Skip to main content

The European industry of sell-off public property

Privatisations of state-owned assets have become a central plank of EU/Troika agreements with debtor nations such as Greece, Ireland, Italy, Spain and Portugal, but there has been little examination of their track record nor an examination of who really benefits. This report puts a spotlight on the legal and financial corporate giants making millions out of the new wave of privatisations across Europe.

European citizens have witnessed a wave of privatisations in their countries in recent years. Transnational Institute (TNI)’s report, Privatising Europe, published in 2013 showed how the European Union (EU) and the International Monetary Fund (IMF) used the economic crisis as a way to push through privatisation programs in indebted EU countries, despite major popular opposition. Three years on, this briefing examines the consequences of those privatisations. It puts a spotlight on the process, the corporate players that have profited, and examines whether the sale of state-owned assets has delivered on the promises used to justify their privatisation.

A study under the title “The Privatising Industry in Europe” by the Transnational Institute

Key points:

  • The rationale put forward by advocates of privatisation does not stand up to the evidence. Privatisation has been justified on the basis of providing revenue for indebted states and increased efficiency. Yet in nearly all cases, only profitable firms are being sold and consistently at undervalued prices. Meanwhile research by the IMF and by European universities shows that there is no evidence that the privatised firms are more efficient. Instead privatisations have undermined wages, weakened labour conditions and growing income inequality.

  • A small coterie of legal and financial firms is reaping significant profits from the new wave of crisis-prompted privatisations. These include the financial and legal advisors and the accounting firms. These players are active advocates for privatisation throughout Europe, and have benefited from the highly lucrative business, winning contracts worth millions of euros.

  • A number of the key lead corporate players, such as Lazard, have been involved in both advising on privatisation and then profiting from their advice. For example, Lazard advisory branch was the principal financial adviser for the privatisation of Royal Mail thus directly influencing the price setting for it shares, yet its asset management branch was one of 16 firms to be given priority investor status. This allowed the firm to make an 8 million pound profit from purchasing and then reselling shares.

  • Despite the rhetoric in favour of private management, many of those who win concessions and buy formerly privatised assets are state-owned companies. Chinese state-owned corporations have for example become dominant players in buying up European energy companies, buying stakes in Portuguese, Greek and Italian public utilities. German and Azerbaijani state-owned companies have also been involved in buying in up privatised assets in other European countries.

  • Privatisation in Europe has encouraged a growth in corruption, with all-too-frequent cases of nepotism and conflicts of interest. In Greece, this has led to constant scandals at the HRADF, the main body responsible for privatisation, with three HRADF board members currently being charged by the Greek Corruption Magistrate for corruption. Similar cases have emerged in Italy, Spain, Portugal and the UK.

  • The bailout negotiations between Greece and the ‘Troika’ (European Commission, European Central Bank and International Monetary Fund) in July 2015 put the issue of privatisation back in the headlines. The Syriza government, elected on a platform that opposed the deeply unpopular privatisation of key state-assets such as water services, was humiliatingly forced to agree to sale of state assets. In fact, privatisation plans imposed on Greece under the latest and third Memorandum of Understanding (MoU) are even more extensive than previous ones. While Greece stands out as the most emblematic case of Troika –forced privatisations, the Mediterranean country is not the only one being pressurised into implementing such programmes. Portugal, Italy, Spain, Ireland and the UK have all seen a renewed effort to privatise the last remaining state services.

  • The IMF, the European Central Bank (ECB) and the European Commission (EC) see privatisation of public utilities and state companies as a panacea for Europe’s economic woes. They claim that private ownership will make companies more cost effective and competitive and that the public will benefit from lower prices and better service. Yet, as this report explores, they ignore the evidence of recent privatisations which have more often led to reduced state revenue, increased corruption and poorer services. They also ignore the wage losses, redundancies and erosion of labour rights that have resulted from privatisation that have further exacerbated the economic crisis. The blindness of the Troika to the detrimental effects of short-term liquidation of state assets may be ideological in nature, but it is bolstered by the growth of a powerful privatisation industry in Europe that profits immensely from these sales and actively lobbies for continued business.

  • The evidence shows that state companies are consistently undersold and even end up costing governments extra money (undermining the argument that privatisation generates revenue). Particularly in Greece, state assets have often been sold for prices far below their true market value. Research also shows that privatisation has negative implications for labour rights and what consumers pay for public services.

  • Due to the different, complex levels of financial and legal advice and the many parties involved in privatisations, the processes tend to be very susceptible to different kinds of corruption and conflicts of interest if they are not strictly supervised and monitored. Whereas cases involving flagrant corruption occur relatively often in countries accused of loose transparency and accountability like Greece, conflicts of interest also take place in countries that serve as global hubs for financial and legal services, like the UK.

The question remains therefore why the Troika insists on making privatisation a cornerstone of the austerity packages it has imposed on European debtor nations. Not only do the privatisations fail to deliver the revenues and efficiency that justify them, they are also fuelling nepotism, corruption and profiteering by small privileged groups at a time when the social costs of austerity are more blatant than ever. They are therefore exacerbating a social crisis of growing inequality and leading to social unrest and growing disaffection with the political system at national and European levels.

