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INSTITUTIONAL ANALYSIS

I- World Bank/ IMF:
The World Bank and the International Monetary Fund have pressured Mauritania’s government to privatize their state owned enterprises as part of their overall structural adjustment reforms. This mass privatization is intended to reduce the public budget deficit and to create a market based economy. According to World Bank analysis, Mauritania’s state owned enterprises account for one half of all outstanding domestic debt and for a substantial portion of foreign borrowing (World Bank Report, 1999). Moreover, the lack of competition and monopoly positions have led to high labor cost and institutionalized corruption among managers of state owned enterprises and government officials.

To compete in the global market, Mauritania must increase private sector participation in the economy. Deregulating will allow the private sector to compete with state owned enterprises. The goal of the World Bank policy for Mauritania is for the government to reallocate public resources from subsidies for SOEs to investment in infrastructures and social programs.

The World Bank and the International Monetary Fund see privatizing state enterprises as essential for introducing a market economy. Privatization will increase the size and the dynamism of the emerging private sector. It will distribute ownership of SOEs more widely and it will promote both foreign and domestic investment. By promoting private investment in SOEs, privatization reduces inflation. By attracting foreign capital investment in privatized firms, it reduces external debt. The international institutions see privatization of SOEs as a means to reduce public expenditure, pay off foreign debt, and increase government revenues.

II- The Word Trade Organization:
Mauritania, as a member of the World Trade Organization since January 1995, is committed to the National Treatment Principle and the Most-Favored Nation Principle. The National Treatment Principle applies automatically on the goods side. On the services side, National Treatment applies only to sectors where countries made commitments. Mauritania’s government offered National Treatment on services only in the tourism sector, which is unrelated to the port privatization. Therefore, the liberalization of port services is not a concern of the GATS.

With regards to Transparency, the General Agreement on Trade and Services says that governments must publish all laws and regulations. Foreign companies and governments can use these inquiry points to obtain information about regulations in any service sector. The World Trade Organization wants to create an open system of operations not ruled by corruption.

The World Trade Organization encourages members to enhance labor and environmental standards to increase safety for workers and reduce trade impacts on the environment.

III-World Maritime Organization:
Mauritania, as a member of the International Maritime Organization, must comply with the international maritime rules and standards that ensure safe and effective shipping services. It also must protect the coast from environmental degradation from ships and related activity. To improve the safety and efficiency of maritime transport, the International Maritime Organization recommends the use of modern equipment. This will help ports be more efficient and reduce operational cost. The Port of Abidjan (Ivory Coast) and the Port of Dakar (Senegal) have invested in cargo handling equipment which permits loading and dispatching operations on both sides of vessels. Moreover, the IMO suggests the use of basic standard equipment such as computers and the internet which young trained people can operate. Finally, ports exchange large amounts of information with other members of the distribution chain. The IMO encourages ports to use the Electronic Data Interchange system (EDI) to better integrate port operations, manufacture, transport and warehousing. The rules of EDI are set by the United Nations Rules for Electronic Data Interchange for Administration, Commerce and Transport. A UN/ EDIFACT study proves that the use of EDI in ports could improve resource savings and customer services (IMO Report, 1999).

LEGAL ANALYSIS

Mauritania’s public law port regulation states that as a government entity, the Nouakchott Port Authority should be owned and operated by the government. However, private law states that before a government starts a privatization program, legal provisions that discriminate private sector participation in state-owned enterprises should be amended or abolished. Then, the government should initiate a competition policy that allows the private sector to compete with the public sector on an equal footing. This competition policy should include removal of subsidies, public loan guarantees and harmonization of tax systems applied to the state owned enterprises and private enterprises (Guislain, 1997). Apropos of investment, rules must protect foreign investors, recognize foreign participation in private ownership, determine to what extent foreigners can participate in the privatization of SOEs, and guarantee repatriation of profits and capital. Regarding the World Trade Organization obligations, Mauritania’s schedule states that the government is committed on trade and services only in the tourism sector, which is not related to the liberalization of port operations. Concerning labor, law reform is needed to determine the extent to which private investors can set employee salaries and benefits, hire and lay off workers. Generally, labor for state owned enterprise personnel do not favor privatization because public sector employees enjoy special civil service benefits. The public labor regime is established more in accordance with sociopolitical than commercial criteria (Guislain, 1997, p.74).

