New Russian Entrepreneurs Urge On Yeltsin Reforms; Old Guard Drags Its Feet

BRIGHT, young, and energetic, Alexander Sedov and Dmitry Pavlov are ready to make the break with their socialism-steeped past.

They head the external relations department of the Rostov Watch Factory in this southern Russian city. In the two years since they began negotiating deals with Western businesses - free of state interference - they concede they have been burned a few times because of inexperience in capitalist economics.

But they add they have learned from their mistakes. Now, with a few breaks, they insist the plant can survive Russia's industrial collapse and compete for world markets. The factory has a 200 million ruble debt (about $250,000), but that is manageable, they add. "There is demand for our product," Mr. Sedov says. "We're starting to understand what the Western economic system is all about."

To make it over the hump, the watch factory, along with Russia's business sector in general, desperately needs political stability, Mr. Pavlov says, adding that constantly changing tax laws are creating havoc. The battle for power between President Boris Yeltsin and his parliamentary enemies has paralyzed efforts to end Russia's economic crisis.

But opinions differ greatly as to which institution - the president, or Parliament - can create the most favorable conditions for recovery. That question is central to Sunday's nationwide referendum to appraise Mr. Yeltsin's political and economic policies.

Many directors of medium- and large-scale enterprises, accustomed to the perks of the Soviet system, are inclined to back Parliament's go-slow on economic reform. Younger middle managers, as well as many private entrepreneurs, back Yeltsin's more progressive policies.

Both sides have been agitating in the run-up to the referendum. But though small in numbers, Russia's factory directors control much of the nation's industrial potential, and thus, wield great political influence. Their lobby, the Union of Industrialists and Entrepreneurs, has been fiercely critical of government policies.

Denouncing the reform plan as an "economic blitzkrieg," industrialists union leader Arkady Volsky said in a recent speech in Moscow: "The economy could have suffered much less if reforms had been carried out by professionals, not romantics."

In response, Yeltsin has pledged to adjust policy.

But the Parliament, which comprises many former Communist Party bosses and factory directors, wants to significantly slow the pace and alter the scope of reforms, particularly the government's rapid privatization campaign. If the legislature successfully wrestles control over the economy from Yeltsin, Sedov says, reforms could go haywire.

"We won't have a return to Brezhnev times when we had a command economy, but if we stop or decelerate, we'll end up with a system based on corruption and crime," Sedov says.

Yeltsin supporters say most factory directors are resisting reforms because they are too old to discard outdated ideas.

"These people can't fit into the new mechanisms and face losing their positions and their influence," says Vladimir Yemelyanov, deputy head of the Rostov regional administration.

Yeltsin supporters say he must crush his opponents if he wins sufficient backing on Sunday.

"If Yeltsin wins, a crackdown against the Parliament and the introduction of harsh measures is the only way out," says Anatoly Nikolenko, a Rostov entrepreneur. A clampdown would pave the way for a bill guaranteeing private property rights, he says.

If legislative power defeats executive authority, factory directors and others may end up disillusioned. That is because many seem to want an impossible combination of socialist "discipline" and state support for unprofitable enterprises with the profit potential of capitalism. The central Russian region of Mordovia is a bastion of support for legislative power, not just among directors but also many entrepreneurs.

Mordovian legislators, however, make no secret of their desire to roll back reforms. Nikolai Biryukov, speaker of the Mordovian legislature, says he opposes private property, and favors collective production.

An attempt to reintroduce the old system would be unacceptable to most businessmen, who are enjoying their new freedom from state planners. "Can we go back - no way," says Vyacheslav Levakin, a lamp factory director.

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