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Privatisation: the moment is not up to the ideology
Published on 17/06/2010 in L’Orient - Le Jour
Privatization. The word, so often part of the public debate, has become a political marker. Some are "for", others are "against". As if privatization was a cause or corresponded to an ideology. The reasons behind this radicalization are numerous, the political divide that the National Unity government was able to reduce has not prevented both sides from mobilizing their people around galvanizing themes. The extremely patchy economic culture of the political class and the Lebanese in general, promotes the politicization of concepts whose meaning remains unclear to the greatest number. In this context, it seems necessary to clarify the issues of privatization.

What are we talking about? The concept of privatization informs two kinds of relationships between the State and the private sector: either the former gives the latter a public asset or it concedes - for either a short or an extended period of time - ownership, management or operation of a public asset to the private sector.

Some public properties are amenable to sale, others are not. For example, it is unthinkable to consider the definitive transfer of the maritime domain, airspace, radio waves or even airports to the private sector. In turn, no one today would understand the State owning - as is still the case in some countries – car-making factories! This last question does not apply to Lebanon but it largely defined the debate on privatization in the 1980s, whether it took place in France or in the England of Margaret Thatcher.

Assets held by the Lebanese State are relatively few. Privatization would therefore be limited to Middle East Airlines, Intra, the old oil refineries, Tele-Liban, Radio Lebanon, the Casino, the mobile phone networks and power plants. Our situation has nothing to do with the wave of privatization affecting countries whose Socialist regimes have long placed the economy under the yoke of the State, such as Syria, Egypt or Russia. In this regard, the Russian experience is cited by many today as a typical example of the excesses of privatization, when assets are sold for a pittance to individuals whose subsequent enrichment is brazen.

In fact, behind the issue of privatization hide two issues, which must be distinguished.

The first concerns the liberalization of a sector. Competition is the best guarantee of quality and of controlling prices and in this respect, the behavior of a monopoly, whether it is public or private, is effectively the same. The second concerns the concept of public service. There is a tendency to think that only the State is capable of providing public services. I would say that the State must be their guarantor, through mechanisms of regulation and control, but that it is not incumbent it provide them itself.

In Lebanon, the alleged failure of the State to assume its role leads some to the desire to privatize everything, the private sector being considered more effective. This recommendation is understandable given that successive Lebanese public administrations have failed. But this can never be seen as more than a fit of pique. For, make no mistake, privatization does not relieve the State of its regulatory responsibilities: the reform of the State is in any case a necessity, otherwise you end up with companies that are certainly private but with dissatisfied customers and users. It is also the responsibility of the State to define sectoral policies, in which all stakeholders, both public and private, play their part.

The privatization debate is badly framed in Lebanon. The question is not whether or not to use the private sector, but how. Privatization does not entail an abdication by the State. Quite the contrary in fact, if it is done under proper conditions.