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Public-private partnerships fail not because of bad actors but because of four structural fragility cycles: political, financial, capability, and civic. Each ensures extraction over creation.
PPP contracts span 20-30 years. Political cycles span 4-6 years. Each new government inherits contracts they didn't negotiate and may not support.
Mechanism: Political discontinuity breaks commitment continuity
Consequence: Renegotiation, nationalization, or abandonment
PPPs assume stable revenue streams. Economic shocks, currency fluctuations, and demand changes break financial assumptions.
Mechanism: Optimistic projections meet reality
Consequence: Bailouts, guarantee calls, or default
Complex infrastructure requires institutional expertise. Staff rotate, knowledge is lost, and oversight capacity degrades over contract life.
Mechanism: Expertise degrades faster than contracts expire
Consequence: Asymmetric information favors private partner
PPPs operate at arm's length from democratic accountability. Citizens can't directly influence private operators or clearly assign blame.
Mechanism: Accountability diffusion across public-private boundary
Consequence: Democratic legitimacy erodes, protests emerge
Private partner gains leverage over time. Each crisis becomes an opportunity to extract better terms. Original 'risk transfer' reverses to public.
Example: Toll roads renegotiated when traffic projections fail
Private partner retains specialized knowledge. Public partner rotates staff every 2-3 years. Information gap widens throughout contract.
Example: Water utilities where only the operator understands the system
When service fails, private operator blames government policy. Government blames private operator. Citizens can't determine who's responsible.
Example: Prison services where outcomes depend on both parties
PPPs attempt to span 20-30 years across institutions that operate on 4-6 year cycles:
Result: The public side of PPPs can't maintain capability, continuity, or accountability over contract life. The private partner, with longer institutional memory and aligned incentives, extracts value across each political transition.
PPP failure is a symptom of temporal architecture mismatch:
Multi-decade contracts require multi-decade institutional capacity. Neither side typically has it.
Either build perpetual public vehicles with maintained expertise, or use shorter contracts that match actual governance capacity.
Key insight: Don't design contracts longer than the institutional memory that will enforce them. If public capacity spans 5 years, contracts shouldn't span 30.
PPPs fail due to four structural fragility cycles: political (discontinuity across governments), financial (optimistic projections meeting reality), capability (expertise degrading over contract life), and civic (accountability diffusing across public-private boundaries). These are architectural problems, not primarily corruption problems.
Not necessarily. PPPs can work when: (1) political consensus spans multiple governments, (2) revenue models are robust to shocks, (3) public-sector expertise is maintained throughout, and (4) accountability lines are clear. The problem is that these conditions rarely hold simultaneously over 20-30 year horizons.
IRSA research suggests alternatives include: pure public provision with operational autonomy, perpetual public vehicles that accumulate capability over time, and shorter-term service contracts that don't require multi-decade commitments. The key is matching temporal architecture to actual institutional capacity.
PPPs allow governments to move infrastructure off-balance-sheet, creating the appearance of fiscal discipline. They also shift immediate political risk (construction delays, cost overruns) to private partners. The failures often emerge after the signing government has left office.