The Strategist

Privatization Equates To ‘False Promises’

04/30/2015 - 12:33

A report of P.S.I points out the inconsistencies of privatization which seems to gain popularity among government figures. – 26 April 2015 – Rosa Pavanelli reports that promoting “privatizations” have been mere “false promises” as proven by the worldwide failure of attempting “water, energy, rail and health privatizations”. In fact, political parties have won election battle on the strength of promises that were made to keep public services in public hands. Sectors providing public services with the “community attitudes” like energy, education, transport, health and water departments “strongly support universal public provision”.
Nevertheless, the trend of “public-private partnerships” along with privatization is reappearing in the commercial-political platform. As a result many government bodies are exploring the option of “public-private partnerships” whereby hoping to restore public services and infrastructures that are under “financial crisis”. However, there are attempts of incorporating “privatization” in the official policy list of the United Nations. As Pavanelli writes that the hope of “public-private partnerships”:
“...has long run through the World Bank and OECD, but is now emerging in the G20 and the ongoing negotiations at the United Nations for the Sustainable Development Goals and the linked Financing for Development. If successful, privatization could become official UN policy.”
The issue to ponder over is that in spite of the failures of past thirty years that prove “privatization” to be fundamentally flawed, what could be the possible reason for the same to resurge at present. According to Pavanelli, governments are facing tight situations wherein they need to arrive at quick solutions to hard problems so that they can maintain “public services” and fund the infrastructure projects. The longer period of time a crisis continues, the more it poses pressure on the governments adding to “the risks of forgetting the root causes: greed, deregulation, and excessive faith in private corporations.”
According to a report of P.S.I, titled “Why Public-Private Partnerships (PPPs) don’t work”, exploring the significance of “public investment”, scrutinises the capabilities, performance, influence and motives of various private sectors. The said report has been formulated after 30 years of experiences were gathered in assessing privatization, “in countries both rich and poor”. Usually, the process of ‘Public- Private Partnership’ is shrouded in secrecy, as most of the negotiations involved are kept confidential “to protect commercial secrecy”. In Pavanelli’s words:
“There are no public consultations, lots of false promises, and incredibly complex contracts, all designed to protect corporate profits. There is also a fair amount of bribery, as privatization contracts can be extremely valuable.”
The P.P.Ps are designed to “conceal public borrowing” although it provides “long-term” profit guarantee to “private companies”. The private corporations are obliged to “maximize profits” as their survival tactics whereby displaying a fundamental incompatibility to protect the “environment” and to ensure “universal access to quality public services”. The concluding words of the report states that:
“PPPs are an expensive and inefficient way of financing infrastructure and services.”
The said report us understand better the dangers of privatization whereby various “arguments” need to be taken into consideration. However, most government officials, instead of accessing information from the said report or the likes, remain under the influence of “biggest services and financial corporations, global consulting and law firms”. Therefore Pavanelli urges that:
“It is our job, in alliance with social movements, to raise the alarm bells, to demand transparency and accountability of our public officials and elected politicians and to create mechanisms for systematic participation in decision making.”