The IMF (Privatization in Transition Countries: Lessons of the First Decade, 1999) considers that the method of privatization does seem to matter a great deal in explaining efficiency improvements of the performance of privatized State-owned Enterprises. Outsider dominated firms show better improvements than insider-dominated firms.
Furthermore, "in some cases the result could be development of monopoly interests that will prevent future evolution of a competitive, ha
rd budget environment.”
The result is least efficient firms owned by the politically favored for whom the privatization program had been designed, leading, as the case of Russia and Ukraine, to removing assets from the state hands in favor of a minority controlling the state and the economy.
In the case of Lebanon, Mr. Fadi Abboud, calls to "breaking the monopoly" and liberating tobacco market in Lebanon and "opening the way for the private sector for investment", because profit lays in competition. Undoubtedly, breaking any monopoly is a popular demand; Adam Smith considers that the monopolist achieves great profits by setting the price of his product above the normal price, while supplying the market with quantities less than demand, and thus achieving abnormal profits.
Gandhi has broken the salt monopoly in India and challenged the colonialists because he was Gandhi and because monopoly was over salt for the benefit of the colonialists, not a commodity considered by the WHO as “toxic” and leading to health and social costs. Breaking monopolies is a moral necessity, except in the case of tobacco and intellectual rights.
For tobacco, it is essential to monitor product quality, control quantities, raise prices to reduce the number of smokers, and get in the way of adolescents to reduce the health and social bill and increase State revenues. Breaking the monopoly in tobacco means increasing competition, lowering prices, and increasing the number of smokers, and thus increasing spending on health and social services, while reducing state revenues until drawn out. In result, profits are guaranteed in pockets, while health and social costs are left on the State burden. Lessons may be drawn from the experiences of other countries, where breaking the monopoly is denying a sector worth six billion dollars and depriving the State of its revenues. The need is to strengthen and enabling it by setting boundaries. The Regie controls the market by accurately using financial means. Prices have been raised at rates that lead to a reduction in smuggling from Lebanon while maintaining profitability.
Managing a harmful sector requires monopoly, solidity, and flexibility in light of political, security instability, and regional wars.
Border control remains a mandatory requirement to reduce quantities, raise prices, reduce the number of smokers, and raise incomes. Monopoly has been eroded by uncontrolled borders and the decline in State capabilities. Its abolition means the elimination of the authority that regulates the sector. Partnership is possible. However, partnership or privatization require the stability of markets, politics, money, and the availability of financing and legal structure to enforce contracts attracting investors and expertise, that is, an institutional structure. Alon Harel (Why Privatization Matters, 2019) argues that excessive privatization leads to the erosion and undermining of the state and the elimination of the power that people enjoy in making basic decisions.
He warns of its repercussions on democracy. What will happen to us in such climates and circumstances? They will definitely abort what remains. Debra SATZ (Some Problems with Privatization, 2019) fears that it may lead to the promotion of private interests over the common good. The costs of private profits become too great for the welfare of societies and drain out economies. Jessica FLANIGAN (Oppression and Privatization 2019) fears the disruption of relational equality between the components of society as a result of privatization. People feel offended by the power allocated to a few.
Finally, the partnership between the public and private sectors may be part of the solution to our crisis, as well as the privatization of some losing sectors. However, this requires reforms and a change in climates and mentalities in order not to cause additional collapse.