Privatization in Israel
Encyclopedia
The privatization in Israel refers to the transferring or selling of a service or property owned by the Israeli government or any public organization to private ownership. The meaning of the privatization is reducing the share and level of intervening which is directly connected with the Israeli government in the Israeli economy, increasing the portion and the economic activity of a private group, on the control and ownership of the assets.
The inverse process to the privatization process is called Nationalization
.
The privatization processes in Israel belong mainly to the following types:
Many refer to the structural change which has happened in many of the kibbutzim in Israel "privatization of the kibbutzim", although this process does not in relate to privatization processes. The kibbutz is a private voluntary association and not a public association, and the changes which occur in it are not considered Privatization as it is described in this article.
in Israel, started in the period of the Yishuv
, which evolved in parallel with the state. The structure of the Israeli public sector was designed during the pre-state period, a period in which the national institutions were established, which were designed in a large extent continued to operate and become a major part even after the establishment of the state. Through the years, reciprocal ties and cooperation was formed between the public sector and the private sector. These patterns were manifested with the establishment of joint businesses, along with various cases of transition from the private sector to the public sector and from the public sector to the private sector. The various parts of the public sectors recognized the economic importance of their activities, and it is difficult to distinguish between the political motives and considerations and economic considerations. The two were, and would continue to be interwoven with each other.
After the state of Israel was founded and the cabinet was established, many dominant institutions which were formed beforehand were transferred to its possession as an “inheritance”. The Israeli government like many other governments acts and intervenes in the economy of the state in order to realize major aims such as: ensuring competition, providing public goods, ensuring the existence of information and preventing restrictions on the ability of the public to choose, ensuring the stability, growth and aid in low point periods and in times of crises.
The public sector in Israel contains in it many non-governmental organizations, and the entirety of the organizations is not only a source of budgetary revenue, but also a source of expenditures. The flow of finance from various sources expands the boundaries of the public sector and adds an important dimension to the Israeli political economy.
The activities of the public sector are measured to a large extent by the public consumption. A reduction or increase in the consumption reflects the involvement extent of the state in the Israeli economy.
The extent of involvement might derive from the security expenditures made by the state and the expenditures made on immigrant absorption.
perceptions or social democratic
welfare state
perceptions, which are both opposite economic and social perceptions.
Arguments in favor of privatization:
The supporters of privatization in Israel claim that reducing the state's involvement increases the involvement of individuals. Thus, promoting competition, encouraging investment, having a strong economy and reducing the state expenses - which would lead to cheaper services.
Arguments against privatization:
The opponents of privatization in Israel argue that companies would also be able to be effective under government ownership. Privatization affects employees and leads to the dischargment of employs, leads the workers to choose to get early pension and salary cutbacks. The Israeli economy is gradually becoming controlled by a small number of rich families. The privatization of public services affects the public and especially the poor population, which are the main consumers. One of the main goals of the state is to take care of its citizens, people’s security, people’s education, to the profitability and to the preservation of the social community. A state which disclaims those responsibilities violates its own principles.
The method which has become customary in Israel in the last decades is selling the control of the public assets into the hands of capital owners, while other countries rather choose to issue the company shares to the public and company employees.
Agriculture:
Construction and infrastructure:
Transportation and aviation services:
Finance, banking and funding:
Natural resources:
Technology, Industry and telecommunication:
Governmental Authorities:
General:
The inverse process to the privatization process is called Nationalization
Nationalization
Nationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...
.
Privatization processes
The privatization processes in Israel intensified in 1986 following the intensified privatization in Britain in the 1980s. So far around 90 government companies and subsidiaries have been privatized in Israel, which produced for the country, between the years 1991 and 2003 – a revenue amount of 8,749 million U.S. dollars.The privatization processes in Israel belong mainly to the following types:
- Gradual Sale: a gradual sale or dilution of the state’s holdings in the public body to the extent where the state would no longer have a significant holding of the body. A notable example for this is the gradual selling of the Israeli telecommunications provider "BezeqBezeqBezeq, the Israeli company for communications, is a telecommunications provider in Israel.Until the mid-first decade of the 21st century when it was owned by the Israeli government, Bezeq had a monopoly on landline telephony and Internet access infrastructure...
