In defense of nationalizations and renationalizations

Carmela Gross, ENTRE WORDS series, Janota, 2012, graphite and enamel on dictionary sheet, 27,5 x 20,8 cm
Whatsapp
Facebook
Twitter
Instagram
Telegram

By FELIPE COUTINHO & GILBERTO BERCOVICI*

The review of privatizations is a necessity for us to resume a national development project

It is never too much to remember that Petrobras is the result of one of the greatest popular mobilization campaigns in Brazilian history, the Campaign “O Petróleo é Nosso”. The proposal to create a state company with a monopoly on the oil industry did not come from a cabinet, but from the streets. This company, created by Getúlio Vargas in 1953, had and still has the objective of guaranteeing the national fuel supply and energy security in Brazil. For this, immense amounts of public money were used to finance the structuring and growth of Petrobras, which, in a few decades, consolidated itself as the largest company in the country and one of the largest in the world in its area of ​​operation. As if the size and importance of Petrobras for Brazil were not enough, the state-owned company is also characterized by being the company that most invests in science and technology in Brazil and owns innovative products and technologies that make it stand out in the world oil industry.

The fact that, in Brazil, the oil sector is a state monopoly (Article 177 of the 1988 Constitution) and has a state-owned company, the mixed-capital company Petrobrás, as its main agent, is not the result of any exclusively Brazilian specificity. In the main oil-producing regions, the oil industry is state-owned or has been nationalized. About 90% of the oil reserves in the world belong to the State, being exploited by state companies, which control approximately 73% of production, acting in a monopoly or quasi-monopoly regime over the resources of their countries. Among the five largest oil companies in the world, four are state-owned and, among the top 25, 19 are state-owned. The role of the State is central to energy policy in general and, in particular, in the oil sector, serving to curb the economic power of the large oligopolies, guarantee the non-predatory exploitation of deposits and defend the interest of the community, in addition to acting strategically, militarily and economically, controlling the supply of oil and derivatives.

The historical context of the struggle of developing countries for political independence and economic emancipation meant that state oil companies and many state mining companies ended up personifying sovereign control over natural resources. After all, state-owned companies are instruments of the national economic policy of their states, acting in accordance with the strategic objectives and social well-being of the state, going far beyond the mere pursuit of profitability.

The assessment of the efficiency of state-owned companies must consider their socio-economic objectives: national energy security and self-sufficiency, reduction of supply costs, greater recovery and replacement of reserves, appropriation by the State of a greater fraction of oil income, access to information on investments and operations for greater tax and regulatory efficiency in the sector, the guarantee of geopolitical advantages to the State for having oil in its international relations and the national development resulting from investment policies with local content, as well as in research and technological development, with the resulting generation of jobs and technological sovereignty.

While the evaluation of the efficiency of oil companies controlled by private capital derives from the generation of value for shareholders, expressed by the relationship between the payment of dividends and the price of shares and/or by the simple appreciation of the price of shares in the market.

All this public property, therefore, of the Brazilian people, has been threatened with the policy of dismantling and selling assets planned and initiated in the second Dilma administration and expanded under Michel Temer and Jair Bolsonaro. This policy delivers portions of Petrobrás' equity to its international competitors at a low price and without competition, burdening the Brazilian people with relatively and unnecessarily high prices charged for gas, fuel and other essential products. In addition, the dismantling of Petrobras has sought to end its role as an integrated energy company nationwide to restrict itself to a pre-salt explorer in the Southeast of the country, abandoning entire regions and populations to their fate.

Brazil is once again being subjected to colonial-type exploitation, after the cycles of brazilwood, sugar, gold, silver and diamonds, coffee, rubber and cocoa. Now it is the turn of the extractive and primary export cycle of Brazilian oil.

While crude oil is exported from Brazil, the country increasingly imports its refined products. Around 30% of petroleum derivatives consumed per day are imported, most of which is produced in the United States.

Petrobras' pricing policy, since 2016, has been based on parity with imported fuel prices. The practice of prices higher than import costs has made the import chain profitable and imported fuels competitive, especially from the United States.

The most expensive Brazilian fuel loses market share to the imported one, which results in the idleness of Petrobrás' refineries, in up to a quarter of their capacity. of importation, despite the oil being produced in Brazil and having the capacity to refine it in the country, meanwhile Petrobras loses market.

