Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Luzhkov Wrestles State for Property

In a bid to wrest control of privatization from federal hands, Mayor Yury Luzhkov has issued a decree requiring that the Moscow government approve the privatization plans of all enterprises within city limits, a spokesman for the mayor said Tuesday.


The Moscow Property Committee will have "to present privatization materials of enterprises with more than 1,000 employees for consideration by the Moscow government," said Yury Zagrebnoi, press officer at Luzhkov's office.


The decree is the latest incident in an ongoing battle between Luzhkov and privatization chief Anatoly Chubais over the privatization of Moscow enterprises.


Luzhkov, seeking more money from privatization for city coffers, has likened the government's voucher privatization program to "the way a drunkard in order to buy booze sells his possessions in the street for nothing." Chubais has in turn accused Luzhkov of "bureaucratic lawlessness" and called Moscow's privatization record the worst in Russia. No end to the battle is yet in sight.


At stake are the futures of hundreds of small and large enterprises, ranging from the local cafeteria to major industrial firms like Saturn, maker of engines for the SU-35 and SU-37 military jets.


Most Moscow enterprises remain in government hands or have been turned over directly to workers and management without voucher auctions, compared to the thousands of small and large companies throughout Russia that have hit the auction block since privatization began in October 1992.


Valery Anupriyenko, head of the industrial privatization department at the Moscow Property Committee, which the mayor controls, said that Luzhkov issued the decree to preserve jobs and support production as city enterprises undergo privatization.


But Arkady Yefstafyev, press secretary for privatization chief Anatoly Chubais, said that the decree violates federal privatization regulations and trespasses on the jurisdiction of the State Property Committee, which runs the privatization program.


"The State Property Committee does not need permission from anyone to sell federal property," he said. "Any arbitration court will confirm this."


Just last week, Chubais presented a special privatization plan for Moscow, under which more than 50 of the capital's firms, including Saturn, would sell shares for vouchers in the next two months.


Zagrebnoi said, however, that the State Property Committee had undervalued the assets of enterprises going under the hamme.


"They evaluate them in the prices of Peter the Great's times," he said.


He said that the committee failed to take into account the high value of land in Moscow. Enterprises within Moscow are considered attractive investments solely for the value of their land.


Luzhkov's decree requires that city officials set a price for each enterprise that includes the price of land, and that each enterprise sign a contract to rent its land from the Moscow government. But Yefstafyev said that city officials are not qualified to evaluate the assets.


"The essence of a voucher auction is competition," he said. "The market will decide how much this or that firm costs."