Privatisation ties Moscow up in red tape

THE PITHIEST explanation of what has gone wrong with Russia's privatisation programme came from Pavel Voshchanov, former press secretary to Mikhail Gorbachev. 'The trouble with modern Russia,' he sighed wearily, 'is that its bureaucracy is miserably poor.'

Three weeks into the grand scheme to give every citizen a stake in the country's property, millions of vouchers have not been distributed, and millions more have not even been printed. Some Russians have no idea where to collect their vouchers, and others who thought they knew have run into a brick wall of officialdom, spending a whole day being shunted from one office to another.

'Most people have enough on their plate to worry about and they are thoroughly confused by the whole business,' said one Moscow woman.

Many Russians are so unsure about the vouchers' value and purpose that, if they have been lucky enough to get them, they have instantly sold them for a bottle of vodka or some winter clothes. The beneficiaries, as often in post-Communist Russia, are clever entrepreneurs, gangsters and speculators. They see a chance to amass large holdings of vouchers and make an easy profit.

'During the current privatisation, the powers-that-be are striving above all to solve their own problems. This leads to the formation of a corrupt and mafioso state,' Mr Voshchanov said.

The government has promised to issue 148 million vouchers - one for every man, woman and child in Russia - by the end of this year. Next year, people will be able to swap their vouchers for shares in state companies, or use them to buy land, houses and municipal buildings. In the meantime, they are free to sell them for cash.

The government, anxious for its vision of a mass property-owning democracy to become a reality, does not want people to sell straight away. But it appears to have underestimated the impact on the programme of Russia's runaway inflation. The face value of each voucher is 10,000 roubles (about pounds 16) but the rouble's value is falling every day because of inflation, whose annual rate is likely to soar above 1,000 per cent by the end of December.

For many Russians, it makes sense to sell their vouchers as fast as possible and spend the cash, or to exchange them for something that seems more useful, such as meat, alcohol or an animal. Thus the hardy Siberians of the Altai region are reported to have rejected a share-owning future in favour of bartering vouchers for a bottle of vodka each.

In the Urals region of Orenburg, a man put an advert in a newspaper proposing to exchange a cow for vouchers. In the Chuvash autonomous republic east of Moscow, people have offered to sell their vouchers in return for renting an apartment.

A primitive form of cash market in vouchers has also sprung up, and the bidding prices indicate widespread scepticism about the programme. A joint stock company in the Far Eastern city of Khabarovsk is offering a mere 700 to 800 roubles per voucher, or scarcely more than pounds 1.

Even that is perhaps better than no voucher at all. By last Friday, out of 3.1 million vouchers planned to be issued in the Moscow region, only 90,000 had been successfully distributed. Across the whole of Russia, a mere four million people, or less than 3 per cent of the population, had received vouchers, according to Olga Tankova of the Committee for the Management of State Property.

One theory holds that Russia's state printing presses lacked the capacity to issue all 148 million vouchers when they were needed. Thanks to the inflation, they are already working night and day to churn out hundreds of billions of roubles in banknotes. But Mr Voshchanov's succinct appraisal of Russian bureaucratic standards also seems to throw light on the problem.

Government ministers are confident that all the vouchers will be printed and distributed by the end of the year. If so, it may well prove to be an exercise resembling the frantic, last-minute fulfilment of state economic plans in the Communist era.