 C00175461
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 APSN PM2408103593C
 DOAT 930813
 SLIM Moscow IZVESTIYA in Russian 13 Aug 93 First Edition p 4
 AUTH Aleksandr Kislov: "Saratov's Industrial Generals Fight for Reforms and
 Want To Turn the Shadow Economy Into a Normal Economy"
 SOBS [Article by Aleksandr Kislov: "Saratov's Industrial Generals Fight for
 Reforms and Want To Turn the Shadow Economy Into a Normal Economy"
 SUBJ TAKEALL-- Saratov Oblast's Reform Plans Explained
 Full Text Superzone of Message
 1     ]
 2     [Text] Saratov -- At a recent meeting in Saratov with Premier Viktor
 Chernomyrdin, the directors of the oblast's major enterprises put on the
 table a package of proposals aimed at making market reforms more radical,
 at the center of which was a project elaborated by Aleksandr Yermishin,
 general director of the aviation plant.  The premier approved the project
 and issued the relevant working instructions to the leaders of several
 state committees and ministries.
 3    The Director as the Mainstay of Transformations [subhead]
 4    Yermishin's office contains models of Yak-42 aircraft, the plant's main
 output, and a machine of an intrinsically new design that is reminiscent
 of a fantastic "flying saucer." The series-produced machine will soon
 receive its international certificate and will join the "Boeing"; it will
 cost $21 million.  The "saucer" has already been made up in metal, and
 preparation for series production is now underway.  The aviation plant,
 transformed not so long ago into a joint-stock company of the closed type,
 is confidently increasing production in the most difficult conditions of
 the transitional period.  However, our conversation with the director was
 not about this.
 5    "Reforms should be conducted only with the active participation of
 enterprise leaders," Aleksandr Viktorovich said.  "They are the framework
 which is keeping the economy from final collapse.  In Saratov, for
 example, defense enterprises have great weight.  How could the state leave
 us without an arms program?  To this day, you see, there isn't one.  If
 only the government would summon up the courage and declare that there
 will be no orders."
 6     "Nevertheless, you and your colleagues have risen above the grievances?"
 7     "But surely grievances are not the point?  We have simply realized that
 this potential will disappear unless it is utilized."
 8     However, I think that Saratov's industrial establishment was prompted to
 get involved in reforms by more than just a patriotic desire to
 participate in the reconstruction of Russia.  Being pragmatists, they
 extrapolated the development of events in conditions of continuous war
 between the branches of power and came to the conclusion that the road
 ahead leads into the abyss.  Anyway, everyone realizes'that the way back
 is barred.
 9    To continue to build up grievances against the government, accusing it of
 neglecting the collectives' needs and asking for loans to pay wages,
 although easy enough to do, is not promising.  And here Yermishin proposes
 a mechanism with whose aid it would possible not only to preserve the
 collectives but also to secure their future.
 10   Cadres Plus Investments -- the Survival Formula [subhead]
 11   I have before me a memorandum "On the Mechanism for Collaboration Between
 the U.S. and Russian Governments in Converting Russian Enterprises and
 Approved for Release
 19
 C 0 0 1 7 5 4 6 1ing Private Investors from Both Countries in This Process," prepared
 uy voctor of Sciences Aleksandr Yermishin in conjunction with scientists
 from the U.S.  National Academy of Sciences.  It was submitted to the
 attention of participants in a meeting of Russian and U.S. delegations on
 conversion and privatization held at the end of May this year.
 12    PM2408103593TAKE1
 13    [Text] Several factors were the prerequisites for the emergence of this
 program of reforms in Saratov Oblast.  First, the severe shortage of
 capital for investments and for increasing the working capital of
 enterprises.  Second, the fact that money for conversion is not always
 used for its appointed purpose.  Third, the center of gravity of
 conversion should inevitably shift to the regions -- it is impossible to
 run this process from a single center.
 14   The mechanism is as follows.  The Russian and U.S. Governments. would
 guarantee and sponsor a pilot scheme of reforms in Saratov Oblast,
 creating for it initial resources in the form of a conversion and
 privatization fund.  This fund would be held in trust by a joint-stock
 company of the closed type, whose founders would be the professionals
 themselves -- the economists and organizing managers.  Sociological
 research has been carried out in the oblast, in the course of which nine
 people were selected who enjoy the trust of the governmemt, the
 administrations, and the soviets, and are respected by enterprise
 directors.  Money would be lent at interest, on the condition of carrying
 out the conversion and privatization of, say, 10 major enterprises.  In
 addition, contracts would include a requirement to ensure a certain level
 of employment, the necessary consumer basket, and the production of goods
 people need by the enterprises which are converted.
