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7 DECEMBER 1989 





JPRS Report — 

Soviet Union 

Economic Affairs 




19980123 159 

Soviet Union 

Economic Affairs 




Economic Effects of Conversion to Civilian Production Discussed 

[SELSKAYA ZHIZN, 2 Nov 89] . 1 

Roundtable Discussion on Results, Profitability of Conversion 

[L. Ivankin, Ya. Stmgach; LENINGRADSKAYA PRAVDA, 2 Oct 89] . 2 

Proposed Amendments to Cooperative Law Called ‘Step Backward’ 

[A. Yakovlev, et al; SOVETSKAYA ROSSIYA, 4 Oct 89] . 6 


Production Shortfalls Disrupt Fulfillment of State Orders 
[K. Malakhov: PLANOVOYE KHOZYA YSTVO No 10, Oct 89] . 8 


High-Interest Bonds, Other Securities Needed To Counter Inflation 


Procedures for Currency Auction Explained [EKONOMICHESKAYA GAZETA No 40, Oct 89] ... 19 
Cooperatives Offer Solution to Excess Money Supply 
fN. P. Shmelyev; VECHERNYAYA MOSKVA, 12 Oct 89] . 21 


Consumer Goods Production from Ministry of Defense 

[V.M. Arkhipov: SOVETSKAYA KULTURA, 5 Oct 89] . 23 

Kharkov Tank Plant Lags in Civilian Production [A. Kleba; IZVESTIYA, 19 Oct 89] . 24 

Consumer Goods Production More Profitable than Defense [KRASNAYA ZVEZDA, 26 Oct 89] .. 25 
Success of Conversion at All-Union Aviation Materials Institute 

[V. Savelev; VECHERNYAYA MOSKVA, 5 Sep 89] . 25 

Results of Minlegpishchemash Transfer to Defense Sector Analyzed 

[L. Pertsevaya; SOTSIALISTICHESKAYA INDUSTRIYA, 22 Oct 89] . 26 

Conversion: Defense/Civilian Joint Stock Groups Proposed 

[A. Kusov; MOSKOVSKA YA PRA VDA, 6 Sep 89] . 28 

Conversion Creates Problems at Leningrad Shipyards 

[V. Ganshin, L. Frolov; LENINGRADSKAYA PRAVDA, 8 Sep 89] . 29 

Conversion: Policy of Scrapping Armored Vehicles Questioned 

[A. Ostrovskiy; KRASNAYA ZVEZDA, 31 Oct 89] . 30 

Motor Vehicle Repair Enterprise Produeing Furniture 

[F. Semyanovskiy; KRASNAYA ZVEZDA, 10 Oct 89] ... 31 

Conversion: Missile Design Bureau Producing Washing Machines 
[Yu. Shcherbinin; PRAVDA, 6 Oct 89] . 31 


Gosplan Head on BSSR Approach to Self-Financing 


Estonian Export Potential Examined 

[Kh. Eller, Kh. Reedik; SOVETSKAYA ESTONIYA, 12 Oct 89] . 35 

Price, Tax Reforms Important for Interrepublic Trade 
(EKO) No 9, Sep 89] . 37 

7 DECEMBER 1989 


Economic Affairs 

UkSSR Council of Ministers Chairman on Economic Reform, Other Issues 
[V.A. Masol; KAZAKHSTANSKAYA PRAVDA, 3 Sep 89] . 44 



Preparation of Law on Leasing . 48 

Improvements in Laws On Leasing Suggested 

[V. Gusakov; VESTNIK AGROPROMA No 36, I Sep 89] . 48 

Legal Problems Interfere With Implementation of Leasing 

[I. Kostik; VESTNIK AGROPROMA No 40. 29 Sep 89] . 50 


Krasnodar First Secretary on Lack of Progress in Perestroyka 
fl. Polozkov; SELSKIYE ZORI No 8, Aug 89] . 53 


Rail Transport Problems Disrupt Produce Deliveries . 64 

Grain Delivery Problems at Ports [G. Melnychuk; SILSKI VISTI, 19 Sep 89] . 64 

Produce Transport Delays Detailed [M. Nechypurenko, et al; SILSKI VISTI, 13 Oct 89] . 65 

Sugar Beet Processing Problems Detailed . 66 

Early Resolution Doubtful [SELSKAYA ZHIZN, 9 Sep 89] . 66 

Problems in Central Chernozem fYu. Baklanov; SELSKAYA ZHIZN, 12 Oct 89] . 67 

New Sugar Plant fN Bulavintsev; SOVETSKAYA ROSSIYA, 16 Sep 89] . 69 

Belgorod Oblast Progress [SOVETSKAYA ROSSIYA. 6 Oct 89] . 69 

Belgorod Oblast Problems [VESTNIK AGROPROMA No 39, 22 Sep 89] . 69 

Sugar Beet Harvest Transport, Distribution Problems in Ukraine . 69 

Harvest Lags [A. Gorobets; PRAVDA UKRAINY, 26 Sep 89] . 69 

Rail Transport Problems [V. Denisenko; GUDOK, 20 Oct 89] . 70 


Livestock Feed Problems Retard Agricultural Development [A. Kosynkin; PRA VDA, 23 Aug 89] . 72 


Defense Industry Converting to Farm Machinery Production 

[N Zheleznov; SOVETSKA YA ROSSIYA, 12 Oct 89] . 73 

Inferior Rostov Combines Cause Grain Losses 

[Ye. Boshnyakov; SOTSIALISTICHESKA YA INDUSTRIYA, 15 Aug 89] . 74 

Machinery, Equipment Requirements for Central Chernozem Zone 

[M. Runchev; SELSKIYE ZORI No 9, Sep 89] . 76 

Equipment Problems Hurt Feed Procurement Effort . 78 

Equipment Problems [Yu. Baklanov; SELSKAYA ZHIZN, 23 Aug 89] . 78 

Inferior Equipment, Official Indifference 

[Yu. Belyayev; SOVETSKAYA ROSSIYA, 15 Jun 89] . 79 

Spare Parts Supply Problems in Kazakhstan . 81 

Supply Problems Hamper Harvest [V. Savelyev; SELSKAYA ZHIZN, 23 Jul 89] . 81 

Follow-Up Commentary [SELSKAYA ZHIZN, 3 Sep 89] . 82 


Consumer Interests Addressed in Turkmenistan . 84 

Food Shortages Tied to 1st Secretary’s Absence 

[M. Meleshenko; SOVETSKAYA KULTURA, 31 Oct 89] . 84 

Consumer Monitoring Club [TURKMENSKAYA ISKRA, 10 Oct 89] . 85 

JPRS-UEA-89-039 ^ . 

7 DECEMBER 1989 3 Economic Affairs 


Output of Soaps, Detergents Increases, Distribution Problems Remain 

[PRAVDA UKRAINY, 4 Nov 89] . 87 

Firm Stores, Other Trade, Production Problems Discussed 


Workers Use Strike Threat To Resolve Poor Housing Complaints 
[N. Zenkov; SOVETSKAYA KIRGIZIYA, 14 Sep 89] . 90 



International Machine Building Concern Created 



Jan-Sep Rail Performance Reported [GUDOK, 18 Oct 89] . 94 

Railroad Line Enterprises’ Rights Published [GUDOK, 29 Sep 89] . 97 

Chief Interviewed on BAM’s Future [V.A. Gorbunov; GUDOK, 30 Sep 89] . 99 

7 December 1989 




Economic Effects of Conversion to Civilian 
Production Discussed 

904A0060A Moscow SELSKAYA ZHIZN in Russian 
2 Nov 89 p 44 

[Response by Maj Gen V. Korolev, professor, doctor of 
economic sciences, head of Department of Political 
Economy and Military Economics of the Military- 
Political Academy imeni V.L Lenin, in response to 
reader’s letter:“Conversion”] 

[Text] Recently one hears more frequently about the 
^'conversion** of military production. What is it? A curtail¬ 
ment of defense industry, voluntary and one-sided disar¬ 
mament of our country? I would like a competent spe¬ 
cialist to tell us about conversion in SELSKAYA ZHIZN. 
[Signed] V. Ishchuk, town of Radekhov, Lvov oblast. 

[Korolev] In brief, conversion is going over from mili¬ 
tary production to production of peacetime goods. 

Why did conversion become possible today? First of all, 
because first successes appeared and perspectives 
opened in the field of true disarmament, especially in 
connection with the going into effect of the Soviet- 
American agreement on destruction of medium and 
short-range missiles. Also, progress in negotiations on 
reductions in strategic aggressive weapons, the possi¬ 
bility of concluding a convention on the liquidation of 
chemical weapons, and negotiations began on conven¬ 
tional armaments in Europe. 

Speaking at the United Nations, M.S. Gorbachev 
emphasized the timeliness of the transfer from the eco¬ 
nomics of armament to the economics of disarmament 
and suggested that all governments, especially the large 
military powers, make their national plans for conver¬ 
sion. Based on them, a special international group of 
scientists could prepare materials on the problem. For its 
part, the Soviet Union decided in the course of 1989 to 
prepare experimental plans for a civilian reequipping of 
2-3 defense enterprises, and publicize the results of the 
experimental work restructuring of specialists from the 
defense industry and also the utilization of its equip¬ 
ment, buildings and related equipment in peaceful areas. 

Furthermore, in January 1989 the Soviet Union 
announced a 12 percent personnel reduction in the 
Armed Forces, 14 percent in the military budget, and 
19.5 percent in armaments production and military 
technology. At this time, conversion is proceeding on a 
bilateral foundation. However, this foundation is asym¬ 
metrical: quantity and structure of military enterprises 
and armaments subject to the INF treaty significantly 
differ between the Soviet and American sides. In the 
Soviet Union, in part, production of intermediate and 
short-range rockets, their launchers and ancillary equip¬ 
ment has been discontinued. Certain parts of the rockets 
are being eliminated, others are being passed on to the 

peoples’ economy for peaceful use. It has been 
announced that instead of rockets, new forms of drilling 
equipment, metal-cutting lathes, perfected machines for 
processing of agricultural production, and consumer 
goods will be turned out. 

In January, a new stage of conversion is beginning. It will 
involve restudy of many military factories, eliminate 
them or convert their military technology, which is 
already paid for, to peaceful purposes, find jobs for 
retired military, requalify a portion of the personnel of 
defense enterprises—^all this requires new and substan¬ 
tial expenditure. 

What economic advantages does the policy of disarma¬ 
ment now being effectuated in the country offer? 

The intended reduction in defense expenditures of 14 
percent will yield direct savings of 10 billion rubles. 
Furthermore, releasing 500,000 military, of whom, as 
analysis indicates, at least 80 percent can be attracted to 
the people’s economy, will create favorable conditions 
for growth of public production. According to specialists’ 
calculations, this will permit increase of the national 
income of the country by a minimum of 1.8 billion 
rubles. It follows that the overall economic effect on 
society from reduction in defense expenditure and in the 
numbers of Armed Forces personnel, and in connection 
with it attraction into public production of demobilized 
personnel, will amount to about 12 billion rubles. All 
these means can be used for social needs and economic 
development of the country. 

But the economic effect of reduction of the Armed 
Forces and conversion of the powers of military produc¬ 
tion is not limited to the above-mentioned sum. The 
elimination of 10,000 tanks, 800 combat aircraft, and 
many thousands of units of other military technologies 
will permit the country, figuratively speaking, to “beat 
swords into plowshares” and obtain an additional 1.8 
million tons of steel, 0.5 million tons of aluminum, and 
also the use for civilian needs of 1.8 million tons of 
various fuels annually. All of this, with former Armed 
Forces strengths and combat technology, would have 
been used for combat preparedness and for replacement 
of rapidly-aging weapons. After all, today many forms of 
weapons are morally unsuitable for the conduct of con¬ 
temporary warfare already 4-5 years after the beginning 
of their mass production. And an active life-cycle of even 
ordinary armament systems does not exceed 10-12 years. 

A significant economic effect will be obtained from 
direct use for civilian purposes of military and its ancil¬ 
lary equipment, their assemblies and parts. Diesel tank 
engines, some aircraft equipment, troop command and 
control points, and so-called dual purpose equipment: 
automobiles, bulldozers, mobile power stations, river¬ 
crossing equipment, troop quartering (quartermaster 
and engineer) equipment, and many other items are kept 
in mind. The owners of this wealth could become indus¬ 
trial enterprises, sovkhozes, kolkhozes, cooperatives, 
individual renters, schools, professional-technical 



7 December 1989 

schools, and other educational institutions. Relatively 
low prices for military property to be transferred to the 
people’s economy, if accompanied by well-organized 
information, will help the program’s rapid execution. 
One could organize regional auctions of assemblies and 
parts, even entire technical systems, which could serve 
peaceful labor. 

From our viewpoint, the problem of reorienting enter¬ 
prises which turned out military equipment now being 
eliminated to civilian production is fully solvable. In the 
USSR, this involves factories at Votkinsk, Volgograd, 
Petropavlovsk, and Sverdlovsk. Even though the INF 
Treaty does not prohibit the use of their capabilities to 
produce other kinds of weapons, the enterprises men¬ 
tioned are already delivering civilian products. Thus, for 
instance, an automated line for assembly of precision 
lathes with programmed controls is running at the Vot¬ 
kinsk machine-building factory; it also produces equip¬ 
ment for dairies, systems for drilling installations and 
underwater drilling, assemblies and parts for automo¬ 
biles and washing machines. 

In the course of the current perestroyka, technical mod¬ 
ernization and equipping of civilian enterprises is 
entrusted to industrial administrations of defense 
branches. It is decided to convert 250 military factories 
to the manufacture of equipment for processing of 
agricultural raw materials. The execution of these plans 
will occupy over 200 leading scientific research institutes 
and builders’ offices of defense industries. 

Already now industry working for military requirements 
manufactures about 2000 items needed for daily living, 
economic, and cultural purposes, while civilian produc¬ 
tion takes about half the volume. Only in 1988 almost 10 
million television sets, 95 percent of all domestic refrig¬ 
erators, 62 percent of washing machines, and 69 percent 
of vacuum cleaners were produced here. It is estimated 
that in the coming years defense industry will develop 
and produce more than 140 kinds of complicated tech¬ 
nological consumers goods, including digital laser record 
players, videocameras, pocket watches with voice syn¬ 
thesizers, videotape recorders, civilian computers and 
others. In a word, reduction of the Armed Forces and 
conversion of a portion of military production permits 
society to get a significant economic advantage. But to 
bring conversion into effect, a whole series of economic 
and social problems must be solved. 

Roundtable Discussion on Results, Profitability of 

in Russian 2 Oct 89 p 2 

[Roundtable discussion by members of LENINGRAD¬ 
SKA Y A PRA VDA Businessmen’s Club, conducted by L. 
Ivankin and Ya. Strugach, under the rubric “The Busi¬ 
nessmen’s Club”: “Levers and Incentives”] 

[Text] Probably no problem is more acute today than the 
shortage of consumer goods. It creates inflationary trends, 

social tensions and economic difficulties. The prolonged 
distortion in the development of branches in groups A and 
B has made itself felt. Capital investments in construction 
and reconstruction and in the updating of technology and 
equipment at light industry enterprises are still not pro¬ 
ducing a perceptible return. Furthermore, given the 
increasing consumer demand, it is doubtful that we shall 
totally eliminate the shortage in the near future. 

Attempts to rectify the situation, enlisting machine- 
building enterprises for the production of consumer goods, 
are not yet producing any big results. For purposes of 
encouraging increased consumer goods production, the 
government has established a number of benefits for those 
who are successfully increasing their production rates. 

The term “conversion^’—that is, changes in the produc¬ 
tion structure of the defense industry branches—has come 
into widespread use of late. It is planned to increase their 
output of products for the people by reducing the produc¬ 
tion of military equipment and utilizing the available 
highly skilled cadres and the production base. 

What have these steps produced? What contribution are 
the Leningrad enterprises of the machine-building and 
defense industries making to increased production, to the 
enlargement of the assortment and enhancement of the 
quality of goods for the people? What is hampering 
things? What economic and legal mechanisms are neces¬ 
sary? These questions were discussed at a regular session 
Club in which directors and specialists from a number of 
city enterprises took part. 

[N.A. Ignatyev, first secretary of the Oktyabrskiy Rayon 
CPSU Committee] The subject of discussion is naturally 
of concern to all of us. I would like to share the 
information I possess as chairman of the commission set 
up by the CPSU oblast committee to study the situation 
of consumer goods production at nonspecialized enter¬ 
prises. Today, the defense enterprises alone turn out 
more than 1 billion rubles worth of goods annually, and 
the average annual growth rate is as high as 20%. 

Leningrad’s industry as a whole produced 3.88 rubles’ 
worth of consumer goods per ruble of wages during the 
first quarter of 1989. There are many enterprises with a 
considerably higher figure, but there are also many at 
which consumer goods account for a miniscule portion 
of output. 

While consumer goods production grew by 6% last year, 
however, the monetary income of the population dou¬ 
bled on average. Industry is clearly not satisfying the 
needs of the consumer market. This trend is intensifying. 
The population’s income grew by 15.8% during the first 
quarter, for example, while the increase in goods 
amounted to only 3.5%. 

Production will have to be increased several times over 
in order to saturate the market. And basic changes are 
essential throughout the entire production and sales 
chain in order to achieve this. 

