Is the Israel Post being privatized? Not Really

Why did the government choose to promote the privatization of the Post Office, a month before the elections? Do our politicians finally understand the virtue of the market and want to serve their citizens better?

When looking more carefully at the privatization reform, it becomes clear that our representatives have not yet pass Economics 101. In this reform, the State, now the sole owner of the Israel Post, will relinquish only 40% to the private sector, 20% to a strategic investor, and another 20% to the public. In other words, the Israeli government is still controlling 60% of Post.

More worrisome than ownership title is that no competition has been introduced by this reform. Moving from a public monopoly to a private/public one will not improve the market conditions. The government still has no intention to allow new entrants and competitors in the mail and parcel delivery service; the reason for this announcement is ironically populist.

The Israeli Post is one of the most hated state monopolies. Israelis have no choice but to use their terrible service for parcel deliveries facing excruciating delays and even total collapse during pick periods. In 2019 according to the State Comptroller report, 80% of Israelis reported that a product purchased overseas did not reach them.

The public wants privatization and competition, the government is fully conscious that reforms have to be done in that sector. Still, they are not willing to go against special interest groups, break the monopoly and introduce a real liberalization. Real privatization of the Israel Post Office will have to be implemented by a leader that isn't afraid to face powerful unions.

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