Over 1,600 towns, cities worldwide now reversing privatization

Over 1,600 cities and municipalities in 45 countries have acted to claim back public utilities and services from private companies, of which 835 were successful cases, showing people’s initiatives to wrest control over earlier privatization moves the past two to four decades that only resulted in spiralling prices, nondelivery of services to the poor and more misery.

This is the summary of an ongoing three-day conference (February 13 to 15) of the Asia-Europe People’s Forum at University of the Philippines Diliman, where 20 foreign and local scholars, mostly with doctorate degrees in various fields, share notes on the accelerating movement toward reversing neoliberal policies, particularly the privatization and takeover of big businesses over public utilities and services.

Significant deprivatization models and best practices worldwide were also discussed in a book, entitled Reclaiming Public Services, which is a compendium of studies documenting actual experiences from different countries and edited by Satoko Kishimoto of Transnational Institute and Olivier Petitjean.

Privatization causing inequality? Conference delegates told journalists that while privatization and the neoliberal policies the past decades may claim to have contributed to growth, they helped worsen global inequality.

Prof. David Hall of the Public Services International Research Unit and the University of Greenwich-UK, said that “even the International Monetary Fund [IMF] in 2012 and United Nations Conference on Trade and Development in 2011 admit that the austerity policies” did more harm and increased inequality, and affected long-term stability. In short, if growth ever happened because of “macroeconomic policies, as IMF theorizes, it was captured by a few and did not trickle down to the benefit of many,” added Prof. Rene Ofreneo, former labor undersecretary and dean of UP-School of Labor and Industrial Relations.

Also raised in the conference was the observation that even if countries have exited from IMF or stopped dealing with IMF, the onerous loans transacted decades back continue to be a burden owing to the tied conditions or strings attached, which are more like hangman’s nooses.

Cash-strapped in the past, many governments like the Philippines even begged for foreign loans, with creditors demanding sovereign guarantees in return that guaranteed payments through automatic debt service payments, even ignoring the constitutional power of Congress to make budgetary appropriations, making the Philippines one of a few of its kind with this onerous arrangement. Worse, these loans were tied to payment arrangements based on current foreign-exchange (forex) rates.

Thus, when the Light Rail Transit Line 1 was clinched in 1981, forex was P7.80 per dollar, the government only raised P15.60 per dollar of debt based on the rule-of-thumb operating costs double the forex. Today, with the forex at P51.77 per dollar, the government has to raise P103.54 for every dollar of debt, or 1,227.43 percent more in effective costs than the original forex rate.

Austerity is no precondition for growth. IMF’s austerity prescription as a precondition for growth does not hold true based on volumes of facts and studies, Hall said. On the contrary, “long-term data shows GDP per capita rises as public spending rises as a percentage of GDP.”

On the argument the private sector is more efficient, Hall said there are no statistical proofs, claiming both are comparable, citing numerous studies.

Unlike in privatization, whereby only those who pay avail themselves of “public” services, in publicly run services, distribution is done equally. Better still, even if rich and poor get the same equal public services, for the poorest 20 percent even in Organisation for Economic Co-operation and Development the same services already equal to 76 percent of their disposable income, Hall added. More so, in developing countries, where the poorest families have no incomes to start with and thus rely 100 percent on public services.

Privatization reversal a trend? Even in the United Kingdom where privatization started under Thatcher, there are already 64 cases of public takeovers from the private sector, called in Europe as “municipalisation” of running services for people not for profit.

Prof. Vittorio Agnoletto, a medical doctor and professor at University of Milan, claimed it is privatization that has worsened inequality. He showed studies that Lenzie and Calton, two areas of Glasgow less than 10 miles apart, have male life- expectancy differences of nearly 30 years, with Lenzie, a rich neighborhood with 82 years old, while Calton, a poor neighborhood with only 54 years.

The book Reclaiming Public Services noted that in Germany, 347 cases of remunicipalization were done the past 16 years, of which 284 cases were in energy. Moreover, 109 new municipal energy grids were established. Hans Bockler Foundation estimates that 600,000 jobs were lost in Germany between 1989 and 2007 due to privatization, but the reduction in jobs did not necessarily meant improvements in efficiency as labor savings were replaced by other forms of corporate greed.

Paradox of  health workers. Locally, there are no experiences yet about reclaiming back public services, but one issue worth studying, Mercy Fabros of Woman Health and Alternative Budget Initiative said, is the paradox between the fact “the Philippines is the No. 1 exporter of doctors and No. 2 exporter of nurses, and yet 7 out of 10 die without ever seeing a medical professional.”

She added there are over 300,000 unemployed nurses, and 250,000 underemployed nurses. And yet there are moves to privatize or cut down the number of government hospitals like in Manila.

Problem gets too big with H20 privatization. Water in the local Philippine language is tubig, and the problem, indeed, gets too big when this public utility is privatized. From P2.50 per cubic meter before it was privatized, today it is now P40 per cubic meter.

In Indonesia Aqsa Alghiffari revealed that after 20 years of privatization, Jakarta claimed back in October 2017 its public-water utilities in a Supreme Court decision after efforts of civil society, trade unions and media. It is high time the government listened to the grumbling voices of the silent majority, and learn from the mounting experiences of other countries.

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Michael Alunan was for many years a full time business journalist tasked to mind other people’s businesses, but he tried venturing later into business going left and right, up and down, zig and zag till he broke down with heart surgeries for aortic valve replacement and two cases of aneurysm. He is now busy with pro-bono coop organizing and social entrepreneurship development for basic sectors and just keeps a weekly column for the love of writing and to have fun and make pun, while contributing to policy reforms and program development.