The fact the EU institutions are responsible for overseeing the implementation of privatisation programmes makes their capacity for good governance an additional concern, especially in the current circumstances where there is an increased transfer of sovereignty from member states to bureaucrats in Brussels.

The fact that the European Commission (and the Troika) persists in its privatisation agenda despite the evidence of its failures and the growing economic and social costs suggests two possible motives. One, that the European Commission is so ideologically wed to neoliberal policies that it unwilling to even consider the concrete evidence of the economic, social and political costs of privatisation for its own member states. Or two, that there is such a powerful corporate industry at work in support of privatisation, from the advisers to the corporations that buy up state assets, that it is impossible for the EU institutions to reverse course. Either motive or the likelihood that both are true reflects very badly on the European Union. It also goes along a way to explain the growing disaffection and popular resistance to the privatisation agenda and more broadly to the whole European Union project.

Full study:

Comments

Popular posts from this blog

MSNBC poll on Julian Assange backfires epically

globinfo freexchange
Frequently - if not always - polls set-up by corporate media aim to track public opinion on a specific issue. The results could be used by the deep state apparatus in order to justify an action, or, figure out how to handle a negative trend for the deep state agenda.
Of course, the question could be set-up in a very simplified and convenient manner, so that the results could be translated accordingly.
Yet, the results from the following MSNBC poll on Julian Assange are so devastating for the deep state planning that leave little room for any misconception and manipulation.
Specifically, you have two options to answer the following question: “Should Julian Assange be prosecuted for his involvement in WikiLeaks?
The first option is to answer that "Yes, he is a criminal."
The second option is to answer that "No, he is a whistleblower and deserves protection."
At the time we checked out the results, the second answer prevailed overwhelmingly with 95% (~1…

Trump's failure to start a civil war in Venezuela could be proved disastrous for the plans of the US imperialists

by system failure
Donald Trump and his bloodthirsty warhawks are about to break the record of failed attempted coups against a single country. Concerning Latin America, the US imperialists were setting the desirable conditions for their corporate beasts usually by overthrowing governments and supporting military dictatorships.
But Trump himself has already broken another record. The record of not keeping his promises to the American people - every one of them. The 'anti-interventionist', 'anti-establishment' Trump, has already started a war against Venezuela, which so far includes brutal economic sanctions, sabotage operations, attempted coups. Trump not only does whatever he can in order to satisfy the US neocon/neoliberal establishment and the deep state, but especially in the case of Venezuela, he follows the obsolete CIA playbook to the letter.
So, after a series of failed orchestrated coups, Trump's warhawks attempted to start a civil war in Venezuela by mobiliz…

Fox clowns committed suicide by bringing Bernie Sanders inside their nest to destroy them

... and the liberal centrists must be really pissed off
globinfo freexchange
It was epic indeed. The moment where the crowd inside the Fox ultra-right nest enthusiastically cheers in favor of a government-run healthcare system, could actually be considered a historical moment, thanks to Bernie Sanders.
The moment clearly depicts and officially marks the end of controlled audiences in controlled MSM environments. It shows that the well-paid MSM pundits and their producers are finding increasingly difficult to set up the scene according to the desirable agenda. Therefore, audience reactions can't be directed, or predicted in many cases by the MSM 'experts'.
The shock for the MSM tools was inevitable. It shows that they are now completely detached from the ordinary people and their problems.
But the whole thing highlighted something even more fundamental. It was another loud evidence for the fact that the BS neoliberal narratives don't work anymore.
And even more remarkably, th…

Former top US official confirms: military action against Venezuela will become a Vietnam 2.0 for the US imperialists

globinfo freexchange
Former US Chief of Staff for Secretary of State, Lawrence Wilkerson, spoke with Sharmini Peries of the Real News about Trump's plans for a potential US military action against Venezuela.

As he pointed out:
Elliott Abrams, Mike Pompeo, John Bolton, and the administration’s approach to Venezuela, is as if they were Panama or they were Honduras. They are not. They’re very professional. That puts them above Argentina, above Chile, whose militaries are quite competent, too. 
Mr. Trump ought to be very, very careful about saying he’s going to send marines or soldiers to Venezuela because the Venezuelan military will be unified immediately. It will take to the hills and it will fight as the Vietnamese did during the Vietnam War, and as the Taliban are in Afghanistan right now: to the last marine, to the last soldier.
Putin is a smart man, probably told Trump 'you don’t want to get involved in those jungles. You don’t want to get involved in those mountains. You …

Updates for a possible coup against Jeremy Corbyn

 globinfo freexchange

In this episode of RT's Going Underground, former MP and author of A Very British Coup and The Friends of Harry Perkins, Chris Mullin, spoke about the history of MI5 and MI6 meddling in UK politics against Labour Party leaders. He also estimated whether a British coup is underway against Jeremy Corbyn.
The story of A Very British Coup was set in the 1980s when there was speculation about the possibility of a government led by someone like Tony Benn and the establishment conspired to bring it down. The establishment in this case being a sort of mixture of the security and intelligence services, the media barons, with a little help from the Americans. 
Tony Benn looked likely to become deputy leader of the Labour Party which at the time was strongly challenging the government of Margaret Thatcher in the opinion polls. Persistent rumours circulated over the years about attempts by members of the British security services, and other wings of the British Establish…

