European post offices speed towards privatisation

The privatisation of postal services, focus of a watershed election in Japan over economic and social reform, is well underway in Europe under the twin pressures of competition and financing.

Many of the objections being raised in Japan have already been aired in Europe, albeit with less dramatic effects.

Opposition, sometimes virulent, continues in some areas as a trend towards the introduction of private finance into what used to be an almost entirely publicly owned and run sector gathers pace.

In the United States the postal service, the largest in the world, remains a federal agency with a monopoly on letter mail. But its market share has been eroded in the parcel delivery market by private operators such as UPS, DHL and Federal Express.

And in Canada, where the postal service is profitable, there is no talk of privatisation.

In Europe, various factors have come in to play in different countries but there are some common themes: for example increased opportunities for new entrants to compete, if only for parts of the traditional postal business, such as next-day parcel delivery, a sector that has boomed worldwide in the last decade.

Another is a much wider trend towards privatisation to relieve the public sector from the cost of investment, and in some cases of the burden of losses, and in a broad context of an increasingly globally competitive and free-market economic environment.

Japanese Prime Minister Junichiro Koizumi called an early election for Sunday after parliament refused to privatise the Japan Post, a move which the government said would have stimulated the economy, sent a strong signal of reform and helped strengthen central government finances.

The Japanese post office, which is effectively the world's largest bank with three trillion dollars of funds in savings and insurance money, has been criticized as a resource for the government to finance wasteful but popular public works. It is also a huge employer.

Although reform of the Post Office in Japan has come as a major shock to the political system, privatisation has received the stamp of legislative approval in many countries in Europe and is on the way to delivery.

The European Union has sought to open the postal services to competition in the 25-member bloc while keeping the public-service character of the organisations, such as the distribution of mail in all parts of a given country even if some routes are not profitable.

European competition law does not lay down the legal status of post offices which remains a matter of national choice.

However, many EU countries have opted to at least part-privatise their postal services and a growing number are planning to list them on stock exchanges.

The postal services of The Netherlands and Germany are already listed on the stock market, and Austria and Italy also plan to take their post offices to the markets

In The Netherlands, the government nonetheless retains a 10-percent share in the company.

In Germany, the government sold its stake in Deutsche Post in July but indirectly still controls 44.7 percent via the public bank KfW. The government is expected to leave the mail business completely in private hands by the end of 2006.

In Austria, the conservative governnment, which is allied with the far right, has said it intends to list 49.0 percent of the post on stock exchange by 2006.

In Italy, new management of the postal service is mulling a stock market flotation, but analysts say that this is unlikely to happen before legislative elections in the spring of 2006.

The Danish government has sold 22.0 percent of the postal service to an international investment fund, CVC Capital Partners.

Belgium is also working on a similar move, planning to sell a stake to CVC before the end of September, although the state is expected to remain the majority stakeholder in the company.

In France and Luxembourg there has been no talk of privatising the postal services.

In Britain, on the other hand, the privatisation of the 100-percent state-controlled post office has been the subject of hot debate. Industry and Trade Minister Alan Johnson, who is a former postman, has excluded the possibility of privatisation but has favoured postal employees receiving ownership stakes in the organisation.