Privatization vs. Nationalization: Italy's Choice

Last month, the government was at the center of a heated debate over selling a stake in Poste Italiane. The proposal is to sell 15% of the company while keeping a 50% controlling interest, with the potential to raise at least 2.5 billion euros.

This isn’t the first time the government has sold stakes in state-owned companies. In recent months, it sold 2.8% of Eni’s shares for 1.4 billion euros and 25% of Monte dei Paschi di Siena for 920 million euros. Following the same strategy, there are plans to sell 30-40% of Ferrovie dello Stato, valued at around 5 billion euros, 15% of Rai Way for 200 million euros, and stakes in other companies like Enel, Leonardo, and Snam.

The government’s privatization plan aims to help reduce, at least partially, the country’s massive public debt, which now exceeds 2.95 trillion euros. Privatization is a legal and economic process that transfers ownership of an entity or company from state control to private hands, the opposite of nationalization. In theory, privatization offers two key advantages: it lowers the state’s management costs while generating revenue from the sale, and it assumes that the private sector will manage the assets more efficiently.

Italy has pursued privatization policies in the past, particularly during the 1990s and 2000s, selling off industrial assets worth around $160 billion. These efforts were driven not only by the need to raise funds and reduce public debt but also by an industrial strategy aimed at improving efficiency. The expectation was that converting public companies into private entities would enhance their competitiveness and, in turn, strengthen the country’s economy. However, this period also witnessed the decline or downsizing of key private firms such as Fiat, Olivetti, Montedison, Pirelli, Falck, Condotte, and Astaldi. The CGIL union strongly opposes this latest privatization effort, viewing it primarily as a cash grab.

The sales proposed by the Meloni government could generate around 20 billion euros to help reduce the public debt. However, it’s important to recognize that using 20 billion to address a debt of nearly 3 trillion is not a viable solution, as that amount only accounts for 0.67% of the total debt. While this operation may provide short-term benefits, it could lead to significant long-term losses, as the government would be forfeiting a substantial portion of the profits from the strategic companies it depends on.

In conclusion, the current landscape is largely dictated by political propaganda, which is far from the concrete actions needed to safeguard and revitalize the country’s industrial system. There is a clear absence of a strategic, holistic vision to steer the market, develop supply chains in key sectors, and create value chains that can drive economic growth and generate stable, professional jobs while addressing the many corporate crises currently underway.

Translated by Iuliana Cindrea

Mondo Internazionale APS – All rights reserved ® 2024