Privatisation, TNCs and DemocracyIntroduction Privatisation in Europe/the EU In
addition to the general ideological pressure,
EU’s own research institute, the European
Foundation for the Improvement of Living and
Working Conditions (the so-called Dublin
Institute), recognises two main factors which
have increased the frequency of privatisation in
the European Union over the last fifteen years.
Firstly, the decision to establish the Single
Market, which resulted in a number of directives
on deregulation from 1986, created the
institutional framework for, and the political
project of privatisation. Secondly, the
Maastricht Treaty of 1992 which, by means of its
very strict so-called convergent criteria,
pushed privatisation in many countries in order
for them to comply with the same criteria
(budget deficit of no more than 3 per cent and
state debt of no more than 60 per cent of GNP).
In other words, liberalisation of markets and
fiscal constraints have been used as effective
means to force privatisation in the member
states. However,
based on recent developments, we do have to add
a third factor behind the increased pressure to
liberalise and privatise public services in
Europe – as well as world-wide. That is the
General Agreement on Trade in Services – the
so-called GATS agreement in the World Trade
Organisation, which came into force from the
very beginning of the WTO in 1995. This
agreement, in combination with the stated aim of
the EU in its Lisbon strategy to become the most
competitive region in the world, will have
enormous repercussions on public services in
Europe – even if this is consistently being
denied by EU officials and governments up and
down Europe. In
advanced economies, services now constitute the
main and the fastest growing part, something
which makes them increasingly important and
attractive to transnational companies. There is,
in other words, no chance for the EU to reach
the top of the premier league in market
competition without involving the entire service
sector – public services included. Or, to
quote a report of the Confederation of Swedish
Enterprises, which was published last January:
“A noteworthy increase in employment on
account of private trade in services in Sweden
cannot be expected until the public monopolies
within healthcare and education are opened up to
competition.” That is plain speaking! The
GATS agreement, however, is not the source of
the evil as regards privatisation and
liberalisation. It is just one more instrument
in the hands of the economic interests behind
the neo-liberal offensive. This offensive has
been going on for about 20 years in Europe, and
from the very beginning, Great Britain was in
the forefront of deregulation and privatisation.
In its Thatcherite period, it played a leading
role in the global neo-liberal “revolution”.
At first, it privatised all state owned
manufacturing industry, then tele communication
(1984), bus public transport (1985), gas (1986),
water and electricity (1990), railways (1996)
and nuclear power (1997), although under the New
Labour – Old Policy Blair government. In the
same period, a lot of laws and regulations were
abolished. Now, there is not much left of public
utilities to privatise. There has also been
widespread privatisation in the health and
social sectors. Prisons have been privatised,
and in the municipal sector, more than half of
all so-called blue-collar work has been taken
over by private companies. The three phases and the three stages The
second phase comprised the privatisation of
utilities (or the core infrastructure of
society) – like energy, water, telecom, postal
services and railways. Many EU countries are in
the middle of this phase. These kinds of
privatisation have created more heated
discussions and social confrontations than the
privatisation of manufacturing industries – in
particular between trade unions and governments
– but since all types of governments, right
wing as well as centre and social democratic
ones, have pursued this kind of privatisation
policies, trade unions and other social
movements have mostly been on the defensive. The
third phase of privatisation has just started in
Western Europe and include sectors like health,
education, social services, pension schemes,
etc. These are the last parts of the welfare
state which are now being attacked by corporate
interests and governments. The need for
harmonisation of social conditions, professional
qualifications and social benefits in order to
facilitate the free movement of labour between
the EU member states, and thus the creation of a
much more flexible workforce, are being used as
arguments for the deregulation, and consequent
privatisation, of these sectors. In
parallel with these privatisation phases, there
is an ongoing struggle to transfer as much as
possible of municipal services to the private
sector, mainly through the use of competitive
tendering. The
three stages of privatisation in particular
apply to the utilities. The first stage is
represented by the deregulation of the market in
question. Every privatisation process starts
with the liberalisation and deregulation of the
market. The second stage consists in the
transformation of public undertakings into
publicly owned joint stock companies, and the
third stage involves the real privatisation
process, when the state sells off its stocks to
