you're reading...
Europe, Greece, Italy, Portugal, Spain

European crisis: the real aim is to privatize

What is the European crisis? One answer is that it makes the privatization of public assets inevitable, delivering big profits for private individuals and organizations. As Greece, Spain and Portugal demonstrates. Europe is being sucked into a downward spiral caused by counterproductive measures, while the crisis carries on its slow, relentless work. Families, if they can, save money, and cut spending. Companies do not invest. Banks are reducing the credit. A crisis of external debt (mostly private) has been dressed up as a crisis of public debt. Public spending is blocked with perfect timing by an international treaty [EU fiscal compact] which imposes the brutal constraints of a balanced budget, without much to distinguish whether it is capital expenditure or current expenditure. It is well known that a policy of compressing public spending, at a time of excess private sector debt and already low – historically low – interest rates could have deleterious effects. The collapse in domestic demand has now reached the strongest economies in the euro area, which is also heading into recession.

Assuming the impossibility of collective madness of all the European ruling classes, one is left wondering who benefits from all this? It is no coincidence that a fashionable recipe to get out of the crisis is the sale of public assets in order to reduce debt. Of course, public finances in a mess, forced to privatize public goods and services, is the classic scene from a film we’ve already seen in many parts of the world. We haven’t got here by chance. It’s one of the barely hidden objectives in strategies of attrition in the public sector to ‘starve the beast’. The beast is the state, the ideological enemy that must be starved of resources. The quality of the services it provides to citizens decreases. The citizen sees it and begins to wonder if it really is worth keeping up with their taxes and poorer public services. Then come the saviours of the country, who buy the company or public service at an reduced prices and extract profits. In the best case scenario, the new owner of the former public service delivers it more selectively and at higher costs to the citizenry. It the worse cases, it cherry picks the best parts, and offloads the remaining unprofitable assets on society, takes the money and runs.

The privatization of health care in the United States has doubled the costs for citizens, excluding a huge portion of the population from any health care coverage. Obama understood the error and the economic and social costs of this process and considers the reversal of this evil trend as the most important of his first presidential term. The experience of the “reforms” in Central and Eastern Europe after the fall of communism teaches us that the privatizations – carried out to generate cash, making public goods for the exclusive benefit of a few individuals, with the first services to be privatized the ones that work best, the family jewels – contribute to a substantial increase in inequality. Other parts of the world, such as Latin America, have had similar experiences in which public goods and services were sold at conditions favourable only for the buyer. It is no coincidence that Carlos Slim, the richest man in the world according to Forbes, owes his fortune to the wild privatizations of the 80s and 90s in Mexico, from the mines to telecommunications.

Now it is the turn of old Europe. Portugal ended 2012 privatizing airports, the national airline, (former) public television, state lotteries and shipyards. In Spain, the privatisation ‘express’ concerns ports, airports, the network of high-speed trains- probably the best and most modern in Europe – health, water management, state lotteries and some tourist centres. Greece has recently been urged to accelerate the process of privatization of goods and services provided so far by the state, as a condition for continuing to receive European aid. In Italy, Mario Monti, shortly before his resignation as Prime Minister, decreed the financial unsustainability of the national health system, explaining the need for “new models of additional financing. The Monti agenda argues that “growth can only be built on sound public finances” and then invites us to continue disposals of public assets. And on the front pages of some newspapers there are those who still see “too much state’ in Monti’s agenda.

Economic theory and past experience teach us that while the privatization of public companies can reduce the deficit in a given year, it creates a significant risk of increasing the deficit in the long run, if the company disposed of is productive. Furthermore, it is not enough that the private management is more efficient than the public, the efficiency gain must also absorb the profit that the private investor necessarily pursues. If the seller (the state) is in a hurry and under pressure to do it, those who buy (private investors) have a clear negotiating advantage, allowing for more favourable terms.

And if the conditions of privatization are more convenient for the private sector, they will be symmetrically be more inconvenient for the public sector, ie the general public. Recent studies show that citizens of countries that have undergone rapid and massive privatization in the 90s are deeply unhappy with the results. The ex-post evaluations are all the more critical if the privatization was carried out rapidly, the greater the proportion of public services sold off (water and electricity in particular), and the higher the resultant level of inequality in the country.

