Russia's economic reforms grind to a standstill in the regions: Novosibirsk's suspension of state sell-offs typifies the local opposition to Yeltsin, writes Andrew Higgins

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The Independent Online
SVETLANA FISANA sits behind a wooden counter at Number 37 Soviet Street, smiling and answering the same question dozens of times a day: is reform dead? She is paid to say no, at least not yet. But a crucial part of it - the privatisation of state industry - is under threat.

Mrs Fisana is one of the 33 staff at the Novosibirsk Share Centre, a spanking new office set up six weeks ago to help residents of this western Siberian city take part in Russia's ambitious sell-off of state firms.

The centre, funded by the International Finance Corporation, an affiliate of the World Bank, is meant to offer advice on how to invest - and a rose-tinted glimpse of what a future under capitalism could be: clean floors, courteous service and no queues. Most visitors, though, want only assurances: 'Everyone is anxious,' says Mrs Fisana, 'They want to know what is going on.'

They have good reason to ask. Just over a week ago, Novosibirsk's regional Soviet (or council) voted to suspend all privatisation auctions for three months. 'I can't understand it at all,' says Andrei Danilyuk, the share centre's director. 'I absolutely do not understand . . . People were just starting to grasp what privatisation really is, to open their eyes.'

Russia launched its grand sell-off last year, pushing ahead at breakneck speed to demolish state ownership and establish free-market change. By the end of February, 58,000 enterprises, mostly shops and small workshops, had been put on the block. But few, if any, changed hands. In most cases, ownership merely shifted from the state to so-called workers' collectives and or management.

The decisive phase of privatisation, aimed at transforming Russia's industrial spine, has only just begun. It covers 5,000 medium and large firms, including such socialist behemoths as the Zil Autoworks and the Dzerzhinsky Tractor Factory.

Chosen to lead the way was Novosibirsk, along with 14 other regions scattered across the country. More than 1,700 miles from Moscow, Novosibirsk can claim to be the cradle of economic reform. It was here, a decade ago, that a group of heretical academics led by Tatyana Zaslavskaya first challenged the command economy in a bold manifesto later known as the 'Novosibirsk Report'.

Instead of pioneering change, however, Novosibirsk is now in the vanguard of do-nothing opposition. 'Reactionary political forces are waging a powerful counter attack,' says Anatoly Manokhin, President Boris Yeltsin's pro-consul. 'They have decided that their time has come, that their hour has struck.'

Mr Yeltsin's best hope of resisting the assault rests with the national referendum this Sunday on his leadership. Whatever the outcome, the high tide of rapid economic reform has probably passed. 'The period of reformist romanticism is over,' the Prime Minister, Viktor Chernomyrdin, announced last week. Along with Mr Yeltsin's mutinous Vice- President, Alexander Rutskoi, Mr Chernomyrdin has voiced doubts about the pace of privatisation.

The public has little enthusiasm - with good reason in some cases - regarding the sell-off of state firms as just a massive exercise in asset stripping. Mr Yeltsin tried to get the public involved by issuing a 10,000-rouble ( pounds 8.20) voucher to every one of Russia's 150 million people. But the vouchers, designed to be converted into shares, have become emblems of the economic collapse, trading on the street for less than half their nominal value.

There is little Mr Yeltsin can do to force Russia's 49 regions, 16 republics and assorted other administrative areas into line. Some, like those in Nizhny Novgorod, promote radical change, but many more seem to share the views of the Novosibirsk Soviet. His weakness is particularly glaring in Novosibirsk, whose governor he tried to sack on 20 March only to back down a few days later. Vitaly Mukha, the governor, is typical of the local barons now in the ascendant across much of Russia. He was the region's former Communist Party secretary and has the support of local bureaucrats and the local Soviet.

Having survived the aftermath of the August 1991 coup and the first wave of shock therapy, Mr Mukha and his allies have gone on the offensive. Their opposition to privatisation is as much political as as economic: it shows who is boss. They justify the move as necessary to stop outsiders from buying up Novosibirsk's industry. But local officials offer only one example of this happening - a lone businessmen from Turkmenistan said to have invested 1,200 privatisation vouchers.

For the time being, Novosibirsk is merely postponing not cancelling privatisation. But Mr Yeltsin has warned reform is like riding a bicycle: it must not stop. His local representative, Mr Manokhin, is pessimistic: 'Nothing is ever more permanent in Russia than the temporary.'