Nationalization

Nationalization or nationalisation is the act of taking assets into state ownership. Usually it refers to private assets being nationalized, but sometimes it may be assets owned by other levels of government, such as municipalities. Similarly, the opposite of nationalization is usually privatization, but sometimes it may be municipalization. Nationalization that happens after a previous privatization is often called renationalization.

A key issue in nationalization is whether the private owner is properly compensated for the value of the institution. The most controversial nationalizations are those where no compensation is paid or an amount unreasonably below the likely market rate as expropriations. Many nationalizations through expropriation have come after revolutions, especially socialist ones.

In some instances, nationalization occurs as the government seizes the corporate property of a criminal. An example is Renault, which was seized by the French government from its owners because they had collaborated with Nazi Germany.

The cost of legally buying a large business is such that many legal nationalizations have happened when firms of national importance run into trouble (close to bankruptcy), and could be acquired by the government for little or no money. A classic example is the UK nationalization in the 1970s of the car-maker British Leyland. At other times governments have felt it important to gain control of institutions and industries of strategic economic importance, such as banks or railways, or of important industries struggling economically. (The case of Rolls Royce plc, nationalised in 1971, is an interesting blend of these two arguments - see below). This policy was sometimes known as ensuring government control of the "commanding heights" of the economy, to enable it to manage the economy better in terms of long-term development and medium-term stability. The extent of this policy declined in the 1980s and 1990s as governments increasingly privatized industries that had been nationalized, replacing their strategic economic influence with use of the tax system and of interest rates.

Nonetheless, national and local government has seen the advantage of keeping key strategic assets in institutions that are not strongly profit driven, can raise funds outside the public-sector constraints, but retain some public accountability. Examples from the last five years in the United Kingdom include the vesting of the British railway infastructure firm Railtrack in the not-for profit company Network Rail, and the divestment of much council housing stock to 'arms-length management companies', often with mutual status.

Notable nationalizations

• Canada - Canadian National Railways, created from several systems nation-wide following their bankruptcy during and after the First World War, and since privatized. Nationalization of electricity during the Quiet Revolution of Quebec, by minister René Lévesque and the Lesage government, to create Hydro-Quebec.There is talk of nationalizing the oil and gas industry thought this may lead to increased feelings of Alberta Separatism.
• United Kingdom - British Coal, British Gas, British Petroleum, British Rail, British Steel, British Leyland, British Airways, the Bank of England, and the telephones division of the Post Office (now British Telecom). All the aforementioned were privatized during the Conservative period in power from 1979 to 1997, except the Bank of England which remains state-owned, but semi-independent. Many - particularly British Steel and British Leyland - fared poorly whilst nationalized. Conversely, British Rail (broken up into multiple parts including train operators, train owners, and a track owner, Railtrack; the latter is now effectively renationalized as Network Rail after near-bankruptcy) fared poorly after privatization.

  Another example of a successful large nationalised utility was the CEGB, which was for a time the world's largest integrated electricity generator. Nationalisation was used by all political parties. In 1971 the Conservative government of Edward Heath nationalised the strategically-important aero-engine part of the recently-bankrupt Rolls Royce plc. (It is perhaps note-worthy that Rolls-Royce's Filton factory lay within the South Gloucestershire constituency of the then Minister for Aerospace, Frederick Corfield.)

• United States - All U.S. railroads were nationalized as the United States Railroad Administration during World War I as a wartime measure but were returned to their private owers almost immediately after the war. The National Railroad Passenger Corporation (Amtrak) was a government corporation created in 1971 for the express purpose of relieving American railroads of their legal obligation to provide intercity passenger service. They were trying to get out of this obligation anyway, but by taking over their passenger rail assets, Amtrak was able to keep the passenger trains running. In 1976 the Consolidated Rail Corporation (Conrail), another government corporation, was created to take over the operations of six bankrupt rail lines operating primarily in the Northeast U.S.; Conrail was privatized in 1987. Initial plans for Conrail would have made it a truly nationalized system like that during World War I, but an alternate proposal by the Association of American Railroads won out. Organization of the Tennessee Valley Authority entailed the nationalization of the facilities of the former Tennessee Electric Power Company in 1939. In 2001, in response to the September 11th attacks, the then-private airport security industry was nationalized and put under the authority of the Transportation Security Administration.
• Philippines - During the administration of Ferdinand Marcos, important companies such as PLDT, Philippine Airlines, Meralco and the Manila Hotel were nationalized. Other companies were sometimes absorbed into these government-owned corporations, as well as other companies, such as Napocor and the Philippine National Railways, which in their own right are monopolies (exceptions are Meralco and the Manila Hotel). Today, these companies have been reprivitized and some, such as PLDT and Philippine Airlines, have been de-monopolized. Others, like government-formed and owned Napocor, are in the process of privitization.
• Nationalization of the oil industry in numerous countries, including Libya, Kuwait, Mexico, Saudi Arabia, and Venezuela.
• Companies in Cuba after the 1959 revolution bringing Fidel Castro to power in which the assets of foreign (largely U.S.) companies were expropriated without compensation (the USA has long complained about these nationalizations).
• Zimbabwe's nationalization of its food distribution infrastructure.
• 1918, 1948. All manufacturing enterprises in the Soviet Union, in 1918, as well as in other countries of the Soviet bloc (for example, Czechoslovakia in 1948).
• 1918. Many retailing enterprises in the Soviet Union.
• 1944. Renault (seized from Louis Renault after WWII for his collaboration with Nazi Germany). Renault was successful whilst nationalised and remains successful today, after having been privatised in 1996.
• 1948. With the Decree 119 of june 1948 the new romanian communist regime nationalised all the existing private companies and their assests in Romania leading to the transformation of the Romanian economy from a free market economy to a centralised one.
• 1956. Under the presedential decree of 26th July 1956, The Egyptian President Gammal Abdel Nasser nationalised The Canal De Suez(Suez Canal) company. Such act led England, France and Israel to launch a combined attack on Egypt that was stopped by the US and the former Soviet Union.
• 1969. Nationalization of banks in India.
• 1982. The Paris business of M&A advisory firm Rothschild was nationalized and renamed.
• 2003. The Labour Government of New Zealand took an 80% stake in national air carrier Air New Zealand in exchange for a large financial infusion.

See also

• Privatization
• Reprivatization
• Public ownership
• Railway nationalizationbg:Национализация

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