When countries suffer from financial crises or crippling debt, the IMF and World Bank often insist on privatization of state-owned enterprises, utilities and social services and market liberalization as a condition for financial help. But sometimes, they push privatization indirectly. Rich countries-working through international institutions like the World Bank-rarely help poor countries modernize and strengthen public services. But they often push them to privatize and commercialize public services, a move that they themselves would never make. The IMF has the power to declare countries credit worthy – or not. To get the seal of approval countries have to accept the conditions of structural adjustment programs.
The government of Pakistan has been raising the banner of privatization in spite of its failure globally. Despite the IMF and World Bank claims of Structural Adjustment Programs (SAPs) successes, it is widely acknowledged that SAPs have failed to achieve their goals. Both the agencies have thrown millions of people deeper into poverty across the world by promoting the same harsh rather cruel “economic reforms”—including privatization, budget cuts, and labor “flexibility”—regardless of local culture, resources, or economic context. Privatization in Pakistan began in earnest as part of the conditions set by the IMF and World Bank. Failed privatizations, rampant unemployment and a thoroughly inefficient and unaccountable political system are continuing. In fact privatization is nothing but a brazen act of robbing the poor to settle the rich, and legal looting of public assets by a few capitalist elements and multinational corporations.
Overall, 31 enterprises, worth billions of dollars and belonging to extremely profitable sectors such as oil and gas, banking and finance, power, industries and real estate are again up for loot sale in the name of privatization under the dictates of IMF. Nearly everything is being sold off, whether it is banks, communication, roads, mines, electricity, oil companies, engineering companies or shipping company. But does this privatization help to reduce poverty, inequality and unemployment? The general perception that privatization results in higher level of efficiency is not true at least in case of Pakistan. Privatization has caused social development slow down.
Employees are opposing the sale of these companies. Corporate elites are pushing privatization to ensure that they control all of our means of subsistence. It is sad how the governments have been promoting nepotism for years in appointing heads of these corporations and overstaffing these entities. One of the major reasons in the downfall of these national entities is the appointments, at the top and not at the bottom as generally conceived, that are made at whims of the government, be it political or otherwise. The failure of incompetent and inefficient managements deployed by the political leaders to devastate the public institutions to pave the way for loot sale of those public assets; a few that Pakistan is left with. Behind the guise of privatization, hidden actually is a plan to sell off huge properties of these unlucky entities. The sell-offs come at a time of debate about private versus public ownership of the public entities, amid concern about soaring costs and poor performance.
Privatization policies and practices are the primary tools that have enabled transnational corporations and private elites to plunder the public domain for private gains. Pakistan now has the extremely high level of wealth inequality in the world. Healthcare, transportation, banking, communicational tools are being privatized. Private business owners and high management are seeing the highest profits at the expense of the poor consumers. The active agents of the 1% elites are infecting the vital organs of society and appropriating their nutrients. As public services are privatized, the price of those services increases and profits multiply as enterprise capital is liquidated and real wages are cut. In reality, most privatizations are a redistribution of public assets to the rich, who get richer, while the public as a whole gets poorer. And that’s the real story: What’s achieved is not higher efficiency, but the transfer of public assets to those influential who can afford to buy them, usually at fire-sale prices. This is exactly what happened here when natural resources were privatized.
Despite the IMF and World Bank claims of Structural Adjustment Programs (SAPs) successes, it is widely acknowledged that SAPs have failed to achieve their goals. Both the agencies have thrown millions of people deeper into poverty across the world by promoting the same harsh rather cruel “economic reforms”—including privatization, budget cuts, and labor “flexibility”—regardless of local culture, resources, or economic context. Strapped with heavy debts, Pakistan also accepted these so called reforms, known as SAPs, as a condition for receiving IMF or World Bank loans. .
The issue of income inequality is in the news at a time when the Pakistani public believes there is a growing gulf between rich and poor that is likely to continue. The people at the bottom are going to be continually squeezed, and I don’t see this ending anytime soon. Widening inequality is creating a vicious circle where wealth and power are increasingly concentrated in the hands of a few, leaving the rest of us to fight over crumbs from the top table. Analysis of the previous privatization has shown that it has not been able to achieve the intended goals of privatization. Governments themselves became part of the conspiracy once the politicians realized that looting public assets was an efficient way to reward their private benefactors.
There are painful examples of grabbing national assets; for example in 1991 Pasrur Sugar Mills was sold to United Sugar Mills of United group for a ” token price of Rupee one only” by Mian Nawaz Sharif as CM Punjab, Samundri Sugar Mills was sold to Monoos and Rahwali Sugar to a Muslim League politician Sheikh Mansoor, following single line advertisement in newspapers under the caption, ” Bids invited for Rahwali Sugar Mills” and so on. There are hundreds of such like other examples causing billions and billions of dollars loss to national exchequer. The recklessness and favoritism shown in privatization of the PIDB units by Chief Minister Nawaz Sharif was to become the hallmark of his privatization as Prime Minister. Similarly as per reports Prime Minister Shaukat Aziz and his cabinet embezzled about $ 24 billions in privatization process, an amount which was nearly equal to the total external debt at that time. Let’s learn from history and not repeat it. Let’s not ignore our state Constitution; it’s a needed protection.
The most tragic consequence of privatization was the closure of 20 units after transfer to private owners. The closure of these units has played havoc with the national economy and the first phase of privatization contributed to the lower rate of industrial and economic growth. The GDP growth, which was above 6% in 1980s declined to around 4% in the post privatization period. The buyers were not interested in running the privatized factories but in stripping the assets. This is a frequent bane of privatization. Assets strippers buy, pay one installment, remove the machinery, sell the real state and then walk away. All the engineering units except Millat and Al-Ghazi Tractors were closed after privatization, as their buyers had no intention of running them. Do not allow our government to plunder our most valued assets. We must tell them that we do not want them to divest and/or dilute the assets. The people of Pakistan should not accept the loot sale of these national assets to the crony capitalists because even the profit making Public enterprises like OGDC, power, petroleum and the Banks are also again on the hit list of the government. Instead of going for privatization, the government should take extreme measures to end corruption in these public entities and try all the accountable who looted these institutions.