7 December 1989 



[B.N. Taller, chief engineer at the Machine Building 
Association imeni Ya.M. Sverdlov] Our collective still 
has nothing to brag about in this respect. We produce 
13.6 kopecks’ worth of consumer goods per ruble of 
wages. A shortage of production space is the cause. The 
construction of an electronics plant is currently being 
completed in the Pamas Industrial Zone, to be sure. A 
single engineering and production system is being set up 
there for turning out consumer goods, which will house 
production, design, technological and economic services. 
It is planned to initiate the production of personal 
computers, electronic toys, metal furniture components 
and plastic items in the new area. This will make it 
possible in 3-4 years to produce almost 13 million rubles 
worth of TNP [consumer goods], which is four times the 
present amount. 

There is a realistic possibility of increasing the output of 
the highly popular all-purpose woodworking lathes from 
3,000 to 5,000 within the near future. I am reluctant to 
make any guarantees, however. The supply of assembly 
parts is still very poor, after all. The Poltava plant, for 
example, cut our order by 1,600 motors. Just tell me how 
we are to work our way out of the situation under these 

In general, almost every enterprise in Leningrad 
involved in the production of household equipment 
experiences a constant shortage of electric motors. I 
believe that the program for regional economic account¬ 
ability should provide for the construction of an electric 
motor plant to meet the needs of Leningrad’s industry. 

Here is another thought. We all know that many enter¬ 
prises are taking a risk in setting up or increasing the 
production of consumer goods, since they are not certain 
that their plans will be backed up with a reliable supply 
of materials and equipment. And progress will be slow 
until the Leningrad Supply Administration guarantees 
the provision of everything necessary for the production 
of consumer goods. 

[V.P. Zanin, general director of the Signal Association] 
As long as I can recall being in management I have heard 
appeals to increase the production of consumer goods, 
but the matter nonetheless just squeaks along. All admo¬ 
nitions are useless until economic mechanisms are acti¬ 

To improve the financial situation in the nation, I 
recommend that the state borrow from the enterprises 
and from citizens the amount necessary to cover the 
deficit in the state budget not backed up with available 
goods, and at a higher interest rate than that set by the 
Savings Bank. Furthermore, it should revise the methods 
for ascertaining profits and regard them as the difference 
between all revenues and all outlays. This would make it 
possible to eliminate the frequently unrecognized pad¬ 

Furthermore, the subsidies received by the producers for 
so-called cheap production should be distributed directly 

to the consumers. It is hopeless to attempt to saturate the 
market with consumer goods while the inflationary pro¬ 
cesses exit. 

The production of these goods should be advantageous 
not just to the enterprise as a whole, but also to the actual 
people who produce them. What we have is this, how¬ 
ever. If a person produces 10 items and receives 10 
rubles, his earnings are increased by only 2-3 rubles if he 
doubles that. 

Wages must grow at the same rate as output. With the 
existing system for determining labor productively, it 
makes no economic sense to stress outstripping rates of 
growth for this indicator over rates of growth for wages. 

Another thing. I propose abolishing the mandatory revi¬ 
sion of quotas and rates. The fear that they can be cut at 
any time does nothing to stimulate labor enthusiasm. It 
is frequently an actual retardant to the development of 
technological progress. The decision to revise them 
should be at the discretion of the labor collective. 

[A.P. Korolev, general director of the Almaz Associa¬ 
tion] As an experiment, we have decided to leave the 
scheduled basic cost of production at the same level for 
several years for the production of consumer goods. 
Automation has been introduced, more products are 
being turned out and profits have increased, but we do 
not touch them. They remain at the disposal of the 
collective and are distributed at its discretion, whether as 
bonuses or for the further development of production. 
The worker now has a direct interest in turning out more 
products and is not afraid that the rates will be cut. And 
he no longer has any reason to keep his own professional 
secrets from others. 

We do a very poor job of getting to the bottom of our 
own internal problems. Right now we are most con¬ 
cerned about relations with the suppliers. All of our good 
intentions are frustrated by the adverse supply situation. 
We should expect the situation to grow worse as a result 
of the establishment of taxes on the wage fund, and 
enterprises producing parts for consumer goods or mate¬ 
rials will stop building up production. 

[V.D. Pishkov, deputy general director for economics at 
the Association imeni Kozitskiy] We constantly come up 
against this problem. I do not recall a year in which we 
received everything we were supposed to from the 
stocks. We now have a realistic possibility of increasing 
the output of television sets but are being held up by a 
lack of assembly parts. We now have a fourth generation 
of fine colored television sets almost ready to go into 
regular production. We have been able to make only a 
few experimental sets, however. When the new product 
goes into regular production basically depends upon the 
supply of assembly parts. We could somehow provide an 
incentive for our subcontractors. As a temporary mea¬ 
sure, for example, we could send our sets to them for sale 
in their collectives. We do not have the right to do this, 
however, since all of our output must be turned over to 
the trade system. We are told that we. can dispose of 



7 December 1989 

everything over and above the plan as we see fit. But we 
barely scrape together enough assembly parts for the 
volumes specified in the plan. 

Let us say that we increase our present volume by 
50,000-100,000 sets. The immediate question then is 
whether the Leningraders will benefit from the increase. 

The fact is that our wholesale trade component distrib¬ 
utes the association’s products throughout the nation, 
“from Moscow to the very hinterland,” as they say. Only 
about 10% of the television sets produced by the Asso¬ 
ciation imeni Kozitskiy remain in Leningrad. The cus¬ 
tomer can choose a product from some other television 
plant in the nation, to be sure, but what sense does that 
make? Given the present enormous demand, there is no 
competition. The servicing and repair of the equipment 
is deteriorating drastically, however. 

I see the extensive development of proprietary trade as 
the solution. Only with great difficulty were we able to 
set up our own store in Leningrad. Transportation costs 
and damage to the sets were drastically reduced as a 
result, since they are competently prepared before 
leaving the association for the trade system. The war¬ 
ranty service is also far better in this situation. We are 
prepared to open a number of other proprietary stores in 
Leningrad, but the trade system has other interests. 

[A.P. Korolev] I would call this “dictate by the trade 
system.” They are already beginning “to twist our arms” 
at the wholesale fairs. They either refuse without ade¬ 
quate justification to accept that which they themselves 
have recommended or, under the pretext of protecting 
consumer interests, impose delivery volumes which they 
know in advance cannot be met. The solution is simple. 
Apply toward the commodity turnover target fines for 
failure to live up to the terms of the agreement. There 
may be no goods on the shelf, but the trade system will 
not be the loser. It is our opinion that agreements on 
deliveries of consumer goods should be based on what 
the industrial enterprises can provide and not on the 
demands of the trade system. The enterprise should be 
authorized to conclude agreements with the trade system 
for no more than 75% of the total state order for the 
production of consumer goods, the rest being sold on the 
open market as above-plan output. 

A new product frequently does not reach the consumer 
just because the enterprises and the trade system cannot 
reach agreement on prices. We thought about producing 
commemorative serving tables. We calculated how much 
their production would cost the enterprise itself. The 
total cost of purchased parts amounted to at least 80 
rubles, and we suggested a retail price of 100 rubles. 
Representatives of the trade system said, cutting the 
price: “We will not take them at more than 50 rubles.” 
We suggested offering at least a small batch of them for 
sale in order to test customer response. The trade 
workers absolutely refused, however, and were not even 
interested in the opinion of consumers. Perhaps the price 

would have been acceptable. After all, these are not 
everyday products, but items for aficionados, so to 

We believe that authority to set prices for new products, 
regardless of which department the enterprise producing 
them is under, should be the prerogative only of the 
corresponding executive committee of the soviet of 
people’s deputies, where this matter should be conclu¬ 
sively decided with the assistance of skilled specialists. 

[V.V. Kotylevskiy, chief of the consumer goods section 
of the Znamya Truda Association] I want to return to the 
problem of wholesale fairs already mentioned. We are 
forced to participate in them, although there is nothing 
for us to do there. We know in advance that the trade 
system will purchase everything, demand an additional 
volume over and above all our production capabilities 
and then send us schedules indicating where to send the 
products, and how many. I believe that prior to 
attending an All-Union fair, we need to first hold a 
Leningrad fair arranged by the executive committee. We 
would then know what the city needs. 

The same with prices. We need to take into account the 
fact that changes are constantly occurring. The represen¬ 
tative of the Association imeni Kozitskiy just said that 
their television set has finally become profitable. But 
what are we to do in the case of production of boat 
anchors which sell for 4 rubles, while our production cost 
is 8 rubles? This product became unprofitable for us 
when we began producing it out of steel instead of the 
cast iron previously used. I could cite many such exam¬ 
ples. As you know, we are facing substantial changes in 
the price structure, which is an objective process. If the 
price policy remains unchanged, however, we shall not 
benefit. Particularly since the trade system has no incen¬ 
tive to lower prices. 

How are we to increase output. I believe that expanding 
cooperation within the Leningrad area is one way. Our 
association presently produces 50 kopecks worth of 
goods for the people per ruble of wage fund. We shall 
increase their output and master the production of 
gardening items and stainless steel thermoses. We want 
to set up the production of all sorts of kitchen equip¬ 
ment. We immediately encounter difficulties in setting 
up the operation, however. Here is a simple example. 
When we decided to make plastic children’s sleighs we 
had to prepare a fairly large die. I am ashamed to say that 
preparations for the production of this item took 5 years. 

[N.A. Ignatyev] The Metalloposuda Association waited 
more than 2 years for an ordinary teapot handle. 

[V.V. Kotylevskiy] In general, the manufacture of such 
tools is the problem of problems for most Leningrad 
enterprises. We must have a specialized tool plant. This 
matter was raised many years ago, and it has still not lost 
its urgency. 

Cooperation needs to be organized on a qualitatively 
new basis. We made an attempt together with Elektrosila 

7 December 1989 



to produce electric meat grinders. We were prepared to 
make certain parts, deliver them to Elektrosila in 
exchange for assembly parts and then assemble the entire 
product. Several months have gone by, however, and the 
Elektrosila people have not yet provided the necessary 
drawings. We need electric motors for dishwashers, for 
example. It was suggested that we set up their produc¬ 
tion, but the suggestion was rejected. We are now 
working out an alternative, setting up production of the 
motors at a plant in Gusev, Kaliningrad Oblast, partic¬ 
ularly since the collective there wants the plant to 
become a part of the Tekhnokhim MGO [not further 
identified]. These are all future plans, however. I support 
the suggestion that we need to build in Leningrad a plant 
specializing in the production of electric motors for 
household equipment. It could provide a great many 
[enterprises] with its products. I believe that the Lenin¬ 
grad Executive Committee should establish a situation 
most conducive to the building of an enterprise ame¬ 
nable to the production of electric motors for household 

[B.N. Taller] We also feel the dictate of the trade system. 
We expend an extremely significant amount for each 
woodworking lathe we produce, which provides only 3-4 
rubles in profit. We could rectify this situation somewhat 
by arranging for direct sales of the products through our 
own store. The trade system is afraid of losing the trade 
discount received from the enterprise, however, and 
rejects our suggestion. But then we ourselves are not 
overly enthusiastic about making a product which actu¬ 
ally does not earn enough to cover the production costs. 

[LG. Rekord, director of the Scientific Consultation 
Center at the Finance and Economics Institute imeni 
N.A. Voznesenskiy] This occurs because our trade 
system is actually the distributor of the goods. It should 
be a commercial enterprise, however. Let us say that 
slow-moving goods have accumulated at the bases. The 
manufacturers can be blamed. But then they received 
orders for the product. They sold it to the wholesale 
purchaser. So he should be responsible for what he 
bought and cover losses out of his own funds. Today, the 
trade system bears practically no liability for not 
studying demand or for orders compiled “by cursory 
estimate.” It zealously rails at the suppliers, however. 

When a producer begins preparations for production he 
must have a good idea of precisely what products the 
consumer needs, how many and at what price, where to 
obtain the production documents, and so forth. In other 
words, he has to engage directly in marketing. 

I have been working for several months now on the 
adoption of a system of economic incentives for con¬ 
sumer goods production at the Kirovskiy Zavod, I 
encountered these questions from the very beginning. 
The system itself was recently described in LENIN- 
GRADSKAYA PRAVDA, and I want to stress once 
more the fact that we would hardly have been able to do 
anything at the Kirovskiy Zavod if our relations with the 
trade component had not been changed. 

[V.L. Turkin, chief engineer for the Nevskiy Zavod 
Association imeni V.L Lenin] The marketing service 
needs to be developed as extensively as possible, of 
course. Unfortunately, we are frequently forced to rein¬ 
vent the wheel, even though there are scientific organi¬ 
zations, as an example, which could work out the tech¬ 
nology and the design according to our orders and help 
with other specific matters. The Nevskiy Zavod intends 
to increase the output of consumer goods 2.5-fold during 
the next 5-year period (we now produce 23 kopecks 
worth of goods per ruble of wages). We manufacture 23 
different products and many things out of the byprod¬ 
ucts. We have also begun producing medical items and a 
considerable quantity of laboratory equipment meeting 
foreign standards. 

It is the usual situation, incidentally. The vessels desig¬ 
nated for use on electric burners must have a reinforced 
bottom and an exceptionally smooth surface. This means 
that we need a special technology which we have never 
before used in our main production operation. Someone 
has it, though. Someone is using it, but we have to invent 
it anew. 

[G.S. Khizha, general director of the Svetlana Associa¬ 
tion] Unfortunately, we have to overcome enormous 
difficulties and obstacles to get anything done, although 
there are many interesting ideas today. The Svetlana 
recently succeeded in resolving one extremely important, 
fundamental problem. The State Commission of the 
USSR Council of Ministers approved our suggestions for 
increasing the firm collective’s incentive to produce 
consumer goods. As of now, all profits from production 
over and above the yearly level (this year is the base year) 
will remain at the enterprise at the disposal of the 
collectives which earn them. And the Svetlana has 
received authority to dispose of this profit at the discre¬ 
tion of the STK [not further identified]. In addition, we 
are opening another account at the bank, and earnings 
from the sale of consumer goods will go into it. 

And so, part of the goods we produce will go to our 
proprietary store, and the earnings from them will go 
into the aforementioned account. This money will go to 
the shop collectives, which will set up the necessary 
funds and settle with the subcontractors. They will also 
take wages from it, which will be paid out only after the 
goods have actually been sold. Essentially, shops pro¬ 
ducing consumer goods are receiving the same economic 
rights and benefits as those enjoyed by the cooperatives. 
I am convinced that this is one of the most important 
mechanisms we need today for developing initiative in 
the state enterprises. 

Since the additional goods produced will be sold through 
our own Svetlana trade system, the amount of the trade 
discount will be added to the profits. A council of the 
labor collective will decide how the income is to be used. 
I would point out that this income, made up of ready 
money from the population, contains not a kopeck of 
so-called non-cash, “dead” money whose conversion 
into “live” money is today rightly named as one of the 



7 December 1989 

main sources of the advancing inflation. The STK is 
authorized to channel the money acquired into any of 
three economic incentive funds. 

And a few more thoughts. About price setting. Unlike the 
cooperatives, which perform work and services based on 
prices and rates established independently by agreement 
with the consumers, we plan to sell the additional output 
of consumer goods at state prices—at agreed-upon retail 
prices based on calculated outlays only in the absence of 
these. This rules out the possibility of arbitrarily raising 
prices and speculating on the interplay of supply and 

The wages paid to workers employed in the production 
of consumers goods or providing paid services for the 
population have to pass through subcontracting sections, 
shops and collectives, which will increase responsibility 
and material incentives to achieve good end results at 
minimal cost. 

In addition, part of the additional funds are to be 
centralized and used as bonuses for workers, specialists 
and managers in other subdivisions for making timely 
preparations for consumer goods production and devel¬ 
oping new products and as incentives for the labor 
collectives of construction enterprises and organizations 
providing the raw and processed materials and assembly 
parts necessary for their production. After all, as has 
been correctly stressed here, it is difficult to count on 
success in this area without an economic incentive for 
our subcontractors. 

The growth of wages under this system will strictly 
correspond to the growth of production. The accumula¬ 
tion of funds in a separate account will also promote 
their goal-oriented use for developing consumer goods 
and services and tooling up for their production. 

The participants of the Businessmen's Club believe:: 

—that a number of fundamental economic, technolog¬ 
ical and organizational measures are needed for dras¬ 
tically increasing the output of consumer goods, 
enlarging the assortment and improving their quality; 

—^that limitations on wages for the producers of con¬ 
sumer goods must be lifted when this is not the main 
production line at the enterprise; 

—that it would be expedient to begin setting prices for all 
new goods at the Leningrad City Executive Com¬ 
mittee, bypassing the State Committee on Prices and 
other organization; 

—that the Leningrad Main Supply Administration is 
obligated to create a situation of priority for supplying 
the consumer goods industry with the necessary equip¬ 
ment and spare parts and to introduce the unlimited 
and unfunded release of materials and assembly parts 
for specific purposes; 

—that the consumer goods production base needs to be 
strengthened; specifically, the need has arrived to 

build a specialized tool plant and an enterprise for the 
production of electric motors for household appli¬ 

—that we must develop and intensify in every way 
cooperation in the production of consumer goods 
within the Leningrad area; 

—that we must grant enterprises the authority to 
exchange consumer goods produced over and above 
the plan through direct contacts; 

—that we should study the experience of the Svetlana 
and Kirovskiy Zavod associations in the development 
of an economic policy aimed at further encouraging 
consumer goods production and take steps toward its 
extensive dissemination based on the specific circum¬ 
stances of each enterprise; 

—that we need to organize a unified service for the study 
of competition and demand in the consumer market 
in the Leningrad area; 

—that each enterprise should have a comprehensive 
program for the development of new types of products 
and for increasing output to more fully satisfy con¬ 
sumer demand; 

—that it is very important, as the participants in the 
Businessmen’s Club stressed, to regularly publicize 
positive experience acquired at specific enterprises 
and how they succeed in overcoming departmental 
and bureaucratic barriers on the way to the consumer; 
the editors accept these proposals and intend to con¬ 
tinue monitoring problems involved in consumer 
goods production. 