Concerning legislature, ordinance no. 97 of April 1996 states that the decision to transfer ownership assets from the public sector to the private sector of any state owned enterprise should be made in the council of ministers. Moreover, the ministers should discuss and pass the bill in the parliament, which is composed by two chambers, the Senate and the House of Representatives. To pass the bill, the law requires more than 50% of the votes in the two chambers. Then the bill becomes a law.

POLITICAL ANALYSIS

Privatization is a political process that can disrupt various interest groups. Ports are sources of employment and thus are vulnerable to political pressure. Governments are sociopolitical institutions, and it is difficult, if not impossible, to resist pressures from port labor for protectionist measures and subsidies. Such pressure is usually justified in terms of (a) the preservation of national sovereignty or independence; (b) the desire to retain national control over certain activities; (c) the sense that state ownership is needed to safeguard the public interest; and (d) the fear that wealth might become concentrated in the hands of a few private parties. Commercial targets are put to one side and treated less rigorously (Guislain, 1997, p.21).

In Mauritania, labor and government use collective bargaining more as a means of redistributing the nation’s wealth (role taxes) and satisfying political aspirations, than as a means of increasing national wealth or protecting workers from unhealthy working conditions. This has led to over-staffing, low productivity, high costs and corrupt practices. If Nouakchott Port is privatized, the short-term constraints will dominate. The potential social impact of privatization is often calculated in terms of lost jobs. But excess labor is a problem in itself, caused by poor public management. It is a problem that would need a remedy even in the absence of privatization. According to Pierre Guislain, social factors usually taken into consideration focus more on the short term losses resulting from necessary restructuring than on long term job creation generated by a more flexible and dynamic port.

In practice:
To succeed a port privatization program, the real political questions are: How is the power structured in Mauritania? Who are the power brokers and to whom do they respond? What must be done to accomplish these changes? To get answers, we should know the stakeholders involved in this issue.

Stakeholders that have an interest in the issue:
The executive power:
The executive power is the council of ministers, headed by the prime minister. The government has control over its members in the Parliament; on the other hand, the government maintains its power by responding to other political forces. The goal of the government is to enhance trade, reduce the public budget deficit, and respond to demands of the World Bank and International Monetary Fund. Moreover, the Finance minister’s objective is to fix the economic problem of Mauritania, to attract new investments, and to reduce the demand of labor on the public budget.

World Bank / International Monetary Fund:
These institutions pressured Mauritania’s Government to privatize the Nouakchott Port Authority and other state owned enterprises as a part of the overall structural adjustment reforms. The privatization of Nouakchott Port Authority is a required for Mauritania to receive loans.

The Parliament:
Legally, the Senate and the National Assembly should approve the privatization of the Nouakchott Port Authority or any state owned enterprise. The government controls 55 seats of the 56 seat Senate, and 71 seats on 79 seat National Assembly. We can assume that the bill would pass the two chambers smoothly.

The trade unions: Union Mauritanienne des Travailleurs.
Unions oppose Nouakchott Port privatization because privatization is often calculated in terms of layoffs or lost jobs. Short term losses garner more consideration than long term job creation. The government should negotiate with unions to reach an agreement.

The Business Community: Importers/ Exporters
The business community favors port privatization, because private sector participation in port operations increases port efficiency and introduces competition. The importers/exporters want access by land and sea to a port that operates quickly and expeditiously, enabling them to reduce export, import and transport costs.

Shipping Companies:
The shipping companies are the first ones concerned with Nouakchott Port Privatization. Often, companies that operate port facilities are subsidiaries of shipping companies. If shipping companies run their own facilities, investment becomes more efficient.

POLICY RECOMMENDATION

In this section, I will design for Mauritania’s government a strategy to follow:

• Phase one: Selecting the best model for port privatization
• Phase two: How to structure port privatization
• Phase three: How to deal with workers to facilitate the political ramifications.

To reach these objectives, it will be better for Mauritania’s government to initiate reform, such as labor reform, under the state umbrella and to put port facilities in reasonable economic situations before the government auctioned off.

Applying Models of port privatization:
The choice of which model the Mauritanian government should adopt for Nouakchott’s Port depends on the objectives of port privatization and the special requirements of Nouakchott Port.

