Zil sticks to old model on its new road: Russia's giant car company has its own view of privatisation, Andrew Higgins writes in Moscow

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The Independent Online
SITTING beneath a framed portrait of Lenin, a tangle of cords from five telephones snaking around his desk, Gennady Vikharev explains how Russia's crash-course in capitalism might change life at the Zil autoworks: it won't.

As a trade union leader at the mammoth plant, purveyor of limousines to the Kremlin and provider of fridges and plastic buckets to the less exalted, he sees no reason to alter management or workforce when Zil goes to the market some time next year.

'We must build our factory for the benefit of the workers,' said Mr Vikharev, a former Communist who makes no apologies for keeping Lenin on his wall: 'I think he was a genius. I agree with his teachings.'

Equally determined to defend the old order under a new guise is Yuri Brakov, Zil's bluff, burly general manager. At a gigantic, polished pine conference table in a 12th floor boardroom, Mr Brakov outlined his vision of what privatisation means: 'I feel quite secure about my future.'

A tough survivor of battles past, Mr Brakov has faced far more difficult challenges than privatisation. Three years ago, he was the man chosen by the Communist Party to try to keep Boris Yeltsin in the political wilderness. He was trounced.

Now, though, may be the time for quiet revenge. Unlike many state factores, Zil makes a profit - or at least claims to. It has not had a full audit and the finances of its 17 plants spread across three former Soviet republics defy any conventional accounting methods.

The possibility of it shedding such responsibilities or trimming its workforce in the interests of profit, however, are slight. Written into its privatisation deal are guarantees that a cradle-to-grave welfare system remains untouched.

Zil began life as a small repair shop a year before the Bolshevik revolution. Nationalised in 1918, it mushroomed into one of the Soviet Union's biggest state firms. It has scaled back production of limousines but is still Russia's main truck manufacturer.

And now, after 70 years as a model of central planning, it has declared itself the first of Russia's industrial behemoths ready for the shift from state to private ownership.

In all, more than 50,000 enterprises are due to be privatised as part of a huge sell-off of state assets. The programme stumbled into effect two days ago when the government began halting efforts to distribute millions of vouchers that will allow the public to buy shares in firms like Zil.

The number of Zil shares available to private investors, however, will be sharply limited. Under pressure from a powerful lobby of industrial managers such as Mr Brakov, the government made changes in its original blueprint to allow workers and bosses to buy 51 per cent of the shares in their firm.

For Zil, though, this was not enough. They did not have the money to buy a controlling share in such a huge firm themselves, so Zil management, supported by the trade union, negotiated another option. This allows control to stay with the current leadership even though management will buy only 5 per cent of the shares themselves and a 25 per cent portion of stock handed out free to workers will have no voting rights.

In order to do this, Mr Brakov won key concessions from the State Property Commissions. Not only will he be able to use profits from the past two years to buy up 25 per cent of the voting shares, the government will chip in so that Zil can buy a further block of stock and keep absolute control.

To explain the deal, Mr Vikharev quotes Lenin: 'He said in 1921 that the new society must be created out of the old.' Lenin did indeed say such a thing. He said it to justify the use of capitalist methods as part of his New Economic Policy. What workers and bosses at Zil seem have in mind is the opposite.