Privatization’s Hidden Aim
By Tariq Majeed
The writer, a retired naval officer, is a researcher in the global power game and has authored many articles and several books, including one titled, “The Global Game for a New World Order,” published in 1995.
Those who praise Thatcher’s massive privatization of Britain’s state-owned enterprises do not know the real story. She in fact wrecked the sound structure of Britain’s economy that was a fruitful mix of socialism and capitalism. She “enabled Britain’s rich to get richer, but made life hell for many working-class Brits.” It was some years later when independence for Scotland loomed on the political scene as a reality that the hidden political aim behind Thatcher’s policies dawned on the British people.
New Wave of Pressure. Pressure on Pakistan to privatize its state-owned enterprises is again increasing. This is not to say that there was any lapse in it. This pressure is a constant feature that is evident from its recurring mention in the media. Its heat, of course, is felt without let up by government officials, especially those in the Foreign Office and the Economic Affairs Division. But then, there are among them those who are part of the pressure machine.
Bhutto’s Nationalization – Part of the Plan. The pressure stems from the IMF-World Bank Duo, which demands that Pakistan sell off all its State-Owned Enterprises (SOEs) to private companies. The demand, actually the second part of a long-term plan, was initiated in early 1980s. Its first part was Z.A. Bhutto’s sweeping nationalization of all privately-owned enterprises in the country in 1972–that damaged both the economy and the economic structure of the country. A. G. N. Qazi, who had a long career in the Economic Affairs Ministry, disclosed in a PTV interview in June 1993 that, “ In the early 1970s, the IMF and the World Bank were coaxing and guiding us to make nationalization a prerequisite in our economic policies. Then, in the early 1980s they were coercing us to denationalize and privatize everything.”
Pakistan government, in fact, did not disappoint the two financiers, when it is considered that to meet their demand scores of SOEs were sold off to private parties in the past 20 years or so. Amongst them was PTCL, a strategic and highly profitable state asset. Most of them were profit-yielding entities and were sold off at literally throw-away prices when compared with their market value. It was in the first tenure of Mian Nawaz Sharif as prime minister (1990-93) that the privatization programme took off. Thereafter, it went on flourishing during each of the successive governments.
The Remaining Vital Assets. What is irking the IMF/WB is that several units that have been on the top of their demand, such as, Pakistan Railways, PIA, PSM, PSO, Pakistan Post, have still not gone into foreign private hands. The PPP government, like its predecessor, was willing to sell them off in spite of their vital strategic value for the country. However, wiser elements in the civil-military establishment and some within the PPP kept warding off the danger of losing these national assets, although the government had redoubled the efforts to turn them into ‘white elephants’ and ‘deadwood,’ to show that they were a drain on the economy. Now, new life has been put into these efforts.
The propaganda managers never let a word out in public about the valuable strategic nature of these units or about the ever-increasing financial misery imposed on the masses as a result of the ‘market forces’ controlling the numerous units already privatized.
“Thatcher Plan”- A Misconceived Model. On 30 April, the Nation, published an interview of Pakistani billionaire Mian Mohammad Mansha by Bloomberg with the headline, “Pakistan Needs Thatcher Plan after Poll.” Describing Mian Mansha “as one of the country’s richest men who oversees MCB Bank and whose Nishat Group spans finance, textiles and cement-making,” Bloomberg quoted him as saying: “State-run companies are bleeding cash…They have got so bad now that we need a Maggie Thatcher type of solution.” Bloomberg explained, Mansha was “referring to the 1980s push to sell-off loss-making government companies led by the late British prime minister.”
Mian Mansha is in big business and obviously has certain merits. But, does he not know that the ‘Thatcher type of solution’ actually wrecked the sound structure of Britain’s economy that was a balanced mix of fruitful practices of socialism and capitalism? She was a darling of the Big Business but was despised by most Britons, especially the Blue-collar Masses.
Thatcher made Masses Economically Miserable. A Reuters headline in the Nation, Wednesday, 10 April 2013, two days after her death on 8 April, summed it up: “Thatcher Mourned, But Opponents Celebrate.” “Loathed, Thatcher crushed trade unions and privatized swathes of British industry.” Britain’s Daily Mail, April 9, labelled her as “The Woman Who Divided a Nation,” and “questioned the ceremonial funeral planned for her.” Another story by Reuters in the Nation on April 16 said: “Thatcher deeply divided Britons and while some have paid tributes to the achievements of her Conservative governments, others said her privatization of swathes of industry had destroyed communities.”
Similar bitter comments were made by several columnists and observers, following her death. A column in New York Daily News, April 8, 2013, commented: “Thatcher’s popular capitalism enabled Britain’s rich to get richer and buttressed some sections of the middle class. But it made life hell for many working-class Brits and by the mid-1980s unemployment doubled to more than three million. And even when members of her own Conservative Party urged moderation, she tightened her resolve.”
