Vague, 500-day transition to market economy under way today in Russia But republic remains at odds with Kremlin

November 01, 1990|By Scott Shane | Scott Shane,Moscow Bureau of The Sun

MOSCOW -- Most Russians will be too busy scouring the stores for food to notice, but today begins the official countdown on Russia's 500-day march toward a market economy.

Russian Federation Prime Minister Ivan S. Silayev told the parliament of the largest Soviet republic yesterday that the plan would be launched despite the unresolved dispute with the Soviet government over who controls what.

The 500-day plan envisions extensive denationalization of commerce, industry and agriculture, free prices for most goods, and austerity measures to cut the state budget deficit. But parts of the plan -- slashing the KGB and defense budgets and dismantling the central ministries, for instance -- are not within the power of Russia to achieve on its own.

Mr. Silayev said the "basic guidelines" for economic reform passed by the Soviet parliament Oct. 19 saddle the republics with responsibility "for the social situation of the workers and for the consumer market."

At the same time, he said, the guidelines envisage "an extreme centralization of material, hard-currency and other financial resources, depriving republics of the possibility to ensure the accomplishment of tasks entrusted to them."

Nonetheless, Mr. Silayev said that much of the 500-day program could and would be implemented in Russia -- most importantly, its call for privatization of housing, land, stores and many industrial enterprises.

In its latest attempt to enforce the sovereignty it declared in May, the Russian Supreme Soviet overwhelmingly approved yesterday a law on economic sovereignty. The law declares that natural resources as well as buildings and equipment on Russian territory are the property of the peoples of Russia -- not of the central Soviet ministries that traditionally have controlled the economy.

But like many such laws, it lacks a specific plan for enforcement, TC thus running the risk that it will remain just on paper.

Hopes were high in August and early September that both the Soviet Union's parliament and that of the giant Russian republic would pass the 500-day plan, worked out by a team of economists appointed by Soviet President Mikhail S. Gorbachev and Russian President Boris N. Yeltsin. It is often called the "Shatalin-Yavlinsky plan," after the names of top economic advisers of the two leaders.

But in October, under pressure from Soviet Prime Minister Nikolai I. Ryzhkov and other conservatives, Mr. Gorbachev endorsed the compromise "guidelines." A furious Mr. Yeltsin denounced them as a recipe for "catastrophe."

Mr. Gorbachev and his advisers say the guidelines give the republics the freedom to design their own economic programs with consideration of local traditions and problems.

Russian officials reply that by leaving the powerful ministerial bureaucracy of Mr. Ryzhkov virtually intact, the guidelines make it possible for the central ministries to sabotage virtually any republican initiative.

The result is virtual warfare between union and Russian officials on many matters. Soviet bank employees have been told they will be dismissed if they obey orders from Russian officials. Russian protests against union sales of oil, gold, diamonds and other resources from Russian territory have been virtually ignored by union officials.

Russian Vice President Ruslan Khasbulatov said yesterday that the Soviet customs service was holding up some shipments of goods bound for Russian organizations. He said Soviet Finance Minister Valentin Pavlov has been discouraging foreign businessmen from negotiating trade and investment deals with Russian officials.

Meanwhile, economic figures released yesterday document the continuing chief ailment of the Russian and Soviet economies: people's buying power outstripping the supply of goods. This fundamental imbalance explains the paradox that with production remaining roughly the same or declining slightly, shortages grow constantly worse.

In the Russian Federation in the first nine months of the year, the ruble output of consumer goods increased by 5.8 percent -- which means, once inflation is considered, that production probably was stagnant or fell slightly.

But cash income rose by 14 percent, according to official statistics reported by the news agency Tass. So the increase in income was enough to swallow instantly any new production and produce even louder complaints.

The first 100 days of the 500-day economic plan are to consist of a crash stabilization program to bolster the ruble. It includes budget-balancing measures, including such politically sensitive proposals as a cutoff of subsidies to most money-losing factories and state farms. It calls for replacement of the current centralized banking system with a U.S.-style federal reserve system.

More than half of state enterprises should be converted to joint stock companies by January, the plan says, and state farm employees should be permitted to leave and take a piece of land with them.

Although many Western and Soviet economists consider it the best Soviet reform plan they have seen, the 500-day plan has come in for considerable criticism. Critics have pointed out that while listing noble goals, the plan offers little in the way of specific ways to reach the goals.

Mr. Silayev said yesterday that under present circumstances, the 100-day stabilization portion of the plan cannot be carried out successfully. But he was not specific about what circumstances he had in mind.

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