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Will Israel profit from the sale of
government-owned companies?

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REID

hen Prime Minister

Binyamin Netanyahu
talks about his plans to
free the Israeli economy,
what he means more than any-
thing else is privatization. He has
said he intends to sell off 50 of
some 140 government-owned
companies over the next four
years. These companies are the
symbol of what Mr. Netanyahu
and other free marketeers call Is-
raeli economic Bolshevism.
Privatizing these companies
won't be easy. They employ about
70,000 workers — at El Al, major
banks, utilities, airports and sea
ports, defense and petrochemical
industries and more. To the His-
tadrut national labor union, pri-
vatization does not mean freedom,
but massive layoffs.
Protesting what they feared
would be the sell-off of the sea
ports, workers shut them down
for a day early this month. Em-

move which critics say is an at-
tempt by Mr. Netanyahu to by-
pass the Knesset and sell off
government companies almost by
prime ministerial fiat.
Moshe Lyon, the PM's Office's
deputy director-general for eco-
nomic affairs, will not say which
companies will be first to go on the
block, but adds, "We intend to
start [offering them for sale] soon."
The government-owned com-
panies, many of which were found-
ed beforeisrael's independence in
1948, have long been a stronghold
of the Histadrut and, by extension,
the Labor Party. They are also
central to the country's military-
industrial complex, providing
highly-paid management jobs to
military and intelligence officers
who retire from the service in their
40s and 50s.
They also are notorious for the
proliferation of patronage jobs, and
many are perennial money-losers.

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These workers in a software protection systems plant could be affected it
privatization takes hold.

ployees at Ben-Gurion Airport
slowed operations to a crawl for
the better part of a day. Transport
Minister Yitzhak Levy cooled the
dispute by promising that the air
and sea ports would remain un-
der government ownership.
The Histadrut is threatening to
shut down the country next
month with a general strike
against privatization. Yet the
prime minister is in earnest. He
moved the Government Compa-
nies Authority out of the hands of
the Finance Ministry and into
those of the Prime Minister's Of-
fice. He has directed Justice Min-
ister Ya'acov Ne'eman to draw up
legislation that- would speed up
the privatization process — :a

"The government is not efficient
at running companies, and there
is a consensus that the govern-
ment has to become smaller [by
selling off companies]," said He-
brew University economics Pro-
fessor Haim Barkai.
Even the previous Labor gov-
ernment had a privatization pol-
icy; it sold off about 10 companies.
The Histadrut backs privatization
in principle, but only as long as
it can be achieved with a mini-
mum of layoffs and generous com-
pensation to those laid off.
Here is the crunch. "Privatiza-
tion and layoffs go hand-in- hand,"
said Professor Barkai. More than
one-quarter of the Shekem de-

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