With Yeltsin on vacation, legislature strips his privatization agency of power Move by foes viewed as delaying tactic

July 22, 1993|By Los Angeles Times

MOSCOW -- The Russian legislature dealt its most direct challenge to President Boris N. Yeltsin's free-market reforms yesterday by voting to strip his privatization agency of power to continue selling off state-owned enterprises.

The move by the Supreme Soviet was not expected to halt the mass auctions of shares in these companies, but reformers said it could give ex-Communist apparatchiks still entrenched in the government bureaucracy enough legal leverage to bog the process down.

Acting while Mr. Yeltsin is away on vacation, the Supreme Soviet authorized government industries and ministries to take over the powers of his State Property Committee, the most dynamic reform agency of the post-Soviet era, and to carry out privatization as they see fit.

The Property Committee promptly issued a statement that it has no intention of giving up power. But its chairman, Deputy Prime Minister Anatoly B. Chubais, warned that conservatives could "sabotage" privatization and "deal a blow to millions of people" who want to become capitalists.

Created by Mr. Yeltsin and approved by the legislature as the Soviet Union was collapsing in December 1991, the Property Committee first distributed a free voucher to each Russian citizen, then began accepting those vouchers in exchange for shares in state companies.

Mr. Chubais said Tuesday that 57 percent of the country's smaller state-owned enterprises and about a third of the larger ones -- more than 60,000 companies in all -- have been sold to private shareholders in an auction unprecedented in ambition and scale.

Such former Soviet show cases as the Volgograd tractor plant and the ZIL factory that made limousines for the Communist elite are now joint stock companies.

Public interest in the auctions is growing: The vouchers, after dipping below half their original face value of 10,000 rubles apiece, now trade for 10,500 -- about $10 at the current exchange rate.

The Supreme Soviet and its parent body, the Congress of People's Deputies, never approved the selloff and continually snipe at it. They claim the process is corrupt and chaotic and tends to concentrate wealth among a small class of the nouveau riche.

On Tuesday, the Supreme Soviet voted to annul a May 8 decree, issued by Mr. Yeltsin after he won a popular vote of confidence in his reforms, to speed up the auctions and force reluctant factory managers to take part.

Then came yesterday's action, throwing the entire program into uncertainty.

Sergei A. Polozkhov, a centrist lawmaker, said: "No one wants to curb the privatization process. We are just improving it. It has become evident that the Property Committee was overwhelmed with the work . . ."

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