Friday, December 9, 2022
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Joaquim Verges. Emeritus professor of financial economics at the Autonomous University of Barcelona

Over the past twenty years, in parallel with what was happening in many other countries, the public sector in Spain has undergone significant restructuring and some reduction, then a comprehensive privatisation programme, concentrated in the years between 1996 and 2003.

It is noteworthy that in a first stage until 1995, the policy of successive governments (PSOE) in this regard was characterized by a combination of, on one hand, privatizing certain industrial owned enterprises (SOEs) with viability problems and, on the other hand, to enhance others, reorganizing entire productive sectors, introducing or strengthening a modern business mentality of competitiveness and profitability in the management of those PCs (Public Companies). The result was the emergence of clusters such as RPCsol (petrochemicals), Endesa (electricity), Tabacalera (tobacco and food), Telefónica, Inespal (aluminium), Indra (technology) and Aceralia (steel). In fact, because of this mixed policy, the weight of public sector in the Spanish economy had barely changed until 1995 (about 8% of GDP).

The political idea then spelled out by the government was that such "new PCs" (true modern business groups in a country with few examples of this type) would continue as PCs and to try to provide funding (dividends) to the state budget. The flagship and most significant part of this policy was the creation of holding multisectoral public Teneo in 1992 in which grouped all these 'new' PCs, along with the rest of the old INI companies that were profitable or that had clear business viability alone in the market. The motto of the new public holding was clear: profitability, international expansion and competitiveness in the global market. Moreover, indeed some of the enhanced "new PCs" successfully implemented a policy of profitable growth, including a successful international expansion, mainly in Latin America.

In 1996, the PP came to power with a neoliberal programme

Parallel to this policy to restructure and strengthen large PCs, others were effectively privatised since the government considered that they could be viable but not alone, but rather within an international group of the same sector, such as Seat (cars), Enasa-Pegaso (trucks) and La Maquinista (The Machinist) and Ateinsa (goods). They also sold the traditional Campsa (hydrocarbons monopoly); while other state, generally small, PCs were liquidated as being considered economically unviable. In addition, the government carried out sales operations -between 1992 and early 1996- sales on the Stock Market of minority blocks of shares in these "new PCs" with the objective of tax collection, that is, without them ceasing to be under public control.

The March 1996 elections radically changed this situation. The PP took office with a clearly neoliberal agenda; especially in reducing the role of government in the economy, based precisely on "privatise all PCs". Then started the large privatisations themselves, which extended from mid-1996 to late 2003. They consisted first in an accelerating policy of selling successive blocks of shares in the large and profitable PCs mentioned on the Stock Market, until they came to be completely controlled by private investors. Starting with the so-called grassroots "crown jewels" (which, in effect, due to their history of good profitability and international positioning, its shares were generally well received by private investors): Repsol, Endesa Telefónica, Tabacalera (later Altadis), Argentaria (formerly 'Banco Exterior'), Iberia (airline), Red Eléctrica Spanish, Retevisión, Ence (paper), and Indra (technology). All this in just over five years.

In addition, other important PCs were privatised during the second stage by direct sale, usually private companies in the same industry sector. The most noteworthy: Inespal, Elcano (shipping), Suria K Potasas, Enatcar (intercity buses), Santa Barbara (weaponry), Aerolineas Argentinas, Transmediterránea (shipping), and the last major privatisation (in 2003), Enausa (motorways).

This process of privatisation of course spread to other less notorious state PCs; and lengthened over time until 2006 with some operations in particular (most importantly, the Izar shipyards).



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