Yeltsin to Broaden the Scope of Privatization : Russia: Selloff of state property will be speeded up. Decree is meant to strike back at Communist and conservative forces.

Capitalizing on his referendum victory, Russian President Boris N. Yeltsin will broaden the scope of his privatization program, speeding up the selloff of state property and giving ordinary Russians more opportunity to buy into the newly privatized companies, government officials said Friday.

“Privatization is far from being dead,” said Pavel B. Bunich, an economic adviser to the president. “It is just starting.”

Yeltsin outlined the measures in a presidential decree that was signed May 8 but has not yet been published.

The program, as described by Bunich and other officials in interviews Friday, would strike back at the Communist and conservative forces who stand to lose control of Russian industries if free-market reforms succeed.

The decree requires more state enterprises, including some defense suppliers, to put themselves on the auction block. Managers who do not meet tight deadlines could face dismissal, and plants that fail to submit plans for privatizing themselves may be sold off by local property committees.

“The president attaches great importance to privatization, he is fully determined to push this forward, and now he’s doing it from a position of power after the referendum,” said Maxim V. Boyko, head of the Russian Privatization Center.

In what is sure to be a popular move, Yeltsin ordered that 29% of the shares of all enterprises must be sold at public auction within three months of the time they go private. The idea is to give average Russians a chance to own shares in the desirable companies that have sometimes been snapped up by insiders.

“It’s a huge step in the right direction,” said April L. Harding, a World Bank economist working on privatization. “It should also drive up the price for vouchers.”

All 150 million Russian citizens were offered privatization vouchers last fall, and 98% came forward to claim them. But most haven’t yet figured out what to do with the vouchers, which can be sold, given away or traded in for shares in privatizing companies.

The coupons have a face value of 10,000 rubles, worth $32.36 when they were issued in October but only about $11.28 today. The going rate for a voucher Friday was about 4,300 rubles.

The pace of privatization is also slowing. About 47,000 enterprises were privatized in 1992, but most were small stores or businesses. Only 1,339 of the 8,000 enterprises slated for sale this year had reached the auction block by May 10.

Yeltsin officials have blamed factory directors, often former Communist Party apparatchiks, for stalling privatization and preventing the vast majority of shares of companies that are sold off from reaching the public market. Reformers also fault the State Property Fund, which formally owns all enterprises and is under the control of the conservative Parliament.

“They want to keep a big chunk of shares so they can stay in the business of managing these big enterprises,” a Western economist said, adding that if the Russian people “see the old party hacks getting the ax, they may think there’s some justice.”

Russian and Western advisers said they hope the decree will encourage the United States to come through with aid for privatization, which they said is the most cost-effective form of foreign aid.

Yeltsin’s decree contains a number of provisions that will put more private companies on the market, Boyko said. Enterprises that earned 50 million rubles a year were previously eligible for privatization, but now the cutoff is 1 million rubles, he said.

In addition, factories that sold at least 30% of their wares to the military were off limits to privatization under the old scheme, but the government may now sell them at its discretion, officials said.

“Many ministries used all kinds of pretexts, be it secrecy or military order or something else, to take enterprises subordinated to them out of the privatization schedule,” Bunich said. “The current decree eliminates such tricks.”

A major concern of reformers is the extent to which those who ran enterprises under Soviet rule have managed to keep their positions. Under the current system, it would be extremely difficult for outside investors to secure enough shares to force free-market discipline on an inefficient management.

“The whole idea of privatization is to turn the company around,” Harding said. “If the same people control the company as before, then the chances of that happening are slim.”