Proposed Amendments to Cooperative Law Called 
‘Step Backward’ 

Russian 4 Oct 89 Second Edition p 1 

[Roundtable dialogue with A. Yakovlev, M. Masarskiy, 
et al, by S. Brusin: “Rudiments of Cooperatives”] 

[Text] Probably, nowadays nothing develops in such a 
contradictory and zigzag manner as cooperatives. Society 
is learning to differentiate grain from weeds. However, 
negative tendencies both within and without cooperatives 
are strong, which produces the population's negative reac¬ 
tion. All this was also reflected, as in a mirror, in the 
course of the discussion during the first reading of the 
amendments to the Law on Cooperatives at a session of 
the USSR Supreme Soviet. There were voices ‘Tor” and 
“against,” but the voices that were not properly heard 
were those of the cooperative workers themselves. Taking 
into consideration the fact that the discussion has not 
been completed and the draft continues to be worked on, 
SOVETSKAYA ROSSIYA invited the follovnng inter¬ 
ested individuals for a “round table” dialogue: A. Yakov¬ 
lev, USSR people’s deputy, chairman of the Central 
Builders’ Trade-Union Committee, and M. Masarskiy, 
vice-president of the Union of USSR Construction and 

7 December 1989 



Industrial Cooperatives, as well as O. Khorov and L. 
Napalkov, executive director and head of the information 
sector of this union respectively. 

O. Khorov: I will begin from the general impression of 
how the first reading of the amendments to the Law on 
Cooperatives was conducted. To be honest, the impres¬ 
sion of all those who tied their fates to cooperatives was 
depressing. It was difficult to see how some deputies 
tried to solve the most complex economic and social 
problems lightly, on the spur of the moment, and 
without a serious study. 

Unfortunately, cooperative workers saw in this a contin¬ 
uation of the process of plunging from side to side in the 
area of legislation with respect to cooperatives, which 
has been going on for 2 years. All those who undertake to 
regulate cooperatives—^and, alas, the present session is 
not an exception—right away try in a strong-willed 
manner to close something and to leave something, 
without studying the nature of negative phenomena and 
understanding even the rudiments of application of 
economic levers. 

For example, most of the deputies who spoke were not 
familiar with the rich experience in the development and 
regulation of cooperatives in socialist and, moreover, 
capitalist countries. Why is the “price barrier” not 
practised in our country, while it is widely applied in 
socialist countries? For example, in Czechoslovakia the 
price of cooperatives’ products cannot exceed the state 
price more than 10 to 15 percent and even such an excess 
is substantiated by a small-series manufacture, or by an 
improved quality... 

M. Masarskiy: It was asserted from the rostrum that 
cooperative workers were consulted during the prepara¬ 
tion of draft laws. In fact, several people took part in the 
work and gave their suggestions... In the end, however, 
these proposals were not taken into account. In essence, 
documents reflect the drafters’ monologue, not dialogue. 
In my opinion, we are on the threshold of making a step 
backward as compared with the Law on Cooperatives 
presently in effect. 

For example, quite recently leading economists—L. 
Abalkin, V. Tikhonov, and others—^were proud that the 
law provided for a legally irreproachable opening of a 
new cooperative without prior arrangement and registra¬ 
tion. Now it is proposed that it be abolished and that a 
“permitting” principle be introduced, that is, the fate of 
a cooperative depends on whether a deputy commission 
and a union of cooperatives permit it: They will continue 
to be the last authority. However, do we not encourage 
monopolism with this? 

A union of cooperatives—^be it sectorial or territorial—is 
also secretly inclined toward monopolism. The strongest 
cooperatives, which set the tone in its work, probably, 
are disposed against the appearance of competitors even 
more than the state sector. Incidentally, world practice 

abounds in examples where conspiring groups of coop¬ 
eratives do not let strangers and novices into their sphere 
of influence. 

O. Khorov: Amendments to the Law on Cooperatives 
promote monopolism in other things as well. They 
aggravate the position of cooperatives, which, anyway, is 
economically unequal and restricted as compared with 
that of state enterprises. First of all, starting conditions 
are unequal: for example, virtually all construction coop¬ 
eratives are established on the basis of chronically 
unprofitable and low-profitability enterprises. L. 
Abalkin pointed out specific examples. 

M. Masarskiy: Our Volkhoz Cooperative, about which, 
incidentally, SOVETSKAYA ROSSIYA has already 
written, began from zero—we only had a typewriter. 
Now, however, we have at our disposal fixed capital 
worth about 11 million rubles. We have bought equip¬ 
ment worth 2.5 million with our own wages. We have 
leased a broken down brick plant, which before us 
produced 12 to 13 million bricks annually. We have 
replaced manual labor, introduced new technologies 
and, although the plant continues to be an old produc¬ 
tion facility as it was, now 92 workers manufacture 24 
million bricks, that is, twice as much. 

A. Yakovlev: For the sake of fairness it should be noted 
that cooperatives have advantages in some things over 
state enterprises. They enjoy significant tax privileges 
during the first 2 years—^the period of formation. Nor do 
they incur overheads and convert them into ready cash. 
I have in mind, first of all, tiny cooperatives with 50 
people—^they have neither premises for domestic ser¬ 
vices for workers, nor their own production base and so 
forth. They can fully put in their pockets the 19 percent 
included in the price as overheads and the 8 percent 
intended for planned accumulation, which they do. But, 
for example, well-established cooperatives have consid¬ 
erable overheads. 

I agree, however, that without wholesale trade in raw 
materials and equipment the inequality of the two sec¬ 
tors persists and, thereby, the existing situation, essen¬ 
tially, pushes cooperative workers into bribes, specula¬ 
tion, and other illegal acts. 

M. Masarskiy: The amendments do not take into 
account the interests of production cooperatives as sub¬ 
jects of the new market economy, which are beginning to 
operate in an economic system where there is no market. 
Incidentally, in the “one’s own home” program, which 
encompasses the country’s construction cooperatives, we 
ourselves have made an attempt to organize our auton¬ 
omous market, but this is a half-measure. It is necessary 
to develop the market of the entire economy in an 
accelerated manner if we want the cooperative move¬ 
ment to survive. Because, as long as it does not exist, a 
cooperative, at the moment of its appearance, immedi¬ 
ately enters into a conflict both with the state sector of 
industry and with the population. 



7 December 1989 

A year ago N, I. Ryzhkov spoke at the Presidium of the 
USSR Council of Ministers in the spirit that, if cooper¬ 
atives “succeeded” in quarreling with the majority of the 
population, the government would not succeed in pro¬ 
tecting them. Alas, the amendments to the Law on 
Cooperatives do not direct us toward working for the 
population. The population has money, but not 
resources and, therefore, cooperatives try to fulfill a state 
order, which presupposes the allocation of resources. 
However, we do not service the population sufficiently. 

O. Khorov: On our part there are proposals on how to 
make cooperatives face the population. The presently 
established taxation procedure gives privileges extending 
to the entire area of consumer goods production by 
cooperatives. In addition, it is necessary to stipulate 
especially: Housing also belongs to the category of con¬ 
sumer goods. Furthermore, state enterprises and cooper¬ 
atives should be equated in matters of housing construc¬ 
tion supply and you may be confident that then 
cooperatives will literally throw themselves into a com¬ 
petition for the right to build homes with the popula¬ 
tion’s funds. 

O. Khorov [sic]: The unequal position of cooperatives 
and state enterprises also remains in tax policy. As 
before, it is proposed that the tax on a state enterprise be 
computed from the profit, but on a cooperative, from 
income. What is the difference? Profit is the part of 
income remaining after deductions for the total expen¬ 
ditures of an enterprise. It turns out that the tax on a 
state enterprise is 30 percent of the profit and the tax on 
a cooperative, 25 percent of the income. In fact, how¬ 
ever, in terms of the amount of profit it is 75 to 80 
percent. The inequality is obvious. Hence the proposal: 
For cooperatives, whose activity is fully built at uniform 
state norms and rates—and construction cooperatives 
are precisely such—^the tax should be computed just as 
strictly, in the same manner as with respect to state 

M. Masarskiy: Something should be clarified here. At a 
state enterprise, wages are taxed twice—according to the 
expenditure item and as personal income. In other 
words, workers’ wages are included in expenditures. At a 
cooperative, however, wages are taxed three times— 
according to the income item, according to the expendi¬ 
ture item, and as citizens’ personal income. 

Despite the obvious injustice, there is also a fundamental 
difficulty here—it is very difficult to single out wages in 
the income of a cooperative. What is the way out? We 
propose the introduction of a normative wage fund 
calculated in a strictly scientific manner on the basis of 
fund-forming sources and, thus, the establishment of a 
general state criterion—^an average sectorial normative 
fund, that is, an average sum included in production 
costs for wages. In construction this will be about 80 
percent of the estimate. This part should not be taxed—it 
should be considered a natural part of production expen¬ 
ditures. If, however, in the practice of a specific cooper¬ 
ative wages rise above this line—they should be taxed. 

L. Napalkov: Support for production cooperatives is 
now declared. However, a mechanism of taxing a wage 
fund increase, which will give opposite results, was 
adopted. We understand that this is an extraordinary 
measure for 15 months, but we are afraid that the 
temporary may become permanent. Cooperatives, which 
during the fourth quarter of last year maximally 
“stuffed” their income “into their pockets” and did not 
put it into production development, have a more advan¬ 
tageous base for counting the 3 percent determined as 
the borderline for the progressive tax. 

A. Yakovlev: I would like to dwell separately on the 
attitude toward cooperatives. As is well known, this 
problem was examined at the recent AUCCTU Plenum. 
In essence, the plenum reflected the sentiments of 
workers demanding that a limit be put on legalized 
speculation. In fact, walk through Moscow markets. The 
price of meat, which quite recently was 7 or 8 rubles per 
kg, has risen in front of our eyes—10 to 12 rubles. 
Cooperative workers sell piles of watermelons at contrac¬ 
tual prices, that is, 1 ruble per kg, while stores, at 30 
kopecks. I want to stress especially that local soviets, 
which put up with the dubious activity under the guise of 
cooperatives, are to blame for this to no lesser extent. 
Not long ago on a mission to Chita I drew attention to 
the fact that meat on the market cost 4 to 4.5 rubles. 
Local bodies of power manifested firmness and estab¬ 
lished a ceiling acceptable for the population. However, 
such examples are few. In most cases trade and purchase 
cooperatives rake money without control. That is why 
the AUCCTU Plenum made the proposal that specula¬ 
tive cooperatives be closed and only those that produce 
products be left. This is one aspect of the matter. 

There is also another aspect. Unfortunately, I see a vast 
number of examples of a lack of commercial enterprise 
on the part of state bodies. We have not yet seen their 
support in anything. The USSR State Committee for 
Construction Affairs did not lift a finger to help the 
union. As a result, we, the Central Trade-Union Com¬ 
mittee, have to be occupied with the union. And we will 
help it, since we see great benefit in this for the state. 


Production Shortfalls Disrupt Fulfillment of State 

in Russian 

No 10 Oct 89 [signed to press 21 Sep 89] pp 3-15 

[Article by K. Malakhov, deputy chairman of USSR 
Gosplan, under “Current Problems in the Economy and 
Planning” rubric: “Material and Technical Supply of the 
National Economy”] 

[Text] The improvement of material and technical 
supply and the provision of balance in the plans and 
natural-material proportions of the development of the 
national economy under the conditions of the transition 

7 December 1989 



of enterprises to full cost accounting represents one of 
the central and most complex problems in the restruc¬ 
turing of the management of the country’s economy. 

The system of material and technical supply is being 
restructured taking into account the extension of the 
rights and independence of the union republics, associ¬ 
ations, enterprises and organizations, the development 
of wholesale trade and direct economic ties and the 
reduction of the centralized planning of the size of 
deliveries of destributed resources. 

The list of resources centrally distributed by USSR 
Gosplan and USSR Gossnab will be reduced in 1990 by 
a factor of 14 compared with 1987 and will amount to 
610 items determining the pace and proportions of the 
economic and social development of the country. Of 
these, 360 items will be included in the state order and 
250 in control figures. 

The reglementation of the assortment of distributed 
physical resources is completely precluded. The specific 
output included in the group products list will be coor¬ 
dinated and determined in contracts directly between 
suppliers and consumers. The output of interministerial 
consumption is not included in the state order and 
accordingly is not distributed. There has been a substan¬ 
tial expansion of the real rights and independence of 
enterprises and associations in the area of the physical 
balance of the volumes of production and the kinds of 
work and services. Enterprises sell the output produced 
above contracted levels as they see fit. 

The tasks have been set of establishing an efficient and 
mobile system of material and technical supply to ensure 
the proportional and balanced development of the coun¬ 
try’s economy, of carrying out a decisive transition from 
the centralized allocation of physical resources to whole¬ 
sale trade in the means of production and the distribu¬ 
tion of the means of production of special importance for 
the national economy, and of producing at ceilings. 

Under the new conditions of management, material 
balance in the entire national economy depends upon the 
state plan as well as the plans of the union republics and 
their independent horizontal ties. 

The mechanism of material and technical supply 
changes in a fundamental way with the introduction of 
the new system of management. Complete balance in 
production and construction must now be achieved not 
only in the center but also locally through the organiza¬ 
tion and strengthening of direct economic ties between 
suppliers and consumers as well as in wholesale trade 

In 1990, measures will continue to be carried out in the 
formation of the socialist market for the means of pro¬ 
duction, which in the future must be the main form of 
the material and technical supply of enterprises and 
organizations. The staged development of wholesale 
trade was one of the first steps on this road. 

At the present time, all scientific research and planning 
and design organizations, enterprises and organizations 
of nonindustrial ministries and departments of the 
former Ministry of Construction, Road and Municipal 
Machine Building, the Estonian SSR, Yakutskaya ASSR, 
Tuvinskaya ASSR, Kamchatka, Sakhalin and Magadan 
oblasts, and construction ministries of a number of 
union republics are being supplied through wholesale 

In 1990, it is planned to increase the volume of the sale 
of production and technical output to 200 billion rubles 
compared with 40 billion in 1988 and 115 billion in the 
current year. 

This is a completely new form of relations between 
suppliers and consumers based on mutual responsibility 
and aimed at giving enterprises the possibility of freely 
acquiring all that is necessary for their own production 
and social needs through earned money. Questions in the 
free buying and selling and marketing of output under 
the new conditions are being resolved independently by 
the enterprises on the basis of direct ties between man¬ 
ufacturer and consumer or under contracts with a cost¬ 
accounting intermediary—territorial supply agencies of 
USSR Gossnab. The main thing will not be the cus¬ 
tomary increase in the volumes of the production of 
output but the resolute adaptation of its structures to real 

The initial experience in the work of enterprises and 
regions that have been transferred to wholesale trade 
confirms its definite advantages in comparison with 
traditional forms of supplying and marketing output. 
Thus, the Estonian SSR Gossnab fulfilled all orders 
received from consumers through wholesale trade. The 
consumption of resources has been stabilized at the level 
of 1988 and thereby consumer stocks were reduced. In 
particular, the remnants of physical assets in the repub¬ 
lic’s construction organizations declined by 8.6 percent 
last year and amounted to about 88 percent of the 
established standard. 

But the first steps in the development of wholesale trade 
and market relations also revealed many problems. The 
experience gained in the work in 1987-1989 shows that it 
is impossible to develop wholesale trade successfully 
through the mechanical reduction of the state order 
without having resolved the fundamental problems in 
the formation of the socialist market for the means of 
production. Today we have not yet worked out methods 
for the organization of wholesale trade or a mechanism 
for the study by suppliers of the real needs of consumers 
for physical resources. 

Negative tendencies are also arising under the conditions 
of the existing expenditure structure of our economy, a 
significant financial imbalance accompanied by the 
emission of paper money, and the increase in the scale of 
wholesale trade in the means of production. They 
include the monopolism of supply enterprises, the 
strengthening of local and departmental interests, the 



7 December 1989 

rise of exchange in kind accompanied by the reduced 
production of unprofitable kinds of output in acute 
shortage, the washing out of the inexpensive assortment 
of goods, and the lack of provision of state orders with 
individual kinds of resources. 

Some associations and enterprises transferred to the 
provision with material and technical resources through 
wholesale trade are not receiving effective help from the 
territorial agencies of USSR Gossnab in organizing 
direct ties, 

A particularly acute question is that of the satisfaction of 
the needs of enterprises for output not distributed in a 
centralized manner but extremely necessary for the ful¬ 
fillment of the state order for the issue of new products 
or the introduction of new technologies. 

Thus, in April of this year, the Kremenchug Road 
Machinery Plant demanded materials in short supply 
(cement, motor vehicle tires and lumber) from the 
council of the labor collective of the Omskavtodor Plan¬ 
ning, Repair and Construction Association for the 
delivery of spare parts and 100.000 uncompensated 
rubles from the production development fund. This 
means that Omskavtodor would have to pay the Kre¬ 
menchug Plant 10 times the actual cost for each spare 

The staged introduction of wholesale trade has not yet 
led to an increase in the mobility and flexibility of 
material and technical supply but in many cases has 
complicated it, because the old principle of imposing 
limits rather than allowing free selling still exists in the 
practice of wholesale trade. In this connection, many 
enterprises are having great difficulties in meeting state 
orders for material and technical resources sold under 
direct ties and in providing the most important construc¬ 
tion projects with equipment. A certain amount of time 
is still needed to complete the fundamental restructuring 
of the work of the territorial agencies of USSR Gossnab 
and the organization of direct ties as well as a significant 
increase in their initiative and action in the establish¬ 
ment of market relations between consumers and sup¬ 

It is necessary for the agencies of material and technical 
supply of USSR Gossnab and USSR State Arbitration to 
be more active in helping to preserve, strengthen and 
improve the existing economic ties to ensure the stable 
material and technical supply of enterprises with output 
not included in the state order and not distributed in 
accordance with consumption ceilings. 

