Russia Lifts Curbs on Domestic Trade : Economics: The aim is to boost competition by freeing retailers and wholesalers from corrupt officials and illicit middlemen who thrived under the old system.

In a major step to promote competition in Russia’s markets, President Boris N. Yeltsin on Thursday lifted virtually all restrictions on retail and wholesale trade.

Yeltsin’s new trade decree, in effect, gives individuals and organizations in Russia the right to buy and sell goods almost anywhere, including on most street corners, without government permits.

Yeltsin also pledged to dissolve the trade organizations that have worked as middlemen, taking goods from producers to retailers in the former Soviet Union’s centrally planned economy. These organizations were “the biggest obstacle to privatization,” Yeltsin said.

If these measures are effective, they will eliminate the countless corrupt officials and underground business people who have thrived like leeches on the state monopoly system for decades.

With his decisions Thursday, Yeltsin also reaffirmed his determination to force the economy--which he said has slipped into some of the direst straits since World War II--into a market system like that of Poland.

Yeltsin acted after receiving harsh criticism for lifting price controls and ending most state subsidies on Jan. 2, without first breaking up monopolies and selling off state stores and enterprises to private owners. The price reform, his critics charge, has done nothing but impoverish most Russians. State monopolies have been able to increase prices as much as 10 and 20 times this month because of the sharply limited market competition.

The lifting of the retail and wholesale trade restrictions was “a very progressive step,” said Mikhail Berger, an economic commentator for the prominent newspaper Izvestia.

“But it’s also very dangerous,” he said. “This will destroy the distribution system, which is a very serious barrier to a real market. But there are risks. It will ruin the existing system of supply, which may be a bad system but at least it is a system. Without these organizations, shortages may become even more severe and there could be public discontent, perhaps even organized discontent. But I don’t think this will be big scale.”

Seven decades of socialism had stripped the Russian economy of virtually all the incentives that exist in free-market economies. Laws kept would-be entrepreneurs from buying and selling for profit. State enterprises had monopolies on practically all goods.

And state-owned enterprises, whether stores or factories, were so strong that they could all but ignore consumers’ demands.

By introducing competition into the wholesale and retail markets, Yeltsin will cripple black marketeers and white-collar embezzlers who have profited from the present system, Berger said.

“The freer it becomes to do business, the more companies will get involved in selling, and this will take away the Mafia’s work,” he said.

In Russian usage, Mafia refers to networks of corrupt officials who work together with underground businessmen or black marketeers. Such networks pervade the Russian economy.

Yeltsin announced his new measures at a meeting with members of his government and governors from cities and regions across Russia. During the meeting, he strongly admonished those present for failing to implement the economic reforms. He charged them with the responsibility of more swiftly selling off state stores, restaurants and other enterprises in their areas.

“The reforms have been working for 20 days already,” Yeltsin said. “It is not a long time of course, but nevertheless, some conclusions can be drawn already. . . . All the members of the government have been out in the provinces and have fresh, first-hand information from places where the reform is being carried out, but with distortions.”

Assessing the country’s economic crisis, Yeltsin said the Russian economy has not been in such a dire situation for decades. “Russia may not have experienced such difficult times since the Great Patriotic War,” he said, referring to World War II. “We maintain our optimism. . . . I have become convinced that we still enjoy our people’s trust.”

Yeltsin criticized his own administration for failing to have a safety net in place for the poor when prices skyrocketed.

Another reason his price reform has not had its desired effect, he said, is that the West has not flooded the country with goods as he hoped. “We counted on a new big influx of foods and goods to Russia from all countries of the world--at least from the West--and this did not happen,” Yeltsin said in remarks televised from the meeting.

Yeltsin’s decree also abolishes customs duties for citizens bringing goods from abroad or receiving them by mail, allowing relatives and friends to send them clothes, food and household items.

Meantime, the government of Estonia, another former Soviet republic, resigned on Thursday because of its failure to ease that Baltic nation’s economic crisis.

Prime Minister Edgar Savisaar, who played a key role in winning Estonia’s independence after the conservative coup in Moscow last August, announced his government’s resignation after the republic’s Parliament refused to endorse his strategy for economic recovery.