The objectives set up by the Mauritanian government are (1) to increase private sector investment in the port, while reducing pressure on the public sector budget from port expenditure, (2) to improve port efficiency to aid the flow of trade, (3) to raise revenues for government, and (4) to reduce state expenditures on port labor.

Applying Model IV to Nouakchott’s Port, which will bring port operations, port land and port regulations under the control of the private sector, is highly risky. This laissez faire approach has many disadvantages. First, economically it transfers a public-sector monopoly to private interests. Second, politically it submits national sovereignty to private sector interests or to the private interests of another country. Third, socially, it causes job losses by eliminating surplus labor, thus increasing the unemployment rate.

Applying Model III to Nouakchott’s Port, which brings port operation and port land under the control of the private sector, is not a good strategic choice for the government and the private sector. The Model III approach is necessary when the private investor wants to build a new port, which is not the objective of port privatization in Mauritania. Such an approach is very expensive, and has a long term payback because the private sector must build a new port without financial government support.

Model II is more in line with the initial objectives of Mauritania’s government. Adopting Model II will allow the state to withdraw from port operations, and reduce pressure on the public sector budget from port expenditures. Moreover, the new private operator will upgrade the port facilities to increase efficiency, which will aid the flow of trade. Finally, using the Model II approach, the state will continue to enjoy sovereignty on its port land and port regulations. Therefore, I recommend for the government to select the Model II.

The analysis of the top 100 container ports revealed that nearly 90% have adopted the Model II. This model has many benefits:

1- Private sector investment:
With Model II, Mauritania’s government could lease port facilities, while receiving regular payments from the private sector. The government would hold the property rights and control regulations of the Nouakchott port.

2- Private sector management skills and expertise:
Globalization has increased standardization in the shipping and transport industry. International shipping lines are in position to compare port performance on a worldwide basis, which means that a port must provide a high and consistent standard of service to remain competitive. Nouakchott’s Port does not have the sophistication needed by port users, particularly in terms of information technology and management capability. By putting port operations in the hand of terminal operating companies, subsidiaries of shipping lines will increase the efficiency of Nouakchott’s port. These multinational terminal operating companies have experts who know how to meet the increasing demands of port users.

3- Reducing labor expenditure:
Port operation is where the real employment is concentrated. By removing the state from the port operation sector, it Reduces the cost of port labor on the government budget, because the workforce transfers to the new operator. For example, Buenos Aires Port Authority reduced its workforce from several thousand employees to just few hundred after a series of terminal concessions were granted and the workforce was transferred to the new operator. But any labor change from the public sector to the private sector needs a labor reform, which is a prerequisite for the effective privatization of port operation.

Structure of the Nouakchott Port Privatization:
Before privatizing, the port authority should separate the Nouakchott Port Authority into three distinct categories: port operations, port land, and port regulations. The terminal should then be divided into three entities because there are three berths and three cranes. The government could lease the berths to different potential operators to foster competition between the three berths of the port.

To upgrade the port facilities the port authorities have two options. First, Mauritania’s government could negotiate a loan with international financial institutions such as the World Bank and the African Development Bank to invest in new port facilities. This loan could be repaid by the lease of berths to shipping companies. The second option is having the port authority negotiate a leasing contract with potential operators. The contact will allow private companies to invest in new facilities; this investment becomes a loan by the private companies to the government. However, the loan will be repaid by the lease of port facilities from the government to the private companies for a fixed period of time. The lease of berths serves as securities for the private operator, for the loan to the government. The government should take the second option. If shipping companies run their own facilities the investment becomes more efficient and saves on labor.

How to deal with port workers:
Investing in new port equipment allows efficiency and saves labor. The real question is how to handle surplus workers. If the government puts the entire burden of eliminating excess labor on private entities, it is too politically risky for the private investors. Privatization becomes less attractive for the private operators. The port authority under the umbrella of the government should initiate labor reform. The government and the potential operators should sit down with trade unions and explain that the actual port situation is no longer feasible. It is dragging down both the port and the economy of the entire country. We must work together to reduce to essential labor. Workers who are close to retirement could take early retirement, those whose are not can receive training to find jobs elsewhere in the government or with private corporations.

OVERALL STRATEGY:

To privatize the Nouakchott Port Authority, the economic planning board will launch strategies aimed at the Executive power, the Unions, the Parliament and the President.

