Yeltsin declares 'victory' after ouster effort fails Russia's struggle focuses on control of its vast wealth TURMOIL IN RUSSIA

March 29, 1993|By Kathy Lally | Kathy Lally,Moscow Bureau

MOSCOW -- The struggle over who will control Russia, often cast as a brutal battle between Communists and reformers, goes far beyond convenient ideological rhetoric. At the heart of the fight is a challenge any capitalist can understand:

Who will inherit the enormous wealth of Russia?

"It's a struggle for the redistribution of property," Alexander Yakovlev, a former adviser to Mikhail S. Gorbachev, says of the confrontation between President Boris N. Yeltsin and the Russian parliament.

"The parliament is trying to redistribute power in advance of the redistribution of property. And I am afraid that not everyone understands clearly what is happening."

In this struggle, the old power structure is as eager to get its hands on property as the new reformers. The question is not whether the nation's resources will be privatized, but how the process will proceed and who will end up in charge, the new reformers or the nomenklatura that ran the old system.

"This is an economic struggle for billions of dollars," says Pyotr V. Gladkov, president of the Russian Scientific Fund and a public policy analyst. "Communism is gone. It has died. The struggle in parliament is over who will control privatization."

It is an extraordinary opportunity, Mr. Gladkov says, and it's no wonder the combatants are willing to risk anything -- perhaps even the civil war each accuses the other of provoking.

The resources being privatized include everything from Russia's potentially rich oil industry, to 46,000 big enterprises stretching across this big land, to farms growing wheat for the daily bread.

"There is one chance in a millennium to control the privatization of a huge, rich land like Russia," he says. "And in the struggle for that, any means will be used."

Irina Chernova, director of privatization in Serpukhov, an industrial city 60 miles from Moscow, says it is in the interests of the old guard to preserve the current instability and state of confrontation to delay privatization as long as possible.

"They love this interim stage," Mrs. Chernova says. "Once everything belongs to somebody there will be nothing left to steal.

"They don't want to go back before 1985, but they don't want to go ahead. There's too much to steal right now."

In Serpukhov, as elsewhere, the dispute comes down to who will end up running the farms and businesses -- the old party trustees still in charge or new, emerging entrepreneurs. Only a few die-hard Communists remain opposed to privatization in principle.

"A power vacuum provides a good time for making profits," Mr. Gladkov says.

Many businesses and enterprises have already been selected for privatization, and the ordinary person has been able to start investing in them with the vouchers Mr. Yeltsin's government distributed to the entire population last year.

But this is a hugely complicated process, and even in cities where it has been moving relatively quickly, most property remains up for grabs.

For example, in Nizhny Novgorod, Russia's third-largest city, the total assets are estimated at 20 billion rubles, but only 3.7 billion rubles' worth of businesses have been earmarked for privatization.

It will take years to complete privatization, says Boris Nemtsov, governor of the region.

"During the course of 10 years," he says, "3,000 major industrial enterprises have been made private all over the world. Of these, only some 150 cases were successful. In Russia, there are

46,000 big enterprises, so it is physically impossible to do them all in a year."

HTC No decisions have been made on what to do with the vast natural resources industries and the military-industrial complex.

Nor has the simple right to own a piece of land been established. Supporters of that right collected enough signatures last year to put the issue to referendum, but the parliament has not acted on the request.

Mr. Yeltsin originally wanted the question included in the referendum he is proposing, but he dropped the demand in an effort to get a simpler vote-of-confidence referendum approved by the recalcitrant Congress.

Proponents of speedy reform and privatization say that the parliament also is sandbagging reform by allowing the Central Bank, which answers to parliament rather than the president, to print an endless supply of rubles, fueling inflation.

The Central Bank is essentially doing what it did under the old command economy, issuing credits to unprofitable enterprises to keep them going.

The old guard, Mr. Gladkov says, wants to get control of industry as it is privatized. And having the Central Bank pay their debts makes the industries lucrative prospects.

At the same time, the Central Bank support is in line with conservative thinking in parliament -- that people need to be protected from high unemployment by keeping the old state enterprises afloat.

Instead of blaming the bank for 25-percent-a-month inflation because it keeps printing money, the parliament blames Mr. Yeltsin's shock therapy economic policies.

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