Israel Post 311.
(photo credit: Marc Israel Sellem / The Jerusalem Post)
In theory, a globalized economy coupled with extensive privatization promises consumers lower prices, better services and freer access to goods by dint of competition and discontinuation of protectionist restrictions. The boom in online retailing attests to the new, improved worldwide trade environment. We, the people, are supposed to be the direct beneficiaries.
Israel, however, sometimes appears bent on proving precisely the opposite. In our case, privatization can actually lead to higher costs, discourage competition, limit access and in effect impose unprecedented restrictions. A vexing case in point is the Israel Postal Company (IPC), which replaced the state postal authority.
IPC remains state-owned but operates as an independent for-profit business. Among the “improvements” it has recently announced to the public is the introduction, from January 2011, of a minimum NIS 38 “service fee” to be paid upon the receipt of any package from abroad.
The levy is mandatory regardless of the value of the package’s contents and even if said package is exempt from customs duty. The fee could rise significantly depending on “the amount of work” involved in processing the package. Since such determination is likely to be inexact and not based on objective criteria, the charge may ultimately hinge on the whims of individual postal employees.
These levies could be hiked in future, given the patent lack of impartial benchmarks and vague fee-fixing standards. Hypothetically, IPC could cover deficits or boost profits via capricious increases.
The pretext is that the IPC had an unfair advantage over private delivery firms, all of whose parcels go through customs inspection, mandating service fees. Therefore, all IPC parcels will also go through customs and be processed by an outside contractor at the public’s expense.
The Israeli solution of making the postal services more expensive is the
exact opposite of the American approach. Even a free-enterprise
proponent like the US didn’t expose basic postal services to
competition, lest, for example, remote locales be neglected. The only
exceptions were parcel and express services, but only on condition that
they charge significantly higher fees than the post office and meet set
America wishes to give its postal service an advantage.Israel is intent on eradicating said advantage.
Parcels valued at $50 or less will be charged NIS 38, more than $10 at
today’s exchange rate. Higher valuations will mean higher fees, with
customs and VAT surcharges to boot.
THE COMPULSORY inspection of everything will significantly delay
deliveries. Customers ordering from firms like Amazon, eBay, and so on
might end up paying more in surcharges than for their purchases.
Requiring remuneration from a passive addressee is disgraceful,
especially in a country full of immigrants with ongoing ties abroad, and
in the age of online shopping.
Potentially this is worse than what yesteryear’s austerity-gripped
Israel knew. Even then, books, for instance, were duty-free, as befits
the People of the Book.
The Communications Ministry and MKs Meir Sheetrit and Robert Ilatov have
come out against the levies. We support their fight. The government
must step in – both as IPC’s owner and as protector of the consumer.
Since basic postal services cannot be easily opened to outright
competition, consumers remain dependent on the post office no matter
what its formal name, status and organizational structure. Effectively
they can be held hostage. The government, therefore, retains at least a
regulatory obligation. Its duty is to prevent its affiliate, even if
classified as an independent establishment, from holding the public to
The public has no viable alternatives to basic mail service, making it vulnerable to what amounts to extortion.
Indeed in the very few cases internationally of postal service
privatization (never full), no meaningful competition ensued, while
overall cost of services to consumers increased.
While publicly owned postal services worldwide continue to lose
significant chunks of their market share to private carriers, these
generally are too expensive for individuals and households in everyday
IPC knows that most ordinary folks remain its captive clients, a fact which renders its new demands particularly unacceptable.