Nationalization
1062429
225398056
2008-07-13T13:50:19Z
Cassowary
223527
/* Egypt */ the former soviet union's never done anything; it was done by the the soviet union
{{Articleissues|refimprove=May 2008|OR=May 2008}}
'''Nationalization''', also spelled '''nationalisation''', is the act of taking an industry or assets into the [[public ownership]] of a national government. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as [[municipality|municipalities]]. The opposite of nationalization is usually [[privatization]] or de-nationalisation, but may also be [[municipalization]]. A '''renationalization''' occurs when state-owned assets are privatized and later nationalized again, often when a different [[political party]] or [[Political factions|faction]] is in power. ''A renationalization'' process may also be called ''[[reverse privatization]].''
The motives for nationalization are political as well as economic. It is a central theme of certain brands of 'state socialist' policy that the means of production, distribution and exchange, should be owned by the state. Socialists believe that public ownership enables people to exercise full democratic control over the means whereby they earn their living and provides an effective means of redistributing wealth and income more equitably.
Nationalized industries, charged with operating in the public interest, may be under strong political and social pressures to give much more attention to externalities. They may be obliged to operate some loss making activities where social benefits are clearly greater than social costs - for example, rural, postal and transport services. As an instance, the U.S. Mail is guaranteed its nationalised status by the Constitution. The government has recognized these social obligations and, in some cases, provides subsidies for such non-commercial operations.
Since the nationalised industries are state owned, the [[government]] is responsible for meeting any [[debt]]s incurred by these industries. The nationalized industries do not normally borrow from the domestic market other than for short-term borrowing.
Nationalization may occur with or without compensation to the former owners. If it takes place without compensation it is a case of [[expropriation]]. Nationalization is distinguished from [[property redistribution]] in that the government retains control of nationalized [[property]]. Some nationalizations take place when a government seizes property acquired illegally. For example, the [[France|French]] government seized the car-makers [[Renault]] because its owners had collaborated with the [[Nazi]] occupiers of France.
==Compensation==
A key issue in nationalization is payment of compensation to the former owner. The most controversial nationalizations, known as [[expropriation]]s, are those where no compensation, or an amount far below the likely market value of the nationalized assets, is paid. Many nationalizations through expropriation have come after [[revolution]]s.
The traditional Western stance on compensation was expressed by [[United States Secretary of State]] [[Cordell Hull]], during the 1938 [[Expropiación petrolera|Mexican nationalization of the petroleum industry]], that compensation should be "prompt, effective and adequate." According to this view, the nationalizing state is obligated under international law to pay the deprived party the full value of the property taken. The opposing position has been taken mainly by developing countries, claiming that the question of compensation should be left entirely up to the sovereign state, in line with the [[Calvo Doctrine]]. Communist states have held that no compensation is due, based on socialist notions of private properties.
In 1962, the [[United Nations General Assembly]] adopted Resolution 1803, "Permanent Sovereignty over National Resources," which states that in the event of nationalization, the owner "shall be paid appropriate compensation in accordance with international law." In doing so, the UN rejected both the traditional Calvo-doctrinist view and the Communist view. The term "appropriate compensation" represents a compromise between the traditional views, taking into account the need of developing countries to pursue reform even without the ability to pay full compensation, and the Western concern for protection of private property.
When nationalizing a large business, the cost of compensation is so great that many legal nationalizations have happened when firms of national importance run close to [[bankruptcy]] and can be acquired by the government for little or no money. A classic example is the [[United Kingdom|UK]] nationalization of the [[British Leyland Motor Corporation]]. At other times, governments have considered it important to gain control of institutions of strategic economic importance, such as banks or railways, or of important industries struggling economically. The case of [[Rolls-Royce plc]], nationalized in 1971, is an interesting blend of these two arguments. 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 governments have seen the advantage of keeping key strategic assets in institutions that are not strongly profit-driven and can raise funds outside the public-sector constraints, but still retain some public accountability. Examples from the last five years in the United Kingdom include the [[vesting]] of the British railway infrastructure firm [[Railtrack]] in the not-for-profit company [[Network Rail]], and the divestment of much [[council house|council housing]] stock to "arms-length management companies," often with mutual status.
==Notable nationalizations by country==
===Argentina===
* '''1948''' President [[Peron]] [[Railway Nationalisation in Argentina|nationalised]] the largely British and French-owned railways.
===Australia===
* '''1947''' Nationalization of [[Qantas]], the leading airline of [[Australia]].
* '''1948''' The [[Australia]]n government attempted to nationalize the banks, but the act was declared unconstitutional by the [[High Court of Australia]].
