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. Last Updated: 07/27/2016

Duma Rejects Weaker Privatization Bill

Anatoly Chubais, the architect of Russia' s privatization program, backed down on his post-voucher privatization plan hoping that the State Duma would pass the watered-down bill, but conservative deputies turned down the compromise version of the plan Thursday.

Nevertheless, Chubais told reporters after the Duma session that President Boris Yeltsin would shortly sign a decree to launch the second phase of privatization, disregarding some of the concessions made to lawmakers.

"The second phase of privatization will start in a few days when the decree is signed," Chubais told reporters after the first of four votes in which lawmakers failed to pass the bill. "The parliament would in any case take until October or November to pass the final reading of the bill."

Under the proposed privatization plan, state companies are to be sold for money rather than privatization vouchers. The plan will also sell-off the land on which factories are built. The government sees the program as a way to attract investment in industry to help it restructure and become more competitive.

But hardliners in the Duma, who oppose the sale of land and have sought to wrest control of privatization from Chubais, still defeated the plan despite a compromise struck early Thursday morning.

Deputies in the first ballot came within 13 votes of passing the bill, but the 212-74 vote fell short of the 225 needed for adoption.

A conciliatory commission, including Chubais as well as the heads of five Duma committees, had been formed after the plan was voted down for the first time last week. The commission agreed on a compromise version of the program after meeting until 3 A.M. Thursday, according to Duma speaker Ivan Rybkin.

The compromise version of the bill said the privatization of land could only proceed after the parliament passed a Land Code containing property ownership rules.

"The main point on which we differed was the privatization of land," Alexander Nazarchuk, the chairman of the Duma' s Agrarian Committee, told the parliament before the vote. "Now a compromise has been reached and our proposals were taken into account."

Rybkin and the members of the conciliatory committee urged deputies to approve the bill. Rybkin held a record four votes on the matter, making slight alterations to the bill every time, before he finally gave up.

Following an impassioned speech by Vladimir Zhirinovsky, the leader of the ultranationalist Liberal Democratic Party faction, support for the bill plummeted to 189 on the fourth vote.

"Nobody in Russia is asking for a second stage of privatization," Zhirinovsky said. "What they are asking for is punishment for those who conducted the first stage."

Zhirinovsky labeled privatization a case of "state fraud" and called for a "special prison" for reformers.

Chubais denied after the session that he had made any important concessions on the land privatization issue.

"The privatization of land will proceed on a full scale, including the privatization of land under factories," Chubais said. "We will never accept any regulation banning the privatization of land."

Chubais said Yeltsin would sign a decree launching post-voucher privatization in a matter of days, which would only include some of the changes made by the conciliatory commission. But it was unclear which changes would be reflected in the decree.

Chubais called some of the compromises in the new version of the bill "reasonable," including one requiring Duma approval for the privatization of companies with assets of over 200 billion rubles in 1992 or with more than 50,000 employees.

"Let them take part if they want," Chubais said of the deputies.

The legislators on the conciliatory commission also got Chubais to agree that schools and hospitals, as well as Russia' s property overseas, will not be subject to privatization until special laws are passed by the parliament.

-- Svetlana Kolosova contributed to this report.