Soviet lawmakers OK plan for market in landslide vote

October 20, 1990|By Scott Shane | Scott Shane,Moscow Bureau of The Sun

MOSCOW -- After months of indecision over economic reform, the Soviet parliament overwhelmingly approved guidelines yesterday for the transition to a market economy proposed by President Mikhail S. Gorbachev.

"Life itself has led us to the transition to a market," Mr. Gorbachev told the Supreme Soviet before the vote. "The market is the path to improving our well-being."

There is no alternative to the privatization of state-owned enterprises and the gradual freeing of prices envisioned by the guidelines, the Soviet president said. Change could be postponed for a few more years only by "selling off the country's natural wealth while falling steadily farther and farther behind the developed Western countries," he said.

The final vote was 333 to 12, with 34 abstentions, after a day of relatively calm debate.

The lopsided vote reflected the very general nature of the guidelines. The 66-page document did not force legislators to confront specifically the hard choices that almost certainly lie ahead: dividing wealth and power between the republics and the union; dismantling the central ministerial bureaucracy; slashing the budget in politically sensitive areas ranging from defense to food subsidies; and throwing millions out of work at a time of rising prices.

Some deputies said the guidelines are so vague that they cannot or will not be carried out successfully by the government of Prime Minister Nikolai I. Ryzhkov. Tarred with five years of economic failure, he enjoys little public support and has come only reluctantly to accept the necessity of market relations.

"That's the trouble with these guidelines -- they could be a catastrophe or they could work, depending on who implements them," said Anatoly A. Sobchak, a deputy and the mayor of Leningrad. "If they are implemented by this government [of Mr. Ryzhkov], they have no chance of success."

Mr. Ryzhkov has turned out to be a political survivor far more durable than it appeared a month ago, when tens of thousands of demonstrators and the country's most popular politicians joined in calling for his resignation.

The radical Interregional Deputies Group proposed yesterday replacing the Ryzhkov government with a coalition overseeing a trimmed-down bureaucracy. But Mr. Gorbachev came to Mr. Ryzhkov's defense, and the motion failed.

Some deputies said the guidelines are doomed unless an accommodation is reached with Russian Federation leader Boris Yeltsin, who attacked the guidelines Tuesday as a "fraud" and "catastrophe." Mr. Gorbachev charged yesterday that Mr. Yeltsin's statement was a politically motivated maneuver to avoid responsibility for coming hard times, but he added that the Russian leader may have been misled by his advisers.

Mr. Yeltsin was reported to be resting outside Moscow and did not immediately comment on the vote. He has still not fully recovered from injuries suffered in a car accident last month.

Abel G. Aganbegyan, the economist who drafted the guidelines, said Mr. Yeltsin is wrong to believe that they block the Russian parliament's decision to start implementing Nov. 1 a radical, 500-day reform plan. In fact, he claimed, the guidelines leave every republic free to adopt its own specific economic program. As for Russia and the 500-day plan, "I'd advise them to begin Oct. 25," Mr. Aganbegyan joked.

Even as he made a final plea for a plan that includes the trappings of capitalism -- private property, stock companies, free prices, unemployment -- Mr. Gorbachev insisted the country was simply perfecting socialism. "Despite all deformations, all the losses and the dramatic events our people have endured, the socialist idea is alive and deep-rooted in their souls," he said.

The "Basic Guidelines for Stabilization of the Economy and Transition to a Market Economy" set four stages for the reform without setting specific tactics or target dates:

First, cut the budget deficit and money supply to strengthen the ruble and control inflation. Begin privatization of enterprises and land reform.

Second, start to free prices for up to 70 percent of goods, leaving it to the republics to decide how to regulate prices. For people with lower incomes, index wages and pensions to keep up with inflation. Accelerate privatization.

Third, create a housing market by selling or giving away state-owned housing. Free wages from state control except for a legal minimum wage and cancel the residence-permission system to allow people to move freely. Adjust taxes and interest rates.

Fourth, complete stabilization of the economy with anti-monopoly measures and further privatization. Achieve "internal convertibility" of ruble -- free trade in foreign currency within the Soviet Union.

As the guidelines were passed, the latest economic statistics reflected the deepening crisis. In the first nine months of the year, the gross national product and labor productivity both fell by 1.5 percent while wages increased by 14 percent, the Tass news agency reported last night.

Most striking, 70 percent more money was released into circulation in the first nine months of 1990 than in the same period of 1989. This fueled an official inflation rate that reached 9 percent despite strict controls on most prices, Tass said.

Mr. Gorbachev said yesterday that the "most serious lapse" of the five years of perestroika was that "we lost control of the financial situation in the country."

He said no real improvement will be possible until the printing presses for money operate more slowly than the machines that turn out shoes, textiles and other consumer goods.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.