Privatization is the final destination of the journey that Europe and Italy are undertaking. It is essential to discuss this issue openly, if the common good is to be served. What is decided will define the direction that Italy takes after this weekend’s elections.

 Sbilanciamoci  21.2.2013

Translation by Revolting Europe

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or email [email protected]


2 thoughts on “European crisis: the real aim is to privatize

  1. Quite so. It’s only the fringe of Europe, but this is precisely what lies behind Jeremy Hunt’s plot of trying to privatise the NHS in England- which is going on under everyone’s noses. Here in the Netherlands the fully completed private postal system has just undergone its ‘reorganisation’ or in plain language its economising measures. The whole system is a disgrace. A mass of underpaid, demotivated flexible labour and a service that has no actual service (I work in it, so I have direct experience). This sort of thing is the future of all privatised ex-public assets.

    Posted by Hans | February 27, 2013, 5:46 pm


  1. Pingback: // you’re reading… Europe, Greece, Italy, Portugal, Spain European crisis: the real aim is to privatize – Revolting Europe | - February 28, 2013

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Twitter Updates

  • A Week in Revolting Europe paper.li/tomgilltweets/… #austerity #politics #poverty #inequality #protest #banks #pensions #wages #unions 1 week ago
  • A Gathering Storm: Eurozone in 2014 | Jacques Sapir | Revolting Europe wp.me/p1bMfw-1XC 1 week ago
  • RT @labourstart: France: Two Total refineries in France to shut down over strikes ow.ly/rNovF 1 week ago
  • RT @USILive: Banking Union without Reform? - usilive.org/banking-union-… 1 week ago
  • EU credit downgrade 'pours cold water on narrative that things getting better in eurozone' -The Economist. economist.com/blogs/charlema… #austerity 1 week ago
  • RT @corporateeurope: 'Elected politicians excluded from #EU-US negotiations', writes @StaffaniDK #TTIP notat.dk/elected-politi… 1 week ago
  • Women plan mass #protests in #Spain today against law changes taking abortion rights back 30 years newsinfo.inquirer.net/549871/spain-s… 1 week ago
  • RT @euronews: Major austerity drive in Portugal deemed illegal eurone.ws/JOjqV8 1 week ago
  • RT @SocialEurope: Read on SEJ: Why Wage Depression Is Not The Way Out For Spain bit.ly/19xQlGP 1 week ago
  • Families of kids with special needs issue SOS as disability benefits cut & schools cost too much ekathimerini.com/4dcgi/_w_artic… #austerity #greece 2 weeks ago
Follow @tomgilltweets

Enter your email address to follow this blog and receive notifications of new posts by email.


Anti-social Europe in numbers


Key facts and figures on wages across the EU

Wealth Inequality in Europe

Get the key facts and figures


A different take on European issues

Italy’s Healthcare Crisis

Health services are ‘close to collapse’ in Rome, Turin and Naples after years of cuts and privatisation.


99% of the 167 000 Madrilenos who signed a petition rejected the sell off local water company

Filthy Rich

France's Bernard Arnault of the Louis Vuitton Moet Hennessy (LVMH) empire is worth $41 billion. Check out Europe's rich list


Private banks receive half-trillion-euro gift from ECB


Workers and citizens stand up for themselves


Workers are on a go-slow over privatisation

Massive Spanish protest

Half a million take to the streets over labour market deregulation


Hundreds of workers occupied the factory of ArcelorMittal in Florange in the north of France

International Workers Day

International Workers Day 2012

RSS Watching Corporate Europe

  • Pesticides, tobacco and greedy lawyers: the most read stories from CEO in 2013
  • EFSA urged to clean up list of 'public interest' organisations
  • NGOs welcome Ombudsman’s damning report which heavily criticises Commission

RSS Hate Crimes in Europe

  • An error has occurred; the feed is probably down. Try again later.

RSS Fight discrimination in Europe – Amnesty Int’l

  • Listen to Roma Rights
  • Russia: Total disregard for human rights on “Constitution Day”


in Italy the home is a very dangerous place to be


Workers down tools over PM Monti's attack on labour rights


Concentration camps and a massive migrant marine cemetery





Read the statement by Lafontaine and Melenchon

PM Rajoy One Year On

Spaniards are not impressed








The Dossier