‘The Thatcher Plan’ dislocated the steady, masses-friendly conditions of life in Britain and led to decline and volatility in the important sectors, including, health, public welfare, educational and social conditions, industry and economy itself. Does it offer a solution for Pakistan’s troubled economy? No, Mr Mansha! Thank you; Pakistan does not need the ‘Thatcher Plan.’ But, you can help with your business expertise, and advise the government on managing the SOEs efficiently and making them commercially profitable.
The Aim behind Britain’s Massive Privatization. The weekly Time, June 3, 2013, in a write-up on Prime Minister David Cameron’s political woes, shows a photo of “Protestors in London marching against Cameron’s austerity measures.” They are carrying placards with hostile slogans; one huge placard reads: “CAMERON HAS BUTCHERED BRITAIN.” Actually, Thatcher was the architect of such cruelty.
It was some years later, when independence for Scotland loomed on the political scene as a reality in the future that the hidden political aim behind Thatcher’s policies dawned on the British people. Divesting the government of the centrally controlled industries, services and utilities was to pave the way for Scotland to become independent. By then, they had also found that the assertions that these enterprises were functioning inefficiently and incurring losses were artificially created, and that their privatization, contrary to claims of yielding benefits, had worsened the economic and social conditions.
Silence over the Adverse Effects of Privatization in Pakistan. Both these adverse features have been painfully conspicuous in the privatization programme in our country. And yet the advocates of privatizing the remaining state-owned assets never say a word about the acute distress that these two elements have brought to our nation. The advocates lobby, besides some affluent businessmen and officials, in the privatization commission/ministry, includes leading politicians and economists. The silence of the former two groups is understandable, but that of the political leaders and leading economists cannot be explained except in terms of lack of sincerity.
The privatization project is a vast programme of stipulations–known as conditionalities–to be met. Its agenda of undesirable changes has included creation of Oil and Gas Regulating Authority (OGRA) and breaking down of WAPDA into various power supply companies, lifting of price controls, linking of POL prices with those in the international market, pegging the Rupee to US Dollar and thus exposing it to constant devaluation, terminating the beneficial subsidies on essential items and giving freedom to foreign buyers of SOEs to repatriate their profits in foreign exchange.
Distress and Damages Caused by Privatization. The conditions and consequences let loose by the privatization project have been harmful economically, socially and even politically, both for the State and the people. People are suffering from unemployment and a chronic inability to meet the ever rising cost of the basic necessities of daily life, food, electricity, gas, transportation, schooling of children. Impoverishing conditions in the society have increased bribery, robberies and suicides.
The State has lost several regular sources of large sums of revenue. It has lost much of its ability to control rising inflation and to provide relief to people including reasonable opportunity of employment. Its authority to ensure timely availability and maintenance of essential reserves of certain important commodities has been adversely affected.
Security, Sovereignty and Unity Affected. In privatization of a strategic enterprise, when its control is transferred to the foreign buyers/shareholders, as, unfortunately, was done in the case of PTCL, the State loses a measure of its security as well as sovereignty. Both these vital ingredients of the power and independence of the State will be greatly harmed if other strategic enterprises are fully or partially privatized. A vital point which should never be overlooked is that each of the large state-owned services, Pakistan Railways, Pakistan Post, PTCL, WAPDA and PIA, operating all over Pakistan, naturally acts as a binding element in national integration and unity.
Shallow Arguments. What was the government’s explanation for selling off the SOEs to private parties? It was simply this: ‘The SOEs were sick units, mismanaged, incurring heavy losses and a drain on public exchequer and, therefore, had to be privatized.’ This was touted as a slogan–to justify the official policy. Twenty years on, the same slogan was used by Mian Mansha; only the words were different.
This argument holds no water, to say it in polite words. In critical analysis it turns out to be unsound, and far short of the level at which strategic issues are evaluated for taking decisions in the National Interest. Besides, this justification was clearly incorrect in the case of many of the SOEs, including PTCL, Sui Gas Corporations, Fertilizer and Cement Factories and the Landhi Tool Factory, which were earning profits. The Kot Addu Power Plant was showing high profits when it was privatized. When PTCL was being privatized in 2006, news appeared in the press that Pakistan’s Telecommunication Service was the highest profit earner among the world’s state-owned telecommunication services. Informed economists considered PTCL as one of the main engines of growth in Pakistan.
