Privatising Rail in Europe


January 23, 2008 17:55 | by Alex Gordon

Despite the disastrous results of rail privatisation in Britain, the EU is rolling out the same 'liberalisation' model across the bloc, writes Alex Gordon

After the European Parliament recently voted to open international EU rail passenger traffic to 'market competition' by 2010, Luca Cordero di Montezemolo - chairman of Ferrari and Fiat - announced plans to launch Europe's first private, high-speed train service.

Taking advantage of the EU's so-called "third rail package" rubberstamped on September 25, Montezemolo and co are set to announce the service called NTV. Alstom, Siemens and Bombardier are on a shortlist to build the trains, which have been made possible by EU 'liberalisation' legislation and are scheduled to start running towards the end of 2010. Montezemolo is chairman of Confindustria, the main Italian employers' body and his partners include industrialist Gianni Punzo and Giuseppe Sciarrone, former head of passenger services with the state-owned Trenitalia operator. Sciarrone has been the chief executive of Rail Traction Company, Italy's private rail freight operator, founded when the EU 'liberalised' rail freight.

Private monopoly

These latest EU diktats directly benefit Europe's largest rail interests and assist the development of private rail monopolies, particularly in Germany.

German rail operator Deutsche Bahn (DB) has extended its dominance of the sector buying up rail freight companies in Poland, Slovakia, Netherlands, Denmark, Spain and most recently, English, Welsh, Scottish Railways Ltd with a 75 per cent share of the UK rail freight market. DB is due to be privatised, with an initial public offering of 30 per cent expected this year. Austria's national railway company (OeBB) also confirmed that it has had discussions with Germany's Deutsche Bahn on the potential for a strategic partnership between the two rail operators.

EU spin

The EU spin machine portrayed this major step towards a fully privatised passenger rail market as a 'victory for consumers', claiming new rights for passenger compensation. However, the small print reveals that such compensation is triggered only if train operators are held responsible for delays, not if they are caused by engineering work, points or signal failures or bad weather.

EU Directive 91/440/EEC, which mandates member states to create a "vertical split" between train operations and rail infrastructure, means that severe rail disruption, such as swept parts of the UK this summer, would almost certainly not leave rail companies facing compensation claims.

The 'liberalisation' measures in the EU's so-called 'third rail package' also includes common EU rules for train driver certification covering medical fitness and professional skills to facilitate "professional mobility and cross-border services".


Train companies that operate over international routes from 2010 will also be able to practise 'cabotage' - meaning to stop and take on passengers in countries they cross. This latest 'package' amending Directive 91/440/EEC marks the second major step in implementing EU rail privatisation since rail freight was liberalised in 2003, when trans-Europe networks were opened to competition, followed by international freight and domestic networks from March 31, 2006.

A similar staged 'liberalisation' process is now being applied to passenger rail regardless of the consequences. The European Commission will now report on the next stage of 'liberalising' domestic rail services by 31 December 2012. This hugely complicated process, proposed by the German MEP Georg Jarzembowski, amounts to little more than the enforced mass privatisation of the entire rail sector across the EU.


The European Parliament left group, the GUE/NGL has opposed the introduction of competition for international rail services, arguing that once again hardline neo-liberal ideology, promoted by corporate lobbyists, had prevailed. GUE/NGL President Francis Wurtz described the "Jarzembowski report" as a new stage in the politics of "liberalisation at all costs" without serious studies of the effects of 'liberalisation' such as the disastrous experience of rail privatisation in the UK.

He told the European Parliament that such a path was "dangerous for public employment and service and a path subjected to an obsession with competition and the market". However, Jarzembowski, an MEP from German Chancellor Angela Merkel's right wing CDU, assumed that "national governments are going to apply the new Regulation as soon as possible also for domestic trains. We will be able to do away with the notorious change of train drivers at borders".

It is easy to see why DB bosses would welcome interoperability and a common EU train driver licence. The newspaper Bild am Sonntag has reported that DB is planning to hire foreign train drivers from Austria and Switzerland to break a national rail strike by the GDL drivers' union.

"We plan to hire locomotive drivers from other countries such as Austria and Switzerland to help out," a senior manager told the newspaper.

Business railway

The right wing Belgian MEP Dirk Sterckx described the latest agreement as a "serious step" towards a European railway market.

"European railway companies have to organise themselves to face international competition, national administrations will have to act more as regulators instead of financers of national monopolies," he said.

The third rail package is a dramatic escalation of the drive to transform rail services from a social railway towards a rail business with an investment bias towards freight and business travel and away from regional and urban social rail services.

While Brussels may dress 'rail packages' and privatisation up as a matter of consumer rights, competitiveness or 'liberalisation', in fact, it marks a decisive turn by the EU towards consolidation of the neo-liberal project embodied in the Single European Act of 1986 and further developed through the Lisbon Strategy in March 2000.

It is a strategy that is also reflected in the EU Constitution rejected in 2005 and now being undemocratically resurrected. One of the 52 areas where all national vetoes will be abolished, as envisaged in the Constitution, is transport including rail.

The effect of EU rail privatisation will increase downward pressure on jobs and wages in the rail sector and inevitably undermine safety. For European rail unions a serious strategy to defeat the social dumping which will undoubtedly follow is long overdue.

Alex Gordon is an executive committee member of the British transport workers' union the RMT.

See also