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APEC Koh Samui
March 18 2013
Paul Mitchell
Communication Integral to Reform
Fuel Subsidy Reform will not succeed without
communication that is integral to the process from
the beginning (or even before!) and continues
throughout the process and possibly for a period of
time after the reforms have been implemented.
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Political Unrest
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Political Unrest
“An oil price hike by Bangladesh has sparked a call from opposition parties
for a nationwide strike. Bangladesh’s main opposition parties have backed
several violent strikes and blockades in recent month.” Reuters Jan 4 2013
“India has announced a sharp increase in fuel prices in a long awaited but
politically risky move. The increase risks triggering an intense political
backlash.” Financial Times India Sept 13 2012.
“The demonstrations that have mobbed the streets of Amman for two weeks
are demanding the overthrow of King Abdullah – a criminal offense in
Jordan. This was spurred by a basic issue; the rising price of gas after the
government withdrew subsidies. Time magazine November 28 2012.
Thousands of people in Nigeria fought deadly street battles with police after
the government cut its fuel price subsidies in 2012.
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Politics and Subsidy Reform
 Governments fear instability one way to reduce dangers is to
provide visible services at low cost. Once this process has
begun it is difficult to stop particularly in oil rich states where
the subsidy is a readily available means of supplying visible
goods and service to unrest prone populations.
 “The fuel price subsidy saga has not benefited any political
party.” ADB, Asia Pathways, Oct. 30, 2012.
 “Subsidies even in countries lacking energy resources
contribute to political and economic stability.”
Yale Global online Will
Hickey June 7 2012.
 “Governments give subsidies as part of a political bargain as a
visible way of delivering benefits”. Global Subsidy Initiatives August 2012
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Technical or Political Issue?
Removal of fuel subsidies is a POLITICAL
issue based on policy and technical
work
Need to take a political economy
approach
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Why communication ?
“Public information campaigns can mobilise political support
for reforms and help overcome vested interests. The public
should be informed about the drawbacks of existing subsides
and the benefits of reform.” IMF Fuel and Food Price Subsidies: Issues and Reform Options,
Sept 8, 2008.
“Many development failures― particularly those involving
economic reform, utility reform and large infrastructure
projects― have resulted from ignoring the political, social and
cultural context within which the development intervention
takes place, and not from a failure to propose the right
technical solution.” The Impact of Communication on Development, World Bank 2006.
“ Clear communication with stakeholders and the public
appears to be a key element of an effective reform strategy.”
International Institute for Sustainable Development, Global Subsides Initiative, Untold Billions.
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Strategic Communication
Strategic Communication is
the development of programs
designed to influence the
voluntary behavior of target
audiences to achieve
management objectives.
Communications Darwinism
Define
Be Defined
Copyright © 2003 Chlopak, Leonard, Schechter & Associates
Communication: Two-way approach
Social programs, laws,
Projects
Government
Comm.
Office
Information
Media
Society
Stakeholders
Types of Communication
Internal
Ensure the
effective flow of
information within
the institution
Strengthening the
effectiveness of
the institution
Corporate
Promote its
mission and
activities with key
external
audiences
Strengthening the
image of the
institution
Advocacy
Persuade and
influence policies
and programs
about key issues
Influencing
specific
audiences to
support key
issues
DevCom
To support
projects/
programs
achieve the
intended
change
Building trust
understanding,
assessing risk,
and behavior
change
Communication Strategy Framework
Strategic Context
Management Objective:
Communication Objective:
Strategic Elements
Key
Risks
Audience
Current and
desired
behavior
Messages
Work Plan Elements
Channels/
Activity
Timing
Responsibility
Resources
Evaluation
Expected
Outcomes
One Initiative - Two Perceptions
Perception of Government
Perception of Consumers
REMOVING FUEL SUBSIDIES
REMOVING FUEL SUBSIDIES
Improved
economy
More money in
budget
More for
education and
health
Satisfy donors
and markets
Better
macro
economic
situation
Better living
standards
Better
governance
Reduce
corruption
Leaner
government
Better
environment
Entitled to low fuel
costs
Higher costs for
food fuel and
transport
Government
corrupt no
transparency
Who benefits
where will
savings go
Reduced Income
Lower lifestyle
No salary
increase
Anxiety &
mental
problems
Better Life
Feeling Trapped
GREATER BUDGET SECURITY
INSECURITY
Less $ for
school fees
Might have to
move for job
Defining Political Risk
“…effective political risk analysis is not just a question of
evaluating a country risk. Instead, risk assessment must
identify the implications of social, political and economic
conditions of each particular development
intervention.
The key to analyzing the political risks facing a project is
to identify the winners and losers and assess their
relative ability to help or hinder a project, whether directly
or by influencing others.”
Political Risk is Highly Contextual
Issue
Internal Politics
Time
Place
Who is involved
History
External environment
Social and cultural environment
Dimensions of Political Risk
Who is involved?
What influence can they exert?
Will they use it and to what
degree?
What impact will it have?
Risk Differences:
Fuel subsidy removal
Political Risk:
Likelihood of political and social unrest; protests. No way to “win”
on issue but must pursue for budget purposes. Issue could fail
government could be punished in elections.
Social Risk:
People believe that they are entitled to the benefits of oil and
gas industry or that the government owes them subsidized fuel
as their right.