If the government, at any of its levels (federal, state or municipal), decides to expropriate the property of an individual to carry out any public undertaking, such as a road or road work, the citizen who suffers the expropriation has a series of rights and guarantees. After all, in the Rule of Law, the legal system protects the private owner in his confrontation with the Public Power with guarantees and demands that must be inexorably fulfilled in an expropriation process. Compensation to the dispossessed is one of these guarantees, expressed since the first declarations of rights of the liberal revolutions of the XNUMXth (England) and XNUMXth (United States and France) centuries.

There is, however, no guarantee or legal protection for citizens when the government decides to transfer certain community assets to the private sector, such as a state-owned company, the provision of a public service or the exploitation of a public good. On the contrary, privatization is considered an absolutely free and legitimate option for governments to adopt, without any kind of challenge. The expropriation of private property, in turn, is considered almost taboo. The mainstream media extols the privatizers and vehemently condemns those who dare to nationalize, nationalize or recover public goods inappropriately transferred to private ones. For those, the paradise of good governance and the applause of the “market”. For them, the hell of populism (or Bolivarianism, depending on the case) and the unanimous disapproval of the mass media.

What no one says is that by privatizing a state-owned company or any portion of public property, the government is expropriating the population of public goods that are in its ownership. That simple. In privatization, the government acts in the same way as in expropriation. In the same way as expropriating private property, in privatization the government alienates public property. The problem is that the private owner can contest and has guarantees, the people cannot.

Every privatization process is an expropriation of assets that should be permanently part of the public property of all citizens, decided by a political authority that exercises power temporarily (and, in Brazil after the 2016 coup, illegitimately). In the privatization process, the government does not sell what belongs to it (the government). In privatization, the government sells what belongs to all of us. And without consulting us about it.

We can illustrate the situation with the example used by the Italian jurist Ugo Mattei: authorizing a government to freely sell everyone's goods to meet its contingent and conjunctural economic policy needs is as irresponsible as consenting, at the family level, that the caretaker sell the most valuable assets in the house, such as silverware, a car or appliances, to meet your particular needs, such as traveling on vacation or paying off a personal debt.

The government is a trustee, that is, it acts only under mandate. You cannot dispose of public goods as you please. The government does not own state-owned companies, it just manages them. The government must be the servant of the sovereign people, not the other way around.

Public goods are not easily recoverable. Investments of immense amounts, applied in a planned way in the long term, the sacrifice of millions of Brazilians cannot be dissipated just like that, to cover a short-term deficit in public accounts.

Brazil, thus, became the only country in the world that deliberately relinquished control of its strategic natural resources, destroying a development policy based on industrialization and national control of our resources implemented since the 1930 Revolution and which was maintained, with advances and setbacks, even with the military dictatorship of 1964 and after redemocratization.

For the reversal of this situation and the reconstruction of the Brazilian state apparatus destroyed in recent years, the nationalization or renationalization of several privatized or alienated sectors will be necessary. For that, in legal terms, there is no obstacle in the Brazilian Constitution of 1988. The constitution entrusted the ordinary legislator with the task of deciding whether or not to carry out nationalizations. Article 173 of the 1988 Constitution concerns direct exploitation by the State of economic activity, not the exceptionality of State intervention in the economic domain. This is because there are several other cases of direct state exploitation of economic activity provided for in the constitutional text (such as Article 177 or the possibility of direct exploitation by the State of public services in Article 175), whose provision is a constitutional duty of the State. The provisions of Article 173 authorize the State to directly exploit economic activity when this is necessary for the imperatives of national security or relevant collective interest, as defined by law. It is up to the State, therefore, to decide on the amount of resources destined for the reproduction of capital and on the amount directed to meet the social objectives foreseen in the emancipatory formulas of the Constitution.

In terms of international law, there is no restriction whatsoever on renationalization or nationalization, especially of strategic sectors. Since the approval of United Nations General Assembly Resolution No. 1803 (XVII), of December 14, 1962, the Resolution on the Permanent Sovereignty of States over Natural Resources, it is understood that each State has the right to regulate, way you understand best, about the treatment of capital and foreign investments, as well as, if necessary, to expropriate or nationalize them, in accordance with the rules in force. But the main determination of permanent sovereignty over natural resources is the recognition that States have the right to dispose of their natural resources and wealth to use them in their national development process and for the well-being of their people.

Since 2006, Latin America has witnessed new nationalizations or renationalizations of strategic companies, especially in the mining and oil sectors. Nationalizations took place in Venezuela, Bolivia, Argentina, just to mention the closest countries. The much-feared reaction of international markets turned out to be much more pragmatic than threatening. In addition to the threats of sanctions, invasions and coups, so feared by those who do not want nationalizations, there was effectively a series of negotiations that culminated in the realization of renationalizations, as in the case of the Argentine state oil company YPF (Fiscal Petroleum Deposits), in 2012.