USSR Gosplan is obligated to establish sufficient 
reserves for the reliability of material and technical 
supply as well as the prompt resolution of tasks not 
considered in the plan but arising under extreme circum¬ 
stances. Above all it must take measures to increase 
operational reserves for the most important kinds of 
output and prepare proposals on the increase in the 

volumes of commodity stocks at the bases of USSR 
Gossnab as a result of the corresponding reduction of 
transitory consumer stocks. 

Material and technical supply will be regulated in 1990 
for a limited list of resources through consumption 
ceilings determined on the basis of control figures for the 
volumes of the production of output accepted by the 
enterprises as well as the development of the most 
important accounting balances to guarantee a physical 
equilibrium at the macrolevel, to give an objective 
evaluation of the conditions of supply and demand for 
specific kinds of output in the country and to reveal 
bottlenecks in the supply of the national economy. The 
ceilings take into account the possibilities and tasks in 
the saving of raw materials, supplies, fuel and energy. 

USSR Gosplan has determined the priorities for the 
formation of ceilings for centrally distributed material 
and technical resources on the basis of state orders that 
do not now fully cover the production and construction 
programs. The indicated priorities include: 

—^the provision of resources for buildings foreseen in the 
state order; 

—the provision of resources for the agroindustrial com¬ 
plex, the production of consumer goods and paid 

—^the delivery of resources for exports and the domestic 
retail market; 

—the ensuring of the production and operational work 
of the social and cultural sphere and the development 
of its material base; 

—the provision of resources for defense needs; 

—^the development of technology, the USSR Academy of 
Sciences and its divisions; 

—state and operational reserves of the USSR Council of 
Ministers and an undistributed reserve; 

—^provision of resources for construction and installa¬ 
tion work for construction projects intended for pro¬ 
duction being carried out through own resources and 
included in the list of facilities of state orders, con¬ 
struction projects of defense branches and the gold¬ 
mining industry, the construction of roads in the land 
poor in chernozem, and facilities in the social sphere. 

In 1990, the undistributed part of resources from deliv¬ 
eries under state orders will be allocated to consumers 
for residual needs proportional to their calculated 
requirement taking into account the special features of 
the utilization of specific kinds of output. 

In reducing the amount of the production of output 
under the state order beyond the limits of centralized 
supply, a certain share of output of machine building and 

7 December 1989 



production construction, technical servicing, the repair 
of fixed production capital, and several other needs will 

In the initial stage, the realization of the indicated 
approach can, in individual cases, lead to a complication 
of the process of material and technical supply, because 
the market distribution of output will not always corre¬ 
spond or coincide with the needs of those directions of 
consumption that will remain beyond the bounds of 
planned provision. 

It is planned to leave more than 4 million tons of rolled 
ferrous metals, 1 million tons of steel pipe, 6 million tons 
of cement and about 100,000 tons of polymer materials 
and other kinds of material and technical resources at 
the disposition of manufacturing enterprises for free sale 
without stocks and limits. It is necessary for ente^rises, 
organizations and supply agencies of the ministries and 
departments of the USSR and territorial agencies of 
material and technical supply of USSR Gossnab to do 
much work on the signing of delivery contracts in 1990 
for the output remaining beyond the bounds of central¬ 
ized distribution taking state interests into maximum 

Foreign economic activities are an important part of the 
work of enterprises. They must be carried out on the 
basis of currency cost recovery and self-financing. But 
this work must be organized under the qualitatively new 
principle of economic independence, the introduction of 
which represents an integral part of the economic reform 
in the country. Currency cost recovery is a means of 
carrying on foreign economic activities in which cur¬ 
rency expenditures are fully covered through the receipt 
of foreign exchange from the sale of own output and 
services. The objective of the transfer of enterprises to 
the conditions of currency cost recovery is to make the 
provision of aenterprise with foreign exchange directly 
dependent upon the foreign economic results of its 
economic activities. The stocks of foreign-exchange allo¬ 
cations formed in accordance with stable long-term 
standards from resources received from the sale of 
output in the external market must be utilized above all 
for the purchase of raw materials, supplies and com¬ 
pleting products as well as equipment and the associated 
spare parts for the technical reequipment, reconstruction 
and development of production and the improvement of 
its technical level. The currency cost recovery of enter¬ 
prises is attaining a particular urgency the present time, 
when the state does not have the possibility of allocating 
significant foreign exchange for the purchase of physical 
resources that ought to be produced at domestic enter¬ 
prises. In the plan for 1990, there are sharp reductions of 
purchases of chemical, metallurgical and other kinds 
kinds of output through centralized foreign exchange. 

Centralized foreign exchange is used above all for the 
purchase of food, highly efficient consumer goods and 
resources in short supply, the domestic production of 
which cannot be increased in a short time. 

These measures were taken in connection with the coun¬ 
try’s increased indebtedness in recent years. Today about 
half of the country’s receipts in freely convertible foreign 
exchange are already going to pay off financial credits 
received from foreign banks. The continued receipt of 
new large credits would mean an even larger transfer of 
foreign exchange to Western creditors. Under these 
conditions, it is necessaiy for the enterprises themselves 
to use some of their foreign exchange for the purchase of 
needed physical resources for their own consumption. 

The right of enterprises and organizations to carry out 
direct export and import operations gives them the 
possibility of the independent search for commodities 
and choice of markets and partners. 

But we are seeing such unfortunate occurences as the sale 
of goods at unjustifiably low prices and purchases at 
elevated prices, the sale of output in short supply for the 
national economy and purchased abroad, and the impor¬ 
tation of output that can be produced in our country, 
which leads to significant losses. 

It is certainly time to learn to expend our own resources 
efficiently and not, as before, to count on obtaining them 
from the state budget. This requirement applies in par¬ 
ticular to the earning of foreign exchange and to its 
rational utilization. 

We have recently become to observe an alanning ten¬ 
dency toward the reduction of the production and 
removal of the capacities for the production of extremely 
important kinds of output for ecological reasons. As a 
result, deliveries of the basic kinds of chemical and 
petrochemical output are developing with considerable 
strain. This is caused primarily by the unsatisfactory 
utilization of the established production potential, the 
significant lag in putting into operation production 
capacities equipped with devices ensuring ecological 
purity, and the sometimes unjustified removal of indi¬ 
vidual capacities from operation. 

In this connection and also because of the delay in 
introducing new capacities, the volume of production in 
1990, according to the sum of enterprise plans, is 
declining by 5.2 million tons for mineral fertilizers in 
comparison with the five-year plan, by 951,000 tons for 
soda products, by 387,000 tons for methanol, 513,000 
tons for polymer materials, 282,000 tons for synthetic 
rubber and 265,000 tons for chemical fibers and threads, 
which greatly complicates the resolution of the task of 
balancing the need for these products for light industiy 
and the production of consumer goods and makes it 
necessary to increase their purchase through freely con¬ 
vertible currency. The present situation was also brought 
about by the fact that in the years 1986-1988 capacities 
for the production of 1 million tons of ammonia, more 
than 1.1 million tons of mineral fertilizers, about 
100,000 tons of caustic soda, 76,000 tons of carbamide- 
formaldehyde resin, 138,000 tons of Formalin, 700,000 
tons of sulfuric acid and 37,500 tons of chloroprene 
rubber and a number of other products were taken out of 



7 December 1989 

operation at the Nairit Scientific Production Association 
in Yerevan for ecological reasons. 

The breakdown of the Western Siberia-Urals-Volga pipe¬ 
line led to an acute deficit of hydrocarbon raw materials, 
which substantially reduced the production of synthetic 
rubber, tires, synthetic resins, plastics and other petro¬ 
chemical products. It is necessary for the USSR Ministry 
of the Petroleum and Gas Industry and the USSR 
Ministry of Construction of Petroleum and Gas Industry 
Enterprises to carry out an entire complex of measures in 
the repair and reconstruction of the pipeline and to 
restore it completely in the current year. Otherwise this 
will lead to the nonfulfillment of the program planned 
for this year for the production of up to 200,000 tons of 
synthetic rubber, more than 100,000 tons of synthetic 
resin and plastics, and up to 20 percent of tires. 

In connection with the unfavorable ecological situation 
that has developed in a number of regions, capacities for 
the production of up to 230,000 tons of cellulose annu¬ 
ally have been shut down and, taking into account the 
tightening of demands on environmental protection, the 
cellulose production losses in 1990 may reach almost 
400,000 tons, including 200,000 tons for paper and 
cardboard. In Uzbek SSR, they have decided to close the 
Novokokandskiy Chemical Plant, which was put into 
operation 5 years ago. The losses will amount to 160,000 
tons of fertilizer and 500,000 tons of sulfuric acid, which 
will have to be brought in from the European part of the 
USSR. In Armenian SSR, they have decided to take the 
only capacity in the country for the production of 50,000 
tons of chloroprene rubber out of operation on 1 January 
1990. And it should thereby be kept in mind that it is 
impossible to purchase such quantities of rubber through 
freely convertible foreign exchange (about 100 million 
rubles) because of the lack of offers in the foreign market 
and the acute shortage of foreign exchange. 

The best approach to the elimination of the enumerated 
difficulties is the comprehensive forced fulfillment of the 
necessary measures for environmental protection rather 
than a general one-time shutting down of capacities, 
leading to a serious unbalancing of the national economy 
and the unjustified increase in purchases of chemical 
products abroad. If the negative phenomena are assessed 
together, it must be recognized that it is becoming 
difficult to predict the development of a number of 

It is necessary to talk about the market in particular. The 
reasons for the many negative occurrences that have 
arisen in the last 2 years are that we have had a certain 
weakening of the significance of planning indicators and 
also that market relations are being introduced only 
slowly. But for the market to work, it will be necessary to 
introduce fundamental reforms in the system of owner¬ 
ship, planning and price-setting, resolutely transfer all 
production to strictly contractual relations, and establish 
a system of state and republic taxes. The socialist market 
cannot function without these conditions. Even granting 
the enterprises the possibility of independently disposing 

of part of their output beyond the state order does not 
lead to a market but sometimes to simple barter, which 
cannot be a serious replacement of the existing methods. 

USSR Gossnab together with USSR Gosplan and other 
agencies have prepared proposals on the overcoming of 
monopolism with the help of economic and legal mea¬ 
sures and the establishment of competing firms and 
enterprises. The proposals provide for a program of 
urgent measures to eliminate the monopoly structure of 
production and to develop socialist competition. And, in 
our opinion, it is expedient to adopt them legislatively. 

Further work has been done on the improvement of the 
formation of direct long-term economic ties in 1990. The 
corresponding plan has been affirmed taking into 
account the experience gained. More than 2,000 All- 
Union fairs for different kinds of production and tech¬ 
nical output were held in the period from April through 
June of 1989. It is planned to increase their effectiveness 
significantly in 1989-1990 and specific tasks have been 
specified for interbranch complexes and territorial agen¬ 
cies of USSR Gossnab and their commercial centers 
both in the period before the fairs as well as during the 
time when they are held. 

For the purpose of providing enterprises with the neces¬ 
sary commercial information that allows them to react 
promptly to changes in the supply and demand situation 
and to utilize production capacities and physical and 
other resources more rationally, USSR Gossnab is estab¬ 
lishing an automated information system that includes a 
state commercial information bank and a network of 
regional commercial centers. At the present time, more 
than 100 such centers that provide services to enterprises 
in the formation of economic ties have already been 

The territorial agencies of USSR Gossnab must restruc¬ 
ture their own activities more vigorously: expand and 
raise the quality of services provided to enterprises; 
study and analyze information on supply and demand 
for the means of production on a new basis; forecast the 
rise of shortages and carry out measures to prevent them, 
that is, implement marketing more extensively. 

The basis of the balanced development of all branches of 
the national economy is the timely making of contracts for 
the delivery of output and their fulfillment. 

In the country’s unified national economic complex, the 
work of each labor collective has a definite impact not 
only on the work of individual enterprises and their 
subcontractors but in the final analysis also has a sub¬ 
stantial influence on the pace and proportions of the 
development of the economy as a whole and on the 
degree of the satisfaction of the urgent needs of the 
society. In the existing production cooperation, each 
enterprise inevitably fulfills the functions of supplier and 
consumer. And if today for some reason it refused to 
help its partner and did not fulfill its obligations to that 
partner, then tomorrow it may find itself in the role of 

7 December 1989 



the suffering side. The experience in the work of enter¬ 
prises in 1989-1990 provided many examples in which 
the failure of one enterprise to perform a task for one 
reason or another gave rise to a “chain” reaction, often 
leading to irrevocable losses. This puts new and higher 
demands on the organization of planning, economic and 
juridical work at enterprises and significantly increases 
their responsibility for the organization of rational eco¬ 
nomic ties. 

The level of the commercial activities of enterprises 
must be raised significantly under the new conditions. It 
should be noted that many economists are still not taking 
an active position in the matter of searching for and 
organizing new business ties, have an old-fashioned 
attitude toward the study and introduction of progres¬ 
sive undertakings, and are paying too little attention to 
advertising. In short, we are feeling the burden of unfor¬ 
tunate experience, when enterprises showed inertia and 
passively waited for someone else to allocate the neces¬ 
sary means, raw materials, equipment and supplies. 

The timely carrying out of contract campaigns is 
increasing particularly by virtue of the fundamental 
change in the system of planning. It is being democra¬ 
tized in practice. Just yesterday contracts were made for 
planning targets issued from above. Today the sum of 
contracts signed between enterprises is made the basis of 
the state plan. They determine the degree of satisfaction 
of needs and the observance of progressive national 
economic proportions. 

According to the data of the USSR State Committee for 
Statistics, enterprises of 21 industrial ministries for 
which there is an accounting of the course of the signing 
of contracts for the delivery of output adopted produc¬ 
tion plans for 1989 that were 2 billion rubles below the 
control figures, including 1.8 billion rubles for the min¬ 
istries of the machine building complex. 

An analysis shows that the basic reasons for the untimely 
and incomplete making of contracts in the period under 
consideration were: 

—a strengthening of the dictates of suppliers expressed 
in the unilateral removal or reduction of the produc¬ 
tion of output previously produced, in demands for a 
nonequivalent exchange for the delivery of needed 
output, and frequently in cases of open extortion for 
its release or the acquisition of individual kinds of 
freely sold output at the location of manufacturers to 
the detriment of other consumers; 

—disproportions between interdependent production 
capacities of a number of industrial branches and the 
passive position of many ministries and departments 
of the USSR that have practically evaded their respon¬ 
sibility for satisfying the needs of the national 
economy and the elimination of these disproportions; 

—^the nonconformity of the production plans of indi¬ 
vidual enterprises with the orders of consumers with 

respect to the product list, assortment, technical level 
and quality of produced output; 

—^the limitedness of allocated consumption limits for 
some kinds of physical resources in acute shortage; 

—^the continuing practice of evaluating the activities of 
production collectives on the basis of the general rates 
of growth of the volumes of production and the means 
of the formation of fund for the remuneration of labor 
that do not encourage the manufacturer to satisfy the 
demand of consumers for an assortment or to raise the 
quality of output and its technical level; 

—^the imperfection of price-setting, which leads to the 
cessation of the production of output that is in short 
supply but unprofitable or of low profitability; 

—^the inadequate efficiency of the operative system of 
economic incentives that do not encourage manufac¬ 
turers to increase the volumes of production of neces¬ 
sary output primarily through the technical reequip¬ 
ment and reconstruction of operative production 

—the striving of individual enterprises independently to 
export kinds of output in short supply through the 
reduction of their deliveries to domestic consumers, 
including for priority national economic needs; 

—^the existing imbalance between the total volume of the 
output of the means of production and the total 
payments resources of enterprises and organizations 
in connection with the formation of significant finan¬ 
cial savings; 

—^the insufficient material responsibility of manufac¬ 
turers for avoiding the making of a contract. 

In a number of positions, the plans adopted by enter¬ 
prises do not ensure the fulfillment of the state order 
foreseen by the plan for 1989. In particular, the enter¬ 
prises of the USSR Ministry of the Machine Tool and 
Tool Building Industry have adopted plans below the 
state order for such important products as automatic and 
semiautomatic machine lines by 5 percent, by 6 percent 
for foundry machines for thermoplasts and thermoset¬ 
ting plastics, and by 21 percent for automatic and 
semiautomatic forging and stamping lines. Plans below 
the state order were adopted for a number of consumer 
commodities in short supply—e.g. by 1.6 percent for 
washing machines, 1.7 percent for radio receivers, 2.3 
percent for bicycles and 1.9 percent for motorcycles. 

The shortcomings in the work of a number of the 
country’s industrial branches are creating strain in mate¬ 
rial and technical supply. Contractual obligations for 
deliveries of output in accordance with the state order 
and in direct ties with consumers were 99.1 percent 
fulfilled in the first 7 months of 1989, or at the level of 
the corresponding period of last year. It would seem that 
0.9 percent is not such a large amount but there was 



7 December 1989 

shortfall of 4 billion rubles in deliveries of output to 
consumers and 20 percent of enterprises failed to fulfill 
contractual obligations. 