Cultural Risks:
Driving a car seen as important for status even for short
distances. Using other means of transit seen as “poor peoples’”
transportation.
Communication Based
Assessment
• A process which obtains information from the stakeholders allows us
to recognize the environment in which the development initiative will
be implemented; use the findings to shape the project before it is
implemented; bring certain stakeholders into the process; and
identify the information and communication gaps, and bridge them, in
order to achieve the desired impact.
• Through systematic analysis of external actors, regime leaders, and
the economic, social, and political sectors, pressure and interest
groups, and culture, captures the relationships among key internal
and external actors and between those groups and government
authorities. Public opinion polling, as part of the CBA captures
empirical information related to the social, political, cultural,
communicational and institutional situation (including civil society
participation) of a development intervention.
Why use Survey Research ?
 Survey research objectively and independently
uncovers opportunities and identifies red flags,
obstacles and risks.
 Survey research can assess risk among a range of
stakeholders from opinion leaders to the general
population.
 Survey research allows you to track attitudes in order
to ‘have a finger on the pulse’ of movement of risk
Which Research Methodology?
• Should be chosen on a case by case basis that reflects the
challenge your project/program faces. Also based on information
gaps from other assessments.
• The general population's views may be best gathered through a
combination of qualitative and quantitative research.
• Topics are probably sensitive when there is political risk to
consider. Hence, use independent firms to measure attitudes. Do
not use firms that are aligned with a political party.
• Choose a firm that has expertise in the area of policy and is issue
oriented. Exploration will require a nuanced approach.
Reform Issues
Prepare
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Reform Issues
 What was the political logic behind the establishment of
the subsidies? Often a mix of interest based politics and
some legitimate policy issues.
 On average the richest 20% now receive over six times
more in subsidy benefits than the poorest 20%. World Bank,
Chief Economist for Africa, April 2012.
 “Yes we feel entitled to it and if government raises LPG
prices next week, as it inevitably will we’ll scream bloody
murder.” Firstport Jakarta May 24 2012 murder.”
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Reform issues
 The subsidies are the only tangible benefit the poor
can get in normal economies especially in resource
rich developing countries. Yale University, Global online, June 7, 2012.
 Assuring the public that savings will be used well is
critical especially since many governments are viewed as
corrupt and will not use savings for people’s benefit.
 Embedding the reform within a broader reform package.
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3 E’s
Emotions
Expectations
Entitlement
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Reform Issues
Focus on Outcomes
Not Process!!!
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What is consultation?
Public consultation, or simply consultation, is a
regulatory process by which the public's input on matters
affecting them is sought. Its main goals are in improving
the efficiency, transparency and public involvement in
large-scale projects or laws and policies. It usually
involves notification (to publicise the matter to be
consulted on), consultation (a two-way flow of information
and opinion exchange) as well as participation (involving
interest groups in the drafting of policy or legislation)*
*Wikipedia 2012
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Language used by Government
 “Essential step to revive the economy and build investor
confidence.”
 “A first step to fiscal consolidation.”
 “Urgency to curb budget deficit to stave off a threatened
downgrade by credit rating agencies.”
 “Necessary to bring order to public finances”
 “It is a credible step towards fiscal consolidation that the
government has taken something for which the market
has been waiting a long time.”
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Language Used by Opponents
 “Black subsides”
 “Climate Spring”
 “Financial terror”
 “Ending subsides only adds to the ranks of the poor
and threatens global security.”
 “A very cruel blow “
 “Those who want to raise prices want to see this
country burn.”
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Timing
Tendency to undertake reforms too late often after a series
of other budget saving measures; in isolation; in a poor
economy; when fuel prices are high; people are already
fed up.
Whether to go with “big bang” or slowly introduce reforms is
highly contextual:
 Is ultimately a political calculation partially based on budget needs.
 Depends on the ultimate goal for reform.

Is a function of the political risk involved.
 Depends on the amount of pain a government is willing to undertake and when it
wants to take it.
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Transparency
 An effective political strategy benefits from transparency in the
cost and purpose of the subsidy. Many subsidies survive
because the parties that carry the burden are unaware of the
costs they are paying.
 Need to have an informed debate over legitimate purposes of
the subsidy.
 Public information allows for an independent assessment of a
subsidy policy.
 Disclose information about how prices are formed (e.g. Ghana
provides information on taxes, distribution costs and refining
margins).
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Communication that Works
Ghana 2005
 Outsourced research to independent institute – credibility
 Highlighted positive results of subsidy reform and costs of





inaction.
President involved high level commitment – also high
credibility in government. Finance Minister led campaign
Subsidy savings devoted to social priorities. Made transparent
and monitorable – included elimination of school fees and
improved public transport
Comparison to other countries showed low cost of fuel in
Ghana
Multi media campaign – radio broadcasts, advertising,
interviews
Trade Unions still opposed but public acceptance no large
demonstrations.
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Communication that Works
Indonesia 2005
 2003 attempt failed widespread distrust of government.
 Led large multi media communication campaign
newspapers, village notice boards, televisions shows,
FAQs
 Government greater popularity.
 Tied to cash compensation scheme widely publicized.
 Carried communication program throughout reform.
responded quickly to problems.
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Fill Your Reform with Communication
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