Top Management Posts in Wrong Hands . How did various units that were running efficiently and yielding profits turn into allegedly “sick” units a few years after their nationalization by Z. A. Bhutto in 1972? Mainly, because their top executive posts, in disregard to rules and regulations, were gifted to cronies of the country’s ruling elite. Such appointees, apart from being devoid of the expertise required for the job, treated it as an opportunity for making money. This has been the practice, starting from Bhutto’s PPP regime down to the PPP-led regime that ended on 16 March 2013. An excerpt from a story in the News on 15 May 2013 highlights this point:
“To pre-empt political appointments in state-owned entities by the upcoming government of Nawaz Sharif, a petition filed in the Islamabad High Court seeks a complete end to high profile appointments except in accordance with the transparent and competitive induction process as laid down by the Supreme Court. The petition expresses deep concern about the state of affairs where incompetent, unfit and corrupt persons are deliberately placed in top regulatory, government corporations and authorities. The previous government made appointments without following transparent, fair, merit-based procedures to at least 20 such bodies and organizations, including PIA, PSM, Pakistan Railways, SSGPL and SNGPL. The result of such blatant abuse of executive power was an 1800 billion rupees corruption during the last five years because of which there are huge electricity and gas shortages and state corporations like PIA, PSM etc. are virtually bankrupt.”
Massive Outstanding Bills and Loans. Apart from being victims of mismanagement and massive corruption, units such as WAPDA and KESC accrued losses due to non-payment of bills by large governmental and private consumers, and stealing of electricity by influential people. They were financially damaged also in other ways. When WAPDA was being prepared for privatization, its labour union leader, as reported in daily Din, 14 November 1997, lamented: “WAPDA was a profit-yielding body till by wrong policies billions of rupees of its earnings were shifted to outside agencies.”
Privatization of Banks was preceded by a flood of propaganda that the banks were failing due to huge losses. What had caused the losses? Enormous loans obtained by influential businessmen and politicians. These remained unpaid and went on multiplying from year to year. As their privatization was finalized, many of the loans were written off; some were recovered. The losses disappeared and the banks immediately began to show profits! These banks were a rich source of revenue for the government. Their profits now go into the coffers of private parties, and the outsiders among them promptly send the wealth in foreign exchange out of Pakistan.
Dishonest Dealings. It is not in the scope of this writing to discuss the irregularities committed in privatizing various units, including appointment of foreign consultants as asked by IMF/WB and payments made to them, and selection of the buyers and settling of the sale price and other terms with them. Other researchers have analyzed this aspect. It is covered in an extensive study, “Senseless Privatization in Pakistan,” by Usman Karim at http://www.paklinks.com/gs/pakistan-affairs. The financial managers in the newly installed PML(N) government would find it very useful. In the privatization programme during 1985 to 2008, dishonest dealings on the part of both parties, the government functionaries and the private buyers, caused serious losses to Pakistan in terms of national economy, security and sovereign control over the state assets. Just the corruption involved in that process amounted to US $42 billion, according to the study mentioned above.
The Political Aim. Scotland’s full independence, set for 2014, that will shatter Britain’s unity, could not have taken place without breaking up the state-controlled centralized structure of national systems of communications, transportation, utilities, services and industrial and other assets. The breakup was accomplished by Thatcher’s privatization programme. That was privatization’s hidden political aim. And so it is, in Pakistan and many other countries, including India, Indonesia, Sri Lanka, Egypt, Nicaragua, Nigeria and so on, where privatization is in progress. Everywhere the regimes are carrying it out on the directions of IMF and WB.
Part of the New World Order. Privatization is an integral part of the New World Order (NWO), which is a world-wide plan seeking to alter the value systems of societies and the geography of countries. Conditions are being promoted to break up the existing nation-states into smaller territorial entities using ethnic, linguistic and other parochial differences in the people within each state. The plan envisages uniting the new territorial/geographical entities into regional federations which would be under a restructured UN broadly acting as a One-World Government. Its originators are the exclusive group of International Financiers who dominate the world economy and consequently politics, media and other instruments of power.
It is not a conspiracy theory. It never was. When President George H. W. Bush in a speech on 28 February 1990, said: “Out of these troubled times, our fifth objective— a new world order— can emerge,” people heard this phrase for the first time. But implementation of NWO had been already going on. European Community, precursor of EU, and other regional organizations, such as ASEAN, SAARC and GCC, to be turned into federations in future, had been formed. And, privatization, the cornerstone of NWO, was in progress in many countries. People did not know its real aim, but they knew by experience that its end result was more misery for them. So, in every country they have been resisting it.
That privatization is a scheme for breaking up of countries is a very closely-guarded matter by IMF and World Bank, the principal implementers of the NWO. The people and even the political and military leaders in most countries remain ignorant of it. However, here in Pakistan, we are sure they would no longer be unaware of this grave danger to the country.