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