===Bolivia===
* '''2006''' On [[May 1]] [[2006]], newly elected [[Bolivia]]n leader [[Evo Morales]] announces plans to nationalize the country's [[natural gas]] industry; foreign-based companies are given six months to renegotiate their existing contracts.
===Canada===
*'''1918''' [[Canadian National Railway]]s, created from several systems nationwide following their bankruptcy during and after [[World War I]], and since privatized. (N.B. VIA Rail Canada, operator of intercity passenger rail, remains nationalised)
*'''1944''' [[Hydro-Québec]], nationalized electricity concerns in [[Quebec]] by the [[Jean Lesage|Lesage]] government.
*'''1975''' [[Potash Corporation of Saskatchewan]], Province of Saskatchewan nationalized part of the potash industry. Many potash producers agreed to sell to the government instead of being nationalized.
===Channel Islands===
Aurigny Airlines was recently bought by the States of Jersey.
===Chile===
* '''1972''' [[Chilean nationalization of copper]] mining industry by the government of [[Salvador Allende]].
===Cuba===
The Castro government gradually expropriated all foreign-owned private companies after the [[Cuban Revolution]] of 1959. Most of these companies were owned by U.S. corporations and individuals. Bonds at 4.5% interest over twenty years were offered to U.S. companies, but the offer was rejected by U.S. ambassador [[Philip Bonsal]], who requested the compensation up front.<ref name="Thomas">{{cite book |last= Thomas |first= Hugh |title= Cuba; the Pursuit of Freedom |year= 1971 | publisher=Harper & Row |location=New York|month= March |isbn= 0060142596 | authorlink=Hugh Thomas, Baron Thomas of Swynnerton| pages=p224, p252}}</ref> Only a minor amount, $1.3 million, was paid to U.S. interests before deteriorating relations ended all cooperation between the two governments.<ref name="Thomas"/> The United States established a registry of claims against the Cuban government, ultimately developing files on 5,911 specific companies. The Cuban government has refused to discuss the effective and adequate compensation of U.S. claims. The United States government continues to insist on compensation for U.S. companies. In 1966-68, the Castro government nationalized all remaining privately owned business entities in Cuba, down to the level of street vendors.
===Czechoslovakia===
* '''1948''' All manufacturing enterprises.
===Egypt===
* '''1956''' On [[July 26]] [[1956]] [[Egypt]]ian President [[Gamal Abdel Nasser]] nationalized the [[Suez Canal Company]] company provoking the United Kingdom, France and Israel to launch a combined attack on Egypt that was stopped by the U.S. and the Soviet Union.
===France===
Nationalisation in France dates back to the 'regies' or State monopolies first organised under the ancien regime. For example, the monopoly on tobacco sales. Communications companies [[France Telecom]] and [[La Poste]] are relics of the State postal and telecommunications monopolies.
There was a major expansion of the nationalised sector following World War II. A second wave followed under [[Francois Mitterrand]] in the early 1980's but much of his work was reversed by [[Jacques Chirac]].
* '''1938''' Societe Nationale des Chemins de Fer Francais ([[SNCF]]) (originally a 51% State holding, increased to 100% in 1982)
* '''1945''' Several nationalizations in France, including most important banks and [[Renault]]. The firm was seized for [[Louis Renault (industrialist)|Louis Renault]]'s alleged collaboration with [[Nazi Germany]], although this condemnation was without judgement and after his death, making this case remarkable and rare. A later judgement (1949) admitted that Renault's plant never collaborated. Renault was successful but unprofitable whilst nationalised and remains successful today, after having been privatized in 1996.
* '''1946''' [[Charbonnages de France]], [[Electricite de France]] (EdF), [[Gaz de France]] (GdF)
* '''1982''' The Paris business of [[mergers and acquisitions|M&A]] advisory firm [[Rothschild banking family of France|Rothschild]] was nationalized and renamed.
The Paris regional transport operator, [[Regie Autonome des Transports Parisiens]] (RATP), can also be counted as a nationalised industry.
===Germany===
The German railways were nationalised after World War I.
Most enterprises in East Germany were nationalised following World War II. After reunification, an agency, [[Treuhand]], was established to return them to private ownership.
===Greece===
* '''1972''' Nationalization of [[Olympic Airlines]], main airline of [[Greece]]. The company was bought out by its founder, [[Aristotle Onassis]].
===India===
*'''1949''' (1 January) Reserve Bank of India nationalised (Ref.- Reserve Bank of India chronology of events). The [[Reserve Bank of India]] was state-owned at the time of [[Indian independence movement|Indian independence]].