In some branches of physical production, there is not 
only instability in the functioning but also an increasing 
tendency to reduce the volume of the production of a 
number of extremely necessary kinds of output. 

In the first half of 1989, the enterprises of the machine 
building complex did not fulfill the production plan for 
24 items (33 percent) of the considered products list of 
the state order. The fulfillment was: 91 percent for diesel 
engines and diesel generators, 93 percent for main-line 
diesel locomotives, 95 percent for rolling equipment, 94 
percent for excavators, and 93 percent for road graders. 
Also unfulfilled was the state order for main-line freight 
cars, chemical and polymer equipment, processing cen¬ 
ters, personal computers and a number of other kinds of 
equipment. Individual enterprises in the machine 
building complex are even reducing the production of 
output needed by the national economy relative to the 
achieved levels. Thus, in 1989, the production of 250- 
horsepower road graders at the Chelyabinsk Road 
Machinery Plant was reduced by 55.4 percent relative to 
1988 and that of hydraulic graders at the Bryansk Road 
Machinery Plant declined by 40 percent. The production 
of DS-143 asphalt layers at the Kremenchug Road 
Machinery Plant went down by 17.6 percent and that of 
power shovels with a capacity of 2 to 3.2 cubic meters at 
the Voronezh Production Association “Plant imeni 
Komintema” declined by 12.4 percent. A strained situ¬ 
ation developed with respect to the provision of the 
national economy with small electric motors for electric 
appliances and the automation and mechanization of 
labor-intensive processes. At the same time, the enter¬ 
prises of the USSR Ministry of the Electrical Equipment 
Industry adopted a plan for the production of 656,000, 
or 2.6 percent, fewer of these electric motors relative to 
the control figure. In 1989, a number of enterprises in 
this branch reduced the production of small electric 
motors for refrigerators and freezers by 8 percent in 
comparison with 1988. 

The enterprises of the metallurgical complex undersup¬ 
plied the national economy with output by the amount of 
403,000 rubles, which is 1.5 times greater than in the 
corresponding period of the previous year. The 1989 
plan for the aluminizing unit foreseen for introduction at 
the Cherepovetskiy Metallurgical Combine provides for 
the production of 100,000 tons of aluminized steel plate. 
The construction of this unit is lagging behind schedule 
and, as a result, only 20,000 tons of steel can be pro¬ 
duced, which will complicate the situation with respect 
to the issue of consumer goods and modules with light 
metal structures for the needs of capital construction and 
other branches. 

In the first half of 1989, enterprises of the fuel and energy 
complex undersupplied the national economy with 
output in the amount of 246 million rubles, which is 
three times the shortfall in output in the corresponding 

period of last year. Consumers in the national economy 
were undersupplied with coal by 4.3 million tons, gas by 
5 billion cubic meters, petroleum by 6.3 million tons, 
and electric power by 25.6 billion kilowatt-hours. 

In the first half of 1989, the enterprises of the chemical 
and lumber complex undersupplied the national 
economy with output in the amount of 640 million 
rubles, which is 23.1 percent greater than in the corre¬ 
sponding period of last year. The national economy was 
undersupplied by a considerable amount for extremely 
important kinds of output: cellulose, rubber, plastics, 
caustic soda and soda ash, dyes, conveyor belts and other 
items, which seriously complicated the provision of 

Great difficulties arose in the first half of 1989 in 
meeting the national economy’s need for lumber prod¬ 
ucts. In the fulfillment of the plan for the production of 
lumber and sawn timber, their underdelivery to con¬ 
sumers amounted to 3,934,000 and 400,000 cubic 
meters, respectively. The USSR Ministry of the Timber 
Industry is continuing the practice of the preferential 
delivery of lumber for its own needs to the detriment of 
the provision of the most important consumers with it. 
The plan for the delivery of lumber in the first half of 
1989 was 81 percent fulfilled for consumers in the 
agroindustrial complex, 94.8 percent for the coal and 
mining industry, 92.4 percent for market allocations, 
and 97 percent for exports. The situation with respect to 
the delivery of lumber products worsened sharply in 
connection with its unsatisfactory transport by the rail¬ 

An especially acute matter is that of satisfying the 
requirements of enterprises for output that Is not distrib¬ 
uted centrally but is necessary for the fulfillment of the 
state order. Because the provision of state orders with 
resources sold in wholesale trade is done independently 
by enterprises, they depend almost completely upon the 
supplier. In this connection, a preferential right should 
be granted for the making of contracts for the delivery of 
output received through direct ties (independent of 
established ties) for enterprises that need it to fulfill state 

The mechanism now in effect is not very efficient in 
practice, because the procedure for the coordination of 
the projects of these contracts is intolerably slow and the 
ministries and USSR Gossnab do not have adequate 
controls for resolving these matters. 

One should examine the question of granting the state 
arbitration offices the right to review disputes about 
forcing the manufacturer to enter into a contract for the 
delivery of output not distributed centrally in the 
absence of established ties and also to make final deci¬ 
sions on precontract disputes. 

In our view, it is advisable to remove the existing 
limitations on the amount of the fine imposed for the 
nondelivery of output, increasing it from 100 to 500 
rubles per day of delay without limiting the total sum. 

7 December 1989 



Such a measure must be effective, considering that fines 
affect the cost-accounting income of the enterprise. 

At the present time, on the basis of the experience 
gained, organizational and methodological work has 
been done with USSR ministries and departments, 
union republics and territorial offices of USSR Gossnab 
in the carrying out of the contract campaign for 1990. 
Specific plans have been developed for its improvement 
and a coordinating group of USSR Gossnab has been 
established to organize and control the course of the 
execution of the contract campaign. It includes represen¬ 
tatives of the industrial ministries and departments of 
the USSR. The contract campaign for 1990 was begun 
under the difficult conditions of insufficient balance 
between the production of output and its consumption 
and the imperfection of the operative economic mecha¬ 
nism. For this reason, utilizing the experience that has 
been gained, it is extremely important to do everything 
possible to limit the influence of negative factors on the 
practice of making contracts and taking decisive mea¬ 
sures for the financial normalization of the economy. 

For the successful execution of the contract campaign for 
1990 and its conclusion in the established time (by 15 
October 1989), it is necessary for the ministries and 
departments of the USSR, in accordance with the infor¬ 
mation issued to them by USSR Gossnab on the attach¬ 
ment of consumers to the suppliers of centrally distrib¬ 
uted output, to proceed immediately with their 
enterprises to work on the making of contracts, including 
for output for which no limits are being set. 

The state plan for 1990 must occupy a worthy place in the 
overall system of measures for putting the economy in 
order. This plan has a number of special features. 

In its approaches, proportions and proposed decisions, 
the draft plan can quite justifiably be considered extraor¬ 
dinary in connection with the influence of a number of 
negative occurrences and tendencies mentioned above 
on the economy. 

It is necessary in 1990 to achieve a strengthening of the 
social orientation of the national economy. The begin¬ 
ning of the work on the draft showed the impossibility of 
resolving the task of material balance between the 
agroindustrial complex, social sphere and other priority 
state needs without the help of the external market. 

The concluding stages of the work on the draft revealed 
the magnitude of the indebtedness, which did not fit into 
the real possibilities for the receipt of credits. For this 
reason, USSR Gosplan had to work out a version of the 
plan with a greater specific social orientation. 

USSR Gosplan carried out a preliminary balancing of the 
draft plan for 1990 at the macrolevel. In developing the 
draft plan, USSR Gosplan provided for the concentra¬ 
tion of centrally distributed material and technical 
resources for the resolution of the tasks in the social 
sphere and agroindustrial complex by reducing produc¬ 
tion consumption and industrial construction and by 

carrying out conversion in the defense complex. Balance 
between the planned targets for production and capital 
construction in 1990 and material and technical 
resources is coming about under strain. This is the result 
above all of the reduction of the volumes of the produc¬ 
tion of a number of a number of kinds of output in short 
supply in comparison with the control figures for 1990 in 
the projections of the ministries, departments and union 

A complex situation is developing with respect to 
meeting the need for the output of the metallurgical and 
chemical-lumber complexes (sheet metal, items for fur¬ 
ther processing, nonferrous metals, chemical and pulp 
products and others) and also for different kinds of raw 
materials for light industry. 

USSR Gosplan, having chosen the most nearly optimum 
version of the export-import plan taking into account its 
necessary social orientation, has not yet been able to find 
a satisfactory solution to the problem of external indebt¬ 
edness in freely convertible foreign exchange. 

Under present conditions, the role of strengthening 
measures to save resources and to provide for the most 
efficient utilization of the country’s resource potential is 
becoming more important. This path is the main source 
of the material balance of the plan. The calculations for 
the draft plan for 1990 foresee intensive but realistic 
tasks in all directions of resource saving that exceed the 
five-year plan for many kinds of physical resources. The 
alternative is this: either we will be able to realize these 
targets, expending each ton of resources economically, or 
we will encounter great difficulties of an economical and 
technical nature. There is no other alternative. 

This is putting unprecedented demands on the problem 
of resource saving, which must be resolved on the basis 
of a fundamental restructuring of scientific-technical 
and investment policy. 

Special notice should be made of the fact that many 
demands on the material balancing of the plan result 
from the fact that some administrators of ministries, 
union republics, enterprises, associations, kolkhozes and 
sovkhozes failed to adopt the intensive program for 
resource saving foreseen in the five-year plan. Individual 
administrators, as a rule, refer to shortcomings in the 
provision with resources. At the same time, they are not 
making any proposals on increasing the production of 
output, stepping up the economy campaign, and 
reducing losses and nonproductive expenditures. Precise 
work should be organized locally in the introduction of 
scientific and technical progress to ensure resource 
saving. But the draft plans for the utilization of sec¬ 
ondary resources presented by the ministries and depart¬ 
ments of the USSR and the councils of ministers of the 
union republics showed that the enterprises of a number 
of ministries and departments, utilizing the right fore¬ 
seen by the Law of the USSR on the State Enterprise 
(Association), adopted these plans below the targets set 
forth in the five-year plan and, for many kinds of raw 



7 December 1989 

materials, below the levels adopted for 1989. In this 
connection, the freeing of primary raw materials and 
supplies from their replacement through secondary 
materials is estimated at 13 billion rubles in 1990, which 
is 2.4 billion below the targets of the five-year plan. Such 
a situation must be corrected quickly. The national 
economy has significant reserves of secondary raw mate¬ 

Since 1981, when the utilization of secondary raw mate¬ 
rials began to be planned on a national scale, the involve¬ 
ment of many kinds of wastes increased by a factor of 1.5 
to 2. As for the establishment of capacities for their 
reprocessing, however, the State Program for the Utili¬ 
zation of the Most Important Kinds of Secondary Raw 
Materials confirmed in 1986 by USSR Gossnab, USSR 
Gosplan and the USSR State Committee for Science and 
Technology is not being fulfilled. The USSR Ministry of 
the Chemical Industry, the USSR Ministry of Power and 
Electrification, the USSR Ministry of the Timber 
Industry and USSR Gossnab deserve special reproach in 
this connection. As a result, the coefficient of utilization 
of reserves of used petroleum products in the national 
economy is 70 percent, it is 15 percent for ash and ash 
slag, 77 percent for wood wastes, 70 percent for waste 
paper, etc. To increase the reprocessing of secondary raw 
materials, a new step is being taken that is aimed at 
ensuring the economic interest of enterprises. At the 
proposal of the Latvian SSR Council of Ministers, USSR 
Gossnab, USSR Gosplan and the USSR Ministry of 
Finances, from 1990 through 1992 payments will be 
collected in the Latvian SSR for unused secondary raw 
materials on an experimental basis. These payments will 
be made by enterprises located in the territory of the 
republic regardless of their departmental subordination. 
The payments are made through the cost-accounting 
income of the enterprises and go for the formation of a 
republic fund for the financing of measures in the 
utilization of secondary raw materials, which can be used 
for the establishment of capacities in the republics for 
the reprocessing of waste products. Preparatory work is 
under way for the carrying out of such an experiment in 
other regions of the country as well. 

The reduction of losses and nonproductive expenditures 
has become a very major reserve for saving physical 
resources. Let us remember that every year the national 
economy losses 16 to 20 million tons of cement, more 
than 20 million tons of hard coal, and no less than 15 
percent of the annual output of mineral fertilizers. The 
losses of agricultural output are quite large. The reduc¬ 
tion of losses and elimination of nonproductive expen¬ 
ditures is a powerful reserve for raising the efficiency of 
public production that requires the lowest expenditures 
in comparison with their production. 

For the purpose of the more active involvement of 
commodity stocks in the national economic turnover, a 
permanent working group has been established with the 
Interdepartmental Commission for Economy and the 
Rational Utilization of Physical Resources and in July 

1989 a working group for the assessment and determi¬ 
nation of causes and the development of proposals for 
the reduction of nonproductive expenditures and losses 
in the national economy was set up under the committee 
on matters involving legislation, legality and legal order 
of the USSR Supreme Soviet. In this connection, it is 
necessary to obtain reliable information on losses at the 
branch and territorial levels with an indication of the 
reasons for their occurrence. The data of state statistical 
reporting are still inadequate for these purposes. The 
USSR State Committee for Statistics must speed up the 
adoption of the necessary measures to correct the 
existing situation. 

Such are the most acute problems of the plan for 1990. 
The difficulties are obvious and therefore the develop¬ 
ment of measures for a way out of the situation that has 
arisen in the country is attaining paramount importance. 
All of us need to get used to working under abrupting 
changing conditions. Enterprises, as a rule, always 
worked under the conditions of stability of resources and 
sales. The situation is different now. Today the enter¬ 
prises need to restructure themselves because of the 
limitation of the volumes of domestic resources, the 
reduction of imports and the change in the supply and 
demand for output. 

Additional resources will be sought in the course of the 
fulfillment of the plan for 1990 and when necessary 
individual targets will be corrected. The final balance of 
the plan under the new conditions of management will 
be achieved after the conclusion of the contract cam¬ 
paign throu^ the organization and development of 
market relations. 

USSR Gosplan will do all it can to support the practi¬ 
cable proposals of enterprises, ministries and depart¬ 
ments of the USSR and the union republics based on 
independently sought supplementary resources. 

Metallurgy can be one of the sources of the resources, 
including foreign exchange. It has considerable reserves 
and one must carefully analyze the possibilities for the 
further increase in the potential of the branch. It will be 
possible to direct the identified resources expeditiously 
into machine building, housing construction and 
exports. In the area of capital construction, the admin¬ 
istrators of the USSR Ministry of Metallurgy and coun¬ 
cils of ministers of the union republics need to give 
priority to the reconstruction and technical reequipment 
of branch facilities having to do with the increase in the 
production of efficient kinds of metal products. 

Worthy of attention is the initiative of the USSR Min¬ 
istry of Metallurgy and USSR Main Administration for 
Diamonds and Gold, which presented a proposal on the 
additional allocation of physical resources for capital 
construction through the granting of a credit from USSR 
Promstroybank [Industrial Construction Bank], which 
will be supported tangibly by means received from the 
export of the supplemental production of nonferrous and 
precious metals. 

7 December 1989 



Machine building is a branch that must do more to 
reveal its resource, including export, possibilities. We are 
fully capable to going into the world market with a 
number of kinds of equipment on a larger scale than 
shown by plans. It is once apin necessary to examine 
carefully the entire products list and to refuse to produce 
that which we can do without so as to issue products for 

It is necessary to make effective use of the economic 
mechanism of the petroleum and gas industry, utilizing 
for this the special foreign-exchange stimulation of 
petroleum-extracting enterprises amounting to 20 per¬ 
cent of the foreign-exchange receipts from the produc¬ 
tion of petroleum beyond what is considered in the 
calculated balances so that the collectives of the enter¬ 
prises, utilizing internal reserves, can increase the pro¬ 
duction of petroleum. There are also considerable 
reserves in other branches. 

In the course of the development of the plan, USSR 
Gosplan sought systematically to continue to increase 
the pace of the social reorientation of the economy. 
Market allocations for building materials are increasing 
from 8.5 to 13 billion rubles, or a factor of 1.5, in 
comparison with 1989. In so doing, it is planned to 
increase deliveries of cement by 32 percent in 1990, 
wood-fiber and particle board by 20 percent, rolled 
ferrous metals by 57 percent, thin-walled carbon, rolled 
cast-iron pressure and asbestos-cement pipe by a factor 
of two, and petroleum asphalt by 47 percent. Much work 
has to be done to fill the market with the necessary 
assortment of lumber and building materials. 

Despite the great strain in the country with respect to 
physical resources, USSR Gosplan is striving to follow 
the five-year plan resolutely with a further increase in the 
production potential of agriculture, the processing 
industry and other branches of agroindustrial produc¬ 
tion and the social reorganization of the countryside. 

Now as never before the social sphere requires tremen¬ 
dous amounts of physical resources. For this reason, it is 
fundamentally important to utilize them sensibly, eco¬ 
nomically and with maximum efficiency. 

COPYRIGHT: “Ekonomika”. “Planovoye khozyay- 
stvo”. 1989. 


High-Interest Bonds, Other Securities Needed To 
Counter Inflation 

INDUSTRIYA in Russian 26 Oct 89 p 2 

[Article by B. Alekhin, candidate of economic sciences: 
“Better Debt Than Inflation”] 

At the first session of the USSR Supreme Soviet, Yu. 
Maslyukov acknowledged that the time had come to more 

actively engage money from the population and enter¬ 
prises by means of issuing long-term bonds under more 
favorable conditions. Enterprises would also be able to sell 
shares of stock and bonds in order to attract additional 
financial resources. These gratifying changes debunk the 
myth that “cutting coupons” is something alien to the 
class struggle and that socialism should, supposedly, have 
nothing whatsoever to do with such “cutting.” 