I-Executive Strategy:
The Economic Planning Board will launch a strategy aimed the executive council. As mentioned in the political section, the Prime Minister has control over the council of ministers. One way to influence the Prime Minister is to build support within the council of ministers.

Composition of the Council of Ministers:
The Prime Minister, Minister of Foreign Affairs and Cooperation, Minister of Finance, Minister of Investment, Minister of Justice and Islamic Issues, Minister of Education, Minister of Transportation, Minister of Trade, Minister of Labor and Minister of Defense.

Coalition Building:
To gain support for Nouakchott Port Privatization, the Economic Planning Board will build support with other ministers, such as the Finance Minister, the Minister of Investment, the Defense Minister, the Minister of Justice, and the Minister of Labor. This support is necessary to convince the Prime Minister of the need for Nouakchott Port privatization.

Council of Minister Strategy:
The main goal of this strategy is to convince the ministries of Finance, Investment, Transportation and other ministries that have interests in the issue, in order to put pressure on the Prime Minister for the need to privatize the Nouakchott Port.

Public Relation Strategy:
This strategy is needed for the success of the Council of Ministers’ strategy. It will convince the Finance Minister, the Transportation Minister and the Budget Minister of the need for privatizing the Nouakchott Port Authority. The key players in this strategy are the epistemic community, the representative of the World Bank in Mauritania, and the business community, particularly the shipping lines.

II- President Strategy:
Support from the President of the Republic is needed for the privatization of Nouakchott Port. Without his support, privatization will be rejected by members of the Parliament.

Coalition Building:
• Business Leaders
• Commercial Attaches of French and Spanish Embassies
• European Shipping Companies

III- Labor Strategy:
Labor unions are key players in port privatization. The Economic Planning Board has a social plan for the success of negotiations with trade unions. Without an agreement with the unions, privatization will not proceed smoothly.

IV- The Parliament Strategy:
This strategy will be carried out by the Prime Minister and the Finance Minister in the parliament.

Coalition Building:
The support of both the National Assembly and the Senate is needed to pass the bill of the Nouakchott Port privatization. The Prime Minister will try to convince his majority to vote for the reform. Also, the Economic Planning Council and various interest groups will lobby policymakers to support the government action.

CHART

PEOPLE INTERESTS OPTIONS BATNA O.CRITERIA

Strategy Cards:

YES NON UNDECIDED
Executive X
Parliament X
Unions X
Business Community X
World Bank/IMF X

EXECUTIVE STRATEGY

The main goal of this strategy is to pressure the Prime Minister of Mauritania to privatize the Nouakchott Port Authority. Without the support of the Prime Minister privatization cannot be launched.

Coalition Building:
The Economic Planning Board and the Finance Minister will build a coalition with other ministers of the council. The members of this coalition will be:

• The Budget Minister
• The Transportation Minister
• The Commerce Minister
• The Minister of the Investment

Strategy and Process:
To get the Prime Minister to agree to privatize the Nouakchott Port Authority, the Economic Planning Board should build consensus with other ministers.

-The Budget Minister:
The Economic Planning Board will meet with the Budget Minister to raise the issue of the expense of labor on the public budget. The Budget Minister’s goal is to fix the deficit in the public budget. To convince the Budget Minister to join the coalition, the Economic Planning Board will state that not only will port privatization transfer port labor expenses from the public to private sector, but the lease of the port facilities will add funds to the public budget.

-The Transportation Minister:
To convince the Transportation Minister, the Economic Planning Board will argue that port privatization will increase the efficiency and the competitiveness of the port. If shipping companies run their own facilities, their investment is more efficient and productive. Moreover, the lease of port facilities to shipping lines will increase the maritime transport. Mauritania, as a member of the International Maritime Organization, will improve by transferring its port operations to the private sector and concentrating on port regulations.

-The Commerce Minister:
The following argument is made to convince the Minister of Commerce. Mauritania’s exported products compete with the same products from other African countries. The cost of port service is part of the total cost of the final product. If shipping companies run their facilities, port operations will be more efficient and productive. Therefore, the cost of the handled products will decrease, which will affect positively the price of the final product. Products that go through the port will be more competitive in the international market, and demand for Mauritania products will increase. Consequently, trade will increase.

