Nationalizing, Expropriation, and Privatization

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Nationalizing, Expropriation, and Privatization

Models of Privatization

Models in Combination

Joint Venture Privatiation

Mix of trade sale and non-controlling interest model

Shareholder Agreement

Concessions

BOOs

Build-Operate-Own

BOTs

Build-Operate-Transfer

The Sale to Employees

Management are owners, layoffs difficult

Advantages

Gives government employees a stake in the outcome, may bring in labor unions

Sale of Noncontrolling Interests

Trade Sale

Backlash, requires capital infusion, conditions subsequent

Speedy and useful in small enterprises

Patial Sale

Disadvantage

Depends upon perspective

Advantage

Simple

Preparation for Privatization

Methods of Distribution

Assets are transferred to a new entity

Debt-for-Equity swaps

Voucher systems

Preparation of a Legal System for Privatization

Developing of property rights and contract law

Clearing of any expropriation claims

Creation of an Independent Government

Guarding Against Political Risk

Resolving Investment Disputes with Foreign Nations

Foreign Sovereign Inmunities Act

State is inmune for suit except when

Noncommercial torts

Commercial activity

Waiver

Political Risk Insurance

Private

Insurance syndicates

Governement

MIGA

OPIC

Theories Relating to Taking of Foreign Property

Non Western Theories of Taking

State has sovereign right ahead to take of foreign investor

Expropriation

taking a single company

Nationalization

taking an entire industry

Modern-Traditional Theory

Prompt, adeuate and effective compensation for all takings

Traditional Theory

Probition of all takings