Russians Urge More Unified Economic Plan
Yavlinsky draft calls for convertible ruble, stringent curbs in government spending
AS winter approaches and economic crisis deepens, the Soviet leadership is rushing to find an economic plan acceptable to most of the now-independent republics.Some variations of a proposed economic agreement are circulating among the central administration and the republican governments. Proposals range from a loose convention among independent republican economies to a relatively centralized system with a single currency, monetary, tax, and customs structure. The current team managing the Soviet economy, headed by Russian Premier Ivan Silayev, is leaning toward the more unified approach. Mr. Silayev's deputy, radical economist Grigory Yavlinsky, has drawn up a draft treaty of economic union that was submitted last week to Soviet President Mikhail Gorbachev and leaders of 10 republics grouped in the new State Council. "We have major economic difficulties," Mr. Yavlinsky told reporters yesterday. "Inflation is rampant. Production is going down. The goal of this document is to lead the country out the crisis." Yavlinsky admitted that there would be difficulties in getting the republics to agree to this draft treaty, but he added, "Economic union is not a choice. It is a necessity. This much is clear to everybody." He said if republics delay in signing the treaty, Russia is prepared to move forward alone. Representatives of all the Soviet republics, including the Baltics, participated in the discussions leading to this draft treaty. But the treaty will still have to be approved by each republican government. The Ukraine, the second richest Soviet republic after Russia, will likely not make its decision until after a Dec. 1 referendum on independence. Yavlinsky predicted the process of finalizing the treaty will be lengthy. "It will be difficult to reconcile this document with the political ambitions of various leaders." Yavlinsky refused to give specific figures for Western aid needed to help the Soviet Union through this crisis. But he said that "transition to a market in this country without interaction and integration with Western countries is simply impossible." He said the West would not be ready to give aid until a treaty on union is signed. The draft treaty of economic union is a voluntary association, allowing for an associative status for republics ready to assume only parts of the joint obligations. The republics that do not want to join will be treated as foreign countries, the document states. The economic union will jointly form policy on a range of areas including monetary and credit policy, finances, taxes, customs, currency, legal regulation, and the movement of goods, services, and labor, according to a summary of the text yesterday in the daily newspaper Izvestia. Policy will be made at the highest level by the State Council. Below that will be an interstate economic committee, a banking union, and an arbitration body. The draft treaty states that private property will be given priority in the new economic union and freedom of entrepreneurship guaranteed. Goods and services would move freely throughout the union, as well as the labor force, without any restrictions by individual republics. One of the more controversial aspects of the Yavlinsky plan is its suggestion that the ruble be preserved as a single currency in the union and that steps be taken to strengthen its value during the next two years. That would include stringent curbs in government spending and tightening credit to bring down the massive inflation that makes the ruble virtually worthless. On this basis, the treaty says, partial convertibility of the ruble to allow foreigners to buy and sell rubles, for example, will be ins tituted more quickly. Many republics, including the powerful Ukraine, have already indicated their desire to establish their own currencies, however. The Yavlinsky draft, bowing to that reality slightly, says an introduction of national currencies is permitted but only "under condition that they do not undermine the viability of the ruble," presumably by having their value tied to that of the ruble. The proposed new banking system is also a mixture of central administration and republican sovereignty. The current State Bank of the USSR would be abolished and replaced by a union of republican central banks, similar to the US Federal Reserve system. The banking union, independent of the executive power, would regulate the ruble rate, control the use of gold and currency reserves, regulate commercial banks, and control the money supply. The other thorny issue is that of budgets and taxes. Even before t he failed coup, the Russian republic and the Ukraine had refused to have any federal taxes. The draft treaty reflects that view, calling instead for republics to give a fixed percentage of their national income (or a similar index) to fund common programs of the union. Finally there is the problem of foreign debt and credits. Many foreign governments have said that they cannot give aid and loans unless they know to whom they are giving them. The draft treaty says the union can receive loans only if all the members agree. Otherwise individual republics can get credits but are fully responsible for them. The draft apparently drops an earlier idea to divide the responsibility for the Soviet Union's huge estimated $60 billion debt among the republics.