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. Last Updated: 07/27/2016

President Boosts the Cause of Privatizers

Reformers in Russia's cabinet won crucial support from President Boris Yeltsin on Thursday for new laws that would wrest control over Russia's privatization program from conservative bureaucrats.


Speaking to a meeting of the cabinet, Yeltsin complained of a recent "slackening" in the sell-off of state firms and called for "a cardinal breakthrough in the next few months" in auctions that are supposed to sell 80, 000 state-owned firms to the public.


"I'm disturbed that since April 25 the government has become less active. Some softness has appeared, which is inadmissible", Itar-Tass quoted the president as saying. "The economic situation gives no grounds for complacency".


With Yeltsin's support the cabinet gave basic approval to a new privatization program for 1993, to be set before parliament late next month, that would end the veto bureaucrats now have on the sell-off of 22, 000 of Russia's most important state firms.


The move overcame objections from several ministers who still want the state to retain control of major industries and reflected Yeltsin's increasing self-assurance since he won a referendum on confidence in his rule on April 25.


The president has pushed for privatization as the key to turning Russia into a modern economy, but was forced to withdraw a draft of the 1993 privatization law from parliament in early March in the face of opposition from conservative deputies.


Since then privatization has faced growing opposition from bureaucrats in Moscow who want to maintain the centralized control that existed under the Soviet economy.


The bureaucrats, who work in the planning ministries that used to control all of Soviet industry, have used provisions in the 1992 privatization law to block privatization. These say that for reasons of national security and public interest, 60 percent of firms cannot be privatized without special permission from the government.


Dmitry Vasilyev, deputy chairman of the State Property Committee, the main privatization regulator, said the cabinet had decided to undo these restrictions and push through parliament an amended program for 1993.


"Given the mandate we received for economic reform at the April referendum, we have to push ahead", Vasilyev said.


He said the amendments would give local privatization officials power to sell about 22, 000 firms that are currently on the restricted list, without asking approval from Moscow bureaucrats.


Vasilyev said several ministers who control major industrial sectors, led by Igor Shurchkov, president of the industrial policy committee, had raised objections at Thursday's meeting to the new law, calling for control over key sectors to be held in government hands.


But he said the cabinet had appointed Deputy Prime Minister Vladimir Shumeiko to overcome these objections within the next month before the law is presented to parliament.


"We do not want any differences of opinion when we take the law to parliament", Vasilyev said.


Yeltsin went further at the cabinet meeting, according to Itar-Tass, threatening to dismiss officials "who are sabotaging the privatization process".


Privatization began in spring last year with the sale of small shops and service firms, but selling off bigger enterprises has proved much harder.


By the end of May only 2, 000 of Russia's 80, 000 medium and large firms will have been sold, Vasilyev said.