The Privatization of Infrastructures in Germany

Privatization and Public Sector Reform as an International Phenomenon

After a continuous expansion of governmental involvement in all kinds of social activities since the beginning of this century, the last two decades have been characterized by a drastic cutback of state intervention through the reduction of public welfare programmes and the deregulation, liberalization and privatization of economic activities. Virtually all of the industrialized as well as most of the developing countries have launched some kind of fundamental restructuring programme in their public sectors, and in some cases these reform projects have targeted areas which even economic liberals have taken for granted to be core functions of the state. Adam Smith, for instance, listed the provision of infrastructural facilities such as highways, bridges, canals, schools and post offices amongst his three basic duties of a government, and it is striking that he termed these ‘publick Works and publick Institutions’.1

In Germany, most of the public sector reform measures during the 1980s are related to the conservative Kohl government that came into power in 1982. As in other countries these reforms are clearly challenging the welfare state. But since the public sector seems to be more deeply entrenched and the unions are much better organized in Germany than in Britain or the USA, the government has been much more careful to attack the welfare state as a normative ideal and to suggest conflict-generating proposals like the privatization of core welfare programmes (Olsen, 1992: 278–9). Most of the privatization initiatives, however, have also been linked to progressing European integration since the mid 1980s, stimulated by the European internal market programme and the subsequent Maastricht Treaty. However, as just said, the German approach to public sector reform can be seen as relatively moderate. In fact, German reform policy can be depicted as a middle course between, on the one hand, liberalization and cutting back the state, and, on the other hand, the enforcement of control by the state combined with moderate decentralization tendencies characteristic of the French approach to public sector reform (Hesse and Benz, 1988: 80).

As in most public sector reforms world-wide, basic objectives in Germany have been ‘decentralization’, ‘breaking up’ and ‘rationalization’. But the demand for institutional renovation has been relatively restricted from the very beginning. Furthermore, the breaking-up and decentralization questions in particular entail lengthy negotiations between different levels of government, which usually end by comprehensive compromises – one of the reasons why recent reform measures have been relatively modest. Recent German privatizations include the selling of government shares in enterprises in competitive markets,2 different forms of administrative reforms aiming at the introduction of more commercial principles in public sector management and, last but not least, the privatization of some major utilities and infrastructures.

The various privatization measures in the transport and communications sectors, and their similarities and differences, are the topic of this chapter. In the first section we will give a short conceptual introduction to the theme, which will then be followed by a detailed description of the different privatization processes. In the last section, it will be questioned why such institutional changes in property forms and market structures have occurred at all, and why the outcomes of these transformation processes have differed. By a comparative analysis of these similarities and differences in the governance of infrastructural sectors, the chapter aims to achieve a better understanding of the various causes and conditions of this type of institutional transformation.

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