" and the gradual selling of the Israeli banks, which were originally nationalized following the Israeli Bank stock crisisBank stock crisis (Israel 1983)The Bank stock crisis was a financial crisis that occurred in Israel in 1983, during which the stocks of the four largest banks in Israel collapsed, and were nationalized by the state.-Background:...
in 1983. - One-time sale: A one-time sales or issuing all of the company’s shares in the stock exchange. This is the method of action which is most common amongst the smaller companies or when there is a single buyer.
- Franchises and Licenses: initiating privatization processes by means of outsourcing, transferring of franchise, privileges, etc., especially of certain services which are consumed by government bodies. Such an action is not considered privatization by the definition of the Israeli government.
- Disassembly: the disassembly of a governmental body completely due to lack of need of its existence or losses which were made due to the existence of a competitive market.
Many refer to the structural change which has happened in many of the kibbutzim in Israel "privatization of the kibbutzim", although this process does not in relate to privatization processes. The kibbutz is a private voluntary association and not a public association, and the changes which occur in it are not considered Privatization as it is described in this article.
Public sector
The origin of the companies, like the rest of the components of the public sectorPublic sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
in Israel, started in the period of the Yishuv
Yishuv
The Yishuv or Ha-Yishuv is the term referring to the body of Jewish residents in Palestine before the establishment of the State of Israel...
, which evolved in parallel with the state. The structure of the Israeli public sector was designed during the pre-state period, a period in which the national institutions were established, which were designed in a large extent continued to operate and become a major part even after the establishment of the state. Through the years, reciprocal ties and cooperation was formed between the public sector and the private sector. These patterns were manifested with the establishment of joint businesses, along with various cases of transition from the private sector to the public sector and from the public sector to the private sector. The various parts of the public sectors recognized the economic importance of their activities, and it is difficult to distinguish between the political motives and considerations and economic considerations. The two were, and would continue to be interwoven with each other.
Components of the public sector in Israel
- The World Zionist OrganizationWorld Zionist OrganizationThe World Zionist Organization , or WZO, was founded as the Zionist Organization , or ZO, in 1897 at the First Zionist Congress, held from August 29 to August 31 in Basel, Switzerland...
and the Jewish Agency for IsraelJewish Agency for IsraelThe Jewish Agency for Israel , also known as the Sochnut or JAFI, served as the organization in charge of immigration and absorption of Jews from the Diaspora into the state of Israel.-History:... - The HistadrutHistadrutHaHistadrut HaKlalit shel HaOvdim B'Eretz Yisrael , known as the Histadrut, is Israel's organization of trade unions. Established in December 1920 during the British Mandate for Palestine, it became one of the most powerful institutions of the State of Israel.-History:The Histadrut was founded in...
- Cabinet of IsraelCabinet of IsraelThe Cabinet of Israel is a formal body composed of government officials called ministers, chosen and led by the Prime Minister. The Prime Minister must appoint members based on the distribution of votes to political parties during legislative elections, and its composition must be approved by a...
After the state of Israel was founded and the cabinet was established, many dominant institutions which were formed beforehand were transferred to its possession as an “inheritance”. The Israeli government like many other governments acts and intervenes in the economy of the state in order to realize major aims such as: ensuring competition, providing public goods, ensuring the existence of information and preventing restrictions on the ability of the public to choose, ensuring the stability, growth and aid in low point periods and in times of crises.
The public sector in Israel contains in it many non-governmental organizations, and the entirety of the organizations is not only a source of budgetary revenue, but also a source of expenditures. The flow of finance from various sources expands the boundaries of the public sector and adds an important dimension to the Israeli political economy.
The activities of the public sector are measured to a large extent by the public consumption. A reduction or increase in the consumption reflects the involvement extent of the state in the Israeli economy.
The extent of involvement might derive from the security expenditures made by the state and the expenditures made on immigrant absorption.
Implications of privatization
The privatization in Israel consists of ideological problems. The ruling between neo-liberalNeoliberalism
Neoliberalism is a market-driven approach to economic and social policy based on neoclassical theories of economics that emphasizes the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the...
perceptions or social democratic
Social democracy
Social democracy is a political ideology of the center-left on the political spectrum. Social democracy is officially a form of evolutionary reformist socialism. It supports class collaboration as the course to achieve socialism...
welfare state
Welfare state
A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those...
perceptions, which are both opposite economic and social perceptions.
