“Unserious, speculative and criminal methods”

Interview with Werner Rugemer on Public Private Partnership – Part 2

The reforms of the financial and labor markets, as well as the privatization of infrastructure, mainly in the form of PPP projects, have so far had clearly negative consequences for the citizens. For example, in the privatization of the municipal housing company in Dresden, the worst fears of those who warned at the time have now come true. Nevertheless, this policy is maintained unwaveringly. And with the bank bailout, the road to disaster will continue. However, resistance is beginning to emerge from below. Second part of the interview with Werner Rugemer about his book Locusts in the Public Sphere.

What are the general economic and social consequences of PPP for the population?? In your book, you expose the municipalities’ need for austerity as the disguised special interests of auben, which have nothing to do with rational economic management in the interest of the majority of the population. But isn’t this concept also grounded in the very logic of accumulation of capital??

Werner Rugemer: The political parties in power and considered capable of governing – in Germany, the CDU, CSU, SPD, FDP and Grune – have decided that PPP is good and should be demanded by the state. In this respect, whatever combination of federal, state, municipal and district governments they have in charge, they have the "capitalist logic of accumulation" as their program. They demand the ever further exploitation of the existing public infrastructure through privatization and private lending. In the same way, they use taxpayers’ money to rescue bankrupt private banks, and all state governments rescue the bankrupt state banks, whether it is a CDU/FDP state government as in Schleswig-Holstein, a CSU government in Bavaria or an SPD/Grune government in North Rhine-Westphalia; the municipalities also go along with this as a matter of course, they do not resist their compensation because they support the overall model. In addition, municipal savings banks are also being used for these rescues. The consequences for the majority of the population are manifold: first, in the PPP project itself; for example, in a newly built PPP school, the teachers and students now have to pay two euros a day for their parking space to the investor’s underground parking lot operating company; during breaks, they can only eat in the private cafeteria operating company, and so on. Secondly, in the long term, PPP puts the municipality into even more debt than if it were to run the school itself, which in turn creates "austerity constraints". Thirdly, the federal government cuts the allocations to the municipalities (for kindergarten, rents of the recipients of unemployment benefits and basic social security). etcetera), so that counseling centers for seniors and migrants, youth centers, small theaters and swimming pools are closed, subsidies for school textbooks are cut, property taxes are raised, and so on and so forth. In your book you argue that the banks affected by the financial crisis should have been allowed to go bankrupt. What do you think were the positive effects of this decrease and what are the negative effects of the bailout??

Werner Rugemer: After all, the banks were not "affected" by the financial crisis, they caused it themselves. According to the "polluter pays" principle, according to the theory of the market economy ("companies bear the risk") and according to the applicable law (insolvency regulations), every bank should have been regularly placed under the control of an insolvency administrator. This had several positive effects: first, the cleansing effect that controlled insolvency has, namely that a market-failed and unrecoverable company disappears from the market. The market would not function properly until speculators, adventurers and criminals were eliminated. "Economically destructive" Secondly, the court-appointed insolvency administrator had to examine all creditor claims for their justification; this would of course have revealed the dubious, speculative and even criminal methods by which loans were granted and resold, and the fraudulent acts with which so-called auditors and rating agencies aided and abetted; it would therefore have emerged that a large proportion of the creditor claims had no justification and certainly could not be compensated in the public interest. And the perpetrators and accomplices could be held responsible and compensated not only by criminal law but also by civil law. Third, it would have become public that the financial crisis was not caused by the publicly known activities of banks – account and deposit management, lending to companies, governments and consumers, the sale of shares and investments – but by speculative interbank transactions, i.e. through credit cycles between banks (example "cross border leasing"), through loan securitization, through interest rate bets, through derivatives, through lending to hedge funds and private equity funds ("locusts"), through investment banking (speculation by banks with their own buying and selling of foreign exchange and securities, financing of corporate mergers), etc. All this is economically neutral at best in some cases, but destructive in the majority. If the banks had gone bankrupt under state supervision, this would have become clear, and the justification for the state rescue would no longer exist. Fourth, it would have become clear which financial practices need to be banned and which auditors, rating agencies, etc., need to be banned. the license must be revoked. But because these consequences were not drawn, the banks were saved blindly, they can continue as before. But this means that the first bailout will not be sufficient and that further bailouts will be necessary, both nationally and internationally. And that means that the bailouts will lead to further public over-indebtedness, that it is mainly the wage-dependent citizens and the transfer recipients who will have to pay the bill, and that the soil will be further fertilized even for the alleged remedy PPP. What are the alternatives to this policy? In Dresden, the privatization of municipal rental housing was also decided by the Left Party. So how can we hope for the politicians in terms of PPP?? Do beginnings of a resistance exist in Germany??

Werner Rugemer: In Dresden, only half of the left-wing faction of the city council voted for the sale of the 48.000 city-owned apartments to the "grasshopper" Fortress; they have all since dropped out. The other part of the left-wing caucus has supported a citizen petition against the sale. Meanwhile, the Dresden City Council has decided to sue Fortress for about one billion dollars because the Social Charter was violated in many cases. I hope that this lawsuit will be followed through consequently. This would be an encouragement for others, as many rights violations have occurred in privatizations and PPPs. Often there has been no proper public tender or hidden state subsidies. So hat beispielsweise der Europaische Gerichtshof das Kolner PPP-Projekt der Kolner Messehallen fur ungultig erklart. Numerous municipalities are suing Deutsche Bank for deliberate misadvice in interest rate bets, and other municipalities are still dragging their feet, as the complicity continues to have an effect. The politicians, who have acted in agreement with the banks and investors, are mostly not capable of learning, at least so far. It is necessary to force them through citizen movements, as well as to bring new forces into the parliaments and city councils. In contrast to the past, the majority of citizens see public companies as better and want public ownership of public utilities, transport and housing companies. Some PPP projects have already been overturned through the efforts of citizens’ initiatives, trade unions and the Left Party. At least 1.000 concession contracts for municipal energy networks expire in the next two years; until now, RWE and its consortium could hope for an almost automatic renewal of the lucrative concessions, but that has now changed. Own power grids, decentralized energy production – recognition of the value of public infrastructures is spreading. A field of conflict has developed that the established parties and media do not dare to talk about in public. (Reinhard Jellen)