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Soviet Legislature Adopts Economic Reform Plan

October 19, 1990

MOSCOW (AP) _ In the Soviet Union’s most radical departure from Communist economics in 70 years, the legislature voted Friday to transform the economy into the market- oriented system advocated by Mikhail S. Gorbachev.

But a rift with the Russian Federation, the country’s largest republic, threatened to disrupt the effort.

The Supreme Soviet voted 333-12, with nine abstentions, in favor of Gorbachev’s plan to free most prices of government control, end most government monopolies and encourage free enterprise in this nation of 285 million residents.

Lawmakers had given the bill preliminary approval earlier before debating amendments.

It is an ambitious outline for ending chronic shortages of food and housing, integrating the Soviet Union in the world market and encouraging people to work harder and enjoy the benefits.

The plan partially reverses decades of tight central control of the nation’s economy, unleashing market forces to determine prices, what products to make, how to make them and where.

Hours after the plan was approved, the government’s statistics agency released dismal figures for the economy’s first nine months of 1990. Gross national product was down 1.5 percent and inflation was 9 percent, Tass reported.

The plan hopes to reverse those trends, but its success rides on officials in the 15 Soviet republics who must put it into effect through local legislation.

And the republics - increasingly anxious to break away from central control because of decades of unfair treatment under Kremlin economic policies - may not cooperate as much as necessary.

The blueprint came under fire even before Friday’s vote from Gorbachev’s main political rival, Boris N. Yeltsin, president of the Russian Federation. On Friday, Gorbachev launched a counterattack.

″Comrade Yeltsin’s assertions are strange, to say the least,″ Gorbachev told the 542-member legislature.

″I’m under the impression that the Russian leadership is afraid of difficulties and wants to pass responsibility ... onto central organs of power,″ he said.

Gorbachev said he shared many of Yeltsin’s concerns about deteriorating political and economic conditions and inflation. But he accused the government of the Russian republic of contributing to inflation with its recent decision to raise wholesale meat prices.

Yeltsin has lambasted Gorbachev’s plan as a ″catastrophe″ that is ″doomed to fail″ within months. He has said his own republic, the largest and richest, may proceed with its own 500-day plan for switching to a market economy as early as Nov. 1.

In a 50-minute speech Friday, Gorbachev tried to persuade the republics to sign onto his plan. Supporters say it allows the republics wide latitude to tailor reforms to local conditions.

He called the plan the only ″rational″ course of action. But his speech won only five seconds of lukewarm applause.

Stanislav Shatalin, author of the 500-day plan that Russia adopted, told a news conference that although the Supreme Soviet did not choose his plan, he endorses Gorbachev’s outline.

And in a clear reference to Yeltsin, he said the program’s success depends on ″political stabilization.″

″The republics’ survival will depend on whether they act in concert or not,″ Shatalin said.

Another economist, deputy Soviet premier Leonid Abalkin, said Yeltsin’s actions could bring on ″chaos and disintegration,″ and he called for people to express ″confidence in the president.″

That confidence will be crucial to people’s willingness to endure the unemployment and inflation expected as the reforms proceed.

The reforms touch on the fundamentals of socialism, including private ownership of businesses and of land. The republics were left to decide who should be allowed to have private property and whether to allow private ownership of land.

Gorbachev acknowledged that some people were asking whether the transition to a market economy was a departure from socialism.

″We are striving, not through declarations but in reality, to strengthen socialism″ by maximizing potential, he told the lawmakers.

Gorbachev’s plan would transform the moribund Soviet economy in four stages. It sets no deadline for the switch, but says other countries have achieved similar goals in 18 months to two years.

The plan begins by cutting the budget deficit and the nation’s money supply, increasing production of consumer goods, raising bank interest rates for savings and introducing land reform.

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