The securities market (RTsB), like any other market, is 
determined by demand, supply, and the price which 
balances them. Functioning as the net borrowers in this 
market are the state and enterprises, which lack suffi¬ 
cient revenues of their own to finance investments, 
whereas the net creditor is the population, which, for 
various reasons, saves a portion of its income. The task 
is to ensure the fullest and fastest flow of savings into 
production under conditions which satisfy all parties 
involved. In competing with each other on the financial 
market, the state and the enterprises strive to enhance 
the attractiveness of their own securities for the popula¬ 
tion and to offer more favorble loan conditions. In the 
developed countries this has created such a wide choice 
of forms and conditions of savings that it is difficult 
without the aid of specialists (brokers and investment 
dealers) to select and assemble a package of securities 
providing, at one and the same time, reliability of 
investments, their income-producing qualities, and 
liquidity (their capacity to be converted into money 
freely and without loss). For those savers who are still 
very conservative and mistrustful, there are auctions of 
works of art and centers for selling coins made of 
precious metals. 

There is nothing of this kind in our country. The Soviet 
securities market which began to function during the 
years of the NEP [New Economic Policy] fell victim to 
the “great change.” The state was transformed from a 
competitor in the market to a financial dictator, deter¬ 
mining via the Ministry of Finance, Gosbank, and the 
Sberbank [Savings Bank] the forms and conditions of all 
savings, even personal ones. The system of financial 
dictatorship has only one alternative to saving money 
“under the mattress” (unless we count the alternative of 
investing in the “underground economy”). That is 
saving such money in the Sberbank. But just what do we 
receive from the state in exchange? And we must receive 
something because we have contributed labor savings 
and unconsumed income to the state. 

In the first place, the Sberbank’s “counter” is just as 
meager as the counter of an ordinary food store. A 
savings passbook, two or three types of quite unattrac¬ 
tive certificates—that is the entire assortment. In also 
carrying out its function as investment dealer, the Sber¬ 
bank sells bonds of the state loans. But here too there is 
nothing to brag about. The only items being circulated at 
present are “shares” in the 1982 domestic lottery-loan. 
And why, indeed, manifest any inventiveness if we have 
nowhere to go except for the bank? 



7 December 1989 

In the second place, the income on our labor savings is 
extremely low (2 percent a year on non-term deposit 
accounts, 3 percent on fixed-term ones, and 4 percent on 
youth accounts and those set up “for children”), while 
under the conditions of inflation, which exceeds 8 per¬ 
cent on a per-annum average—it is even criminally low. 
Throughout the entire world, with rare exceptions, the 
devaluation of deposit accounts because of the upsurge 
in commodity prices is compensated for by increasing 
interest rates. Otherwise, who would undertake to invest 
money in deposits or purchase bonds? But in our country 
the state has ignored inflation because it retains a 
monopoly on the use of savings. 

In the third place, there is no standard for the financial 
relations between the state and rank-and-file, “retail- 
type” savers. In the developed countries commercial 
banks, by way of protecting the interests of their own 
depositors, very rarely offer long-term credits to compa¬ 
nies or purchase their shares of stock, inasmuch as there 
is always the possibility of a massive demand for the 
deposits. But in our country an enormous portion of the 
money is taken by Gosbank from the savings banks for 
financing heavy industry, which operates at a loss. If we 
all suddenly showed up at the savings banks and 
demanded our deposits, billions of new rubles would 
have to be printed up in a hurry. 

Furthermore, in other countries the bonds have on their 
right-hand sides several rows of coupons, the very same 
ones which are “clipped,” i.e., are cut off and, in the 
form of a small booklet, transmitted to the holders (the 
bonds themselves have long ceased to be stored at home 
but are kept instead in banks for the sake of safety and 
convenience). Indicated on each coupon, among other 
things, is the interest rate on the loan and the date of its 
payment (usually semi-annually). There are also bonds 
without coupons, but this merely means that the interest 
is paid out in the form of a check sent through the mail. 
No matter what the state of the economy might be nor 
how “bad” the government might be, the interest is paid 
out in full and on time. You must agree that such is the 
way civilized relations should be between debtors and 
creditors. Moreover, the interest rates are adjusted to the 
amount of inflation of commodity prices; otherwise the 
state would not be able to finance its own expenditures. 
Because, after all, in developed countries it is not the 
issuance of money but rather loans which constitute the 
principal means for the non-budgetary financing of gov¬ 
ernment programs. 

Let’s take a look now at a bond for the 1982 domestic 
lottery loan. There are no coupons of any kind on it, nor 
do we receive any checks through the mail, although it 
does indicate that the loan is made with an interest rate 
of 3 percent per annum. But where is it, then, this 
interest (albeit criminally low)? Yes, our interest has 
been “played” in the lottery; moreover, only 38 percent 
of the bonds go to pay off the drawings, while the 
remainder have been bought up at their nominal value 
(the 1966 loan was also a lottery type). And if, moreover, 
we recall what far-from economical methods were used 

to handle certain loans, then we can hardly speak about 
the civilized nature of our financial relations with the 

For rank-and-file savers the securities market is a way 
out of the financial trap into which they have been 
chased by the command economy. But why have the 
members of the government begun to speak about it? 
This question may be answered in a narrow as well as a 
broad sense. In a narrow sense, the intention to rely on 
the market mechanism is to be explained by the fact that 
the government itself has turned out to be in an 
extremely complex financial situation as a result of its 
own wasteful, squandering budgetary policy. The old 
system no longer allows it to extricate itself from this 
situation. Being under the press of a gigantic budgetary 
deficit, the government cannot permit itself to continue 
to print up billions of new rubles. Issuing currency on 
such a mass scale would mean rapid inflation, which, in 
turn, would increase social tension and people’s sense of 
being isolated. Furthermore, increasing state revenues by 
means of taxing the wage fund and curtailing state 
expenditures by means of centralized capital invest¬ 
ments would not save the country from its budget deficit. 
We have been assigned the task of cutting it approxi¬ 
mately in half 

But just how can we live with a budget deficit without 
provoking an inflation and without putting a spoke in 
the wheel of economic growth? First of all, we need to do 
what many before us have done, i.e., to “hit” at the 
printing press by means of state loans. Switching the 
budget deficit from the unstable foundation of issuing 
currency to the firm grounds of loans would constitute 
an important anti-inflationary measure. Because, of 
course, in contrast to issuing currency, the issuance of 
bonds would not add a kopeck to the existing money 
supply and, consequently, would not devalue the ruble. 
It would merely shift purchasing power from the popu¬ 
lation to the state, rewarding us for this by higher 
incomes in subsequent years. (By the way, our budget 
deficit is based, to a considerable extent, on currency 
issuance, and, therefore, it cannot be called a state debt. 
When a government prints up new currency, it does not 
owe anyone anything). If the government begins to issue 
bonds at a higher interest rate which is more susceptible 
to inflation—^and worldwide practice many methods of 
adjusting loans to the growth of commodity prices, then 
it will have no problems in seeking out money to finance 
investments. Not only will a considerable portion of the 
savings be switched over from passbook accounts and 
from “money-boxes” back into the hands of the state, 
but, I am confident that many persons will cut down on 
their own consumer expenditures for the sake of owning 
accessible and highly liquid bonds of state loans. 

The government also has a substantial reason for letting 
enterprises stretch out on a longer financial “tether,” 
permitting them as independent goods producers to go 
out into the financial market. For the sake of straight¬ 
ening out the budget, it has agreed to cut back central¬ 
ized capital investments by 30 percent. Obviously, it is 

7 December 1989 



anticipated that the enterprises will be able to compen¬ 
sate for this curtailment by revenues derived from selling 
securities, and thus no serious “braking” of the invest¬ 
ment process will occur. All that needs to happen is that 
the shareholders keep track of how these funds are spent. 
Because, you know, the shares bring not only dividends 
but also the right to vote, the right to monitor the activity 
of the administration even so far as to replace it. You 
will see that instead of STK’s monitored by the admin¬ 
istration there will appear councils of directors. 

In the broad sense, the intention of the government to 
develop operations with securities has been conditioned 
by the logic of perestroyka. The democracy of the elec¬ 
tion district must be improved hand-in-hand with the 
democracy of the market, an inseparable part of which is 
the securities market. The rebirth of the market, to which 
we wish to entrust an important role in the development 
of our society, is not merely a saturation of the stores 
with goods. The market is also the free trade in producer 
goods and the buying and selling of manpower, as well as 
the free flow of financial resources from poorly operating 
sectors and regions into effectively operating ones, 
capable of paying out a higher amount of their revenues 
for their securities. We cannot imagine independent 
commodity production without an independent choice 
of the sources and forms of financing or without free 
price formation. 

For decades we fought against the Western theories of 
“people’s capitalism” and the “democratization of cap¬ 
italism,” attempting to belittle the importance of the fact 
that in the developed countries not only the bourgeois, 
but also millions of working people own securities. 
Mankind invented stocks and bonds in order to combine 
diverse financial resources for the purpose of solving 
major economic problems. The West has utilized this 
invention to increase labor productivity and product 
quality, thus transforming the workers at firms into 
shareholders vitally interested and motivated to achieve 
high end results. Why should we not follow this con¬ 
vincing example? 

Procedures for Currency Auction Explained 

in Russian No 40, Oct 89 p 23 

[Article: “Currency Auctions in USSR”] 

[Text] EKONOMICHESKAYA GAZETA has published 
material related to the problem concerning the necessity 
of conducting currency auctions in the country as one of 
the conditions of increasing the personal interest of enter¬ 
prises in the development of production for export and 
also of a gradual transition to the converted ruble. Such 
auctions, unthinkable for us even recently, now are begin¬ 
ning to become a reality under conditions of radical 
economic reform. Documents published here, which Gos- 
plan SSSR, Gosbank SSSR, Minfin SSSR and Vneshek- 
onombankSSSR prepared under supervision ofVneshek- 
onombank SSSR Commission USSR Council of 
Ministers, confirm this fact. 

Basic purposes of carrying out operations for buying and 
selling capital at currency auctions of Vneshekonom- 
bank SSSR include solution of important problems of 
scientific and technical progress and expansion of output 
of production for export and creation of additional 
opportunities for enterprises, associations and organiza¬ 
tions for increasing production of goods in public 

Funds in foreign currency, acquired at a currency auc¬ 
tion, are subject to the arrangement in force for the use of 
the own foreign currency of enterprises, associations and 
orgnizations, set according to paragraph 4 of the Council 
of Ministers USSR decree of 2 December 1988 No. 1405 
and paragraph 29 of the Central Committee CPSU and 
the Council of Ministers USSR decree of March 1989 
No. 231. 

Vneshekonombank SSSR is not responsible for the legal 
capacity and the ability to pay of organizations partici¬ 
pating in purchase and sale of funds in foreign currency. 

Organization of Currency Auctions 

The general supervision and responsibility for carrying 
out currency auctions is entrusted to an auction com¬ 
mittee which includes representatives of Vneshekonom¬ 
bank SSSR, Gosplan SSSR, Gosbank SSSR and Minfin 

Sources of funds in foreign currency for sale at currency 
auctions are funds of currency funds of USSR state 
enterprises, associations and organizations, admitted for 
sale by the auction committee. 

Capital of currency funds is understood to be capital in 
accounts relating to own resources and accounts not 
relating to own resources, opened in accordance with 
legislation in effect in the USSR. 

The auction committee permits state enterprises, associ¬ 
ations and organizations (except budgetary organiza¬ 
tions) to participate in currency auctions. 

Application for Participation 

Enterprises, associations and organizations desiring to 
participate in the auction must send Vneshekonombank 
a properly completed application which indicates: 

—complete name of the enterprise, the postal address 
and the surname of the associate authorized to make 
decisions concerning participation in the auction and 
his telephone number (telex); 

—name and number of the interbranch turnover of the 
bank serving the enterprise and the enterprise’s cur¬ 
rent account number in this bank; 

—^the total amount of currency bought (sold); 

—how the purchased foreign currency will be used; 



7 December 1989 

—^the contractual price (and course) for which the enter¬ 
prise is prepared to buy (sell) the currency and the 
equivalent amount in rubles, calculated according to 
this contract price. 

The buyer’s application should contain the enterprise’s 
obligation to guarantee payment of the foreign currency 
acquired in the contracted course (at the price) stated in 
the application with an affixed copy of a draft with an 
annotation of the bank’s payer concerning the transfer of 
the auction impost into the account in Vneshekonom- 
bank SSSR. 

The application is signed by the director and chief 
accountant of the enterprise and is authenticated by the 
heraldic seal of the enterprise and is sent, by registered 
mail, to the address given in the announcement con¬ 
cerning the auction. 

Applications received no later than 5 working days 
before the auction date will ensure eligibility to partic- 
pate in the auction. Applications received by the auction 
committee after this date will not be accepted but will be 
returned to the sender and the participation fee will be 
returned to the sender’s current account. 

Applications for participation in currency auctions are 
delivered to the auction committee and the committee 
decides if the senders will be permitted to participate in 
the currency auction. 

Procedure for Conducting the Auction 

At the currency auction, purchaser’s applications are 
complied with in proportion to the decrease of the 
contract price proposed in them, beginning with the 
highest and continuing sequentially until the foreign 
currency available is exhausted (or the initial contract 
price of sale is reached) or all applicants are satisfied. 

In case two or more enterprises offer the same contract 
price and the remaining currency for sale is insufficient 
to satisfy all of these applicants, the auction committee 
will decide which applications will be satisfied on the 
basis of the priority of the purpose for buying the foreign 
currency and then on the basis of the dates of receiving 
the applications. 

Buyers whose applications are satisfied are notified of 
conclusion of the transaction by the Venshekonombank 
SSSR by mail or by telephone. 

No later than the following working day after receipt of 
this notification, the buyer sends the bank servicing it a 
payment order for transfer, to Vneshekonombank SSSR 
of the equivalent, in rubles, of the foreign currency 
purchased, according to the contract price stated by the 
buyer in the application. 

Upon receipt of the equivalent of these funds in rubles, 
Vneshekonombank SSSR includes the amount of the 
foreign currency sold in the current account relating to 
own resources of the buyer and sends a statement of the 
account in the time set. 

The proceeds, in rubles, from the sale of foreign currency 
at the auction is transferred by Vneshekonombank SSSR 
to the seller for deduction of the commission for making 
the sale at the currency auction. These funds are entered 
into the current account of the enterprise, the seller of 
the foreign currency, and are placed in its industrial and 
social development funds. 

After the currency auction, the auction committee pub¬ 
lishes results of the auction in the press and indicates the 
total volume of the sale, the minimum, maximum and 
average contract price of the sale and the number of 
participants in the currency auction. 

Commissions Awarded 

After sale of foreign currency funds for Soviet rubles, the 
owners of these funds collects a commission in the 
amount of 1 percent of the earnings obtained but not 
more than 1000 rubles for each transaction. 

Participants in currency auctions send, together with 
applications for foreign currency purchase, an auction 
impost of 200 rubles to Vneshekonombank. 

The First Currency Auction 

The committee for conducting currency auctions 
announces a currency auction for selling and buying 
foreign currency which is readily converted into Soviet 
rubles, on 3 November 1989. 

State enterprises, associations and organizations (bud- 
geta^ organizations cannot participate in the currency 
auction) may participate in the first currency auction. 

Enterprises, associations and organizations wanting to 
participate in the currency auction should send two 
copies of the application (application forms are illus¬ 
trated on this page of the newspaper) by registered mail 
to Moscow, Center, Moscow Post Office, Subscription 
Box 800, Vneshekonombank SSSR. 

Applications are valid only for this auction. 

Only applications received by the auction committee not 
later than 27 October 1989 will be accepted. 

Foreign currency buyers should attach, to the applica¬ 
tion, a copy of draft with an annotation of the payer’s 
bank concerning transfer of the auction impost of 200 
rubles for the service to account No. 9044 in Vneshek¬ 
onombank SSSR, Moscow (interbranch turnover No. 

The amount of the currency is indicated in non-currency 
rubles and should be a multiple of 1000. The minimum 
amount of sale at the auction will be 50,000 non¬ 
currency rubles and the minimum amount of puchase 
will be 10,000 non-currency rubles. 

Applications received for purchase of foreign currency 
will be satisfied within limits of the number of applica¬ 
tions for purchase of foreign currency received in accor¬ 
dance with the proposed contract prices. 

7 December 1989 



The amount obtained from sale of currency at the 
auction is not subject to taxes. 

The Vneshekonombank SSSR and communication agen¬ 
cies are not responsible for correspondence not received 
by the auction committee by the specific date. In case of 
loss of registered letters, responsibility applies according 
to USSR Communications Regulations. 

Call telephone number 247-42-20 if you have questions. 

[Signed] Auction Committee 

Cooperatives Offer Solution to Excess Money 

Russian 12 Oct 89 p 2 

[Interview with N. P. Shmelyev, doctor of economic 
sciences, author, and USSR People’s Deputy, by N. 
Gromov: “The Anxiety Is Increasing, But There Is a Way 

[Text] How much time do we have? Workers and deputies 
and economists and politicians have been asking this 
question in recent months. They have been asking it with 
more and more anxiety, seeing how more and more new 
economic problems are piling up and how public passions 
are flaring up like bonfires. It must be confessed that 
many have been taken by surprise by the sudden exacer¬ 
bation in the country. But not everyone. Doctor of Eco¬ 
nomic Sciences N. Shmelyev warned in an interview with 
VECHERNYAYA MOSKVA back in March: the state of 
the economy is depressing, and urgent steps are needed to 
overcome the negative trends and the increasing pressure 
of inflation. He said at that time that we have 2 or 3 years 
to accomplish this. 

