Remunicipalization, Deprivatization

A new social movement is sweeping Europe. It is a movement of  local governments and civil-society groups calling for the “remunicipalization” of public services, meaning the return to government control of essential public services that were privatized in the 1980s-2000s due to the then dominant neoliberal thinking that such services are better handled by the private sector. These services include water distribution, waste collection, energy and electricity management, transport, education, health care and social work, infrastructure development, and a host of other local government services.

This remunicipalization movement arose out of the widespread citizen dissatisfaction with the privatization “revolution” launched by Ronald Reagan and Margaret Thatcher in the early-1980s and promoted with unwavering enthusiasm by the global financial institutions World Bank and the International Monetary Fund, in the succeeding decades.

The remunicipalization movement finds strongest expression in Europe. This is partly a reflection of Europeans’ deep resentment against the austerity program that has been embraced by European Union and a number of European governments in the wake of the 2007-2010 global financial crisis.

Also, it should be pointed out that Europe pioneered (after World War II) the development of a strong public sector able to provide the citizenry ample or well-rounded social protection that includes full medical care and unemployment insurance, as well as efficient and affordable public services, such as mass-transport system, water service and so on.  Today, many Europeans find the system of privatized public services expensive, inefficient and even corruption-tainted compared to the old government-managed public services.

Per study by the Public Service International and  Transnational Institute, thereare at least 835 cases of remunicipalization involving 1,600 cities. Most of these are in Europe. However, the remunicipalization movement is also spreading to cities in the United States, Canada and Latin American countries. There are a few cases, too, in Africa and Asia (India, Indonesia, Japan and Malaysia).

Some examples of re-municipalization: Nice of France, governed by a conservative administration, has remunicipalized the city’s water and sanitation, public transport, school restaurants, market and cultural festival. Another famous French city, Grenoble, a pioneer in water remunicipalization, ended what the citizens saw as a lopsided contract with water multinational Suez.

Germany has the most number of remunicipalization cases, 347 in all.  But one project in Hamburg stands out: the remunicipalization of electricity, district heating and gas utility, which were privatized not so long ago, that is, at the turn of the millennium. In 2009 a Conservative-Green coalition government established a new public utility called Hamburg Energie for the purpose of building up renewable-energy generation capacity.  The utility was able to develop 13 MW of wind power and 10 MW of solar energy that involved citizens and local businesses as investors. It was also able to attract 100,000 subscriber clients. And despite a change in government in 2011, the citizen-led coalition for remunicipalization was able to force the new government “to reclaim the energy grids [electricity, district heating and gas]” through a “utility that would concur with social and ecological demands.”

More examples:  In the case of Oslo, Norway, the city was able to bring waste-collection services back into government hands after two decades of dependence on incompetent private service providers, which were found to be noncompliant with labor standards. In the case of Delhi, India, the winning “Common Man’s Party” was able to set up in 2015 affordable and reliable primary health-care clinics numbering around 1,000 at a cost of only $30,000 per clinic (compared to $450,000 in national government dispensaries). From 2015 to 2017 the clinics were able to provide free but quality healthcare services to 2.6 million poor Delhi residents.

In Argentina Correo Argentino (Corasa), privatized in 1997, was renationalized six years after (despite a 30-year contract) because of numerous complaints against Grupo Macri, the winning investor, on the poor quality of its service, series of price increases,
nonpayment of royalty to the government and the nonservicing of poorer areas of the country.  And yet, Grupo Macri was still reported to be in the red. After the re-nationalization, the government was able to make Corasa profitable, improve the quality and reliability of postal service, and, remarkably,  even lower the cost of operations and fees charged to customers.

The foregoing cases of privatization and remunicipalization/deprivatization are just a sample of why there are now more than 1,600 cities in Europe and around the world questioning the wisdom of privatization as a development instrument in the delivery of essential public services.  The traditional arguments raised by neoliberal economists is that privatization makes these services affordable, efficient and less prone to corruption. The exact opposite is what has been happening in most cases.

This is one reason proponents of remunicipalization are coming not only from one segment of the political spectrum.  One would assume that the movement for remunicipalization would be spearheaded mainly by fire-breathing socialist radicals. And yet, in Germany, which has the most number of re-municipalization projects, many of the cooperating city governments are allied with the Conservative Democratic Union. As documented by PSI and TNI,  the effort to remunicipalize is “being carried out by all shades of politicians” based on a “transpartisan consensus” forged among different segments of society.

In turn, this consensus is distilled from the collective daily needs and experiences of the people at the local level.  This explains why the energy multinationals in Germany or the water multinationals in France have failed to stop the remunicipalization momentum.

In fact, a big casualty of the movement for remunicipalization is the public-private partnership (PPP) model of privatization, which allows big private companies to bid for the control or management of public services in the name of cheaper and efficient service delivery. The movement for remunicipalization has shown that the PPP promise of better and more cost-effective service is simply not true.

This brings us to the situation in the Philippines.  Why are our economic planners and technocrats pushing mainly for the PPP modality in developing public infrastructures and maintaining a number of key public services? Is going PPP the only way to “Build, Build, Build” these infras? Based on the emerging global social movement for remunicipalization and deprivatization, is it not wise to take a historic pause from this PPP policy obsession and evaluate first other development options open to the country?

News bit: The Asia-Europe People’s Forum, through its Social Justice Cluster, is holding a conference on “Assuring Affordable, Accessible and Quality Public Services for All” from February 13 to 15 at Balay Kalinaw, UP Campus.


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