Nationalization

History of Nationalization

Nationalization is a 20th-century phenomenon that has often occurred when less developed countries decide to assume control of foreign-owned assets deemed strategic. In 1938, for example, the Mexican government expropriated all oil properties belonging to North American corporations, while in 1951 the Iranian parliament voted to take over all assets belonging to the Anglo-Iranian Oil Company. In the latter instance, Britain froze Iranian assets in England and brought a case against Iran to the International Court of Justice at The Hague; the court ruled in favor of Iran by arguing that a contract between a state and a private foreign corporation does not fall under international jurisdiction and that private foreign investors are therefore not protected by international law and must assume the risk of nationalization. The oil nationalization trend started by Mexico and Iran was followed by Venezuela, Saudi Arabia, Iraq, and Kuwait, and by the close of the century, most world oil had been nationalized.

Examples of nationalization in other industries include the nationalization of logistically important sectors (coal, gas, petroleum, railroads, airlines, communications) by the Labour Party in Britain after the Second World War; the Egyptian takeover of Suez Canal operations and infrastructure in 1956 in exchange for compensation to major French and British stockholders; the nationalization of foreignowned copper mining enterprises in Chile in 1971; and most recently, the confiscation of white-owned farms by President Mugabe's government in Zimbabwe in the late 1990s.

The most dramatic nationalization trend occurred during the period of communist expansion starting early in the 20th century with the Russian revolution, where all industries, down to the retail level, suffered mass nationalization and conversion to state-run enterprises. With a few exceptions, such as Cuba and North Korea, this communist-induced trend had been reversed by the end of the century.

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