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. Last Updated: 07/27/2016

Regions Changing Reforms Privatization Focus Shifted in 3 Areas

The focus of the struggle for economic reform may soon turn to Russia's regions where local councils have proposed a series of changes to the government's key privatization program.

In the central Urals region of Chelyabinsk, the sell-off of big state firms has come to a temporary standstill following a decree by the conservative local council suspending 49 voucher auctions until local demands are met.

In the autonomous republic of Tatarstan, on the central Volga, the local parliament last week passed its own privatization program. In the neighboring republic of Bashkortostan, the local council is planning to launch auctions of state property where vouchers issued to local residents will be worth four times more than other vouchers.

The government has staked its future on selling off 5, 000 large and medium firms this year in a bid to force the transition to a market economy from a centrally planned system.

The role of Russia's far-flung and socially diverse regions in privatization has already surfaced once this year. Faced with strong opposition in parliament to his privatization program for 1993, President Boris Yeltsin withdraw a draft law in early March, saying he wanted further consultation with regional governments.

Arkady Estafyev, a spokesman for the State Property Committee, the government's privatization regulator, said that while many local councils had theoretical power to slow privatization, "we are not in fact encountering this". The decisions in Chelyabinsk, Tatarstan and Bashkortostan were just isolated instances, he said.

But Vladimir Golovyov, the senior privatization official in Chelyabinsk, said the situation in his city was the first attempt by Yeltsin's conservative opponents to stop privatization in Russia.

"They do not want private property", he said.

The Chelyabinsk regional council passed a decree on March 18 to suspend privatization. The region was scheduled to start its first privatization auctions for 53 factories on March 25.

The State Property Committee, which answers to the government disregarded the decree. But the local State Property Fund, a powerful parallel bureaucracy that answers to the local council, refused to release all but four of the properties for the sale and the process is now deadlocked.

Andrei Kosolov, deputy speaker of the council, said voucher auctions would not restart until the government had taken measures to tax speculators from other regions who wanted to buy up Chelyabinsk's industries. He also wanted privatization to compensate Chelyabinsk residents for the high levels of pollution in the region.

Meanwhile in the autonomous republics of Tatarstan and Bashkortostan, local councils have already voted to give their citizens extra rights in privatization.

Farit Garizulin, the chairman of Tatartan's State Property Committee, said that a privatization law passed last week would give all Tatarstan citizens personal privatization accounts with a value of 30, 000 rubles to buy property in Tatarstan.

He said that Anatoly Chubais, deputy prime minister and chairman of the federal State Property Committee, had warned Tatarstan against the moves but he said, "Tatarstan wanted a more just form of privatization".

The special accounts will come into effect Aug. 1 and will be in addition to the 10, 000-ruble vouchers they have received from the federal Russian government. Many poor residents will also receive an additional 30, 000 rubles in their account.

Tatarstan is also negotiating with the State Property Committee to secure a bigger share of Kamaz, a huge, modern truck plant.

Vladislav Vasilyenko, the deputy chairman of the Bashkortostan State Property Fund, said that if a decree by the republic's parliament last December were carried out, local residents would receive similar advantages to those in Tatarstan.

He said that under the decree, privatization vouchers held by local citizens would be considered to have a value of 40, 000 rubles, not 10, 000 rubles. He expected voucher auctions using the higher voucher price would start within a month.

The federal State Property Committee's spokesman, Arkady Estafyev, said he doubted that local councils would proceed with their plans to revalue the voucher and if they did it would make little difference to the overall shape of privatization.