Following my recent first article on the government’s relentless war against its citizens as reviewed by economist Hay Badran from Dror Israel (www.drorisrael.org.il), here is the second part, highlighting the government’s potentially destructive privatization campaign.

Destructive Privatization

As the government is wont to do, it abuses its enormously increased parliamentary power (remember we are talking about a 3/4 majority in the Knesset here) to advance the law on business concentration. Last week, PM Netanyahu and Minister of Finance Steinitz presented a memo of the law to increase competition in the economy based on the recommendations of the business concentration committee. According to the memo, businesses that are highly concentrated will be prevented from participating in privatization schemes and cannot benefit from government appropriations, except for those who are granted permission by a special committee. The areas that were determined to be under limitations include water, energy, roads, communications, broadcasting, mining, natural resources, local financial infrastructure and health services infrastructure.

The interesting thing is that the law includes no restrictions whatsoever on privatization of government services and activities. Accordingly there was no determination that water, energy, roads, communications, broadcasting, mining, natural resources, local financial infrastructure and health services infrastructure cannot be privatized to foreign companies. In other words,  the determination of the law that these areas will not be privatized by sale to Israeli conglomerates (the only bodies who could feasibly acquire the controlling interest in any of these areas) and the lack of qualification that these areas cannot be privatized to foreign companies has only one implication: A clear and unequivocal intent to privatize government activities through sale to foreign tycoons or conglomerates.

As indicated, the distribution of rights to natural resources and  government services and activities will be supervised by a special committee. In this way the government can easily pass public assets to foreign elements based on political considerations.

Whoever plays down the danger of this move can scrutinize the outcome of the recommendations of the committee on business concentration when dealing with financial and real holdings in a test case: Last week the Calcalist economic paper reported on the negotiations to sell The Phoenix, Israel’s fourth largest insurance company to a large private equity fund, Kohlberg, Kravis, Roberts (KKR). KKR was one of the leading funds in the Leveraged Buy-Out (LBO) period of the 80ties of the last century and has continued these activities into the 90ties and beyond.

In parallel we were informed about the sale of Clal Industries to the Russian oligarch Lev (Len) Blavatnik who made his billions during the fire-sale period of the breakdown of the former Soviet-Union. Blavatnik is reportedly interested in turning Clal from a holdings group of real companies into his investment arm in Israel.

The government of Israel continues moving to make deep structural  changes to the economy. Under the heading of “breaking down business concentrations”, the privatization process is exclusively guided to potentially benefit foreign financial elements. It is particularly absurd that critical infrastructures cannot be passed to Israeli tycoons while there is no such limitation regarding foreigners.

I think you are getting the picture, it’s not a pretty one, actually it is quite ugly and the public better wake up before all our assets are gone.