We began the current discussion with N. P. Shmelyev, 
scientist, author, and USSR People’s Deputy, with this 

[Gromov] What is creating particular concern in the 
current situation today? 

[Shmelyev] We have to go back 8 or 9 months in order to 
understand the situation in which we find ourselves. At 
that time there was an atmosphere of universal compla¬ 
cency in the country. The Supreme Soviet at that time, in 
the best traditions of the body of deputies during the 
stagnation, unanimously voted for an appalling absur¬ 
dity—the budget with an enormous deficit which the 
government presented. The public did not see the danger 
right away. But the moods have changed appreciably 
since that time. However, even now the danger of the 
situation is not being grasped sufficiently, in my view. 
And this is reflected in the drafts of the plan and the 
budget for 1990 that have been submitted by the govern¬ 

They can be supported in principle—the suggestions 
which form the basis of the government’s proposals are 

correct, on the whole, but they are inadequate to save us 
from the impending catastrophe, to call things by their 
proper names. 

[Gromov] Why? 

[Shmelyev] I will explain. All these measures affect the 
dimensions of growth. The increase in money and 
demand, including payment in cash and payment by 
written order, and the possible increase in the com¬ 
modity inflation of this money, including consumer 
goods and capital goods. But the main part is not 
affected: that mountain of money which we printed in 
the postwar years, especially over the past 2 or 3 years. 
This mountain threatens to collapse very soon. 

We cannot underestimate the danger of this phenom¬ 
enon which is new to us, the panic which began this year, 
the principal manifestation of which was the speculative 
demand for everything, beginning with soap and deter¬ 
gent and ending with gold items and furs. The market is 
sweeping up everything now. And in order to settle it 
down, we need emergency measures. No soothing prom¬ 
ises that everything will be fine, that we are on the point 
of balancing the increase in money and the increase in 
goods as early as next year, will help at all. You will not 
calm the market with exhortations. Emergency “injec¬ 
tions” are needed to put it on a normal course. 

What do I consider the most serious weaknesses in the 
draft submitted by the government? They are trying to 
persuade us that everything has been balanced more or 
less in the area of production and material and technical 
supply. All right, I am prepared to believe this. But what 
do you wish to be done with the 150 billions—money for 
which goods have not been produced—which has accu¬ 
mulated in enterprises’ accounts? This money makes any 
kind of serious econmomic reform impossible. When 
150 “hot” billions are available just in the enterprises, 
any arguments about restructuring the economic mech¬ 
anism will remain good wishes. The ruble has not been 
working in the production area, and it will not be 
working, either. But force, nagging, a party membership 
card, and intrigues—anything at all—will work, only not 
the economy. 

On the whole, those who drew up the plan and the budget 
are guilty of excessive optimism, in my view. What is the 
value of the assurances from P. I. Mostovoy, the 
chairman of the USSR Gossnab, that the market for 
production and technical items for mass consumption 
has supposedly been balanced already and that the 
consumer will have no problems next year? They border 
on irresponsibility. But who are we deceiving? Try to buy 
bricks or other building materials, machinery, or various 
kinds of equipment the people need. All this cannot be 
obtained now, and we will not be able to purchase it next 
year, either—that is obvious. 

Until the situation in the market is fundamentally 
changed, stimuli will not work in agriculature either, 
because the peasants also have nothing to buy and 
nowhere to spend their money. No matter what you 



7 December 1989 

undertake, everything must be asked for with bows and 
indignities, shaken out, right up to Moscow, and bribes 
must be given, “like gypsies.” What kind of balance can 
we speak about in this market? Nevertheless, the govern¬ 
ment seeks to convince us of this. Why? 

The assessment of the situation in the consumer market 
is also optimistic beyond all measure. Well, how are we 
to believe that we will balance it next year if we give a 
10-percent increase to commodity turnover when even 
the official increase in incomes is 9 percent! After all, a 
minimum of 5- to 6-percent inflation is apparent in this 
10 percent, even to the naked eye. This means that the 
mountain of money that is not provided for will not only 
not be decreased; it will even increase. 

But how will the 10-billion emission and the 60-billion 
budget deficit be covered? It is assumed that enterprises 
may cover the deficit with their loans. But what kind of 
guarantees are there here? I do not think there are any. 
Other types of payments are also being proposed, 
although in point of fact this is all that same printing 

And it is not at all clear what the government intends to 
do sbout the principal danger—namely the 330 billion 
rubles in the public’s accounts, and God alone knows 
how many more billions that have been hidden in socks. 
According to estimates, there are roughly 70 to 100 
billion more. These are not the increase values. It is 
precisely these billions that are also producing a can¬ 
cerous tumor in our economic organism. But we are 
trying to cut out the metastases of it somewhere on our 
heel. And while we are engaged in this, by not touching 
the main tumor, it is just about to devour the remaining 
healthy tissue. And we don’t have 2 or 3 years left, as it 
seemed in the spring; it is unlikely to be more than a 

[Gromov] So what is the way out? 

[Shmelyev] There is only one way out: reduce the supply 
of money to the maximum extent by all means. Give the 
people the chance to obtain at least something for it. If 
the cooperatives are not smothered, they will be able to 
cover the entire increase in the bulk of the public’s 
money for the next year independently. That is some¬ 
thing. On the order of 50 billion also can be “pumped 
out” in this case through an increase in consumer goods 
production in the state sector with a turnover tax. If we 
decided to open a loan for future housing, we would not 
only be able to collect on the order of 75 to 100 billion 
rubles, but prevent a decline in production capacities in 
construction and stop the possible unemployment in this 
sector which threatens hundreds of thousands of people. 
But the main thing is to give hope to 2 to 2.5 million 
families that they will obtain an apartment in 5 years. 
Even those who are poor would find money for this— 
after all, every person wants to have normal housing. 

Or if we had had the courage to purchase two automotive 
plants of the VAZ [Volga Motor Vehicle Plant] type on 
credit in order to turn out an additional 2 million 

vehicles per year in the future, let us say. There is 
nothing unreal about this suggestion—nearly all the 
world’s current motor vehicle powers are being devel¬ 
oped this way. This would also provide on the order of 
50 billion rubles annually. 

And finally, how long can we sit on the supply of gold to 
no purpose? Why are we holding it? In case of war? It will 
not be needed by us then. For a rainy day? It is doubtful 
whether there will be a rainier one. We have begun 
nibbling at it in recent years, thank God, but we haven’t 
gotten to the great bulk of it, either. Meanwhile, it is 
common knowledge that the country can obtain money 
abroad only with a security. They do not provide it under 
the usual commercial conditions; our country has 
become an unreliable borrower. We are left with an 
annual interest rate of 15 to 16 percent or more. But we 
can offer our gold reserves as security. It is foolish to sell 
it: the gold market will collapse instantly, on the very 
next day. This has happened more than once in the 
world—a state offers its gold reserves as a security and 
obtains money for its most critical needs. 

[Gromov] We cannot help but be concerned about the 
fate of cooperative activity. It is being accused of every 
mortal sin now. But is this always the case? 

[Shmelyev] The simplest thing would be to reproach 
those who are attacking cooperatives today for their lack 
of logic. But that is not the way it is, you know. It is 
another matter that this is the logic of the Stalinist 
perception of reality, the logic of inverted thinking. 

Cries are being heard from all sides: “Life is getting 
worse. Do something, at least!” But a real force capable 
of changing something, of plugging up the holes, of 
putting goods on the market, appears and we shake our 
fists and bring all our weight to bear on it. But after all, 
under the conditions of the current breakdown of the 
consumer market, the cooperative sector could cover 
nearly the entire increase in incomes in the country. 

I hear the statement that there is a lot of scum in the 
cooperative movement. But is there less in state trading, 
public catering, and the services field? But we have 
become accustomed to it, we have resigned ourselves to 
it. Does this mean that Rashidov gets his shashlik from 
God, but the one who sells shashlik gets it from the devil? 

They are also saying that cooperative members “are 
earning too much.” And everything is turned upside 
down here: they do not earn a lot, but the worker in state 
enterprises earns little. In accordance with the current 
level of labor productivity (if we look at other countries), 
our worker should earn 500 to 600 rubles per month. 
This is just what a cooperative member earns, on the 
average. But if it is taken into account that labor pro¬ 
ductivity in cooperatives is twice as high, the cooperative 
members are earning a little, not a lot. 

L. Abalkin is right: we are looking for someone to blame 
because nothing turns out. We need the image of an 
enemy we can blame for everything. Now there is one. It 

7 December 1989 



is the cooperative members who, by providing for less 
than 2 percent of the country’s commodity turnover, 
should answer for the collapse of the entire economy for 
some reason. What is more, there are the economists 
(who had nothing to do with such stupid things as the 
anti-alcohol campaign, for example, the Law on 
Unearned Incomes, and the gigantic state budget deficit, 
of course). 

The course of the debate at the USSR Supreme Soviet 
session related to cooperatives means to me that “sitting 
on two chairs” has come to an end. By introducing draft 
amendments to the Law on Cooperatives and drafts of a 
law on property and on taxes, and by proposing at the 
same time a new (taxation) method of holding wages in 
check, the government is following a path of cutting back 
the cooperative movement whose development it fos¬ 
tered itself, in my view. 

It is sad... What do we want, to bring ourselves to 
complete economic paralysis or to recover? And what do 
we intend to be guided by henceforth? Common sense 
and economic competence, or emotions, envy, and an 
uncontrolled striving to destroy and ruin whatever 
comes to mind? 

I am thinking about the recent trade union meeting in 
the Luzhniki. Why are they forcing up passions? 

In any case, you cannot call these actions constructive by 
any means. But after all, this concerns the interests of 
ordinary people and a healthy economy... I fear that 
these problems have proved to be too difficult for the 
trade unions. And they are blaming the cooperatives for 
all our troubles. Instead of protecting the interests of the 
working people who have been put into the hands of 
economic administrators and studying the causes which 
lead to strikes, they are hastily trying to find someone to 
vent their anger on and to blow off steam. It looks as if 
they don’t know what they are doing. But we are the ones 
who must be fully aware of this. A retreat, a return to the 
rusted rails of the administrative-distributive system, 
which is what they are calling for essentially—this is not 
simply putting the switches in the previous direction, it 
is directing the country into a dead end, toward an 
economic and social catastrophe. 

We can still avoid this; there is still time. 


Consumer Goods Production from Ministry of 

Russian 5 Oct 89 p 2 

[Interview with Army Gen V.M. Arkhipov, deputy 
USSR minister of defense and chief of rear service of the 
USSR Armed Forces, by Vil. Niyazmatov, Moscow, 
under the rubric “An Important Interview”: “Military 
Plants—Civilian Goods”] 

[Text] The inter-republic consumer goods wholesale fair 
has ended in Moscow. The USSR Ministry of Defense 
was among the ministries and departments offering their 
products there. This was the subject of an interview with 
Army Gen V.M. Arkhipov, deputy USSR minister of 
defense and chief of rear services of the USSR Armed 
Forces, by our correspondent. 

[Niyazmatov] Vladimir Mikahaylovich, the Armed 
Forces and consumer goods. Does this not seem like a 
strange connection at first? 

[Arkhipov] It would indeed have appeared extreniely 
unnatural two years or so ago. Our ministry’s enterprises 
had only thoroughly departmental assignments. Clearly 
recognizing the situation in the nation, however, we are 
more and more vigorously engaging in providing the 
nation’s population with quality goods. For this purpose 
we thoroughly studied all of the capabilities of our 
enterprises and compiled a specific list of goods which 
could be sold in the state trade sector. Last year we 
produced 80 million rubles’ worth of these commodities, 
but that is only the beginning. 

[Niyazmatov] What do your department’s enterprises 
produce today? 

[Arkhipov] The list is a long one. Suffice it to say, that 
the list of goods for 1988 contained around 1,000 items. 
I shall name a few of them: various household goods and 
dishes, all sorts of locks, hardware, gardening tools and 
accessories, radio equipment, electrical household 
goods, prefabricated garden sheds, construction mate¬ 
rials, various knitwear and woolen items, footwear, 
office supplies.... In short, that which is in great demand 

[Niyazmatov] How is the production of these goods 
distributed among the military districts? What guide¬ 
lines does a certain district follow, for example, in 
planning the production of thoroughly “civilian” goods 
at military enterprises? Have they taken into account 
consumer demand and the needs of the population? 

[Arkhipov] The distribution of production was not made 
“blindly,” of course, and certainly was not dictated in 
orders. The work was coordinated with the local soviets 
in all the districts. Representatives of the rayon and city 
executive committees and oblast soviets of people’s 
deputies visited our enterprises, where they specifically 
discussed what the given region needed most. Stable 
“specialization” has now been specified for the produc¬ 
tion of goods at enterprises of specific districts. In the 
Far East and the Transcaucasus, for example, they set up 
production of fur items and concluded agreements on 
their delivery to the trade system. Upholstered furniture 
is produced at a ship repair plant in the Baltic. Our 
enterprises in the Baltic area have set up the production 
of all sorts of dishes, an auto repair plant in Zaporozhye 
delivers trailers for passenger cars to the trade system, 
and a construction combine in Kaliningrad (Moscow 
Oblast) provides the population with various lumber 
products. At the request of the local soviets in the 





7 December 1989 

Turkestan District, we are producing the special hoes 
used in the region, shovels, handcarts and wheelbarrows. 

Popular items include children’s toys, hammocks, 
sporting goods, plumbing supplies, bicycles.... In short, 
our enterprises will produce 160 million rubles’ worth of 
consumer goods this year. The figure will almost double, 
to 300 million rubles, next year. Incidentally, I recently 
visited our enterprises in the Ukraine, in Novgorod and 
Pskov oblasts and in the Baltic region, where we reached 
agreement with local authorities on the list of items to be 
produced in the future. 

This consumer goods fair was of great benefit to us. We 
not only showed our products to others, but, most 
important, we had an opportunity to see what the 
enterprises of various ministries and departments are 
producing. It is important, after all, that there be no 
unneeded duplication. We also concluded a number of 
agreements on cooperation at the fair. For example, we 
are to be provided with raw materials, in exchange for 
which we shall provide finished products. 

[Niyazmatov] Will the production of consumer goods 
not affect the fulfillment of purely defense plans? 

[Arkhipov] We are performing this work without detri¬ 
ment to our main function. It is important to note first of 
all that we are producing all of the products to be sold 
through the trade system by economizing, seeking addi¬ 
tional material and financial means and utilizing sec¬ 
ondary resources. We have also begun building up enter¬ 
prise capacities and have converted many of them to a 
double-shift operation. Labor productivity, too, is being 
increased by making extensive use of material and moral 
incentives. For example, we permit the workers at our 
enterprises to purchase the products they produce with 
cash. We see the enlistment of the wives of officers and 
warrant officers in the production of consumer goods as 
another source of manpower. We arrange for them to 
work at home, particularly on the production of sewn 
goods, as well as other items. 

Kharkov Tank Plant Lags in Civilian Production 

90UM0074A Moscow IZVESTIYA in Russian 
19 Oct 89 Morning Edition p 2 

[Article by IZVESTIYA Correspondent A. Kleba, 
Kharkov: “The Tank Plant is Spinning its Wheels and 
the Market is Waiting for Goods from the Military 

[Text] The plant imeni Malyshev is the cradle of the T-34 
and a modem Soviet army tank plant. General Director 
V. Pivovarov, speaking at an oblast party conference, 
admitted that the giant had reduced its volume of output 
of nonfood consumer items. IZHYU-5 motors, tents, 
clothes trees, small balcony tables, “Magnetic Letters 
and Numbers” games, food storage trays... They had 
planned to develop six new items in 1989. 

At the present time, the association has begun fulfilling 
the task on designing and developing equipment for 
processing sectors. 

I recently visited the association’s Dergachevskiy affil¬ 
iate where IZH-Yupiter motors and motorcycles and the 
magnetic letters are produced. A letter from workers and 
engineers brought me there. They wrote that the collec¬ 
tive is working a third below its capabilities. The leaders 
of the production association treat them like stepchil¬ 

The affiliate’s collective wants to achieve self-reliance, 
but the association “needs an indicator” of consumer 
goods output and is therefore putting obstacles in the 
affiliate’s way. 

They just announced a conversion policy. But even 
today there are no substantive changes: The tank manu¬ 
facturing giant remains indebted to the country. V. 
Raduto, director of the Soyuzpromvnedreniye zonal 
affiliate, said: 

“The plant imeni Malyshev continues to reduce its 
output of consumer goods. For incomprehensible rea¬ 
sons, production of cast aluminum cookware which 
enjoys enormous demand both here and among our 
foreign partners has ceased at our plant. During the next 
five-year plan, we intend to produce 50,000 multi¬ 
purpose four-wheeled all-terrain motorcycles. They will 
replace the small trucks and tractors, circular saws and 
well pumps....” But what is keeping the plant, which has 
sharply reduced tank output, from already producing the 
all-terrain vehicle during the current five-year plan? 

Here it is appropriate to reveal one more of the Malyshev 
plant workers’ “military secrets.” Last September, the 
designers received the task to develop dough-rolling 
equipment for major public catering centers. The path 
from the drawing board to the first prototypes took seven 
months. The equipment cuts up to a 130-kilogram batch 
of noodles or various kinds of rolls per shift. But... there 
is only one model left right now. 

