Russia's post-voucher privatization plan, enacted Friday by presidential decree, disregards most compromises reached last week with the largely conservative State Duma, despite official assurances to the contrary.
The text of the program, drafted by privatization chief Anatoly Chubais and obtained by The Moscow Times on Monday, allows the sale of commercial land for the first time since 1917, a move that hardline deputies fervently opposed. Last week, Chubais had agreed to a compromise plan with deputies that postponed land sell-offs until the Duma passed a land code containing ownership rules.
Chubais also retracted a concession that allowed the Duma to approve the privatization of the country's largest companies.
Although presidential spokesman Vyacheslav Kostikov said that the approved program took the Duma's demands into account, the only significant concession that remains is the provision that educational and medical institutions will not be privatized until the parliament passes a special law.
"My reaction to this is regret," said Anatoly Peshkov, an aide to the Duma's industry committee chairman and a former member of the conciliatory commission that won the concessions from Chubais. "We had a balanced plan, we had taken out everything that was ill-considered -- but both sides' political ambitions outweighed practical concerns."
Despite the compromise, the Duma turned down the program last Thursday.
Peshkov said the deputies had had no time to study the compromise draft because it was presented just one day before the parliament closed for summer recess. He said that their vote against the program reflected their irritation with Chubais, who had said from the start that if parliament voted down the plan Yeltsin would impose it by personal order.
"When a compromise was finally in sight, the deputies had too little time to get over the initial spirit of confrontation," Peshkov said.
When the deputies come back from holidays in October, they are likely to resume their fight with the government over a number of major points of the approved program.
The sale of land on which factories and other structures are built is the major point of contention. According to the program, the entire territory of an enterprise can now be sold, and the owner of the buildings has a priority right to purchase it. Local authorities are forbidden to deny the sale of land to them, except in extremely rare cases when a certain plot of land is excluded from privatization by federal law.
The privatized land can only be taken away through a court of law and owners are to be reimbursed if local authorities use the property to build roads, lay cables or install new water pipes.
"This is just another revolutionary measure that is more symbolic than practical," Peshkov said of the land sell-off. "Nobody has any idea of the real price of land, and when mass land speculation begins, it will irritate people."
Despite the fact that few political compromises made it into the final version of the plan, its authors have built in some provisions to make it more socially-oriented than the initial concept presented by Chubais in May.
Though the privatization plan favors big investors who can shell out large amounts of money that factories need to restructure, workers of a factory still have many privileges when they buy stock in their companies.
According to different versions of privatization available to companies, workers can buy up to 20 percent of the company that employs them at a 30 percent discount or 51 percent at the market price.
One of the options even allows a company to give away 25 percent of non-voting stock to workers for free and sell a further 10 percent of voting shares to them at a discount.
The program says that companies will be sold off at auctions or investment tenders, with the starting price set at 70 percent to double the January 1994 value of their assets.
The plan makes the transfer of strategically important industries to private hands more gradual than that of other industries. The state retains for three years the right to keep a 51 percent stake in companies that are in "strategic" sectors of the economy, including energy, precious stones and metals, weapons and poisons.
But the list also allows the government to keep a controlling interest in some companies that are questionably strategic, such as liquor factories and circuses.
The text of the program, drafted by privatization chief Anatoly Chubais and obtained by The Moscow Times on Monday, allows the sale of commercial land for the first time since 1917, a move that hardline deputies fervently opposed. Last week, Chubais had agreed to a compromise plan with deputies that postponed land sell-offs until the Duma passed a land code containing ownership rules.
Chubais also retracted a concession that allowed the Duma to approve the privatization of the country's largest companies.
Although presidential spokesman Vyacheslav Kostikov said that the approved program took the Duma's demands into account, the only significant concession that remains is the provision that educational and medical institutions will not be privatized until the parliament passes a special law.
"My reaction to this is regret," said Anatoly Peshkov, an aide to the Duma's industry committee chairman and a former member of the conciliatory commission that won the concessions from Chubais. "We had a balanced plan, we had taken out everything that was ill-considered -- but both sides' political ambitions outweighed practical concerns."
Despite the compromise, the Duma turned down the program last Thursday.
Peshkov said the deputies had had no time to study the compromise draft because it was presented just one day before the parliament closed for summer recess. He said that their vote against the program reflected their irritation with Chubais, who had said from the start that if parliament voted down the plan Yeltsin would impose it by personal order.
"When a compromise was finally in sight, the deputies had too little time to get over the initial spirit of confrontation," Peshkov said.
When the deputies come back from holidays in October, they are likely to resume their fight with the government over a number of major points of the approved program.
The sale of land on which factories and other structures are built is the major point of contention. According to the program, the entire territory of an enterprise can now be sold, and the owner of the buildings has a priority right to purchase it. Local authorities are forbidden to deny the sale of land to them, except in extremely rare cases when a certain plot of land is excluded from privatization by federal law.
The privatized land can only be taken away through a court of law and owners are to be reimbursed if local authorities use the property to build roads, lay cables or install new water pipes.
"This is just another revolutionary measure that is more symbolic than practical," Peshkov said of the land sell-off. "Nobody has any idea of the real price of land, and when mass land speculation begins, it will irritate people."
Despite the fact that few political compromises made it into the final version of the plan, its authors have built in some provisions to make it more socially-oriented than the initial concept presented by Chubais in May.
Though the privatization plan favors big investors who can shell out large amounts of money that factories need to restructure, workers of a factory still have many privileges when they buy stock in their companies.
According to different versions of privatization available to companies, workers can buy up to 20 percent of the company that employs them at a 30 percent discount or 51 percent at the market price.
One of the options even allows a company to give away 25 percent of non-voting stock to workers for free and sell a further 10 percent of voting shares to them at a discount.
The program says that companies will be sold off at auctions or investment tenders, with the starting price set at 70 percent to double the January 1994 value of their assets.
The plan makes the transfer of strategically important industries to private hands more gradual than that of other industries. The state retains for three years the right to keep a 51 percent stake in companies that are in "strategic" sectors of the economy, including energy, precious stones and metals, weapons and poisons.
But the list also allows the government to keep a controlling interest in some companies that are questionably strategic, such as liquor factories and circuses.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Not ready to support today?
Remind me later.
Remind me later.
×
Remind me next month
Thank you! Your reminder is set.
We will send you one reminder email a month from now. For details on the personal data we collect and how it is used, please see our Privacy Policy.