Yeltsin Tries to Turn Skeptical Russians Into Investors

AS President Boris Yeltsin and other reformers see it, the best way to guarantee Russia's continued fast move to a market economy is rapid privatization.

"What we need is millions of property owners, not a couple of millionaires," Mr. Yeltsin said several times during appearances marking the first anniversary of the failed Aug. 19 coup.

At a news conference, the Russian president expressed confidence that his privatization plan would work. Unemployment would grow, he said, and some factories would go bankrupt, but people could expect to see a stabilization by mid-1993. He also dismissed the possibility of another coup.

Some foreign and Russian experts are not as optimistic as Yeltsin, however. The rapid timetable for privatization will stretch Russian logistical capabilities to the limit, they say.

Under the plan, every one of Russia's 150 million citizens will receive a "privatization check" enabling them to buy shares in large state-owned enterprises. Distribution of the privatization checks, which have a face value of 10,000 rubles (about $62), will start Oct. 1 and will be completed by year's end, according to Minister of Privatization Anatoly Chubais.

Using the check, Russian citizens will have the chance to invest directly in up to 7,000 Russian enterprises that should be transformed into joint-stock companies by December, said Mr. Chubais, adding people can also pool their checks in investment funds. Those funds would buy shares in several businesses, thus spreading out the risk of losses due to bankruptcies, privatization officials said.

The announcement of the privatization plan comes at a time when the government faces constant criticism over its reform policies.

Efforts to bring about financial stabilization have produced less than desired results for the government.

Inflation has spiraled and production plummeted since the freeing of state price controls in January, shaking the belief of many that a rapid move to a market is the best way to cure Russia's economic woes. Rising popular discontent, in turn, has strengthened conservatives seeking to change the direction of reforms.Yeltsin and his team of reformers clearly are counting on privatization to stop the erosion of popular support for rapid reform, as well as check the corresponding rise in popularity of conser vatives.

"The people are really dissatisfied because they [the government] haven't been able to do anything to improve the lives of the masses," says Boris Grushin, chief of the Vox Populi polling service.

"But if Yeltsin can take realistic steps in privatization, then he can retain his largest base of support, which is the people," he says.

CONVINCING people of the merits of privatization is now the greatest challenge for the government, Mr. Grushin says. In Russia, the concept of private property is little understood, and therefore widely feared. Even before the 1917 Bolshevik Revolution and subsequent nationalization of the economy, property ownership was limited.

"It's unlikely privatization will proceed according to the plan," Grushin said. "But that doesn't mean the government has lost all it's chances for success."

At a news conference Aug. 21, Yeltsin said the government waited to begin privatization until it felt the population was psychologically prepared. But even today, a significant segment of society still has doubts. According to government estimates, 45 million people, or about 30 percent of Russia's population, remain wary of privatization, and are expected to sell their privatization checks soon after they receive them.

Chubais, the privatization minister, has urged people to hold on to their checks even if they do not intend to participate in privatization, saying the voucher's value is likely to go up. Meanwhile, in a televised speech, Yeltsin tried to win the skeptics over with a personal appeal.

"I call on you, my esteemed countrymen ... to help the government and the president carry out privatization," Yeltsin said. "The more sensibly you manage privatization checks, the faster everyone will get a return from reforms."

A year ago, the nation responded to Yeltsin when he climbed atop a tank during the putsch and called for people to defend the Russian parliament building against Communist hardliners. But now, after months of painful reforms, it is unclear how many people will be influenced by Yeltsin's rallying cries, says Grushin, the pollster.