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. Last Updated: 07/27/2016

Privatization Accelerated

The government of acting Prime Minister Yegor Gaidar on Wednesday moved forward its mass privatization program by a month, clearly hoping to win mass support before the start of the Congress of People's Deputies.


Anatoly Chubais, the deputy prime minister in charge of privatization, announced on Wednesday a series of auctions for vouchers to begin almost immediately. President Boris Yeltsin had announced earlier that vouchers would not be exchanged for shares until after Dec. 1. The date also marks the opening of the Congress.


It is widely expected that the deputies will force a change of government, either sacking most of Gaidar's radical free market ministers or even replacing Gaidar himself.


Chubais told a news conference, "I hear talk that the government will be replaced. I say that tens of thousands of people are now voting for the government by taking part in the privatization. That is the basis on which we are constructing our plan for a market economy".


The measures announced yesterday are designed to buoy the price of the privatization checks that are now being issued to all Russian citizens and in so doing convince Russians that privatization will be a real transfer of wealth back to individuals.


Although vouchers have a nominal value of 10, 000 rubles, they have been trading on the Russian Commodity and Raw Material Exchange at around 4, 300 rubles, well below the face value.


Professional traders have attributed the poor price to doubts that any worthwhile government property would be put up for public auction, especially since the government has so far failed to convince parliament to pass a law on land privatization.


Others fear that property will be sold for cash rather than vouchers to help the government improve its finances.


The government has tried to meet both criticisms. Chubais said the November auctions that will be based in three main centers - Belgorod, Samara and Voronezh - will include some highly profitable businesses.


The list to be auctioned will include at least 50 firms in Samara, one of the former centers of the high-technology military-industrial complex. The sale will also cover several Intourist hotels, which enjoy a virtual local monopoly, earn hard currency and have a lease on real estate.


Chubais also announced details of presidential decrees issued last month that support the value of the voucher by raising the percentage of shares in government companies that can be bought for vouchers.


The proportion of federal government firms that can be bought for vouchers has been raised to 80 percent from 35 percent. For municipal firms the ratio has gone to 90 percent from 45 percent.


The government is also developing an auction procedure that will protect inexperienced investors over professional traders by creating two classes of bidding.


The privatization campaign will sell off 5, 600 large state firms and a much larger number of small state and municipal firms.


Workers collectives are in the process of choosing one of three models for conversion from state entities into joint-stock companies.