank projects. KDP is highly participatory and inclusive. Yet the following paragraphs on empowerment and community participation in the KDP seems to bring us rapidly back to the well known neoliberal notions of governance associated with the Bank:
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In terms of program benefits, villagers report greater access to markets, schools, health facilities, clear supply and sanitation, and other economic opportunities. There is also increasing evidence of improved local governance and community empowerment practices in many KDP areas. KDP has had a multiplier eect on approaches to community-level development. For example, villages are holding local government more accountable and demanding greater transparency within other government-sponsored programs. Villagers are transferring KDP procedures and financial management skills to other development projects. All these changes signal incremental progress in empowering communities and improving the interest and role of local government in responding to community needs. (Ministry of Home Aairs, 2002: 10)

Of course, improved schooling, health facilities and sanitation are all highly desirable, as is other cheaper infrastructure of a decent quality. But none of these come for free in KDP and the question remains as to whether the expensive micro-focused programme with macro objectives can generate the long-term fixes that mean that these elements are more than unsustainably acquired items. Questions also remain over the sustainability of the programmes institutional fixes and indeed their very impact. For example, the persistence of problems of elite capture and graft have been acknowledged within KDP (Chavis, 2006: 10). Furthermore, people like Vedi Hadiz, have portrayed a bleak picture of decentralization more broadly, bringing the question KDPs capacity to have an impact on certain social relations into sharp relief:
Decentralization and democratization in Indonesia have been characterized by the emergence of new patterns of highly diuse and decentralized corruption, rule by predatory local ocials, the rise of money politics and the consolidation of political gangsterism. In the Indonesian context, the main question to ask, therefore, is who has benefited most from this decentralization and this type of democratic system? It is not dicult to identify the beneficiaries. By and large, they are individuals and groups who had earlier functioned as the local operators and apparatchik of the previous New Order small to medium-size, but politically well-connected business people with big ambitions, as well as an array of the regimes former henchmen and enforcers. (Hadiz, 2004: 711)

Thus, while the KDP has big ambitions in the area of governance it faces formidable obstacles, variations of which face any neoliberal institution building project.

