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Privatization or partnership, which is more effective?
Economic 2024/10/07
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Which is more effective, privatization or partnership?
Privatization is a method within the capitalist system that aims to transfer capital assets owned by the state into private ownership as a tool to address loss-making government companies.
As a reminder, during the post-change period, specifically during the era of Iyad Allawi’s government in the year (2005), a privatization commission was formed, which included experienced businessmen and government officials with special and high ranks, headed by a well-known businessman and including undersecretaries of ministries. At the time, I was assigned to work as a media advisor to the commission and I followed its activities until the end. The purpose of forming this commission was due to the fact that there were more than (190) companies, most of whose factories were losing money, including companies that were turning yellow without any production, and companies that did not cover their expenses and the salaries of their members. The commission conducted statistics and surveys of the companies and classified them according to their production capacities and suitability for work. However, with the change of governments, the authority was neglected, abandoned and abolished. The opinions of economists are divided between those who support privatization and those who oppose it. Given the high costs and burdens that these companies pose on the budget, attempts have been made to support these companies with the aim of activating them, but to no avail. Experts ultimately agree that partnership is the best way to revitalize struggling companies and bring them into the business market and make them productive. Partnership is a new method that is included in the attempts of those in charge of economic reform to treat and rescue losing companies, as partnership is considered a type of partial privatization in all cases. What is meant by partnership is a partnership between the public sector and the private sector, provided that the management of companies is handed over to the private sector while keeping ownership fixed for the state, based on the recognition that the mentality of the private sector focuses on profitability to maintain production with high efficiency without wasting productive resources. It seems that the prevailing trend now is to adopt the partnership method in a way that achieves the following goals (which are considered among the advantages of partnership): foremost of which is preserving ownership of capital assets without relinquishing them, as well as benefiting from the expertise of the private sector to succeed. Companies and make them profitable, thus getting rid of the burden of the huge losses they were incurring.
Perhaps there are several reasons behind the failure of public companies, most notably corruption and the lack of concern of public administrations for losses because financing is guaranteed. The most prominent reason is the uncontrolled openness that led to making public companies unable to compete due to the high costs of production and was a pretext for some failed administrations to rely on.
Therefore, it is clear from the above analysis that partnership is more economically viable, and this is what most economic experts around the world agree on, although it is not without flaws. The question remains: What are the challenges facing partnership in Iraq?
The first challenge is the opposition of public company managements to concessions to the private sector, and this has its own reasons and motives of a privileged nature.
The culture of the totalitarian regime is still entrenched in the minds of many, which makes us really need time to achieve an equal partnership preceded by binding laws and procedures that do not allow the laws in force to object to the new management of companies, and we need to prepare an efficient management by applying the terms and controls of governance in a way that paves the way for a successful partnership, so we need time, and the important thing is the beginning.
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