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. Last Updated: 07/27/2016

Yeltsin Withdraws '93 Privatization Bill

President Boris Yeltsin has withdrawn his bill for a new round of privatization of industry after legislators attacked the proposal on the grounds that it was open to fraud and ignored the rights of regions within the Russian Federation.

Anatoly Chubais, deputy prime minister in charge of privatization, acknowledged Wednesday that the government had been forced to withdraw the law because of opposition within parliament.

"We have decided that it would be more reasonable not to stage any battles in the parliament", Chubais said, according to Itar-Tass. "On the contrary, we decided to meet deputies halfway" and make suggested changes.

Yeltsin wrote a letter Tuesday to speaker Ruslan Khasbulatov asking parliament to give the government more time to rework the privatization law.

The proposed legislation presents the government's new plan to sell off more than 5, 000 state-owned enterprises to private investors using either cash or 10, 000-ruble vouchers issued by the government to each Russian.

The move comes with Yeltsin under pressure from lawmakers over control of the country and the pace of reforms. The privatization program is one of Yeltsin's key reforms and is regarded by liberals in his government as the only way to turn Russia into a market economy.

Parliament approved the first stage of the government's privatization program last year, but legislators have become increasingly critical of the cabinet's reforms.

The privatization legislation expired Jan. 1 and the government must now pass a new program. Privatization is temporarily continuing under an extension of the 1992 law.

Chubais said the withdrawal of the draft law would not affect privatization.

"There is not even the slightest reason for panicking, since the laws on which privatization is based are still valid and will be valid until new laws are adopted", Chubais said. Legislators said they expected that the existing law will be extended until the end of next month. It is presently due to expire Sunday.

The government's pullback had no immediate adverse effect on the price of vouchers, which actually rose slightly on the Russian Raw Materials and Commodities Exchange from 4, 587 rubles to 4, 600 rubles on Wednesday.

Chubais is expected to address parliament Thursday on the results of the 1992 program.

The draft has been presented in the past two months to parliamentary committees and factions, many of whom want to amend the program. A group of conservative legislators wants to devise a new version of privatization in which the property would be given to managers and employees of firms for free. Chubais has said such a move would spell the end of privatization.

Vitaly Vitebsky, deputy chairman of parliament's committee on industry and energy, said that one key amendment suggested by his committee involved giving more power to the regions that make up the Russian Federation.

The division of state property threatens to divide the Federation. The republic of Tatarstan, in particular, site of some of Russia's biggest automobile factories, has tried to adopt its own privatization program including its own vouchers.

Vitebsky said that the committee had also criticized Chubais over what he called closed auctions.

It appears that shares in some Russian firms have been sold without the normal publicity, with members of workers collectives and officials receiving first option on stocks. A special privatization scheme approved by the cabinet for the atomic energy industry offered shares to insiders before the public was told of the new issue.

Vitebsky also attacked the lack of any system for destroying privatization vouchers once they have been used in auctions. Many fear criminals will have an opportunity for massive fraud if they can lay hold on these used but still valid vouchers.