One Step Nearer to Port Privatization

The negotiations over the planned structural changes in the ports shifted into high gear this week. After three months of ongoing talks between the government officials and the port workers, the head of the treasury's budget division, Uri Yogev, has joined the negotiations and has been meeting personally with employees in the Ashdod and Haifa ports in order to reach an agreement in the next 10 days.

According to the proposed structural changes, the ports will become independent government corporations and the Ports Authority will be dismantled. The authority will be transformed into a holding company for the ports' assets. This plan was approved by the cabinet in September 2003 and was planned to be one of the most important changes made by the government in 2003. The decision was designed to make the ports more efficient and bring them up to the level of other modern ports. The original implementation date for the plan was scheduled for the end of December of 2003.

However, the port workers protested vehemently against the planned changes, and held a two-week strike in October. Finance Minister Benjamin Netanyahu and Transportation Minister Avigdor Lieberman tried to derail the strike with alternative solutions, such as bringing goods by land from Port Said in Egypt or through the Jordanian port of Aqaba; but in the end the Prime Minister Ariel Sharon and MK Shimon Peres intervened. It was decided to delay the implementation of the plan and to start negotiating with the workers.

The treasury is very eager to finish the talks as quickly as possible, and start implementing its plans. Netanyahu continues to explain at every opportunity that he wants to implement the cabinet's decision immediately. "Breaking the ports' monopoly is the most important strategic goal, and even if there is a battle with the ports' unions, we will win in the end," he says.

On the other side, the port workers are continuing in their firm refusal to implement the cabinet decision. They believe that in the end the decision will harm their employment terms, and at most they are willing to discuss the authority's 2-year-old plan to make the ports separate companies, but still subsidiaries of the authority.

The three ports - Ashdod, Haifa and Eilat - would be required to take efficiency measures and compete with each other under the employees' plan; but the difference between this proposal and the treasury's plan is in the level of independence of the ports and the Ports Authority's role. Instead of a strong, powerful centralized body, the authority would become a shell company only owning the physical assets of the ports with no power over the operation of the ports.

The head of the Ports Authority, Amos Ron - who is also joint chairman of the negotiating team along with Yogev - believes that the ports should be independent and efficient, even if it means detaching them from the authority. Ron argues that this is essential for promoting competition between the different ports, and improving the service provided while also reducing the prices for the ports' customers.

Ron explained that even under the employees' proposal, the authority would need to employ only 25 percent of the present 170 workers. The rest would either be employed by the new port corporations or retire voluntarily.

In any case, the process must be done gradually and in stages, regardless of which proposal is adopted, said Ron. This is because of the extremely complex logistical and organizational issues involved, along with the need not to antagonize the workers unnecessarily so they won't act to impede the process. Therefore, Ron claims it is necessary to start with the ports becoming independent companies, but to still keep them affiliated under a single body and only gradually to turn them into separate, independent government corporations.

Ron refused to say how long all of this would take, but estimates are between one to three years for the entire process.