Gorbachev Supports Plan to Revolutionize Economy : Soviet Union: He favors radical approach to a freer market and rejects prime minister's moderate proposal.


President Mikhail S. Gorbachev publicly threw his support Tuesday behind a crash plan to revolutionize the Soviet economy, rejecting a more moderate program proposed by his prime minister.

Stepping into a tumultuous session of the Supreme Soviet, the national Legislature, Gorbachev said that after weeks of debate over rival reform programs, he prefers the more radical proposals of a task force led by Stanislav S. Shatalin, one of his closest economic advisers.

"If you ask me personally, I am more impressed by the Shatalin program," Gorbachev said as legislators attacked a plan for more gradual change that Prime Minister Nikolai I. Ryzhkov had just presented. "If this has a realistic plan to stabilize finances, money circulation, the ruble and the market, then we should adopt the Shatalin idea."

Until Tuesday, Gorbachev had made no public comment on the competing proposals, apparently unwilling to express a preference while there was a chance that the two plans could be fused. His effective endorsement of the more radical Shatalin plan came after marathon meetings failed to produce a workable compromise.

The Legislature of the Soviet Union's largest republic, the Russian Federation, accepted the Shatalin program Tuesday as the basis for future reforms. It gave officials a month to work out concrete plans to implement it.

The action had been urged by Boris N. Yeltsin, the republic's populist president, and it puts the Russian Federation a politically important jump ahead of the central government.

The Shatalin plan is based on a 500-day reform timetable for shifting the country from central planning to a market-driven economy by selling off state-owned enterprises and government property, releasing prices from state control and doing away with subsidies for businesses.

Politically, the plan takes most power away from Moscow and parcels it out among the Soviet Union's 15 constituent republics, which would be united by a voluntary economic agreement.

Ryzhkov, who has strongly opposed the Shatalin plan as too great a change for the Soviet economy to absorb, indicated that he will resign if it is accepted.

"If there is a decision taken that goes against the government's position, the government will not be able to carry it out," Ryzhkov said.

Bombarded by calls for his resignation and complaints that his Council of Ministers, the equivalent of a Cabinet, is ineffective and conservative, Ryzhkov struck back Tuesday with warnings that the Shatalin plan could cut Soviet living standards by 30% and lead to rampant bankruptcies and widespread unemployment.

Although the Shatalin plan is now clearly the favored one, Gorbachev promises that his formal proposal on economic reform will combine the best of the Ryzhkov and Shatalin programs. He was expected to present it Tuesday but he said that the unified plan was not yet ready, and the Legislature postponed the presentation until at least next week.

Shatalin assured lawmakers that although Gorbachev called his proposal unified, it would be 99% his plan. Joking with reporters in the Supreme Soviet lobby, he estimated that the unified plan would contain only "five or six numbers" from the Ryzhkov version.

Shatalin, a member of Gorbachev's policy-making Presidential Council, said it was not surprising that Kremlin officials were fighting against a program that would undercut their position.

"There has never been a government in the entire world that would voluntarily give up power and land," Shatalin said.

Gorbachev, in an emotional speech to the Legislature, argued that the time is exactly right for radical reform. Earlier, the public was not psychologically prepared, he said, but now the Soviet economy is in such distress that there cannot be a moment's delay.

The country is racked by shortages of food and consumer goods, productivity is dropping, inflation is rising and the government's budget deficit is ballooning.

Ryzhkov said that Soviet industries are failing to supply billions of rubles' worth of goods for which they signed contracts and that the country will have to reduce imports drastically next year because it has no money to pay for them.

His plan, which he called "moderate-radical," would begin a gradual, less painful transition to a market system without risking hyper-inflation and economic chaos, he said. It would set higher prices on most goods and allow the central government to retain much of its economic control over the country.

"The economy is in no shape to switch over in one day to market relations without government regulation," Ryzhkov said.

His plan won little support in the Supreme Soviet, which had already rejected a similar proposal last May, and Gorbachev said it seemed to him that the government was not confident that it could stabilize the economy enough to begin introducing deep reforms.

Still, Gorbachev said, he could not condone personal attacks on Ryzhkov.

"If someone proves incompetent," he said, "let's remove him, but in a normal fashion, not simply push him to the wall. These are insults and insinuations, and they smell very bad."

The deputies demanded that they be given copies of the Shatalin plan for consideration. They complained that they were being asked to judge alternative programs they had never seen.

In the heat of the discussion, one deputy called for Gorbachev to resign, and another, Leonid I. Sukhov, a taxi driver from the Ukrainian city of Kharkhov, said that if the Shatalin plan leads the country from communism to capitalism, so be it.

"We should tell the people openly," Sukhov said, "that the Shatalin conception of a transition to the market is capitalism. We should have a referendum, and if the people accept this concept, then OK, let's go for this capitalism, if life is better under it."

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