*'''1953''' [[Air India]] under the Air Corporations Act 1953.
*'''1969''' [[Banking in India#Nationalisation|Nationalization of 14 Indian banks]].
===Iran===
* '''1953''' [[Iran]]ian Prime Minister [[Mohammed Mossadegh]] nationalized the [[Anglo-Persian Oil Company]] in Iran.
===Ireland===
Railways in the Republic of Ireland were nationalised in the 1940's as [[Coras Iompair Eireann]].
* '''2007''' On [[August 3]] [[2007]], The [[Republic of Ireland|Irish]] government have been offered a stake in [[Eircom|Eircom's]] copper network infrastructure<ref>[http://www.rte.ie/business/2007/0803/eircom.html Eircom and State in broadband swap?]</ref>, should they accept it, it shall represent the return to state ownership of Ireland's Telecommunication's network which was privatised in 1999.
===Israel===
* '''1983''' Nationalization of the major Israeli banks: Bank Hapoalim, bank Leumi, Discount Bank, Mezrachi bank due to the Bank stock crisis that struck Israel in 1983.
===Italy===
* '''1905''' The Italian railways were nationalised as [[Ferrovie dello Stato]].
The regime of [[Benito Mussolini]] extended nationalisation, creating the [[Istituto per la Ricostruzione Industriale]] (IRI) as a State holding company for struggling firms, including the car maker [[Alfa Romeo]]. A parallel body, Ente Nazionale Idrocarburi ([[Eni]]) was set up to manage State oil and gas interests.
===Japan===
* '''1906''' [[Railway Nationalization Act]] of [[Japan]] nationalized 17 railway companies to form the nationwide railway network that was later called [[Japanese National Railways]].
===Malta===
* '''1974''' [[Bank of Valletta]] is founded following nationalisation of the [[National Bank of Malta]]
===Mexico===
* '''1982''' The nationalization of the Mexican [[Bank|banking system]] made by [[President of Mexico|President]] [[José López Portillo]], later in the [[Carlos Salinas de Gortari]] presidency (1988-1994) a large number of banks were [[Privatization|privatized]].
===New Zealand===
* '''2001''' Central government purchased the Auckland railway network from [[TranzRail]].
* '''2003''' The Labour Government of [[New Zealand]] took an 80% stake in near-bankrupt national air carrier [[Air New Zealand]] in exchange for a large financial infusion.
* '''2004''' The rest of the country's rail network is purchased from [[Toll New Zealand]], formerly known as TranzRail. A new [[state owned enterprise]], [[ONTRACK]], was established to maintain the rail infrastructure.
* '''2008''' The [[rolling stock]] of Toll New Zealand was purchased by central government, bringing the rail system under total state ownership and renamed as [[KiwiRail]].
===Philippines===
During the administration of [[Ferdinand Marcos]], important companies such as [[Philippine Long Distance Telephone Company|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 [[National Power Corporation|Napocor]] and the [[Philippine National Railways]], which in their own right are [[monopoly|monopolies]] (exceptions are Meralco and the Manila Hotel). Today, these companies have been reprivatized and some, such as PLDT and Philippine Airlines, have been de-monopolized. Others, like government-formed and owned Napocor, are in the process of privatization.
===Portugal===
After the [[Carnation Revolution]], the [[Junta de Salvação Nacional]] (temporary government) nationalized all the banking, ensurance, petrol and industries companies. Along with the telecommunications companies, which were state-owned even before the Revolution, all the nacionalized companies were reprivatized.
===Romania===
* '''1948''' With the Decree 119 of June 1948 the new [[Romania]]n communist regime nationalised all the existing private companies and their assets in Romania leading to the transformation of the Romanian economy from a [[market economy]] to a [[planned economy]].
===Russia and the Soviet Union===
====Soviet Russia and Soviet Union (1918–1992)====
{{Unreferencedsection|date=January 2007}}
* '''1918''' All manufacturing enterprises and many retailing enterprises.
====Russia====
{{cleanup-rewrite}}
* '''1998''' State began seizing [[Gazprom]] assets, claiming that the company owed back taxes. Privatization of Gazprom from the mid 1990's had been reduced to 38.37% with the intention of achieving full [[privatization]]. However, the stake of the Russian Government in Gazprom has since been increased to 50% with [[Vladimir Putin]]'s plan to increase the stake to a controlling position. Gazprom is also buying up both Russian and other international Utility companies.
===South Korea===
* '''1946''' [[United States Army Military Government in Korea|USAMGIK]] nationalized all South Korean private railroad companies and made Department of Transportation. This now becomes [[Korail]].
