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Bad time for privatisation

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Should the coalition government sell Czech Airlines, Prague Airport or Čepro? The answer is simple: If you consider the instability of the world markets, it should not.

Privatisation in general is usually a very good thing. A private owner can usually look after property better than the state, and it is certainly true in the case of business companies that were set up for the purpose of profit. Since we do not live in honourable Scandinavia and we also also some “natural” or “genetic” inclinations, privatisation is also good for another reason in our conditions: It curbs corruption, as it limits the influence of politicians on the operation of companies and on filling high office posts.

Let us, for example, remember the disgusting power games and political skirmishes around the filling of posts at Telecom, when it still was a state company. Posts on the board of directors were distributed based on a political decision and gigantic bonuses were paid out under the supervision of political parties. People were appointed to these functions by politicians and their monthly salaries exceeded the annual salaries of politicians. Let us not believe that politicians did all that for free. Since being sold to the Spanish Telefónica, the company has fortunately stayed separate from politics.

But that is not all. Politicians are also obliged to take care of the property of their taxpayers “with the care of a proper administrator”. And no proper administrator must allow state property to be sold at a time when the market is down, in a situation, when banks have limited loans (or stopped providing them completely) on investments or on the so-called mergers and acquisitions. And that is what is happening now.

We may be sorry that the current coalition government has not managed to govern or to privatise properly, but it is really not a good time to sell anything right now. Even if we disregard the scepticism and pessimism presented by the media, the global and European economic prospects are probably the worst since the mid-1970s. Income from the privatisation is not the main thing, although it is also important. And the second thing is the selection. In the current situation, the serious bidders will pull back and only the non-transparent ones, linked to authoritarian regimes will remain.

We do understand that ministers do no want to leave the big privatisation morsels to the next government (they would say: we cannot leave it to Paroubek), but if this government, with its quite strong anti-Russian rhetoric, sells Czech Airlines to the Russian Aeroflot, it will do a lot to tarnish its image.

This article was translated with permission by the Prague Daily Monitor.

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