Arguments in favor of privatization:
- Reducing government spending
- Promoting competition
- Maintaining a strong economy
- Increasing efficiency and making services cheaper.
The supporters of privatization in Israel claim that reducing the state's involvement increases the involvement of individuals. Thus, promoting competition, encouraging investment, having a strong economy and reducing the state expenses - which would lead to cheaper services.
Arguments against privatization:
- The transferring of the capital monopoly into the hands of a small group of wealthy private owners.
- It would harm the employees.
- It would harm the effectiveness.
- Losses of the government.
- It doesn't always necessarily increase efficiency
- Making the manpower cheaper and reducing it.
- It would harm the recipients of the services.
The opponents of privatization in Israel argue that companies would also be able to be effective under government ownership. Privatization affects employees and leads to the dischargment of employs, leads the workers to choose to get early pension and salary cutbacks. The Israeli economy is gradually becoming controlled by a small number of rich families. The privatization of public services affects the public and especially the poor population, which are the main consumers. One of the main goals of the state is to take care of its citizens, people’s security, people’s education, to the profitability and to the preservation of the social community. A state which disclaims those responsibilities violates its own principles.
The method which has become customary in Israel in the last decades is selling the control of the public assets into the hands of capital owners, while other countries rather choose to issue the company shares to the public and company employees.
Examples
A partial list of the Israeli companies which have been completely or partially been privatized:Agriculture:
- Agridev (אגרידב חברה לפיתוח חקלאי)
- Weed Control Company (החברה להדברת עשבי בר)
Construction and infrastructure:
- Efridar (אפרידר)
- Lod-Ramle Region Development Company (החברה לפיתוח אזור לוד-רמלה)
- Industrial buildings
- The Israeli construction center (מרכז הבנייה הישראלי)
- Housing and development company of Israel (שיכון ופיתוח לישראל)
- Labour Housing company (שיכון עובדים)
- Water works engineering of Israel (תה"ל - תכנון המים לישראל)
Transportation and aviation services:
- El Al AirlinesEl AlEl Al Israel Airlines Ltd , trading as El Al , is the flag carrier of Israel. It operates scheduled domestic and international services and cargo flights to Europe, North America, Africa and the Far East from its main base in Ben Gurion International Airport...
(including Sun d'Or International Airlines) - MAMMAN cargo handling terminals (ממן מסופי מטען וניטול)
- ZIM NavigationZim Integrated Shipping ServicesZim Integrated Shipping Services Ltd. , formerly ZIM Israel Navigation Company Ltd. and Zim American Israeli Shipping Inc., is the biggest cargo shipping company in Israel, and 10th largest in the world...
– the biggest cargo shippingShippingShipping has multiple meanings. It can be a physical process of transporting commodities and merchandise goods and cargo, by land, air, and sea. It also can describe the movement of objects by ship.Land or "ground" shipping can be by train or by truck...
company in IsraelIsraelThe State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...
, and 13th largest in the world. - Israel ShipyardsIsrael ShipyardsIsrael Shipyards is one of the largest shipbuilding and repair facilities in the eastern Mediterranean. The company also operates the first and only privately owned port in Israel....
– the biggest Shipyard in Israel (מספנות ישראל)
Finance, banking and funding:
- I.D.B Holdings (אי.די.בי החזקות)
- Union Bank of IsraelUnion Bank of IsraelThe Union Bank of Israel, Ltd., more widely known by its Hebrew name, Bank Igud, pronounced Eegude, is the sixth largest Israeli bank with thirty branches spread around the country. The bank complies with the ramifications of loans and interest in Judaism.Zeev Abeles is the chairman of the board...
(בנק איגוד) - Israel Discount BankIsrael Discount BankIsrael Discount Bank Ltd. , I.D.B., is one of Israel's three largest banks, with 260 branches, and assets of 171 billion NIS .-History:...
