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Subject: Russia Pushes Pace of Change As Strife Builds; Truck Buyers on Front Line Of
Date: Sun, 1 Nov 92 09:14:31 EST
Message-ID: <29.1992Nov1.091431@AmeriCast.com>

Russia Pushes Pace of Change As Strife Builds; Truck Buyers on
Front Line Of Conflict Over Reforms<By Fred Hiatt=Washington Post
Foreign Service=

NIZHNY NOVGOROD, Russia, Oct. 31 - Mikhail Pazukhin, 24, kicked a
few tires, counted his rubles and bought a truck today. And with
that simple act, he struck a blow for reformers in Moscow, 250
miles to the west, in their increasingly desperate battle against
resurgent conservatives.

Nizhny Novgorod, Russia's third-largest city and a vanguard of
reform, sold 59 trucks at auction today, taking a first, small
slice out of the 260,000-truck monopoly of Russia's transport
ministry. The auctions are intended to help create a more effi-
cient distribution system and provide opportunities for would-be
entrepreneurs.  But today's auction, coming a half year after the
region began selling off state-owned stores and restaurants, was
also an important political symbol.  With conservative forces
challenging the economic shock therapy of President Boris
Yeltsin, the mantra of reformers across Russia has become neobra-
timie - "irreversible" - and the urgent goal has become to plant
capitalism so deep in Russia's soil that no one will be able to
uproot it.

The scene today at Nizhny Novgorod's fairgrounds, where more than
600 local citizens registered to bid and take a chance on free
enterprise, showed how quickly attitudes have changed. Most were
young and far from rich, and had never thought about business un-
til two or three years ago.<

"If you don't take a risk," Pazukhin said after bidding 180,000
rubles ($450) for a seven-year-old truck, "you won't drink cham-
pagne."

The bidders are among what Deputy Prime Minister Vladimir
Shumeiko said are 30 million Russians - one in five - who now
depend in some way on the private sector.

But even here in this industrial city on the Volga River, the re-
forms remain fragile.

"I think it's too early to speak about any significant change in
people's mentality," said Yevgeny Gorkov, the reform-minded depu-
ty governor of the Nizhny Novgorod region. "The trend is to say
that the reforms are not working."

The rush to implement reforms accelerated this month when
Russia's conservative parliament voted, over Yeltsin's objec-
tions, to convene on Dec. 1 a session of the more powerful - and
equally conservative - Congress of People's Deputies. Politicians
here have suggested that Yeltsin may respond to legislators'
anti-free-market pressure by introducing some form of authori-
tarian rule or by compromising with opponents of privatization.

Nizhny Novgorod's physicist-turned-governor, Boris Nemtsov, 33,
vowed that conservatives in Moscow will not reverse the course of
reform in his region "unless they start shooting." In a statement
he distributed today along with the city's mayor and top legisla-
tors, Nemtsov warned of a conservative coup that would stifle
"the sprouts of market economics, freedom and citizens' rights."

Most observers here say the rush of change can no longer be
stopped.

"The reforms are irreversible in the sense that the administra-
tive command system can never be restored," said Andrei Kortunov,
a commentator in Moscow.

But Kortunov and other observers also say the direction of change
- who will claim the spoils, and how the new world will be
managed - remains very much in question.

The new entrepreneurs of Nizhny Novgorod say their survival is at
stake.

One of the city's most successful businessmen is Vladimir Sedov,
whose Russky Klub includes two restaurants, a bar, a mushroom
farm and other ventures. Sedov employs 1,500 people, including
more than 100 security guards, he said.  "Tomorrow, a different
group of politicians could steer a different course, and take
everything away from me," Sedov said.

"The old bureaucrats are all waiting, and as soon as the conser-
vatives come back to power, they'll move in and shut us down,"
agreed Vera Pavlova, who is now co-owner of the cheese shop where
she had worked as a state employee for 20 years.

The emergence of risk-takers like Pazukhin demonstrates that Mos-
cow would not have an easy time shutting off reform. Pazukhin,
with his partner Andrei Fralov, 24, said he intends to transport
produce from private farmers around Nizhny Novgorod to private
stores in the city, and to work, unlike most state enterprises,
seven days a week.

"To be one's own boss, to depend on nobody, to solve one's own
problems," Pazukhin exclaimed as a young woman led his partner to
the front of the hall to register his bid.

Pazukhin is far from alone. In Nizhny Novgorod, more than 800
small enterprises have been privatized this year, and officials
say that across Russia the number is more than 22,000 - far short
of government goals, but still about 10 percent of all enter-
prises. The number of private farms has more than doubled this
year to more than 120,000.

Larger businesses and factories have barely begun to privatize.
But by this summer, 40,000 had applied to incorporate, the first
legal step toward privatization.  Using privatization vouchers
distributed by the government, more than 6,000 large enterprises
are supposed to become private by the end of 1993.

Perhaps more important, a new private sector, both legal and
illegal, has sprouted through the cracks of the state economy,
not waiting for official decrees. It is this sector of coopera-
tives, private firms, joint ventures and other operations that
now feeds 30 million, Shumeiko said - or 40 million, if private
street vendors are included.

"I'm convinced we're past the point of no return," said Alexander
Lavrov, chairman of Nizhny Novgorod's privatization committee.
"People have already felt it and tasted it. They won't give up
that freedom now."

But more than 90 percent of Russian property is still state-
owned. And according to official statistician Yuri Tartanov, the
state still employs 68 percent of the work force.

Privatization officials in Moscow complain that their efforts in-
creasingly are stymied by bureaucrats and industry leaders who
are trying to preserve monopolies and exempt key industries from
sale.

To hold today's auction, officials in Nizhny Novgorod had to
overcome resistance in Moscow - where top bureaucrats argued that
all of Russia's trucks should be kept in one monopolistic firm -
and in Nizhny Novgorod - where directors threatened to strike and
where some trucks slated for sale were vandalized. Only the as-
sistance of the International Finance Corp., an affiliate of the
World Bank, guaranteed success, officials said.  Still, after
eight months of lobbying and public education - including open
houses in the local kremlin, leaflets for workers, telephone hot
lines and television call-in shows - the auction came off without
a hitch.

Perhaps the most noteworthy success of the day was something that
did not happen. There were no demonstrations by workers opposing
privatization because they fear it would cost them their jobs.

"Most of those strike committee members are now part-owners of
stores, restaurants and cafes," Nizhny Novgorod mayor Dmitri Bed-
nyakov said today. "They stopped their opposition activities long
ago and began to work."<02:28 11-01C9999-----

Copyright 1992, The Washington Post.  This story is from the
Washington Post's Capitol Edition On-Line and is not to be ar-
chived or redistributed.

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