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CONCLUSION This article has made an argument for understanding the PWC beyond its prescriptive content. In particular, it has argued that one of the most important dierences between the Washington consensus and the PWC relates to reform delivery. The case of the KDP demonstrates the importance of understanding this shift. KDP is a dierent kind of neoliberal development project but a neoliberal project nonetheless, and much of what is dierent about the programme stems from its approach to extending, from the bottom up, the institutions and infrastructure of the liberal market. This highly political attempt to build and reform institutions for the market around government, while neglecting crucial structural drivers of inequality and poverty, echoes many of the very concerns signalled by Ferguson in his work on Lesotho and the anti-politics machine a machine adept at de- politicizing everything it touches, everywhere whisking political realities out of sight, all the while performing, almost unnoticed, its own pre-eminently political operation (Ferguson, 1990: xv). Issues of governance are singled out within KDP as the main focus of reform, using the funding of particular projects as carrots dangled in front of the poor in an attempt to enshrine neoliberal norms such as competition, transparency and accountability. When such an approach is considered in tandem with the debt-based funding struc- ture of the programme, KDP displays its loyalty to the dominant paradigm which has so significantly conditioned its form. This perhaps explains why KDP (and its sister projects, like the KALAHI-CIDDS programme in the Philippines), despite being social development projects, have been palatable within the development orthodoxy. These new social programmes that have flourished within the PWC deserve ongoing critical attention, especially given their potential for becoming the norm rather than the other within SIN. In this respect, the rural-focused KDP, together with its urban-targeted sister project, the Urban Poverty Project, have now become the basis for Indonesias national community development programme aimed at eliminating poverty a programme that will require local governments to fall into line on issues such as health, ed- ucation and agricultural matters (World Bank, n.d. a). Furthermore, KDP is particularly (though not entirely) popular at various levels within Indonesian society, and its proponents can make great claims about its comparatively low levels of corruption and lowcost provision of infrastructure and other elements factors which no doubt resonate well with many in the devel- opment establishment. While a concrete assessment of KDPs abilities to emancipate the poor from the shackles of poverty is some way o, the framework conditioning its form is clear and emanates from the stable of SIN. It is a programme that is designed
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to reduce poverty, with the precondition identified by Cammack that this, like the work of the World Bank generally, is conditional upon and secondary to an extension of capitalist social relations and the institutional framework that this is seen to require. Despite all of the hoopla surrounding a project like KDP and community-driven development more generally, the questions hanging over what it does and does not tackle, not to forget the funding structure of the programme, suggest that there is good reason to think that povertys solutions lie elsewhere.
1. The use of the term Trojan Horse here is a twist on John Harrisss observation of the way in which some development practitioners have tried to use the concept of social capital to change the neoliberal development agenda from within (see below). 2. The two terms, post-Washington consensus and new development paradigm are used interchangeably in this article. 3. A recent text that does a good job of appraising the PWC and the manner in which it unfolds in the field is Porter and Craigs Polanyian-influenced Development Beyond Neoliberalism (2006). 4. Cammack (2004: 190) describes this process as being based around equipping the poor for their incorporation into and subjection to competitive labour markets and the creation of an institutional framework within which global capitalist accumulation can be sustained, while simultaneously seeking to legitimate the project through participation and a pro-poor agenda. 5. In particular, those of social conflict theory, new materialism and some Gramscian approaches. 6. This point was also made to me by several Bank sta in the social development unit. 7. In an interview with people from the Ministry of Home Aairs, who were very positive about KDP, the competitive element was iterated as one of KDPs key principles (along with transparency, decentralization, being pro-poor and sustainability) (interview with sta from the Ministry of Home Aairs, 2005). 8. When I asked them what was good about the project, people oered that its involvement of community was positive and that, given the lack of money in the area, any assistance from the government or the World Bank was generally to be welcomed (meeting in West Java, 2005). 9. The role of the Indonesian National Development Planning Agency, BAPPENAS (Badan Perencanaan dan Pembangunan Nasional), is replaced by provincial and district planning boards (Guggenheim et al., 2004: 9). 10. The Bank money, in US$, in the budgets for KDP I, II and III is as follows (accurate up to November 2003): KDP I, $ 275 million; KDP II, $ 320.2 million; KDP III, $ 249.8 million (Guggenheim et al., 2004: 25). In the updated project information document for KDP III, the amount financed by the Bank is stated as US$ 246.4 million (World Bank, 2003c: 17). 11. Guggenheim noted that he saw the project as an example of being able to pursue progressive aims within the neoliberal paradigm (interview with Scott Guggenheim, 2005). 12. The New Order is the term given to former Indonesian President Suhartos three decades of rule. 13. Guggenheim notes elsewhere (Guggenheim, 2004b: 16): It provided a much needed bridge to the Banks economists in a way that the traditional vocabulary of social structure, social organization and the like didnt. Another sta member of the Banks social development unit noted to me that social capital is not used on a day-to-day basis; rather it is used at a higher level as a discourse to connect with economic language (meeting with two World Bank staers, 2005). 14. In the updated project information document for KDP III, the language of the information
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theoretic approach to NIE is evident in one of the areas of governance that KDP is intended to deal with (World Bank, 2003c: 1). 15. Rahadi T. Wiratama from LP3ES, an NGO based in Jakarta which is associated with KDP, deems this media monitoring as vital. Wiratama suggests that this system is successful and unique, although he feels that there are not enough journalists to do the work. See also Guggenheim (2004b). 16. Transparency International ranked Indonesia 137 (out of 158 countries) in its corruptionperceptions index in 2005 (Transparency International, 2005).

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Toby Carroll is a Research Fellow at the Centre on Asia and Globalisation, Lee Kuan Yew School of Public Policy, National University of Singapore, 469C Bukit Timah Road, Singapore 259772. He is currently writing a book for Palgrave entitled Institutionalising Illiberalism: The World Banks Promotion of Good Governance in Southeast Asia. His e-mail address is: tcarroll@nus.edu.sg

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