Latest ridiculous attempts by the US propaganda machine on Gaza, Venezuela – enjoy

globinfo freexchange
Plenty of propaganda is manufactured by the US deep state apparatus to push for the imperialist agenda. Yet, some elements of the propaganda machine are still unable to realize that independent truth seekers and real journalists are watching, and therefore, these elements could be easily exposed.
Sloppy efforts immediately backfire in social media and the Internet. Most recent sloppy efforts are related to Gaza and Venezuela.
As the Newsweekreported:
Senior 2020 Trump campaign adviser Katrina Pierson used a 2015 video showing a Ukrainian rocket launch alongside comments about this weekend's deadly attacks between Israel and Gaza militants and a condemnation of congresswoman Ilhan Omar.
Pierson, who was Donald Trump's 2016 campaign spokesperson and is a frequent cable news guest, shared the video—which was first posted online in 2015 and reportedly shows Ukraine launching dozens of rockets at Russian-backed separatists—on Sunday.
Alongsi…

There is something fundamental missing from Bernie Sanders' new ad

globinfo freexchange
Several progressives expressed their enthusiasm about Bernie's new ad. However, if we examine it closely, we will find that it is quite far from describing an effective progressive strategy that Bernie Sanders should follow.
The ad successfully highlights the complete failure of Donald Trump to secure the jobs of the American workers, and more specifically, his evident unwillingness to fight against the corporate beasts in order to protect workers' jobs and interests.
At the end of the ad Bernie tries to send a clear message to the corporations: “If you are not a good and responsible corporate citizen, do not think that you will get Federal contracts.

What's wrong here?
First of all, only through a miracle we could see the parasitic corporate beasts behave responsively. We know, and Bernie knows, that they don't care about workers' rights and working conditions. They don't care about giving decent wages. They only care about maximizing profits …

How GMO seeds and Monsanto/Bayer’s “RoundUp” are driving US policy in Venezuela

With Juan Guaidó’s parallel government attempting to take power with the backing of the U.S., it is telling that the top political donors of those in the U.S. most fervently pushing regime change in Venezuela have close ties to Monsanto and major financial stakes in Bayer.
by Whitney Webb
Part 3 - The AEI axis
Some of the key figures and loudest voices supporting the efforts of the Trump administration to overthrow the Venezuelan government in the United States are well-connected to one particular think-tank, the American Enterprise Institute (AEI). For instance, John Bolton — now Trump’s national security advisor and a major player in the administration’s aggressive Venezuela policy — was a senior fellow at AEI until he became Trump’s top national security official. As national security adviser, Bolton advises the president on foreign policy and issues of national security while also advising both the Secretary of State and the Secretary of Defense. As of late, he has been pushing for …

How GMO seeds and Monsanto/Bayer’s “RoundUp” are driving US policy in Venezuela

With Juan Guaidó’s parallel government attempting to take power with the backing of the U.S., it is telling that the top political donors of those in the U.S. most fervently pushing regime change in Venezuela have close ties to Monsanto and major financial stakes in Bayer.
by Whitney Webb
Part 2 - U.S.-Backed Venezuelan opposition seeks to reverse Chavista seed law and GMO ban
In 2004, then-president of Venezuela, Hugo Chávez, surprised many when he announced the cancellation of Monsanto’s plans to plant 500,000 acres of Venezuelan agricultural land in genetically modified (GM) soybeans.
The cancellation of Monsanto’s Venezuela contract led to what became an ad hoc ban on all GM seeds in the entire country, a move that was praised by local farmer groups and environmental activists. In contrast to anti-GM movements that have sprung up in other countries, Venezuela’s resistance to GM crops was based more on concerns about the country’s food sovereignty and protecting the livelihoods of fa…

Tulsi Gabbard proves that she is now the champion of the progressives - a straightforward message to the neocon/neoliberal warmongering cabal

globinfo freexchange
With this new ad, Tulsi Gabbard proves that she has become one of the most authentic progressive voices in the Democratic party. Tulsi now surpassed even Bernie Sanders and AOC as she dares to speak openly about the neocon/neoliberal warmongering cabal and clearly condemns any plans for another war against Iran, Venezuela, or any other nation.
Recall also that Tulsi Gabbard was the only one who bravely defended Julian Assange on a US deep state platform.
Right now, Tulsi's progressiveness and braveness could be compared only to that of Ilhan Omar.
Tulsi's message is more than clear: 
The neocons, neolibs and mainstream media are all singing from the same song sheet, saying 'We want war! We need more war!' Trump never gets media support unless he's threatening war, or carrying out a military action.
Today, it's Venezuela. Tomorrow, Iran. Who knows who would be next. It's no wonder that North Korea won't give up their nuclear weapons.
As…