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Slow start to Russia's sale of the century

AT NUMBER 12 Dmitriya Ulyanova Street, the new age dawned much like the old one - with grey clouds, a chilly late autumn wind and a scowl from a bossy woman haranguing customers at a chipped Formica counter.

Yesterday was Day One of Russia's sale of the century, a hugely ambitious plan to turn state industry over to private ownership. The sell-off is to be the biggest of its kind ever attempted, dwarfing even the boldest privatisation programmes in Eastern Europe.

The start, though, was slow. Its first stage, the distribution of freshly minted privatisation vouchers worth 10,000 roubles ( pounds 25) each, is being handled by a network of state savings banks covering Russia's 10 time zones. Every man, woman and child is supposed to get one. But only 40 million of the 150 million needed have been printed and many remain locked in warehouses.

Despite an upbeat television campaign devised with the help of US and British advertising firms, most Russians show little enthusiasm for what President Boris Yeltsin has called their 'ticket to the free-market economy'.

Adding to the mood of gloom was news yesterday that the rouble - once worth dollars 2 at a fixed exchange rate - had lost yet another 20 per cent of its value on Moscow's fledgling currency exchange. It now takes 309 roubles to buy a single dollar.

According to the Itar-Tass news agency, the privatisation launch got off to a good start in Vladivostok and other far eastern cities. It reported a rush to buy up newly issued vouchers by Chinese speculators.

In Moscow, though, there was only bureaucratic confusion. Typical of the mood was the scene at the Dmitriya Ulyanova Savings Bank, a hole-in-the-wall establishment with a cracked tile floor and grimy lace curtain. The cashier, her cheeks caked in purplish powder, put it bluntly: 'Yes, we do have some vouchers but we're not giving them out.' Why not? 'We have a separate office for that.'

This second office stood about a mile away on Trade Union Street. The door, plastered with a sign declaring a voucher distribution point, looked promising. Inside, though, was a decorator putting up wallpaper and four grumpy bank officials with bare desks and orders to tell visitors to come back in a few days.

According to the initial plan announced by President Yeltsin in August, it will take three months before all the vouchers have been handed out. Then, from 1 January, Russians will be able to exchange them for shares in one of more that 5,000 state enterprises up up for sale. These include mammoth firms like the Zil car plant, which employs 110,000 workers and is best known as manufacturer of limousines for leaders, but the final list has yet to be announced. The vouchers can also be sold for cash, though demand, at least in Moscow, is so far light.

Initial excitement over economic reform has given way to cynicism. With inflation expected to reach more than 2,000 per cent this year, even the promise of a voucher worth nearly two month's salary stirs little joy.

Ironically, the distribution of Mr Yeltsin's 'tickets' to a capitalist economy depends on one of the most hated relics of the old socialist system - the propiska or internal passports that kept people bound to a single place of residence. Every adult hoping to obtain a voucher must produce a propiska.

The ultimate object of privatisation is as much political as economic. Mr Yeltsin hopes to create a property-owning middle class that will anchor Russia's fragile democracy. The International Monetary Fund and western officials have praised the plan as a heroic mission to transform and ultimately rescue the Russian economy. 'It is hugely in their interest and hugely in our interest that they succeed,' said Michael Heseltine, President of the Board of Trade, who visited Moscow this week.

But Russian conservatives, keen to exploit popular disconent over the economy, have attacked privatisation as a fire-sale that will benefit only well- connected speculators and organised criminals. 'This illegal scheme will not hand out property to the people but will rob them and lead to the laundering of Mafia money,' thundered a statement this week by the parliamentary group, the Civic Society.

More moderate voices have also expressed scepticism. Mikhail Gorbachev has called it a 'sham' while trade union leaders dismiss it as trick that will only bring unemployment and further hardship.

KIEV - Ukraine's parliament voted yesterday to sack the republic's government, Reuter reports. The decision followed the resignation of the Prime Minister, Vitold Fokin, who is widely blamed for delaying free-market reform and plunging Ukraine into economic crisis.