Where we stand‎ > ‎News & Comment‎ > ‎


posted 23 Oct 2020, 03:51 by Gerry Kangalee   [ updated 23 Oct 2020, 04:27 ]
By 1988, the people’s romance with the NAR’s “One Love” began to fade. When the government cut public sector wages, took away Cost of Living Allowances (COLA), and their private sector money bags began retrenching workers, the government and the party became very unpopular.

Additionally, in-fighting in the party and the government’s decision to enter an IMF conditionality programme created the conditions for the trade union movement to engage in mass protests and demonstrations. These events led to the National Day of Resistance, March 6th 1989, that was organized by the trade unions and supported by the Summit of People’s Organizations (SOPO) which brought the country to a grinding halt.

Then, in 1990, the Jamaat al Muslimeen staged an attempted coup that plunged the country into a political crisis. Coupled with the financial crisis, these two crises made it untenable for the NAR to govern the country. Therefore, when the general election was held in 1991, most of the electorate returned the PNM to power and some supported the United National Congress (UNC) for the role of opposition.

The PNM returned to political office at a time when the Washington Consensus became the hegemonic policy at both the IMF and the World Bank. This came at a time when many neo-colonial countries were saddled with enormous debt and had to take the IMF and World Bank’s medicine of Structural Adjustment (SAP). Working in tandem, the IMF and the World Bank imposed a ten-point policy on debt-strapped countries as conditionalities for funding.

The Clinton administration in the US and Tony Blair’s government in Great Britain, which had converted to Thatcherism were strong advocates for
enforcing these policies. They considered themselves as leaders of the “Third Way” movement that sought to move countries towards the free market and the adoption of neoliberal globalization. Therefore, during the election campaign, the PNM, under Patrick Manning’s leadership, called the party the “New PNM” and sought to distance itself from the party of the past.

This was a deliberate policy because the new PNM had aligned itself with the business class which called for privatization of State-owned Enterprises (SOEs). The business class, led by the Chamber of Commerce and the Employers Consultative Association, were very vocal in their calls for privatization.

In its new incarnation, the PNM administration 1991-95 espoused a far more private-sector-oriented philosophy than had earlier existed. Indeed, the major privatizations that have taken place were initiated under its watch. The new PNM administration sought to redefine the role of Government, arguing that the economic and political realities internationally had been transformed significantly from that of the 1970s. It was affirmed that the perception had changed significantly from that of the seventies to reflect the changes in mainstream economic thought and the new realities of small peripheral nations.

Thus, in the context of globalization, open borders and free markets, the Government had to embark on a programme of rationalization, which embraced divestiture and privatization (See ILO Report on Restructuring and Privatization). Additionally, according to the late Frank Rampersad, Trinidad and Tobago’s government received pressure from international agencies to reduce government involvement in the economy and to privatize its holdings in State enterprises. Reacting to these pressures, given the ideological make-up of the “New PNM,” the groundwork was laid for more privatization of State-owned Enterprises (SOEs).

A 1992 article in the Chicago Tribune entitled Tiny Caribbean nation big on Privatization observed that “The outgoing administration sold some shares in the state phone and cement companies, and
Patrick Manning
also divested a commercial bank starting in the late 1980s. But the 11-month-old government, led by Prime Minister Patrick Manning, is pursuing privatization more vigorously.”
It went on to say that the administration planned divestment of FERTRIN, Trinidad and Tobago Urea Company, Trinidad and Tobago Methanol Company, BWIA, and two hotels in Tobago. These companies were identified because of IMF guidelines which was agreed to by the previous regime.

When the government took office, “it outlined its approach to ownership of state enterprises stressing the role of the state as a facilitator for economic activity. Accordingly, the state would reduce its holdings in the commercial sector except in areas of strategic importance, such as oil and gas, telecommunications, or crucial social services.”

By 1993, the government had identified thirty SOE's for divestment and twelve for liquidation. A Divestment Secretariat was created in the Ministry of Finance. By mid-1995 several companies had either been fully or partially privatized including Trinidad and Tobago Urea Company Ltd., Trinidad and Tobago Methanol Company, BWIA international, and the Electricity Commission.

In the energy sector, the exploration and production activities of Trinidad and Tobago Oil Company (TRINTOC) and the Trinidad and Tobago Petroleum Company (TINTOPEC) were merged into a new company, Petroleum Company of Trinidad and Tobago Ltd. (PETROTRIN). The non-petroleum assets of both TRINTOC and TRINTOPEC were divested.

Another study observed that, “the Government was not averse to the sale of enterprises by private treaty. It established a Divestment Secretariat within the Ministry of Finance, with the responsibility for developing tender documents and negotiating with firms. Moreover, it was inclined to heed the advice of such organizations as the Adam Smith Institute in the United Kingdom. Divestments were made in respect of 13 companies. All but two were initiated and completed during the period of the PNM administration of 1991-95.”

In addition to these privatizations, there was a concerted effort to introduce the private sector into running of the utilities or to allow in market forces wherever possible. The Government sold off the power generation component of Trinidad & Tobago Electricity Commission (T&TEC) to Power Generating Company of Trinidad & Tobago (PowerGen). Severn Trent of Britain was contracted to manage the restructuring of the Water and Sewerage Authority (WASA).

Two oil companies, TRINTOPEC and TRINTOC were merged. The amalgamation of the oil companies was apparently the first stage in the process of their restructuring before being sold off to the private sector. Likewise, the television and radio stations were brought together under Trinidad and Tobago Television (TTT) and the National Broadcasting Service (NBS) Radio. Through its Divestment Secretariat, an active programme of divestiture and privatization was being pursued when that government left office at the end of 1995.

From the above analysis, it is evident that the “New PNM” was different from the NAR only in style but not substance. Its agenda was to promote the interests of the IMF, the World Bank, the multinational corporations, and local business elites. However, by 1995, the PNM fell out of favor with the electorate, and the UNC took control of the government. Part IV will address how the UNC navigated the privatization of State Enterprises.