===Spain===
*'''1941''' Spain's railways were nationalised, as [[RENFE]], in the aftermath of the Spanish Civil War.
*'''1983''' Nationalization without compensation of the Spanish [[Rumasa]]. Separate business were later privatized.
===United Kingdom===
The following companies/industries were the subject of nationalisation in the given year:
*'''1869''' Nationalisation of inland telegraphs under the [[General Post Office (United Kingdom)|GPO]] [http://news.bbc.co.uk/1/hi/business/7250252.stm]
*'''1875''' [[Suez Canal|Suez Canal Company]] - The Egyptian share in the company was bought out by the British Government.
*'''1916''' [[State Management Scheme|Liquor Trade]] - The nationalisation of pubs and breweries in [[Carlisle]], [[Gretna, Dumfries and Galloway|Gretna]], [[Cromarty]] and [[Enfield]] under the [[State Management Scheme]]; mainly an attempt to restricting alcohol consumption by armaments factory workers. The scheme was [[privatised]] by asset transfer in 1973.[http://www.historytoday.com/dt_main_allatonce.asp?gid=9859&g9859=x&g9857=x&g30026=x&g20991=x&g21010=x&g19965=x&g19963=x&amid=9859]
*'''1926''' [[Central Electricity Board]] introduced under '''The Electricity (Supply) Act 1926''' founded [[National Grid UK]] and set up a national standard for electricity supply in the UK.
*'''1927''' [[British Broadcasting Company]] (a privately owned company) became [[BBC|British Broadcasting Corporation (BBC)]], a [[Statutory Corporation#United Kingdom|public corporation]] operating under a [[Royal Charter]].
*'''1933''' [[London Passenger Transport Board|London Transport]]
*'''1938''' Nationalisation of UK Coal Royalties [http://www.data-archive.ac.uk/findingData/snDescription.asp?sn=1825] under the [[Coal Commission]]
*'''1939''' British Overseas Airways Corporation ([[British Overseas Airways Corporation|BOAC]]) later to become [[British Airways]] (BA) - combining the private [[British Airways Ltd.]] and the state owned [[Imperial Airways]]
*'''1939''' At the outset of [[WWII]], much of British industry was subjected to State regulation or control, although not nationalised as such.
*'''1943''' North of Scotland Hydro-Electricity Board
*'''1946''' [[British Coal]], [[Bank of England]] - the latter had had private shareholders who were bought out by the state.
*'''1947''' [[CEGB|Central Electricity Generating Board]] and area electricity boards, [[Cable & Wireless]] Ltd - the latter had had private shareholders who were bought out by the state.
*'''1948''' National rail, water transport, some road haulage, road passenger transport and [[Thomas Cook|Thomas Cook & Son]] under the [[British Transport Commission]]. Separate elements operated as [[British Rail]]ways, [[British Road Services]], and [[British Waterways]], also [[National Health Service]] taking over a mixture of previously Local Authority, private commercial and charitable organisations.
*'''1949''' [[British Gas plc|British Gas]]
*'''1951''' Iron and Steel Industry (denationalised by the following Conservative Government) [http://www.uksteel.org.uk/history.htm]
*'''1967''' [[British Steel]]
*'''1969''' [[National Bus Company]], combining former interests of the British Transport Commission with others acquired from the British Electric Traction group.
*'''1971''' [[Rolls-Royce plc|Rolls-Royce (1971) Ltd]] - The strategically-important aero-engine part of the recently-bankrupt [[Rolls Royce Limited]].
*'''1973''' [[Water Act 1973|Local authority water supply undertakings in England and Wales]]
*'''1974''' [[British Petroleum]] - the combination of a 50% stake bought by [[Winston Churchill]] as First Lord of the Admiralty after World War I with around a 25% stake acquired by the [[Bank of England]] from [[Burmah Oil]] made the UK Government directly or indirectly BP's majority shareholder, though commercial independence was maintained. The shares were all sold during the 1980's.
*'''1975''' [[National Enterprise Board]] - a State holding company for full or partial ownership of industrial undertakings
*'''1976''' [[British Leyland Motor Corporation]] - became ''British Leyland'' upon nationalization. Privatized in 1986 to [[British Aerospace]].