-Minister of Investment:
The Minister of Investment will support privatization of the Nouakchott Port Authority, because the main goal of the ministry is to attract private investment, particularly foreign direct investment. As mentioned, in 1999 foreign direct investment in Mauritania was $0. However, in 1999 foreign direct investment in Senegal was $169 million.

-Minister of Defense:
This ministry is a key player in Nouakchott Port privatization. Port privatization involves national security issues, and Nouakchott Port is the only container port in Mauritania. To convince the Defense Minister, the Economic Planning Board will explain that the government faces a deep public deficit and port privatization will bring funds to the country. This will allow the government to increase the military budget. Furthermore, the Nouakchott Port privatization concerns only port operations. Port regulations, which include the security, will not be privatized.

-Minister of Foreign affairs and the Cooperation:
In Mauritania, two ministries, the Foreign Affairs Ministry and the Finance Ministry,
deal with international financial institutions, such as the World Bank and the International Monetary Fund. To get the support of the Foreign Affairs minister, I will remind him of Mauritania’s obligations with the World Bank/ IMF to receive funds for the government’s economic plan. Among these obligations is the privatization of the Nouakchott Port Authority.

-The Minister of Justice and Islamic Issues:
In Mauritania, every year the Ministry of Justice and Islamic Issues sends several hundred people on a pilgrimage to Saudi Arabia. I will send the Minister of Justice a letter stating that, for budget crisis reasons, the Finance Ministry cannot send people on pilgrimages anymore. After that I will see him. The goal of this meeting is to get his support for the privatization, which will bring funds to the government budget. With this fund, the Finance Ministry could send people on pilgrimages again.

Opposition:
Inside the executive power, the opposition will come from the Minister of Labor, because he must deal with the trade unions. For unions, privatization means layoffs and loss of social benefits. The port workers enjoy benefits of public servants. To convince the Minister of Labor, the Economic Planning Board will suggest a social plan for the excess port labor. Those close to retirement could enter earlier retirement without losing social benefits. Those not close to retirement could train for jobs in other government enterprises or in the private sector.

Public Relation Strategy:
The key players in this strategy are the epistemic community. They will concentrate on advising the ministries. The members of this community are economic, financial, legal and technical experts on port privatization. They will publish articles and reports on the need for Nouakchott Port Privatization.

Moreover, the Economic Planning Board will meet with private interest groups such as the shipping companies and ask them to schedule meetings with the ministries concerned. During these meetings the need for port privatization will be raised. Lobbying will also include phone calls and mailings.

Important facts needed to convince the Prime Minister:

• Mauritania has obligations to the World Bank and the International Monetary Fund
• Mauritania faces a deep public budget deficit and can no longer subsidize the Port Authority
• Mauritania needs funds to finance its economic plan
• Privatization will reduce the cost of labor on the public budget
• Leasing port facilities to potential operators will bring funds to the public budget
• Privatization will attract foreign investment, introduce competition, and increase efficiency
• Privatization will insulate port activities from the political process
• An efficient port increases trade at the national and regional level, and directly or indirectly creates jobs

II- PRESIDENT STRATEGY
The President of the Republic listens to his Prime Minister, the Defense Minister and the leaders of the business community. In the previous section, we discussed how to convince the Prime Minister and the Defense Minister. Soliciting support from leaders of the business community is also very important.

III- LABOR STRATEGY
Issue: The trade unions oppose port privatization because privatization is often calculated in terms of lost jobs. To facilitate the privatization process, the government will negotiate an agreement with the labor unions. The objective of this negotiation is to cooperate to reduce redundant labor.
Preferred Outcome: To free the Nouakchott Port from social and noncommercial obligations.

Objective Criteria: Labor law and Private law.

Stakeholders: The Finance Ministry, the Labor Ministry, the shipping companies and the trade unions.

Important facts:

• The port is inefficient
• The trade volume through the port has decreased since 1989
• The port has excess dock workers
• The situation drags the port down and harms the economy of the entire country
• The current situation is not profitable for any of the parties involved in port activities

Talking points:

• 50% of the dock workers are redundant
• A compensation plan for the laying off dock workers
• A retirement plan for those who want early retirement
• A training program for those who want to shift to another sector

Proposal Agreement:

• An attractive voluntary resignation bonus formula
• New owners should extend the same benefits to employees up to retirement age that they enjoyed before privatization.
• Port status will be transformed from an autonomous public-law establishment to a limited liability company. This will transfer the status of dock workers from civil service to labor code regime.

