1. N ATIONALIZATION AND P RIVATIZATION in the Shadow of Changing Economic Policy Paradigms Eva Voszka, University of Szeged, Hungary

2. G LOBAL S ALES OF S TATE O WNED A SSETS AND S TATE P URCHASES OF P RIVATE S TOCK Source: Megginson (2013) 20.

3. H YPOTHESES (U NITED S TATES AND E UROPE ) 1. Privatization and nationalization waves mean more than merely ownership changes – indicators and elements of changes in economic systems 2. The changes in the post-crisis years have specific features 3. The fragmentation of the directions in ownership changes is connected to uncertainty of theoretical and economic policy paradigms

4. C ONTENTS 1. Characteristics of nationalization and privatization waves before 2008 2. Consequences of the global crisis 2.1. Crisis management by nationalization in the U.S. and in Europe 2.2. Varieties of re-privatization 2.3. Crisis management by privatization in the EU 2.4. Signs of further nationalizations 3. Conclusions

5. 1. Starting point: extreme situation (war, crisis, post-war reconstruction) 2. Harmonized Regionally (similar situation, external influence) With regulation (state role) 3. Connected to modification of economic-social systems New forms of capitalism; systemic change on the European periphery 4. Regarded as panacea Complex (and similar) goals, both privatization and nationalization might solve basic economic problems, advantages for broad social groups, political consensus Theoretical and empirical critics of both directions by the turn of the millennium C HARACTERISTICS OF N ATIONALIZATION AND P RIVATIZATION – W AVES IN THE 20 TH C ENTURY

6. T HE E ARTHQUAKE 2008/2009 Crisis management: Keynesian approach, including nationalizations (bank bailouts and in the U.S automotive industry) - in order to save „free market system” Range: $356 bn in U.S., $500 bn in EU (own estimation) Hidden methods (impaired assets, recapitalization, warrants) – no statistics for EU Similarities : accompanied with other forms of state aid, declared as temporary, obligation of repayment and restructuring, burden sharing, restrictions on dividends and bonuses Differences: US - concentrated in time, including automotive industry; EU - two decision making levels, two phases

7. R ECONSTRUCTION 2009- Income from privatization Other income Total income / investment (%) USA34230104.5 EU – re-privatization10392cc. 39 – other privatization280 The end of Keynesian consensus Arguments for quick re- privatization: banks and governments – before re- regulation US: positive return EU: delayed, the bulk of privatization came from other sectors

8. A FTERSHOCK N O. 1. P RIVATIZATION Crisis management by privatization in Europe: decreasing budget deficit and state debts, without hindering growth Strong external (EU) influence – most effective in cases of international assistance: Greece, Portugal, Ireland – ¼ of total privatization income of the EU (2009- 2014) Characteristics Broad sectorial coverage Minority packages (hybridization) – income plus retaining control Limited effects on short run („privatization potential”: 4-5 per cent/GDP)

9. A FTERSHOCK N O. 2. N ATIONALIZATION Reasons: unfavorable effects of privatization, public aversion Main sectors : public utilities (re- municipalization), energy and other strategic sectors Forms: „Nationalization of incomes” Termination of outsourcing contracts Nationalization of assets „Silent nationalizations” (founding subsidiaries of state firms, privatization incomes reinvested, big state investments) Increasing role of SWFs: tripled investments in 2008-2013, 20% of global nationalizations

10. T RADITIONAL F EATURES OF O WNERSHIP C HANGES AFTER 2008 Unchanged characteristics : extreme situation, it can be managed by both nationalizations and privatizations Modified characteristics : harmonization In time and in space, but nationalization is short episode in the U.S., while re-privatization is slow in Europe Regulation is (somewhat) strengthened, but after privatization

11. … AND S OME N OVELTIES Quick alteration of directions, parallel application of nationalization and privatization Nationalization is declared to be temporary, it does not necessarily mean soft budget constraint None of the directions is regarded as general solution Blurred boundaries between nationalization and privatization (silent methods: SWFs, hybrids)

12. P OSSIBLE E XPLANATIONS OF THE N EW C HARACTERISTICS Both privatization and nationalization might be proper methods of crisis management – theoretical arguments and in practical evidence: parallel application At the same time well-funded critics, evidence on limited effects: temporary feature, limited expectations The uncertainty of theoretical and economic policy paradigm concerning the role of the state and the market: hidden forms, mixed application, blurred borders.

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