*'''1977''' [[British Aerospace]] - combining the major aircraft companies [[British Aircraft Corporation]], [[Hawker Siddeley]] and others. [[British Shipbuilders]] - combining the major shipbuilding companies including [[Cammell Laird]], [[Govan Shipbuilders]], [[Swan Hunter]], [[Yarrow Shipbuilders]]
*'''1997''' [[Docklands Light Railway]] - John Prescott announced to the 1997 Labour Party Conference that he had nationalised this.{{Fact|date=September 2007}}<!-- (it was broadcast at the time in BBC TV coverage so there must be a citable reference to it somewhere). -->
*'''2001''' [[Railtrack]] - although not nationalised as such the takeover by [[Network Rail]] of the railway infrastructure in 2002 following the liquidation of Railtrack, which although not a state owned company has no shareholders and is underwritten by the State. In addition prior to this the government began to make use of a residual shareholding of 0.2% (including voting rights) in Railtrack Group Plc leftover from the original sale. [http://www.publications.parliament.uk/pa/cm200102/cmhansrd/vo020212/text/20212w16.htm]
*'''2008''' [[Northern Rock]] - announced by Alistair Darling, Chancellor of the Exchequer on 17 February 2008 as a temporary measure. The bank will be run at 'arms length' as a commercial business and sold to a private buyer in the future. [http://news.bbc.co.uk/1/hi/business/7249575.stm]
====British assets nationalised by other countries====
*'''1940s''' Argentine railways
*'''1953''' [[BP|British Petroleum]]'s Iranian assets by their government (actually a nationalisation of part of a part-nationalised company)
*'''1956''' The [[Egypt|Egyptian Government]] nationalised the [[Suez Canal]], owned by the Suez Canal Company which was part owned by the British State.
===United States===
* All [[United States]] railroads were nationalized as the [[United States Railroad Administration]] during [[World War I]] as a wartime measure but were returned to their private owners almost immediately after the war.
* The National Railroad Passenger Corporation ([[Amtrak]]) is a [[government-owned corporation]] created in 1971 for the express purpose of relieving American railroads of their legal obligation to provide [[inter-city rail|inter-city passenger rail]] service. The primarily Freight Railroads had petitioned to abandon passenger service repeatedly in decades leading up to Amtrak's formation.
* 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 [[Northeastern United States]]; 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]].
===Venezuela===
* '''2007''' On [[May 1]] [[2007]], [[Venezuela]] stripped the world's biggest oil companies of operational control over massive [[Orinoco Belt]] crude projects, a controversial component in President [[Hugo Chavez]]'s nationalization drive.
* '''2008''' On [[April 3]] [[2008]], Venezuelan President [[Hugo Chavez]] ordered the nationalization of the cement industry. [http://english.aljazeera.net/NR/exeres/78BD5E2C-6A4B-4787-BAF7-7F764A8BF7A0.htm]
* '''2008''' On [[April 9]] [[2008]], [[Hugo Chavez]] ordered the nationalization of Venezuelan [[steel mill]] Sidor, in which [[Luxembourg]]-based [[Ternium]] currently holds a 60% stake. Sidor employees and the Government hold a 20% stake respectively. [http://www.reuters.com/article/worldNews/idUSN0942912020080409?feedType=RSS&feedName=worldNews]
===Zimbabwe===
[[Zimbabwe]] has nationalized its food distribution infrastructure.
===Other countries===
* Nationalization of the oil industry in numerous countries, including [[Libya]], [[Kuwait]], [[Mexico]], [[Nigeria]], [[Saudi Arabia]], and [[Venezuela]].
==See also==
{{Wiktionary}}
*[[Compulsory purchase]]
*[[Eminent domain]]
*[[Expropriation]]
*[[Privatization]]
*[[Reprivatization]]
*[[Public ownership]]
*[[Railway nationalization]]
==Footnotes==
<div class="references-small"><references/></div>
[[Category:Public economics]]
[[Category:Monopoly (economics)]]
[[bn:জাতীয়করণ]]
[[bg:Национализация]]
[[cs:Znárodnění]]
[[da:Nationalisering]]
[[de:Verstaatlichung]]
[[es:Estatización]]
[[eo:Ŝtatigo]]
[[fr:Nationalisation]]
[[id:Nasionalisasi]]
[[he:הלאמה]]
[[lt:Nacionalizacija]]
[[hu:Államosítás]]
[[nl:Nationalisering]]
[[ja:国有化]]
[[no:Nasjonalisering]]
[[nn:Nasjonalisering]]
[[pl:Nacjonalizacja]]
[[pt:Nacionalização]]
[[ro:Naţionalizare]]
[[ru:Национализация]]
[[sk:Znárodnenie]]
[[sl:Nacionalizacija]]
[[fi:Kansallistaminen]]
[[sv:Förstatligande]]
[[uk:Націоналізація]]
[[zh:國有化]]