Intervention by Charis Polycarpou, member of the C.C. of AKEL on the seminar “Initiative on strategic sectors, EU common market and National sovereignty”,

“Initiative on strategic sectors, EU common market and National sovereignty”, organised by the Portuguese Communist Party and GUE/NGL

27th November 2015, Lisbon, Portugal

 

Dear Comrades,

Dear Friends,

First I would like to thank the Portuguese Communist Party and GUE/NGL for the organisation of such an event. Discussing and exchanging experiences on such topics strengthen our struggle against the implementation of neoliberal policies. The cases are different in each country, but the struggles are common.

I would like to start by saying that during the last decade the European Union has ratified a series of measures and policies that affected Member-state’s national sovereignty and aimed at the massive sell out of national wealth to private multinational companies.

The implementation of Memoranda in the peripheral countries escalated the pressure for such policies.

It is a fact that the European Union is undergoing the biggest economic crisis since its foundation, a structural crisis with different characteristics across Europe. For instance in Cyprus the crisis has taken the form of a banking crisis.

The crisis however was incorrectly blamed on excessive government and household spending. Thus, Europe’s member states implemented severe austerity programmes, imposing vicious cuts on vital public services and welfare benefits, undermining the financial stability of such services.

However, behind the cuts and austerity measures lies a systematic attempt by the European Commission and the European Central Bank to deepen deregulation in the European economy and privatize public assets in strategic sectors. We musnt also forget that one of the main disciplines that the Troika demanded in every single country it had a presence was the privatization of public sector services and assets, as a condition for loans.

This demand that had no legal support, neither did it make economic sense.

In legal terms the imposed privatisations are questionable, as EU Treaties require the Commission to be neutral on public or private ownership of companies: “The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership” it is stated in the Treaty.

In economic terms the selling of public property during crisis not only eliminates vital resources for the state in order to maintain social policy and welfare but also diminishes the quality of such services and raises the cost for the consumers.

Public services were an integral part of economic and social history of Europe. It was the outcome and result of significant economic and social needs such as the support of social welfare, the fight against cartels in strategic sectors of the economy and the need to facilitate investments is strategic sectors. Investments which private capital was unable, or simply did not wish to take.

Telecommunications, electricity, transport and water, are examples of sectors where public enterprises played a key role, both to meet the collective needs of the population and to support development and efficiency of the economy.

In the case of Cyprus the concept of national sovereignty and public interest is even more critical than in other EU countries and beyond.

This is because Cyprus is a semi-occupied country, daily threatened by the presence of Turkish troops in the northern occupied area. State control of telecommunications, energy, the ports, transport is a necessary condition to maintain our national security.

Unfortunately, the Anastasiades conservative Government used debt sustainability as a pretext to introduce in the memorandum he signed with Troika a clause for the privatization of profitable semi-government organizations. These organisations operate in the energy sector, the telecommunications and the ports. Organizations that not only support Cypriot economy with investments in infrastructure but also have continuously contributed to the state budget.

The last decade the 3 Organizations (Electricity Authority of Cyprus (EAC), Cyprus telecommunication Authority (CYTA) and Port Authority) have contributed more than EUR 1 billion – 1% of GDP yearly in the state budget. Imagine if these companies were private. They have also made significant investments in infrastructure with new technologies, research and technological development.

Moreover, this Government decide to shut down in just one night the only airline, private or public, with its base in Cyprus, the semi-governmental Cyprus Airways. The decision left Cyprus, an island, with tourist sector as its main economic activity, without a national airline.

Nor the tickets have become cheaper neither the services have become better. It makes no surprise that tickets have rose 15% and trips to some of the main European cities takes double the time.

Behind the neo-liberal “arguments” raised by conservative parties in EU, media and others for undistorted competition in these sectors lies their main objective. To help multinational companies gain even more access to major markets of services and utilities and exploit even more their monopolistic advantage.

In Cyprus such a case is the telecommunications sector. The CYTA – Cyprus Telecommunication Authority is a healthy and profitable organization, although there is no public monopoly as the market has opened since our accession in the EU. Their rhetoric is to sell off the company as it has no sense to continue under public control. These rhetoric comes out not only because strong economic interests exist in the telecommunications but also because EU and the IMF, consider it a bad example, which is essential to dismantle.

More than often when public organisations are sold they become private monopolies. And the wealth is distributed to just a few instead of the society.

Taking for instance into consideration the small size of Cyprus market. The privatization of Electricity Authority will not create the necessary conditions for a real competitive market. Two companies are not viable in such a small market. Economies of scale will be lost and inevitably prices will increase. Undoubtedly the priority of the private sector is to maximize profits followed by lack of investment in research and development, insufficient infrastructure maintenance, lack of environmental care and reduced social work.

This is what is mostly indicated by experience at the European and international level.

There are worldwide public and semi-public enterprises that are profitable and crucial for the modernization of society and economic development. At the same time, there are thousands of examples around the world where private companies went bankrupt and failed to play the role pursued.

Also in many cases the state has regained the control and management of these privatized companies. Great Britain constitutes a classic example of privatization failure in the electricity sector. In Germany, many municipalities regained ownership of the privatized local energy companies.

So, If the privatization efforts of electricity companies have failed to a great extent in most of the bigger European countries, where the electricity markets are much bigger than the market in Cyprus, the question raised is why there are efforts towards the privatization of the Electricity Authority in Cyprus.

What would be the impact of the loss of control over these sectors?

First it will result to the sell-out of national wealth. Both the economic performance of the country and the market size demonstrate that the State will not accomplish to attract an offer that meets the real value of these organisations.

Second, the size of the market as we stated before indicates that privatization will lead to the conversion of public organisation into private monopoly.

Third, privatization will deteriorate the provision of quality services and put in question the universality and the accessibility to such services. It will gradually lead to higher costs for consumers and eliminate special schemes existed for low income population groups

Privatization will also lead to staff layoffs, unemployment will rise and the new private management will promote deregulation on working conditions.

Finally, if Cyprus wants to strengthen strategic cooperation with other countries in the field of infrastructures it shall not put hope to the discretion of private companies to facilitate such strategy. Private companies operate under one value – above all are the profits.

Dear Comrades,

Dear Friends,

It is our position that public organizations can and must be constantly modernized, in an effort to perform with integrity and adequacy their mission. Some reforms could improve their mission such as:

• To improve their institutional framework.
• Become more autonomous and flexible.
• Improve productivity.
• Improve service quality and customer service and support social cohesion,
• Facilitate the combating of climate change
• Contribute to productive reconstruction of Cyprus and
• Help the transition to a new sustainable and equitable economic model.

However these changes do not in any way mean that public ownership should change. In contrary, it’s the public ownership that will grant that the above goals will be implemented.

To support these organisations as AKEL we already tabled a bill to the Cypriot Parliament that calls for the immediate freezing of the privatisation process, already initiated by the government.

We want to support working rights and also because the services provided cover vital needs of the society and require the preservation of social role and public character of the companies.

We will also continue the mobilisation of the workers and the organisation of demonstrations against their privatization.

We once again underline the importance of the organizations for the production, distribution and redistribution of national wealth and the provision of high quality and universal services to the society.