In a speech Monday, President Mengistu Haile Mariam said he wants a return to capitalism. Mr. Mengistu faces impending cuts in Soviet aid and widespread famine after drought and crop failures. He conceded that economic central planning had been a failure.

Ethiopia is fighting two bitter guerrilla wars.

Among the specific reforms Mengistu mentioned were:

-Allowing the private sector to take part throughout the economy.

-Giving government-owned land to private firms.

-Putting state-owned industries on a profit basis; selling unprofitable businesses.

-Giving peasant farmers legal ownership of land and the right to sell their produce.

Mengistu's five-hour speech was broadcast live on national radio and television.

The Ethiopian News Agency said changes were ``based on the objective conditions in the country and taking into account the prevailing situation in the world.''

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