private owners. At every new stage there is
common experience in many countries that
governments, in particular social democratic
governments, try to calm down the trade unions
by promising that “we are going to go this
far, but not further”. Experience has proved
that this kind of “promises” should have
been equipped with “best before”-marks, as
they do not seem to last more than a couple of
years at the very most. The role of the TNCs When
the Swedish Linjebus acquired a bus company and
was awarded a couple of contracts in public
transport in Norway a couple of years ago, when
the British Onyx acquired the biggest Norwegian
waste management company and when the Danish Krüger
tried to take over a water distribution company,
it did not immediately appear to us that all
these companies were subsidiaries of one and the
same multinational company – the French based
multinational giant Vivendi. Vivendi
is the biggest private company in France and
some parts of the conglomerate have specialised
in taking over public services in many sectors
and in all parts of the world. It builds cartels
and develop combines in order to prevent and
reduce competition all over the world. It is a
giant in energy and water, it has extensive
activities in Europe, in South and North
America, in Asia and Australia. It has made its
way from zero to become the biggest public
transport company in Europe and it is big in
waste management, in construction and, over the
last few years, particularly in
telecommunication, media and entertainment. It
also controls the biggest private education
institution in France, Educinvest, with 250
schools. The total number of employees is about
340.000, and it has had an enormous growth over
the last 15 years – until last spring, when
its aggressive policy of acquisitions and high
debt recoiled and made it a victim of the burst
of the stock exchange bubble. In
many areas markets are tacitly being divided
between the big corporations. Water supply is a
good example. Two French companies are dominant
on a word scale, Suez-Lyonnaise and the above
mentioned Vivendi. They do meet competition from
four others; SAUR, Anglian Water, Thames
Water/RWE and International Water (through
mergers and acquisitions they have been reduced
from nine some few years ago). However, these
six companies co-operate a lot, on as well as
behind the scene. When water supply in big
cities is privatised, two to three of them often
establish combines to take over the operations,
and the alliances changes from city to city. We
probably can all imagine what kind of fierce
competition they are able to develop in one city
when they work together in the next! It
is the same situation in refuse collection and
waste management. Four companies dominate not
only the European, but the world market; Sita,
Onyx, RWE and Rethman. Accidentally, the two
first mentioned are subsidiaries of
Suez-Lyonnaise and Vivendi respectively. Five
years ago there were another four companies
which represented real competition
internationally, namely Fabricom, FCC, WMI and
BFI. However, they have all been eaten by the
four giants, mainly by Sita and Onyx. We
can observe the same development in the energy
sector. In Europe many signs indicate that there
will be 5-6 big energy companies only in some
few years. The German giant RWE will surely be
one of them. Another can be Tractebel – owned
by Suez-Lyonnaise. And a third can be the new
company which is now being developed by the
French state monopoly EDF (Energi de France) in
co-operation with Vivendi in order to acquire
energy companies and win contracts outside
France. One
of the strategies of these multinational giants
is to underbid – that means consciously to put
in a bid which does not even cover the costs of
producing the actual services – in order to
get rid of competitors in the belief that it
will pay off in the long run, when a more or
less monopolistic situation makes it possible to
increase profits. The experience with Onyx in
Britain in the middle of the 1990s illustrates
this phenomenon. Onyx had been very successful
in winning a number of waste management
contracts in the south of England, but year
after year it ran with an enormous deficit.
Differently from other companies in a similar
situation, however, Onyx did not go bankrupt.
Every year the company received a check from its
mother company in France, which at that time was
named Generale des Eaux (now Vivendi), and
everybody understood very well what was going
on. Onyx had put in a number of underbids in
order to get rid of competitors. Soon after,
Onyx simply bought its main British competitor
and thus further reduced competition. The
end result of the competitive tendering system
is, in other words, not increased competition,
but increased monopolisation. In Great Britain
an investigation in the middle of the 1990s
showed that five companies controlled more than
60 per cent of all tendered contracts in waste
management. There are even fewer now. The
equivalent figure for the home care sector was
65 per cent. When competitive tendering was
introduced in public transport in Sweden at the
beginning of the 1990s, it took 6-7 years to
restructure the industry completely from a
situation where they had about 250-300 bus
companies to the current situation where three
companies control more than 2/3 of the market.
