Privatization or Plunder? An Anatomy of Ownership Transfer in Rentier Economies
Privatization has been promoted worldwide as a primary mechanism for transitioning from state-led economies to free markets. Economic theorists describe it as the master key to efficiency, competition, downsizing government, and boosting private investment. Yet in many developing and rentier-structured economies, its implementation has produced very different outcomes.
From a political economy perspective, privatization in rentier states often becomes not a path to market dynamism but a form of legalized appropriation of public resources. This can be described as “neoliberal but non-competitive privatization” — liberal in appearance, oligarchic in substance.
Rentier Economy and Privatization: An Inherent Tension
A rentier economy derives a substantial share of national income from natural resource rents, foreign aid, or monopoly privileges rather than productive activity. In such systems, the state acts as the primary allocator of resources, making privatization fundamentally political.
Global Cases: From Russia to Latin America
The experience of Russia in the 1990s illustrates how transferring heavy industries, banks, and mines to oligarchs deepened inequality and aligned state structures with private interests.
Similarly, in Argentina and Bolivia, neoliberal privatization waves were accompanied by corruption and social unrest.
Egypt
Under Hosni Mubarak, privatization served as a tool to consolidate elite loyalty and marginalize rival economic factions.
Venezuela
In Venezuela under Hugo Chávez, a wave of re-nationalization occurred; however, ownership shifts largely favored groups aligned with the ruling establishment rather than broad public empowerment.
Economic:
• Declining efficiency in key sectors
• Failure to realize projected government revenues
• Rising monopolization and erosion of market competition
• Bankruptcy of strategically transferred industries
Social:
• Large-scale layoffs and livelihood crises
• Reduced public access to essential services (energy, education, healthcare)
• Widening class gaps and growing perceptions of systemic discrimination
Political and Institutional:
• Empowerment of a new wealthy class loyal to ruling authorities
• Weakening of oversight institutions and expansion of systemic corruption
• Deep distrust toward macroeconomic policies
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The Role of Neoliberalism in Theorizing Plunder
A subtle but crucial dimension of this process is the instrumental use of neoliberal discourse to justify non-competitive policies. Concepts such as “reducing the role of the state,” “enhancing efficiency,” and “attracting investment” become rhetorical tools for policies that contradict these very principles in practice. This phenomenon is often described as “authoritarian neoliberalism” or “politicized neoliberalism,” where the free market effectively becomes a state-driven project.
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What Is the Way Out?
Unless privatization is embedded within institutional reform, transparency, public oversight, and judicial independence, it remains vulnerable to corruption and abuse. Key measures include:
• Expanding transparency and publicly disclosing contracts and tenders
• Empowering media and civil society for public oversight
• Defining eligibility criteria based on professional competence rather than political loyalty
• Ensuring the independence of judicial and supervisory institutions from political interference
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Conclusion
In rentier economies, privatization without deep institutional reform does not strengthen markets or efficiency; instead, it facilitates unequal redistribution of public resources and consolidates elite power. The experiences of Iran, Russia, Egypt, and Venezuela demonstrate that ownership transfer without transparency, competition, and effective oversight not only fails to resolve economic crises but can intensify them.
This reality calls for serious reconsideration of privatization discourse in rentier states — particularly in Iran: can it still be framed as a path to development, or must it be acknowledged that without good governance, privatization risks becoming systemic plunder?