 15   But the main emphasis is placed on attracting private investments to the
 program, both Russian and foreign.  Governor Yuriy Belykh has set the task
 of finding such investors in the oblast.  According to Aleksandr
 Yermishin, today it is possible to speak with confidence of 10 billion
 rubles which entrepreneurs of Saratov Oblast are ready to invest in the
 program of.reforms.
 16   This money will be channeled through specially created investment and
 insurance companies and a mortgage bank into enterprises of a subsidiary
 company which will carry out specific conversion and privatization
 projects.
 17   The More Bans, the More Violations [subhead]
 18   In short, a consortium is being set up in the oblast which should ensure
 the real progress of reforms on the basis of market laws and using the
 mechanism of the economic interest of the subjects of the market and its
 own employees.
 19   "We intend to live in Saratov for a long time, and want to bequeath a
 normal economy to our children and grandchildren," Aleksandr Yermishin
 explained.  "This is why we are striving for the market.  We are in favor
 of traveling this part of the road as quickly as possible, under the moral
 control of society.  Right now state money ends up in private hands
 anyway.  Everyone knows the 'price' of bank credits, licenses, and quotas.
 These figures are quoted openly in the newspapers.  But the negative
 effects in our economy can be turned into positive ones.  There is such a
 law: The more bans, the more violations.  Why should credits go only to
 state structures?  Why should the man who distributes them receive a
 miserly wage, constantly tempted by bribes?
 20   "We are mastering the principles of the market economy..  And we do not
 intend to sit on state money.  No, we will squeeze the maximum benefit
 from it for ourselves, but our profits should be directly linked to the
 efficiency of our work for society.
 21   "On the subject of 'laundering' money.  If a private person gets hold of
 money, it can erode society, but it can also cement it together.  Yes,
 billions were made from the sale of vodka, for example, when the state
 gave up its monopoly.  This money takes three paths.  First -- to the
 West.  We beg the G-7 for aid to carry out reforms, they give us 3
 billion, although there are already 100 billion 'Russian' dollars, as U.S.
 000175461ists have informed me, circulating in the United States.  Second:
 When people have money 'burning holes' in their pockets, it endenders
 criminal situations.  And finally, there is a third route.  Turning money
 into property, into means of production, so that it works here, in Russia.
 Legally.  With profits for the country of their owner.  If the law
 enforcement organs tell me that someone is untrustworthy, I will have
 nothing to do with him.  However, I will not carry out an investigation
 into where an investor's money comes from
 22    "I took part in a top-level conversation in the General Prosecutor's
 Office.  I say: A rule-of-criminal-law [ugolovno-pravovoye] state has
 already been built in the country.  The period of initial accumulation is
 ending; capital has formed in certain sectors, and everyone knows this.
 What remains?  Either to allow these tendencies to develop further, in the
 same direction, or it is time to summon up the courage and admit that the
 shadow method of accumulating capital is not always criminal.  There are
 market structures which possess a great deal of money.  They are actually
 asking themselves the question: What next?  Those who wanted to go abroad
 have done so.  Obviously, it is necessary to create conditions in which
 money works for society.
 23    PM2408103793TAKE2
 24    [Text] "On the whole they agreed with me.  Organized crime has a serious
 economic component.  Why not try to diffuse this situation by legislative
 and economic measures?  It is more comfortable for someone to work in a
 normal, rather than a shadow environment.
 25    "Our plan also provides for a civilized mechanism for lobbying for
 reforms.  This is what the experment is for -- in order to have an
 opportunity to freely go to the government or parliament and give
 first-hand information on the progress of transformations and make
 proposals as to where the 'rules of the game' need to be changed.  For
 example, it is already clear that there is no use even thinking about
 developing reforms unless the Criminal Code and tax legislation are
 amended and the draft laws on private ownership of land and on mortgages
 [zalog] are dug out from parliament's backlog.  You politicians--can argue
 all you want to, but let people produce their goods, bake their bread, and
 milk their cows."
 26   Politicians claim that, in the current situation of dyarchy, a decisive
 role could be played by an alliance of politicians who support the
 president and pragmatists representing Russia's business circles.  In this
 case reforms would receive the powerful social base they so badly need.
 In conditions of relative equilibrium of the forces clinging to power on
 the political stage in Moscow, practical leaders and the collectives
 standing behind them would ensure that the reformers prevail and, most
 importantly, would confirm the inevitability of transformations with
 weighty economic arguments.  (endall) 13 aug              24/1156z aug WC
 255
 27    PM2408103993TAKE3