IV- PARLIAMENT STRATEGY:

Preferred Outcome: Passing the privatization bill of the Nouakchott Port Authority.

Background: The parliament is composed of the National Assembly and the Senate. The National Assembly is composed of 79 members, 71 from the government coalition. The Senate is composed of 56 members, 55 from the government coalition.

BATNA: The president already agrees to port privatization. The Finance Ministry has the support of the Ministry Council and the business community. An agreement has already been signed with labor unions concerning the port privatization.

Lobbying Campaign: The Ministry of Finance will organize meetings with members of the parliament to get their support. The business and academic communities will give testimonies in both chambers, supporting the action of the government.

Negotiating Tactics
As stated in the legal analysis section, to pass a bill in the parliament requires greater than 50% vote in the two chambers. To convince the government majority in parliament, the Prime Minister should state that the government already has an agreement with unions on port privatization, and that the entire minister council and business community should support the bill. Finally, the president has given his support for the issue.

LABOR REFORM

Background:
In public ports with no private sector participation, state subsidies have made port workers immune from market mechanisms. Moreover, the government has established a labor regime that supports port workers’ desire for jobs and income security. The same regime gives them monopolies over port services. As a result, port workers have no commercial incentive, and are inefficient.

After introducing market based port labor reform, port workers are exposed to the market mechanism. Their jobs and incomes are tied to corporation’s needs. Ports, today, are a part of distribution systems that contribute to the competitiveness of goods on the world market. For this reason, corporations purchase finished or unfinished goods and services wherever total costs, including port costs, are lowest. Only by responding to the needs of these customers can port workers guarantee their jobs and incomes. The goal of this commercially oriented port labor reform is to make workers accept modern technologies and institutional arrangements that enable productivity to increase and costs to decrease. This inevitably will generate job insecurity.

A-The needs of Commercially Oriented Port Labor Reform:

1- Modern Technology:
Investments in new technology are necessary to make ports efficient and attractive to shipping companies, efficient. For many years, governments in developing countries have supported labor in the name of job security and sought to hold back technological innovation.

According to the Pacific Maritime Association, loading and dispatching, containerization, computers, and telecommunication have revolutionized port operations. These technological advances have intensified competition between ports by eliminating monopoly situations. Customers have increased commercial pressure on ports to improve productivity and bring down labor costs.

For example, in the 1950s the handling of dry-bulk cargoes required 20 men for each vessel’s cargo holds. Twenty years later these cargoes were handled at specialized terminals and much larger cargo could be dispatched using three men for the entire vessel (Pacific Maritime Association).

Impact of containerization on port-worker productivity:
Year Man-Hours Worked
(Million) Cargo tons Handled
(Million) Productivity
(tons/man-hour)
1960 29.1 28.5 0.98
1980 18.5 113.7 6.15
1987 17.1 157.8 9.23
1993 15.7 183.6 11.69
1994 17.0 198.8 11.69
1995 17.9 220.2 12.30
1996 18.0 215.5 11.97
(Source: Pacific Maritime Association.)

These technological innovations have satisfied each group of the port community. Unions seek to maintain high levels of employment and benefits, carriers seek to reduce vessel time in port, port managers seek to achieve a reasonable return on investments, and port customer groups seek to reduce charges and eliminate unnecessary delays (Pacific Maritime Association).

2-Corporatization Reform:
Corporatization is needed to convert public enterprise organized under public law into companies organized under private law (Guislain, 1997, p.101). The University of Brussels privatization expert Pierre Guislain has done a fascinating study entitled “A Strategic, Legal and Institutional Analysis of International Experience’’ explaining that corporatization law will not become effective until after the amendment of the public enterprise status, which is typically done within a time limit specified by the law.

The objectives of corporatization are to improve economic performance and enhance port accountability. Further objectives are: to free the port of social and non-commercial obligations, to effect a clear separation between ownership and management of the port, and to empower the manager to run the port as commercial entity.

As written in the Privatization Challenge, corporatization or transformation into a commercial company should not be seen as simply a legal step. It usually requires a broad range of company restructuring measures, such as deregulation and financial restructuring.

