Mayor's Win Is No Victory For Moscow

Yury Luzhkov, Moscow's self-styled lord and protector, has won his battle with privatization chief Anatoly Chubais for control of privatization in the capital. Chubais, likening himself to General Kutuzov, who gave up Moscow to Napoleon but ultimately drove the French troops out of Russia, has pulled back to regroup. In his press conference Monday to mark the end of voucher privatization, the deputy prime minister admitted defeat, but said: "It would be my best revenge on the Moscow authorities to let them work according to their plan."And so it seems that the Moscow authorities will do as they have promised, essentially preserving Soviet-style control over city businesses and industry while simultaneously seeking to turn them over to private owners who have the capital to improve them. In other words, they want to attract a lot of money into the city without giving much in return. That is not what one could call a favorable investment climate.The power of the city to decide exactly what businesses can and cannot do opens up immense opportunities for bureaucrats to enrich themselves. And if one accepts accusations that many city officials are already corrupt -- something Luzhkov has strenuously denied -- it is easy to see how such a plan has gained widespread support in the ranks of the city administration.Even Oleg Tolkachev, the head of the Moscow Property Committee, admits that the plan could lead to a rise in corruption, but maintains that the benefits are worth it.What are those benefits? The plan claims to protect jobs by restricting layoffs, and to guarantee that Muscovites' needs will be satisfied by preventing companies from changing their lines of business. Tolkachev gave the example of a company that plans to sell its employees' cultural center to a bank: If the bank then converts the center to office space, he said, the people will lose their venue for plays, concerts and discos.It sounds altruistic, but what city officials forget is the fact that given a little time the market would inherently cater to many of the social needs they are trying to protect. Without the dual menaces of protection rackets and city controls, a private disco, concert hall or theater will survive if enough people want to go there. Similarly, were they allowed to do so, central Moscow's smoke-belching factories could move outside the city and gain a windfall by restructuring from the sale of their valuable real-estate assets, benefiting both the factory and Moscow's residents.Unfortunately, Moscow appears likely to get more of the same, rather than the changes it needs. Chubais may laugh last, but the joke will be on ordinary Muscovites.