The World Bank is soon likely to adopt a private sector development (PSD) strategy that will require the inclusion of the private sector in all infrastructure and social sector operations in the 78 low-income countries that depend on credits from the International Development Association (IDA). The PSD strategy threatens citizenship rights, jeopardizes affordable basic service provision and promotes a two-tier "separate and unequal" apartheid of access to basic services.

The World Bank should increase support for social investments by credits, debt reduction, etc. But in country after country, the World Bank-supported push to privatize health, education, and water systems is putting services out of the reach of ordinary people÷and pushing control over public assets into the hands of multinational corporations. Increasingly, the Bank is reorienting lending to support private corporations, which means that its private sector portfolio and profitability grow as its policy "conditions" are adopted.

Alarmingly, such changes could be irreversible – "locked in" under trade liberalization agreements such as the General Agreement on Trade in Services (GATS). Once governments allow competition in basic service sectors, GATS disciplines apply to such sectors and to government rules "affecting" such sectors. These disciplines would, among other things, bar a government from favoring a domestic provider or providers, from limiting foreign ownership and control, from limiting expansion of services or access to basic governmental or regulated "monopoly" infrastructure, e.g., drinking water and sanitation networks, power lines, possibly school and hospital systems.

This outcome could come at high democratic, budgetary and developmental cost. Citizens and governments in poor countries need more, not less, control over provision of basic needs. Even in developed countries with sophisticated regulatory systems, "private-public partnerships"...through contractual and other arrangements promoted as fostering competition and efficiency in basic services or key support services have, among other things, been costly to transact and to finance, have reduced budget flexibility over long periods of time, and have degraded public capability and introduced conflicts of interest. In countries with underdeveloped regulatory regimes, limited financial resources, and other weaknesses, liberalization of basic services can lead, not to healthy competition, but to the replacement of local public monopolies with multinational private monopolies or cartels such as the foreign for-profit international water giant Suez des Eaux. Such providers lack accountability to domestic consumers, citizens and governments.

The PSD strategy could:

1) undermine basic citizenship rights in borrowing countries. Citizens have a right to determine their governmentâs role in service delivery. Citizens also have rights to basic services, such as health, education and basic levels of water, sanitation and energy. Cash-strapped borrowers should not be coerced, especially in ways that short-circuit domestic decision-making.

2) widen the gap between rich and poor. The PSD strategy seeks to attract investment capital to poor countries by carving out lucrative markets. "Cherry picking" richer customers would leave the poor to be served by an impoverished public water, power, health or school system. This could create systems of separate and very unequal services. The same is true of long-term service contracts that give discretion to the contractor where to cut cost, reduce service or impose fees. And contracts for specific services that guarantee attractive rates of return by guaranteeing long-term demand for services creates obstacles to healthy competition. Auctions to provide services are rarely a winning strategy – whether the service is water quality or airline security – given the built-in incentives to reduce service quality.nt>