3- Deregulation:
The objective of deregulation is to attract investors into port operation activities. For this reason Mauritania’s government should eliminate rules, regulations, subsidies and sociopolitical obligations that obstruct participation of the private sector in port activities. The removal of such obstacles will give private port operators more freedom to respond to the market mechanism (supply/demand) of the global economy. If deregulation is not accompanied by antimonopoly laws, private terminal operators will attempt to obtain monopoly control over the port operations.

4- Antimonopoly Commission:
The role of the antimonopoly commission is to protect customers from monopoly practices by private terminal operators, exporters/importers associations, and unions. Moreover, the antimonopoly commission will enhance competition and will enforce property rights over port zone activity. This commission will prevent the public sector monopoly from being handed over to private interests because ports have natural monopolies. Moreover, the antimonopoly commission will investigate claims of abuses by dominant firms. Finally, this commission will adopt antimonopoly laws that are applied to terminal operators and dock labor alike, to ensure market mechanisms are used to compete, and not to create cartels.

5-Financial Restructuring Measures:
According to Pierre Guislain, an expert in privatization, financial restructuring measures require abolishing discriminatory practices. Discriminatory practices include such financial privileges as subsidies, tax and customs exemptions, and state guarantees on borrowing. Financial restructuring also includes abolishing such social services as health, education, and housing for employee families. Financial measures will clean up the balance sheet by removing the excess debt, evaluating assets and liabilities, and arranging new agreements with financial institutions, especially creditors banks. Powerful people are needed to execute this restructuring process, which is required for market based port labor reform. Generally, the body that supervises the operations recruits new managers committed to the restructuring measure process because former managers do not have the skills required to manage the process, or they do not support the restructuring and private sector participation in port activities (Guislain, 1997, p.97).

A- The objectives of Market Based Port Labor Reform:
The first aim of market-based reform is to preserve competition by avoiding monopoly control of port services, whether by private terminal operators or labor unions. Without private sector participation in port services, unions will have little incentive to accept market-based reform. Without market oriented reform, no commercial basis for private sector participation can be established.

The second aim of market-based reform is to expose dock workers to the market mechanism of the global economy. Dock worker wages and benefits will become tied to the interests of port customers and private terminal operators. Dock workers will adapt to new technology through retraining programs, which will cut costs and improve productivity. Another objective of labor reform is to enhance the collaboration between unions and the private sector on operational problems. With globalization, the commercial goals of the private sector and social goals of dock workers have become interdependent. Dock workers are the employees of private terminal operators, and work with them to solve productivity and cost problems. Terminal operators seek to motivate dock workers by offering market wages and benefits. This will enhance the competitiveness of exports on the international markets (ECLAC, 1999, p.49).

C- Market based reform commission:
The government should set up a commission to develop a market-based labor regime. This commission should be composed by officials from the Ministries of Finance, Trade, Transport and Labor, and private terminal operators, unions, port administrations, and exporters/importers. The mandate of this commission is to include market-based labor reform. To achieve port labor reform based on consensus, the commission must listen not only to unions but also to customers and private terminal operators. The commission should organize seminars and use the media to convince the union that market-based reform is inevitable, compensations will be paid, and the country will benefit. Moreover, the committee should encourage that joint committees between unions and private terminal operators resolve operational problems and disputes without government intervention. Finally, the commission should give the government a regulatory and promotional role in the port. In conclusion, the market labor reform commission should also set up training programs, placement services for laid off dock workers, and early retirement plans. Placement services should be linked to a worker’s successful completion of training programs leading to jobs either in the port sector or other industries.

D- Examples of results of port labor reforms:
Chile: Compensation paid to workers laid off in Chilean ports as result of the deregulation of the dock labor in 1981 amounted to a total of US $30 million. Payments per worker averaged US $14,300. By 1982 increased productivity had generated savings of US $40 million. These economies benefited port operators as well as exporters, importers and carriers. In 1995, the economies achieved in public-sector ports in Chile increased to US $140 million (source: World Bank).

New-Zealand: The government of New Zealand paid US $28 million to compensate workers made redundant. By the end of 1990 the direct savings to port customers amounted to US $56 million. For every job lost in New-Zealand’s docks, the Government estimated that 10 were generated in other sectors by eliminating cost and productivity bottlenecks caused by the ports (source: World Bank).

