Merits of privatization.

n the past five or so decades Iraq has experienced both privatization and nationalization of some of its public services and businesses. Privatization denotes transferring a state-run enterprise to the private sector, whereas nationalization refers to the reverse process of taking control of a private firm into government or public sector responsibility. Privatization is an old process that has been resorted to in numerous countries whenever it has been felt that key public sector institutions have not been run efficiently due to alleged corruption, bureaucracy, indifference, and incompetence. The international scene abounds with examples, including giant establishments such as British Steel, British Rail, British Telecom, British Gas, and France's Telecom. It is argued that privatisation in Europe has led to genuine competition claiming that the former state-owned enterprises lost their monopolies due to legislation and technological change, competitors entered the market, and prices fell dramatically. In the early 1960s, the Iraqi government nationalized the foreign banks and in the 1970s it nationalized the foreign oil companies. However, in the 1980s Iraq privatised many of its public works such as the cement factories and so forth. In Slemani, people witnessed the privatization of the Palace hotel, the bus service and the cement factory. The basic reason quoted for privatisation is that government administrations do not generally feel sufficiently motivated to keep their entities well run nor do they consciensiously attempt to keep up with technological advancement and progress. They have no competition and thus no comparison can be made with any others so as to discover variances with the aim of taking appropriate measures to rectify weaknesses. As such, it is not possible to know if they are run efficiently. Moreover, it is tough to assess the effectiveness of its enterprises as the public sector might include enterprises which may be of varying technical complexities. This is in contrast to a private entrepreneur who has fewer units to control and does so much more efficiently. This is made easy as the private ownership is enabled to acquire expert operators for its technical requirements and can both reward or replace its managements. For these reasons, the trend for economic development in the last two or three decades, in the developed countries, has focused on privatization. Liberalization of services in those countries has been looked upon as the answer to most economic and political problems. The IMF, World Bank, OECD, WTO and European Union are the most prominent organizations pushing for privatization and liberalization. Another clear example of privatization in Kurdistan has been in the telecommunications field that has led to the founding of Kurdtel, AsicCell and KorekTelecom. The main reason for this was the governance vacuum created after 1990 with the need felt by the KRG to fill in for the lost public services. Unlike western countries, many developing countries have avoided privatizing basic services such as electricity, water supply, education and social welfare. They argue that unrestricted access to such services should be guaranteed as basic rights. Some argue that the track record of privatizing basic utilities around the world indicates that it is a confidence trick. They point out how simplistic ideology and economic theory are used to mask the pursuit of self-interest; how control of electricity has been taken from public hands merely to create profit opportunities for investors and multinational corporations; and how an essential public service has been turned into a speculative commodity in the name of 'reform'. Sometimes, national security concerns may be the source of reverse privatisation or nationalization actions when the most likely providers are non-domestic or international corporations or entities. An example of this is that of the US. In 2001, in response to the September 11 attacks, the then-private airport security industry in the US was put under the authority of an agency of the US government. No doubt, the debate on the advantage of the public sector over the private one or vice versa, has remained inconclusive and will likely remain so. What is important for Kurdistan in is two fold. One is the need to keep up with the Joneses of the international scene and secondly whatever is done, it should ensure that it is not effected at the expense of making labor suffer, prices rising, quality of services deteriorating and the general public denied of easy access to basic utilities.

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