Two of the companies, Swebus and Linjebus (now
Connex) were rapidly taken over by multinational
companies. This is not an exception, this is the
main rule when an entire public sector in a
country is made subject to competitive
tendering. We have seen it in sector after
sector, in country after country. The only ones
who do not notice this development, are the
supporters of privatisation and competitive
tendering. They regularly deny that this very
well documented process is taking place. Bad
experiences, and there are a lot of them, do not
have any influence on their policies and
decisions, what so ever. The
most recent attack on public services The
European Commission argues for the
”necessity” of introducing forced tendering
in public transport in a way which will
eventually apply to any public service which has
been opened for competition from multinational
companies in at least some of the EU member
states. That is now the case in most public
services. Should the Commission therefore
succeed in introducing compulsory tendering in
public transport, the same kind of attacks could
be expected on a number of other public
services, like water and gas supply,
electricity, refuse collection, health and
social services, education, etc. In other words,
the proposed regulation is a privatisation trap. Today,
member states of the European Union and local
authorities have organised their public
transport in different ways. With compulsory
tendering in force, regional and local
authorities will be deprived of the right to
decide how to organise their public transport
and a policy of privatisation will be imposed
upon them. This is most probably also the
intention of the proposal. It is no secret that
the European Commission for a long time has been
impatient and irritated at what it considers
being too slow a privatisation process – in
particular at the local level, where politicians
are closer to the people who elect them and
therefore have to take into account the lack of
popular support for, and opposition to, the
policy of privatisation. Until today, forced tendering in public services has only been tried in
Britain during the reign of Margaret Thatcher
and John Major. Under their governments the
British Parliament introduced compulsory
tendering in municipal services – first
regarding so-called blue collar work and later
on in so-called white collar work. Even
supporters of competitive tendering concluded
that this was an unsuccessful policy, and the
system was abolished shortly after the electoral
defeat of the Tories in 1996. Now the European
Commission has adopted the same failed policy. The
proposal is currently in the rather complex
decision-making process between the European
Parliament and the Commission. Even if
opposition is strong in some contries, most
politicians at the local level do hardly know
anything about this proposal, and among those
who are informed, many do not see the
privatisation trap which the proposal represents
– for all kinds of public services. Organise resistance In
the longer run, we will have to build broad
national alliances against these policies. In
Norway we have organised the so-called Campaign
for the Welfare State which includes trade
unions in the private as well as the public
sector, women’s organisations, student
organisations, retired people’s organisation,
small peasants' organisations, organisations of
users of welfare services, etc. and for which I
am the national co-ordinator. It is not yet e
real popular movement, but we have established
the political, social and organisational
infrastructure based on the broad alliance which
is necessary if we are to stop the policy of
privatisation and make another world possible. A
strong and broad popular alliance against the
currently ongoing GATS negotiations is an
important part of the mobilisation against the
undermining and dismantling of public services
and public welfare. This agreement is now being
used to having public services exposed to market
forces. Again, we can listen to the interests
behind this market offensive rather than the
reassuring lies of our political elite. The
clear message of the Swedish Confederation of
Enterprises leaves us with no doubt:
“Successful new GATS negotiations will through
reduced barriers to trade in services in general
increase the internal and external pressure on
Sweden to in the long term open up the public
monopolies to competition.” This is exactly
the intention of the GATS agreement and the
reason why it has to be defeated. The
British researcher Dexter Whitfield, in his book
Public Services or Corporate Welfare, says that:
“Privatisation is more than asset stripping
the public sector. It is a comprehensive
strategy for permanently restructuring the
welfare state and public services in the
interest of capital.” Well said! Organise and
fight, folk – against the corporate take-over
of our welfare states. Thank you for your
attention! (Contribution at a
Conference on Privatisation, Competitive
Tendering and Alternatives, Initiative
for another Europe, during the EU Summit in
Copenhagen 15 December 2002.) |
