When countries suffer from financial crises or mounting 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 assistance. But sometimes, they force privatization indirectly. Rich countries – working through international institutions such as the World Bank – rarely help poor countries modernize and strengthen public services. But they often force them to privatize and commercialize public services, which they would never do themselves. The IMF has the power to declare countries eligible for financing – or not. Countries have to accept the terms of structural adjustment programs to get the stamp of approval.
Pakistan’s government is raising the banner of privatization despite failing globally. Despite IMF and World Bank claims of the success of Structural Adjustment Programs (SAPs), it is widely accepted that SAPs have failed to achieve their goals. Both agencies have pushed millions deeper into poverty by promoting equally draconian “economic reforms,” including privatization, budget cuts, and labor “flexibility,” regardless of local culture, resources, or economic context. Privatization was initiated in Pakistan as part of the conditions set by the IMF and the World Bank. Failed privatisation, rampant unemployment and a grossly inefficient and unaccountable political system persist. Privatization in reality is nothing but looting of the poor to settle the rich and legal looting of public assets by a few capitalist elements and multinational corporations.
In all, 31 enterprises worth billions of dollars and belonging to highly profitable sectors such as oil and gas, banking and finance, power, industries and real estate are up for looting again in the name of privatization under the mandate of the IMF. Banks, communications, roads, mines, electricity, oil companies, engineering companies or shipping companies, almost everything is being sold. But does this privatization help reduce poverty, inequality and unemployment? The common assumption that privatization leads to higher levels of efficiency is not true, at least in the case of Pakistan. Social development has slowed down due to privatization.
Employees are protesting the sale of these companies. The corporate elite is pushing for privatization to ensure they control all the means of our livelihood. It is sad how governments have been promoting nepotism over the years in appointing the heads of these corporations and overstaffing these institutions. One of the main reasons for the decline in recruitment of these national bodies is at the top and not at the bottom as is commonly imagined. Current governments, be they political or otherwise make these appointments. Failure of incompetent and inefficient management by political leaders to destroy public institutions and pave the way for the looting sale of those public assets; Pakistan has a few left. Under the guise of privatisation, there is actually a plan to sell off huge assets of these unfortunate institutions. The sell-off comes at a time of debate over private versus public ownership of public institutions, amid concerns about rising 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 gain. Pakistan now has one of the highest levels of wealth inequality in the world. Healthcare, transportation, banking, communication equipment are being privatized. Private business owners and top management are looking to maximize profits at the expense of poor consumers. Active agents of the 1% elite infect vital organs of society and consume their nutrients. As public services are privatized, the cost of those services increases and profits multiply as enterprise capital is liquidated and real wages are cut. In reality, most privatization is a redistribution of public assets to the rich, who get richer, while the general public gets poorer. And that’s the real story: what has been achieved is not high efficiency, but the transfer of public assets to influential people who can afford to buy them, usually at fire-sale prices. This is what happened here when natural resources were privatized.
Despite the IMF and World Bank’s claims of success of Structural Adjustment Programs (SAPs), it is widely acknowledged that SAPs have failed to achieve their goals. Both agencies have pushed millions deeper into poverty by promoting equally draconian “economic reforms,” including privatization, budget cuts, and labor “flexibility,” regardless of local culture, resources, or economic context. Burdened by heavy debt, 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 widening gulf between the rich and the poor that is likely to continue. The people at the bottom will continue to be 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 scraps from the top table. Analysis of previous privatization shows that it has not been able to achieve the intended goals of privatization. Governments themselves became part of the conspiracy when politicians realized that looting public wealth was an efficient way to reward their private beneficiaries.
There are painful examples of usurpation of national wealth; For example, Pasrur Sugar Mills was sold to United Group’s United Sugar Mills by Mian Nawaz Sharif as CM of Punjab in 1991 “for a token price of only one rupee”. Samandri Sugar Mills were sold to Monos and Rahwali Sugar to Muslim League politician Sheikh Mansoor, following a one-line advertisement in newspapers titled “Bids invited for Rahwali Sugar Mills” etc. There are hundreds of other such examples which cost the national exchequer billions and billions of dollars. The recklessness and favoritism shown by Chief Minister Nawaz Sharif in the privatization of PIDB units was to become the hallmark of his privatization as Prime Minister. Similarly, according to reports Prime Minister Shaukat Aziz and his cabinet embezzled about $24 billion in the privatization process, which was almost equal to the total external debt at the time. Let’s learn from history and not repeat it. Let us not ignore our state constitution; It is necessary protection.
The most tragic outcome of privatization was the closure of 20 units after being transferred to private owners. The closure of these units wreaked havoc with the national economy and the first phase of privatization contributed to a low rate of industrial and economic growth. GDP growth, which was over 6% in the 1980s, declined to around 4% in the post-privatization period. The buyers were not interested in running the private factories but in grabbing the assets. This is a frequent effect of privatization. Asset stripers buy, pay an installment, remove the machinery, sell the actual position and then walk away. All engineering units except Millat and Al-Ghazi Tractors were closed after privatization, as their buyers had no intention of operating them. Don’t allow our government to rob us of our most valuable assets. We must tell them that we do not want them to divest and/or dilute assets. The public of Pakistan should not accept the sale of these national assets to crony capitalists as profit-making public enterprises like OGDC, power, petroleum and banks are again on the government’s hit list. Instead of going for privatisation, the government should take extreme measures to end corruption in these public institutions and try all those responsible for looting these institutions.