The world's biggest ever privatisation programme has begun in Russia. Each Russian citizen will be issued with vouchers worth 10,000 roubles (about US $40); by the end of the year 6500 major industrial enterprises must draw up plans to become joint stock companies, exchanging shares for vouchers.
In reality the majority of people are expected to immediately exchange their vouchers for cash, as happened with a similar voucher scheme in Czechoslovakia.
This means that a few wealthy individuals and groups will end up owing the majority of shares, and indeed the companies if the auctions go ahead as planned in November and December.
Foreign companies are expected to take a major stake in some more potentially profitable companies. However, the scheme allows for firms to become worker co-operatives, and for management buy-outs.
A big international campaign is to start explaining to foreign firms how they buy-in to the Russian economy; only some firms in the defence and energy sector are excluded from foreign takeover.
The privatisation scheme takes place against the background of a major slump in the economy, and huge struggles inside the leadership and the old *nomenklatura* over economic plans.
According to official figures production fell by 18 per cent in the first half of 1992; inflation is expected to be anything from 1600 per cent to 3000 per cent by the end of the year. Runaway inflation has wiped out the savings of most ordinary people.
The slump and inflation has had a drastic effect on personal consumption by ordinary workers. Spending on clothes and shoes is down by 50 per cent and on milk products by 25 per cent. Half the population is living below the official poverty line; a recent poll found that 40 per cent of people in St. Petersburg said they were 'constantly hungry'.
Spending on health and welfare has been slashed; one result is a 9 per cent increase in infant mortality.
Yeltsin's 'shock therapy' and the general dislocation of state planning have thrown many firms into effective bankruptcy. Since they are only kept going by increasing state subsidies, a major battle has been raging between economic ultra-liberals around Yeltsin and his premier Gaidar, who want to force through the privatisation and bankruptcy laws, and hundreds of enterprise managers, supported by Yeltsin's deputy Rutskoi.
The old nomenklatura is caught in a trap of its own making; the West in general and the IMF in particular will not come to Russia's aid without radical economic reform.
But reform means thousands of enterprises going bust, and millions being made unemployed. In May the Russian Union of Industrialists and Entrepreneurs, desperate to stop the destruction of state industry, founded a new political party called 'Renewal'.
Renewal in turn is part of the 'Civic Union', which includes Rutskoi's Peoples Party of Free Russia. Both the Rutskoi and Gaidar factions are operating within a pro-capitalist, authoritarian, framework – liberally dosed in Rutskoi's case with appeals to Great Russian chauvinism and reactionary nationalism.
Catastrophe
If privatisation and the bankruptcy laws are pushed through, social catastrophe awaits Russia. The mass unemployment which would ensue would could give rise to a social explosion. But despite the strike wave earlier this year, the new workers movement remains extremely weak. According to Nikolai Preobrazhensky, a leading activist in the new Party of Labour: 'The old trade unions enjoy no confidence, by and large; the new ones with the exception of those in the mining regions are very weak. There are no serious organisations expressing the interests of the workers movement nor parties which the mass of workers could consider their own, to be counted on without fear of betrayal or deception.'
Russia: guns but no butter