(בנק דיסקונט לישראל) – partial privatization - Bank Mizrahi Tfachot (בנק מזרחי טפחות)
- Bank HapoalimBank HapoalimBank Hapoalim is Israel’s largest bank. As of 31 December 2008 it had total consolidated assets of NIS 306.85 billion. The Bank has a significant presence in global financial markets. In Israel, the Group has over 260 full-service branches, eight regional business centers, and industry desks...
(בנק הפועלים) - General Bank (בנק כללי)
- Bank LeumiBank LeumiBank Leumi is an Israeli bank. It was founded in London as the Anglo Palestine Company on February 27, 1902, by members of the Zionist movement to promote the industry, construction, agriculture, and infrastructure of Palestine.-History:...
(בנק לאומי לישראל) – partial privatization - The Israeli Credit Insurance Company (החברה הישראלית לביטוח אשראי)
- Otzar HaShilton HaMekomi (אוצר השלטון המקומי)
- Industrial Development Investment Company
- "Yozma" Venture Capital Initiative (יוזמה הון סיכון)
Natural resources:
- The National oil company (חברת הנפט הלאומית)
- Israel ChemicalsIsrael ChemicalsIsrael Chemicals Ltd. , also known as ICL, is a multi-national Israeli manufacturing concern that develops, produces and markets fertilizers, metals and other special-purpose chemical products.-History:...
(Including more than twenty subsidiaries, such as the Dead Sea WorksDead Sea WorksThe Dead Sea Works is an Israeli potash plant in Sdom, on the Dead Sea coast of Israel.-History:The company was established in 1930 by Moshe Novomeysky. It was known then as the Palestine Potash Company...
company, etc.) - LapidotLapidotLapidot is an moshav in northern Israel. Located near Karmiel and Ma'alot-Tarshiha, it falls under the jurisdiction of Ma'ale Yosef Regional Council. In 2006 it had a population of 169....
(and its subsidiary Metsada) - Magen gas and crude oil resources company (מגן משאבי גז ונפט)
- Nefta (נפטא חברה ישראלית לנפט)
- Paz Oil (פז נפט)
- National Coal Supply Company
- Oil Refineries LtdOil Refineries LtdOil Refineries Ltd. , located in Haifa Bay, is Israel's largest Oil refinery. Using its state-of-the-art industrial facilities, ORL is capable of refining approximately 9.8 million tons of crude oil per year providing a variety of products used in industrial operation, transportation, private...
(בתי זיקוק לנפט)
Technology, Industry and telecommunication:
- BezeqBezeqBezeq, the Israeli company for communications, is a telecommunications provider in Israel.Until the mid-first decade of the 21st century when it was owned by the Israeli government, Bezeq had a monopoly on landline telephony and Internet access infrastructure...
- Koor Industries (כור תעשיות)
- MALAM Systems (מלם מערכות)
- Beit Shemesh Engines Ltd. (BESL) (מנועי בית שמש)
- Rafael Advanced Defense Systems Ltd. – partial privatization
- Shore-Van screenings (שור-ואן הקרנות)
Governmental Authorities:
- PrisonPrisonA prison is a place in which people are physically confined and, usually, deprived of a range of personal freedoms. Imprisonment or incarceration is a legal penalty that may be imposed by the state for the commission of a crime...
s – at this stage a single privately-operated prison is approved.
General:
- The Israeli Tourism School (בית הספר לתיירות בישראל)
- The governmental company for medallions and coins (החברה הממשלתית למדליות ולמטבעות)
- Tourism Development Corporation (חברה לפיתוח מפעלי תיירות) – was dismantled
- Katit (כתית)
- Weizmann Institute Press (מוסד ויצמן לפרסומים)
- Shekem Ltd. and Shekem real estate (שקם בע"מ ושקם נדל"ן)
Privatizations planned in the near future in Israel
- Gapim (גפים)
- The Company for automation in the management of the local government (החברה לאוטומציה במנהל השלטון המקומי)
- Tadmor (תדמור)
- Israel's Postal Services Ltd. (חברת דואר ישראל)
- Israel's Postal Bank (בנק הדואר)
See also
- The Shakshouka System – an Israeli documentary film from 2008 which focuses on the allegedly Crony capitalismCrony capitalismCrony capitalism is a term describing a capitalist economy in which success in business depends on close relationships between business people and government officials...
in Israel.