Soviets to Ease Rules, Seek Investors : Reform: Changes will allow foreign ownership. A banking system modeled on U.S. Federal Reserve is also expected.

In his next move to revive the Soviet economy, President Mikhail S. Gorbachev will soon issue a decree creating incentives to attract capital from abroad, allowing full foreign ownership of companies here, his top economic advisers said Friday.

Another decree, establishing a banking system modeled on the U.S. Federal Reserve System, is also expected soon, Western diplomats said.

Further down the road, Gorbachev may devalue the Soviet currency by decree, his advisers said, in a step toward making the ruble freely convertible with other world currencies.

They said a decree freeing retail prices from state control is under consideration, but they are hesitant to raise prices for consumers, who already face empty shelves and must resort to the black market to meet their basic needs.

Leonid I. Abalkin, the vice prime minister in charge of the government’s economic reforms, and Nikolai Y. Petrakov, an economic adviser to Gorbachev, told a news conference Friday that the president must take these radical steps toward a market-based system even before the Supreme Soviet, the national legislature, approves an overall plan to reform the economy.

Two weeks ago, the Supreme Soviet granted Gorbachev sweeping powers--greater, on paper, than any Kremlin chief has enjoyed since the dictator Josef Stalin--in order to hasten the pace of economic reforms.

Gorbachev said he needs the power to rule by decree because many decisions along the path to a market economy cannot wait for the legislators to reach agreement on an overall plan. With the ninth version of the plan now in preparation, Gorbachev is scheduled to present his whole program to the Supreme Soviet on Oct. 15.

Petrakov said Gorbachev needs to lay a foundation quickly for the reforms.

“In order to jump into a market, you have to have a very strong springboard,” he said. “If you are standing in a swamp, you cannot jump. That springboard is the stabilization of existing economic relations.”

On Thursday, in his most recent use of his new powers, Gorbachev freed most wholesale prices from state control. In a decree that ends a key element of central planning, Gorbachev authorized most of the country’s factories and other enterprises to negotiate their own contracts as a way to give them an incentive to increase production by obtaining higher prices for scarce goods.

About 70% of wholesale prices will be freed from state control, but 30% will still be set or regulated by the government, Abalkin said.

A special committee is being formed to protect the market from monopolies, he said, and a special tax will be levied on enterprises that reap excessive profits.

Gorbachev’s decree did not include the delicate issue of raising retail prices, but a change in price tags is not far off, Abalkin said.

“Despite the complexity and unpopularity of such a decision, it cannot be prolonged much more,” he said.

Petrakov added: “We are not holding on to the illusion that prices will stay the same. We are saying that prices should be, stage by stage, freed of all control. Prices should be set by the objective laws of the economy.”

Gorbachev’s next priority is a decree encouraging foreign investment, Petrakov said, adding:

“I do believe it will happen within a few days. In principle, there is already a draft law on the subject. However, the Supreme Soviet does not work very fast, and so the president decided to accelerate that process.”

A draft decree on foreign investment has been sent to leaders of the Soviet Union’s 15 constituent republics, Petrakov said, and will be signed as soon as Gorbachev has their responses.

“In addition to joint ventures,” he said, “we are thinking in terms of setting up enterprises where there will be 100% foreign capital.”

Until now, foreign ownership of joint ventures has been limited to 49%. Petrakov did not spell out the other incentives.

The decree establishing a central bank modeled on the U.S. Federal Reserve System will be a key element in the strategy to regain control of the country’s rapidly growing money supply, according to Western diplomats familiar with the plan. The decree will remove control of the money supply from the government and place it under an independent fiscal authority in an effort to reduce inflation.

A draft decree has been drawn up devaluing the ruble in commercial transactions, primarily the import and export of goods, to bring it closer to its market value. Petrakov said this draft decree is also being considered by leaders of the 15 republics.

Stanislav Asekritov, vice chairman of the government committee on economic reform, said that in the first months of 1991 the government will take many bold steps toward making the ruble convertible with foreign currencies. This is intended to increase trade and to force Soviet enterprises to become more efficient by introducing foreign competition.

“It must happen by the first of next year because this problem is explosive,” Asekritov said.