Privatisation slows down worldwide

Has the money lost heart, or is it the bureaucrats?

Via Richard Murphy comes this Financial Times piece (£), suggesting that privatisation may be declining globally:

The pace of privatisation around the world has slowed sharply, with an unprecedented number of asset sales delayed or cancelled amid volatile markets and political uncertainty.

Despite governments across the globe continuing to hoist for-sale signs over state-owned enterprises ranging from airports to electricity networks, the number of completed deals last year was less than half the 2010 figure, according to the Privatisation Barometer, a joint project between KPMG and Fondazione Eni Enrico Mattei, a Milan-based research institute.

The report (pdf) offers the explanation that last year was one of "global financial retrenchment", prompted by the Eurozone crisis and the fight in the US over the debt ceiling. It offers, as a "dramatic" example of the former:

The Spanish government['s] forced cancellation, literally days before execution, of what would have been 2011’s largest privatization — the October sale of 30% of the national lottery, Loterias y Apuerto del Estado, which would have raised over €7 billion ($9.7 billion) — and the near-coincident delayed (not yet renewed) sale of the Madrid and Barcelona airports that could have raised more than €5 billion ($6.9 billion).

The explanation leaves something to be lacking, however. If, as the report argues, the Eurozone crisis was one of sovereign debt, then it ought to have led to more, not fewer, privatisations, given that they are one of the most effective ways for a nation to raise in a short period of time the amount of cash necessary pay down debt.

Similarly, the big economic story of the last year has been the flight to safety, which has led to the reverse-sovereign-debt-crisis being experienced across much of the world, as well as little quirks like RORO. That too ought to lead to greater, not lesser, privatisation, since taking control of an established monopoly is a pretty safe investment. So long as a company doesn't completely misjudge how much it can make from a utility (looking your way, GNER), it's hard to fail when buying out the state (hard to fail, that is, from a financial point of view. Very easy to fail when it comes to actually providing services).

I think the best explanation is that privatisation is becoming uncool, not for economic reasons, but for political ones. States simply don't want to take the unpopular move of handing over control of their services to the private sector. Whether this is good or bad depends on the specific circumstances (as with Matt Yglesias, I think a well-thought-out mutualisation of the US Postal Service could do wonders, but the sale of Madrid and Barcelona airports risks creating the nation's own version of BAA), but Murphy thinks there is something to celebrate anyway:

Let’s hope that there might also be a realisation implicit in this that people now realise that it’s not just banks that can be too big to fail, but that much else that we depend upon is also too big to fail, and needs to be state run to ensure it survives as a result.

Barcelona airport, following a protest by cleaners. The airport was due to be privatised this year. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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France to bulldoze Calais Jungle days after child refugees arrive in the UK

The camp houses thousands. 

Refugees and migrants in Calais began queuing up for buses this morning as the French authorities plan to demolish the "Jungle" camp.

But activists fear that, unless France significantly speeds up its asylum process, the displaced people will simply move to other camps along the northern French coast.

Meanwhile, the first children of Calais brought to the UK under the Dubs Amendment arrived at the weekend.

The camp known as the Jungle, in a wasteland by the port of Calais, is actually the latest manifestation in a series of camps established since 1999, when a French reception centre became too crowded.

However, it has swelled as a result of the refugee crisis, and attempts by residents to sneak onto lorries entering the Channel Tunnel have become daily occurences. The French authorities bulldozed part of it earlier this year.

Ahead of the latest demolishment, which is expected to happen on Tuesday, Clare Moseley, founder of Care4Calais, said: “In February this year over 50 per cent of the camp was demolished and yet six months later the camp is bigger than it has ever been before. 

"This is clear evidence that demolitions do not act as a deterrent.  The refugees come because they have no choice."

Future refugees will go to other camps with even less facilities, she warned.

The camp houses thousands of residents, but because of the authorities' unwillingness to legitimise it, there is no official presence. Instead, the residents must rely on volunteer aid services and have little means to stop intruders entering. 

Although conditions in the camp can be dire, residents have created a high street with basic tent shops and restaurants catering to the needs of its displaced population. Many of those in the camp say they are there because they hope to be reunited with family in Britain, or they have given up on ever being processed by the French authorities. 

After the UK government was pressurised into passing the Dubs Amendment, which provides sanctuary to unaccompanied child refugees, some children from the camp have arrived in the UK. The first group is reportedly mostly girls from Eritrea, who will be processed at a UK immigration centre.

One of the MPs crucial to ensuring the Dubs Amendment delivered, Stella Creasy, said many more still needed help. 

Children reunited with their families under the Dublin Convention arrived in the UK last week, although their arrival was overshadowed by a debate over age checks.  

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.