by Godfrey Vincent
In the 1986 general election, the PNM’s thirty-year political rule came to a dramatic end with a 33-3 seats landslide victory by the NAR, a coalition of opposition parties that comprised the Democratic Action Congress (DAC), the United Labor Front (ULF- Panday Faction), the Organization for National Reconstruction, and TAPIA. This party had the support of big business and the various Chamber of Commerce organizations, some trade unions and their leaders, and massive support among the Afro and Indian Trinidadian middle class, sections of the working-class and rural populations. The NAR government soon proved to be just as committed to the policy of privatization as the PNM government before it.
The party campaigned on a platform of change and convinced the electorate that it possessed the best policies to solve the economic crisis that resulted from falling oil prices. One plank of that change was Divestment of State Enterprises.
On page thirteen of its 1986 manifesto, point c: Divestment of State-Sector, the NAR declared, “In State-Sector industries of all types, the NAR proposes to introduce meaningful forms of participation in ownership of shares divested.” This term divestment was deliberately used to soften the impact it would have had on the electorate. Had the NAR used the term privatization, it would not have garnered the support of sections of the working-class.
During the campaign, the left and progressive forces argued that Divestment is synonymous with privatization. They pointed to Margaret Thatcher’s sale of British Petroleum to the Private Sector. BP was a nationalized company and was the first of British companies that was placed on the privatization bloc. Fearing backlash from the electorate, the NAR while in private spoke of privatization, in public they tried to mask their true intentions. When the NAR took office in 1987, it embarked on the implementation of Structural Adjustment Policies, one of which was divestment of State Owned Enterprises (SOE).
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To justify that structural adjustment was necessary for the country, the Prime Minister A.N.R. Robinson, in a speech to Parliament proclaimed that “the Treasury was empty” (See 1987 Budget Speech). In that same speech, he focused his attention on SOEs by calling out what he deemed their poor performances, financial burden on the government, lack of accountability, and poor management. Robinson stated, “It must be emphasized that capital re-structuring may be achieved through diverse forms of which divestment or privatization constitutes a single category”.
Moreover, he noted, “Given the new policy direction I have outlined, it is appropriate to reflect in the 1987 budget a break with the practice of financing state enterprises and public utilities, under the recurrent expenditure of the central government” (see 1987 Budget Speech).
Furthermore, in his 1988 Budget Speech to the House of Representatives, Prime Minister Robinson, once again, set his sights on SOEs. He contended that the SOEs contributed to a large portion of the country’s external debt relative to the Yen, the Deutsche Mark, and the ECU dollar. In providing data on the total debt, Robinson singled out the Iron and Steel Company of Trinidad and Tobago (ISCOTT) and Telephone Company (TELCO) (See 1988 Budget Speech). By making the argument that SOEs are a drain on the economy, the Prime Minister set the stage for the privatization of these two companies and others that he did not mention in the speech.
On November 16, 1988, the Minister of Finance Selby Wilson, in a letter of intent to the IMF on behalf of the government, wrote: “Government committed itself to reducing transfers to loss-making enterprises and public utilities, and to cutting drastically public debt as a percentage of GDP”. It had already realigned the currency and had wound up three state enterprises – the School Nutrition Company, the Secondary Roads Management Company and National Hospital Management Company.
A Special Committee of the Ministry of Finance was established to monitor the operations of the other state enterprises and public utilities, and to make recommendations on the approaches to their reorganization (See 1999 ILO Report on The employment impact of restructuring and privatization in Trinidad and Tobago). Before the NAR government left office in 1991, in addition to outrightly closing down SOEs, it was successful in privatizing National Commercial Bank (NCB), Trinidad and Tobago Cement Limited (TCL), Telephone Company (TELCO), which was renamed TSTT, and Iron and Steel Company of Trinidad and Tobago (ISCOTT) that became ISPAT (See Deryck R. Brown, Negotiating Under Pressure: Selling Public Assets in Trinidad and Tobago). While the NAR government had more SOEs for sale, its defeat by the PNM in 1991 general election crashed its agenda. However, this did not mean that the PNM was anti-privatization. (LOOK OUT FOR PART THREE)