E- Consequences of Market-Based Labor Reform:
1- Political:
The government will not participate directly in relations between port labor and private terminal operators. The collective negotiation will be bipartite (employers-unions) rather than tripartite (unions-government-employers), due the new relationship between employers and workers that arises from market-based labor reform. The government will abstain from interfering in port labor relations, except in its capacity as regulators, owners and investment promoters. The regulatory function of the government is confined to establishing and protecting competition, and to intervening to help resolve regulatory disputes. Finally, the government will no longer yield to the demands of port unions. Port administration will not participate in port activities as operators and employers. In this context, collaboration and trust between port unions and private terminal operators will be fostered, which will help improve workers wages, benefits and job security while helping private terminal operators achieve commercial goals.

2- Economic:
The adoption of market-oriented port labor reform will expose dock-workers to the competition of the global economy, where the demand for labor services is derived from the volume of goods handled. The new labor regime will transform ports from sites where workers’ wages and benefits are given priority by governments, to sites where port labor suits customers’ needs by providing services that are innovative, productive and efficient. The government will no longer absorb low labor productivity and provide market distorting subsidies.

In the past, the government reserved the domestic market for national entrepreneurs and guaranteed jobs and benefits for dock workers without acquiring new technology, cutting costs or improving productivity. These policies raised the price of imported products in the national market. Adopting a market oriented labor regime will motivate workers to respond to customers’ needs. Private terminal operators will not have to pay dock-workers for their political value of their services, but will pay market determined wages, no more and no less (ECLAC, 1999, p.49).

3- Social:
Collective bargaining will shift from tripartite (unions-government-employers) to bipartite (unions-employers). This new situation will change the behaviors of the employers and workers. Private terminal operators will see port labor as a commercial tool to enhance profits and increase competitiveness, while unions will see job security and purchasing power linked to the commercial goals of employers. To achieve these commercial goals, workers and employers must collaborate.

Port workers have valuable experience that can help improve productivity and lower costs. Employers can provide training to dock workers, which will increase their capacity to respond to the market mechanism, generating greater value-added for port employers and customers. In conclusion, in an open and competitive environment, workers and employers must collaborate not only to increase productivity and cut costs, but also to increase income and benefits. Moreover, employers understand that commercial success is closely linked to the social goals of workers (loyalty and welfare). Finally, dock-workers will understand in a competitive atmosphere that the security of their benefits and jobs depends on commercial success.

Appendix A
Op-Ed Piece for Mauritania’s Newspaper

There are three main aims of Nouakchott Port privatization. First is attracting foreign direct investment to increase productivity and competitiveness. Products that pass through the port must compete in the global market and port services must reflect international levels of efficiency. Second, privatization aims to increase port efficiency, to increase trade at the national and regional levels, and directly or indirectly to create jobs. Lastly, privatization aims to expose port workers and other members of the port community to the market mechanism of the global economy where competition is the rule.

Since its inauguration in 1984, the Port of Nouakchott has been run as a publicly owned monopoly. Unfortunately, the lack of investment in new technology caused the port to become costly and inefficient. Moreover, the monopoly decreased competitiveness of the port in West Africa. The Nouakchott Port has lost market share to the Port of Dakar (Senegal) and the Port of Abidjan (Ivory Cost).

The lack of investment in port facilities is costly to trade in Mauritania. We know that Nouakchott Port uses the technology from 1980, with a productivity of 6.23 tons per man-hour. However, today the average port technology has a productivity of 12.30 tons per man-hour. The inefficiency of the productivity at the Nouakchott Port is 910.05 tons per man-hour. In the global market, where competition is the rule, ports that are inefficient due to obsolete facilities stall economic development.

Liberalizing port activities will bring private sector investment. This investment will upgrade the existing facilities, which will increase the efficiency of the port. Moreover, international shipping companies will bring management skills and expertise to the Port of Nouakchott. Often subsidiaries of shipping companies have experts who know how to meet the increasing demands on port users.

Once again, port activities play an important role in the development of the economy of any coastal country, especially a country like Mauritania that has adopted an export oriented economy. If a port is efficient and reliable, the overall economy of that country is positively affected. An active port increases trade at the national and regional level.

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