THE COUNCIL of Ministers approved the roadmap for the privatisation of semi-governmental organisations on Thursday and as expected the bills were primarily designed to limit political and union opposition. From the first reactions we can conclude that the government has failed in this respect. The union bosses of the SGOs paraded through the media on Friday morning vowing to fight against the government plans while AKEL tried to add fuel to the fire by accusing the government of being ideologically opposed to the state sector and championing the interests of capital.
The truth is we should not be having this debate because the government has signed the MoU which clearly stipulates that €1.4 billion would be raised through privatisations by 2018. As we cannot privatise the National Guard or Cyprus Police we have to sell off SGOs like Cyta, EAC and Ports Authority which have real assets and profit-making potential if properly managed; other smaller concerns could follow. Are the SGO unions suggesting the government does not honour its signature and find a way out of its commitment to international lenders?
It is astonishing that none of the opponents of privatisations have any scruples about going back on what we had agreed, presenting it as if it is the obvious thing to do. Union bosses are irresponsible chaps, but the parties are bringing the country into disrepute with their stance. AKEL is the worst of all. The provision for privatisations was included in the MoU agreed by Demetris Christofias so it is a bit hypocritical to complain now, unless of course the comrades had no intention of honouring their agreement either.
All the populism and union threats have obviously influenced the government’s plan which tries to pander to all interests. Even the terminology being used is designed to appease the moaners – de-nationalisation rather than privatisation would take place – while government spokesman Christos Stylianides assured that the state would keep a stake in all the de-nationalised firms. State participation will be directly related to how much money could be raised by the sales which prompted Stylianides to describe the de-nationalisation as an “evolutionary procedure”. So, in theory, if the sale of 40 per cent of Cyta, of EAC and the Ports Authority generated the €1.4bn required the remaining shares would stay with the state.
This muddled thinking permeates the government’s philosophy. For instance, the government said it would contribute to the €1.4bn with revenue from gaming licences including those for casinos and through the sale of state-owned real estate. The amount raised from these transactions would determine the size of the stake in the SGOs that would be sold to the private sector.
It is an irrational approach, because the economy would benefit much more if the funds generated from gaming licences and the sale of state property was spent on development projects instead of being used to maintain some state participation in SGOs, from which the economy has nothing to gain.
The government has adopted this half-baked approach so that President Anastasiades does not go back on his election promise to DIKO and so as not to be accused of having sold off the national wealth by AKEL and EDEK. This is how national policy is shaped. Inevitably, national policy has to pander to the unions. The bill, the spokesman said, would safeguard all workers’ rights, without specifying if this meant that the plundering of SGOs by unions would continue.
Worse still, as part of the roadmap, shares would be offered to workers of the SGOs or their provident funds. This is scandalous preferential treatment which should not be allowed to stand. Shares should be offered to members of the public who have as much right to buy a stake in SGOs – after all, this is the national wealth belonging to the public as AKEL keeps reminding us – as the workers of the organisations. Are people that do not work for the SGOs second-class citizens, excluded from investing in these companies?
In its effort to limit the noise made by unions and political parties the government has come up with a plan that leaves all options open. Full privatisation might be still be necessary to raise the €1.4bn but the government will worry about that when the need arises, via the “evolutionary procedure.” There is a big risk involved in not setting a clearly-defined path for such an important policy objective. Improvising policy, in accordance with public demand, as we go along, is how the government has decided to implement the de-nationalisations. In Cyprus politicians always choose the path of least resistance, usually, with disastrous results.