According to a study by the Transnational Institute (TNI), a center for studies in democracy and sustainability based in the Netherlands, renationalizations are a trend and are growing. Between 2000 and 2017, 884 services were renationalized in the world, 83% of them from 2009 onwards. High prices and lack of investment are among the most common complaints, the trend is especially strong in Europe, but it happens in countries around the world[I].

What is fundamental in the case of nationalizations and renationalizations is political and popular support. A national reconstruction project only generates effects when it is present in the collective imagination of society, otherwise it will not get off the ground. After all, it is not a simple government plan, but a collective construction that essentially seeks the objectives of a better, more egalitarian and more democratic society in the future. In this sense, the proposal for a referendum to revoke privatizations is of enormous importance. Consultation with the real owner of the country's strategic resources, the people, is an essential instrument to guarantee political strength to nationalizations.

The review of privatizations, therefore, is a necessity. This is a fundamental step towards resuming a national development project. With the review of privatizations, what is sought is not just to regain state control over the provision of services or over the exploitation of a strategic resource, but national economic sovereignty itself. The review of privatizations is now identified with the necessary reaffirmation of national sovereignty. By defending the renationalization, we defend the economic sovereignty of Brazil, we demand that the overcoming of the colonial economy be completed and the Nation become effective. Brazil's future will not be that of a primary-export colony, dominated by parasitic oligarchs and multinational agents, but that of a developed, industrialized nation that will guarantee equal social and economic opportunities for all its children.

*Felipe Coutinho President of the Petrobrás Engineers Association (AEPET).

*Gilberto Bercovici Professor of Economic Law and Political Economy at the Faculty of Law of USP.

Note


[I](UOL), Juliana Elias.Renationalization grows because private service has poor service. 2019, https://economia.uol.com.br/noticias/redacao/2019/03/07/reestatizacoes-tendencia-crescendo-tni-entrevista.htm

See this link for all articles

10 MOST READ IN THE LAST 7 DAYS

______________
  • About artificial ignoranceEugenio Bucci 15/06/2024 By EUGÊNIO BUCCI: Today, ignorance is not an uninhabited house, devoid of ideas, but a building full of disjointed nonsense, a goo of heavy density that occupies every space
  • The society of dead historyclassroom similar to the one in usp history 16/06/2024 By ANTONIO SIMPLICIO DE ALMEIDA NETO: The subject of history was inserted into a generic area called Applied Human and Social Sciences and, finally, disappeared into the curricular drain
  • Franz Kafka, libertarian spiritFranz Kafka, libertarian spirit 13/06/2024 By MICHAEL LÖWY: Notes on the occasion of the centenary of the death of the Czech writer
  • A look at the 2024 federal strikelula haddad 20/06/2024 By IAEL DE SOUZA: A few months into government, Lula's electoral fraud was proven, accompanied by his “faithful henchman”, the Minister of Finance, Fernando Haddad
  • Letter to the presidentSquid 59mk,g 18/06/2024 By FRANCISCO ALVES, JOÃO DOS REIS SILVA JÚNIOR & VALDEMAR SGUISSARDI: “We completely agree with Your Excellency. when he states and reaffirms that 'Education is an investment, not an expense'”
  • PEC-65: independence or patrimonialism in the Central Bank?Campos Neto Trojan Horse 17/06/2024 By PEDRO PAULO ZAHLUTH BASTOS: What Roberto Campos Neto proposes is the constitutional amendment of free lunch for the future elite of the Central Bank
  • Chico Buarque, 80 years oldchico 19/06/2024 By ROGÉRIO RUFINO DE OLIVEIRA: The class struggle, universal, is particularized in the refinement of constructive intention, in the tone of proletarian proparoxytones
  • Why are we on strike?statue 50g 20/06/2024 By SERGIO STOCO: We have reached a situation of shortage of federal educational institutions
  • The melancholic end of Estadãoabandoned cars 17/06/2024 By JULIAN RODRIGUES: Bad news: the almost sesquicentennial daily newspaper in São Paulo (and the best Brazilian newspaper) is rapidly declining
  • Return to the path of hopelate afternoon 21/06/2024 By JUAREZ GUIMARÃES & MARILANE TEIXEIRA: Five initiatives that can allow the Brazilian left and center-left to resume dialogue with the majority hope of Brazilians

AUTHORS

TOPICS

NEW PUBLICATIONS