Why is the tank manufacturing giant delaying produc¬ 
tion of needed goods? The issue remains unresolved of 
using powerful all-terrain prime movers capable of oper¬ 
ating under extreme conditions and of transporting 
12-20 ton cargoes. Kharkov bulldozers [tyagachi] can 
overcome all types of barriers, build roads through rock 
and taiga, and dig foundation pits up to 3.5 meters deep 
in permafrost ground. This entire arsenal is frozen and 
waiting for the association’s leaders to find out where 
they need to look for consumers of powerful equipment. 

The situation which has taken shape at the plant imeni 
Malyshev reflects the attitude that Kharkov’s other 
defense enterprises also have toward conversion. Thus, 
the radio electronics plant is not hurrying to produce 
dual-cassette stereo tape recorders, high class “com¬ 
bines,” modern portable color televisions, video 
recorders, computers, and radio-controlled toys. Here it 

7 December 1989 



is hoped that the word “conversion” was found acciden¬ 
tally. However, the time to work only on military orders 
has passed; it is now time to work for the welfare of the 

Consumer Goods Production More Profitable than 

90UM0074B Moscow KRASNAYA ZVEZDA in 
Russian 26 Oct 89 First Edition p 2 

[Unattributed Article: “A Shortage of Sailors’ Striped 

[Text] The USSR Ministry of Light Industry has exam¬ 
ined the issues touched upon in Captain 2d Rank 
Lukanin’s correspondence published in the August 25, 
1989 issue of KRASNAYA ZVEZDA under the same 

E. Razumeyev, deputy minister, reports that the main 
cause for not fulfilling the USSR Ministry of Defense’s 
special delivery are the items’ return on investment and 
their low profit margin (up to 3 percent) in comparison 
with production of consumer goods (up to 30 percent). 

Equipment retail price lists have been developed and 
approved with the USSR Ministry of Defense which 
provide for a 20 percent increase in profitablility for the 
purposes of interesting the sector’s enterprises in pro¬ 
ducing items specially designated by the USSR Ministry 
of Light Industry. The time period for introduction of 
the new price lists will be determined through an appro¬ 
priate government decision. 

Furthermore, disruptions in deliveries of certain assort¬ 
ments of clothing items have occurred which were 
caused by raw materials supply problems and the closure 
of a number of USSR MVD institutions that manufac¬ 
ture clothing items in accordance with agreements with 
the RSFSR Ministry of Light Industry. 

USSR Ministry of Light Industry and union republic 
ministries of light industries carry out constant moni¬ 
toring of timely fulfillment of special item deliveries. 
Thus, at a meeting of the board of the RSFSR Ministry 
of Light Industry, the causes of unsatisfactory work at 
Vladivostok Industrial-Trade Clothing Association were 
discussed. The Association is currently taking steps to 
insure fulfillment of the state order for 1989. 

Delivery plans have been carried out in accordance with 
the established task for the 9 months of 1989 by the 
clothing knitwear sailors’ striped vest factory and the 
Uzbek SSR Ministry of Light Industry for soldier’s 
box-calf boots. 

Success of Conversion at All-Union Aviation 
Materials Institute 

Russian 5 Sep 89 p 2 

[Article by V. Savelev: “Defense Industry to the Con¬ 
sumer: VIAM [All-Union Scientific Research Institute of 
Aviation Materials] Invites You To Shave”] 

[Text] As far as we know, no one has ever succeeded in 
shaving with a brick. But, it looks like conversion is 
approaching this historic event. In any case, I saw an 
experimental model of a razor blade made of clay: A 
milk-colored ceramic weightlessly lay in the palm of my 
hand. This razor blade is the eternal embodiment of a 
dream of our men who are compelled to painfully scrape 
their cheeks with dull steel. Just where did this miracle 

Among the reactions to the news articles “Composite” 
and “Butcher with a ‘Space-age’ Knife” (VECHERN¬ 
YAYA MOSKVA 20 July 1989) from NPO [Scientific 
Production Association], there was an invitation to one 
more “well known in narrow spheres” scientific center: 
VIAM, the All-Union Scientific Research Institute of 
Aviation Materials. The technology for the “eternal 
shaver” was developed right here. This is only one 
example of how unique scientific achievements will be 
placed into service for our future needs. But before I talk 
about the successes of conversion, I must say several 
words about VIAM itself. 

This institute will soon be 60 years old. It was “split off” 
from TsAGI [Central Institute of Aerodynamics imeni 
N.Ye. Chukovskiy] in 1932 in order to concentrate on 
development of materials for aviation, and later also for 
space technology and materials. I cannot list all of the 
technologies and materials which were bom in its labo¬ 
ratories and transferred to aircraft. 

Currently, the institute is a powerful scientific produc¬ 
tion association. The range of its research is from non¬ 
combustible cloth for aircraft seats to super-modem 
alloys and composites. But nonetheless, the signs of the 
times are not only these undoubtedly first class achieve¬ 
ments. They existed even before now. But right now it is 
as if VIAM is coming out of a shadow and is completing 
the breakthrough to the mass consumer. 

It is no accident that guests have been visiting here more 
frequently of late. The institute and enterprises of seven 
ministries have developed a program for utilizing the 
institute’s latest scientific and technological achieve¬ 
ments within the framework of conversion. Financing 
for just the first year totals 40 million mbles. 

“We ourselves are investing enormous resources into 
conversion,” says Ye. Kachanov, first deputy general 
director. “The market is presenting its demands. It is 
difficult to adapt to them. Here is one of the most 
difficult tasks: Reduce the costs of new materials without 
worsening their characteristics. Additional tests of suit¬ 
ability for their ‘peaceful’ uses are also required.” 



7 December 1989 

Conversion is a difficult and complicated process and it 
does not fit into a simple antithesis: Before cannons, now 
toys. It is absurd to transition from missiles to meat 
grinders. An enormous intellectual and technical poten¬ 
tial that has been accumulated in the military industrial 
complex for decades is being impermissibly squandered 
and changed over to knickknacks. It is bad when under 
the slogan of “more consumer goods” defense enter¬ 
prises are being forced under administrative pressure to 
take up the first thing to come along and not utilize a 
hundredth of their capabilities. They are capable of the 
most complex scientific production. 

Manufacturing sports planes is not a new a direction but 
it is now getting a lot of attention. The SU-26 aircraft, 
which has brilliantly demonstrated itself in the sky of 
Tushin, is manufactured from light weight and very 
durable carbon plastic. It is capable of withstanding 12 G 
loads, more than any fighter aircraft. Thanks to the 
outstanding qualities of the new aircraft, our pilots 
gathered 10 of 11 gold medals at the last European 

The Letuva and Nida gliders and the Nyamunas pow¬ 
ered glider are also manufactured from carbon plastic. 
The main thing is that these aircraft are competitive. 
This is the best characteristic of any consumer goods. 
You agree that not many of our items are now worthy of 
it. Here the aircraft builders are also ready to help their 
neighbors in the machine tool complex—the vehicle 
manufacturers. How many problems they have with 
materials! Body, chassis, and spring corrosion.... VIAM 
together with the Minsk and Gorky auto plants and ZIL 
have begun to combat it. A practically “eternal” com¬ 
posite material has been developed for automobiles and 
it is light, durable, and high-technology. I saw a 
Moskvich hood made of this material, a cast aluminum 
alloy, at an institute exhibition. One-piece wheels are 
made from this material instead of being welded. 

The institute’s developments also found an application 
in the food and light industries. The same ceramic filters 
[are used] for ultrafme juice straining. Or a ribbon-foil 
for a loom. The use of carbon plastic made it several 
times lighter. Just thanks to this, production capacity 
was doubled and noise was reduced by a factor of two. 
We are also saving hard currency that was previously 
used to acquire foils abroad. 

The range of conversion is unusually broad. The wastes 
from composite production are also being used for 
manufacturing skates. VIAM’s speed during this period 
of time is less than that of their colleagues from 
Kompozit. But there is a long road ahead. 

“What is keeping us from moving more rapidly?” Ye. 
Kachanov asks again. “The situation at the institute is 
generally typical for VPK [Military Industrial Complex]: 
Almost 100 percent state order. This undoubtedly con¬ 
strains self-reliance in the search and selection of part¬ 
ners and customers.” 

Not everything has been put in order by the recently 
adopted amendments to the Law on State Enterprises. 
They stimulate the output of goods, that is, the end 
product. But here we have components. How can that 
be? VIAM and other enterprises and institutes that do 
not work directly at the market lose the stimulus to carry 
out conversion. Moreover, it is becoming profitable to 
restrain growth to a level of three percent below which 
taxes do not “shave off” profits. Or did the legislators 
not take this into account? 

Yes, it is difficult to transfer the former “boxes” to the 
peaceful track. There are the razor blades themselves. 
The idea is really marvelous and there is nothing like it 
in the world. But meanwhile VIAM has not provided any 
more samples. Who would support it? 

Results of Minlegpishchemash Transfer to 
Defense Sector Analyzed 

INDUSTRIYA in Russian 22 Oct 89 p 1 

Special Correspondent L. Pertsevaya: “Economics of 
Disarmament: The Market Cannot Tolerate Orders”] 

[Text] Our land produces more than enough of every 
product and stores are empty only because transport, 
storage, and processing losses are too high. This is an 
axiom which no one any longer doubts. Let us get the 
processing sector straightened out and everything will be 
in order. 

During the stagnant times, this action would have begun 
in accordance with appropriate resolutions and would 
have ended with them. And the efficiency measure of 
transferring all USSR Minlegpishchemash [Ministry of 
Light Food Processing Machine Building Industry] 
enterprises to the defense industry complex was stipu¬ 
lated in the transition-perestroyka resolution of 1987. 
There, they said, the military has strict execution disci¬ 
pline and they are not lazy, they will do it. Once again 
there are no reform innovations nor cooperators— 
leaseholders, no shareholders, no markets or bazaars that 
can balance the socialist economy just like in the good 
old times when orders still worked. 

In short, society was justified in counting on an active 
assault of the problems and rapid results. 

I am not saying that the defense industry complex 
immediately exerted itself to the extreme. And today, a 
year and a half later, former Minlegpishchemash plants 
produce 85 percent of the food industry’s equipment. 
But nevertheless, 134 design bureaus and design insti¬ 
tutes and 176 enterprises which previously worked 
exclusively on military equipment were tasked with this 
work. As a result, they succeeded in producing almost 1.3 
billion rubles of various equipment and production lines 
for processing agricultural products. Is that a lot or a 
little? According to the memories of food industry 
experts, it is a small stream that momentarily quenches 

7 December 1989 



the inexhaustible thirst of the desert. Yes and it was 
repeatedly emphasized at a meeting of the State Com¬ 
mission of the USSR Council of Ministers on Military 
Industrial Issues that if it is oriented on the national 
economy’s requirements, almost nothing has been done 
thus far. They stated the numbers: of 585 nomenclatures 
of new equipment, they planned on producing 120 types 
but succeeded in producing only 23. Only 12 percent 
meet the world [quality] level. 

It is clear that customers are not happy with the new 
chiefs. They showed me the first Lastochka, a vacuum 
mixer with forming equipment dashed out from the 
Ministry of Defense Production, in the sausage shop of 
the Kharkov Meat Combine. The metal skin of this line 
is made in the USSR and all of the electronics are 
imported. Accordingly, the packaging material, film, and 
paper must also be bought abroad and we have to look 
for spare parts in the FRG or Sweden. Naturally, the 
manufacturer is not assuming responsibility for its brain¬ 
child during the warranty period. The equipment costs 
120,000 ruWes which is almost ten times more than a 
similar old one. 

Alas, many defense complex plants are trying to increase 
prices of equipment for the “civilian sector” to the level 
of “firing irons” and prices for 27 types of food pro¬ 
cessing equipment have increased by a factor of 10, But 
imagine, for example, how long it will take to pay off a 
bird carcass packaging line if it costs 232,000 rubles! 
Thus a weighty monetary wave of 1.3 billion rubles is not 
quite so weighty in its natural replenishment in units. 
For some reason, food industry enterprises are being 
renewed so slowly and only 60 of 274 start-up facilities 
have been equipped with machinery this year. 

We can suggest that the defense ministries have spent the 
past one and a half years on the take-off runway; They 
have rebuilt the base, prepared draft documentation, 
and have studied demand in our country and the latest 
achievements abroad. But all of the speeches at the 
aforementioned meeting of the Commission on Military 
Industrial Issues are also proof that the defense industry 
is only opening these issues for itself. 

I cite Minister of the USSR Defense Industry B. 
Belousov’s speech. He stated that the 10 Minlegpishche- 
mash enterprises given to Minoboronprom [Ministry of 
the Defense Industry] need to be re-equipped and accu¬ 
mulated social issues need to be resolved. They need to 
study the agricultural production processors regional 
requirements for the appropriate equipment. They are 
continually totaling savings for equipment deliveries to 
civilian sector plants and it turns out that it is impossible 
to get by without cooperating with them... 

Defense industry complex enterprise ministers, direc¬ 
tors, and designers got up on the speaker’s dais and set 
forth ever new reasons which are delaying them from 
beginning production. O. Shishkin, Minister of General 
Machine Building, admitted he had discussed the prob¬ 
lems of manufacturing equipment for the food industry 

11 times at the collegium! He managed to complete the 
plan in the monetary expression but the expectations of 
many customers will be disappointed. They have only 
produced 9 of the 57 types of new equipment. The prices 
to purchasers are excessively high. Instead of technolog¬ 
ically closed lines, they are only getting their elements 
with productivity limited by manual labor (for example, 
bakeries without dough machines). Do you know how 
the defense industry reacts to customer complaints about 
high prices? They are ready to punish “capricious” 
native consumers and to search abroad for customers for 
their output. I think that commentary is superfluous. 

Thus, a year and a half has gone by just for recognition of 
the problems. How much time will the process of orga¬ 
nizing and setting up production itself take? 

The defense industry is thinking solidly and basically 
and the realization of their proposals will take quite a 
long time. The appropriate institutes from the civilian 
sphere—milk, meat, potato, and others, that develop 
technology for processing these products need to follow 
on the heels of the Minlegpishchemash enterprises. We 
need to organize an information coordinating system 
that will concentrate all developments that already have 
native and foreign examples of equipment that process 
agricultural products. All civilian sector enterprises need 
to “get into their heads” the appropriate components in 
the state order and strictly demand its fulfillment. And 
the main thing is to “set forth the case so that it is 
beneficial for us to manufacture this equipment.” 

In short, They are thinking of establishing a closed 
production system that could operate on total self- 
servicing and like a monopoly with a guarantee of a well 
paid rhythmic order and easy sales. Thus, the defense 
industrial complex is accustomed to operating as the 
strictest sector of our state economy. So that each plant 
can conduct its business independently, in an enter¬ 
prising manner, with careful accounting, under condi¬ 
tions of competition, and the sector as a whole can be 
centralized and guaranteed in a measured, progressive 

I can imagine how the impatient reader will exclaim: 
“Well, that is just great! The defense industry succeeded 
in insuring a high level of equipment to the Army for all 
those years and with solid deliveries, now let it serve the 

It succeeded. Due to its special position in raw materials 
supply, immeasurable and incalculable financing, pri¬ 
ority equipment deliveries, and provision of the best 
personnel. In other words, due to unconditional depen¬ 
dence and existence under exclusive conditions. And the 
fact that it operates under exclusive conditions can 
hardly become an ordinary daily routine. We have 
decided to produce both consumer goods, equipment for 
light and food industries, and sales equipment at the 
expense of the defense industry... We are going to paint 
all transport vehicles fire engine red and we are going to 



7 December 1989 

give them all access to the green lane [translator’s note: 
high speed commuter lane]. A traffic jam is unavoidable! 

However, let us return to the Oval Hall of the USSR 
Council of Ministers where the high commission met. In 
1990, nearly all ministries of the defense industry com¬ 
plex plan to double output of vitally important equip¬ 
ment and the defense industry as a whole will make 
almost 42 percent of all equipment and processing lines 
for the food industry. A decision has been made that a 
special commission will track price formation. Yet one 
more special agency will compile a list of equipment 
coming in from the “civilian sector” and will monitor 
the flow of deliveries. All through a centralized system. 
And insofar as there are already disruptions in carrying 
out these proposals, enlisting the aid of defense industry 
enterprise party committees and reinforcing orders with 
slogans and organizational work is recommended. 

Familiar methods and levers tested by life. It is true that 
the entire economic complex is renouncing them today, 
these unreliable ones that have frequently resulted in and 
led us toward the present crisis. Economic reform is 
beginning to gain speed and one after another sectors are 
getting out of the strict administrative command system: 
Concerns, leased enterprises, and cooperatives... And we 
are artificially attempting to maintain the most impor¬ 
tant sectors of the economy in this system. Is this 

Conversion: Defense/Civilian Joint Stock Groups 

Russian 6 Sep 89 p 1 

[Article by A. Kusov, candidate of engineering: “Stocks 
for Conversion”] 

[Text] The peaceful initiatives of the Soviet state, and 
the formation of new political thinking quite logically 
involve beneficial economic consequences. It is neces¬ 
sary to make able use of the situation. In the interests of 
society, the funds freed from expenditures for defense 
are to turn into real income and raise the level of 

In 1988, a substantial quantity of consumer durables, for 
example, approximately 10 million television sets, 95 
percent of all the Soviet-made refrigerators, 62 percent 
of the washing machines, and 69 percent of the vacuum 
cleaners, were produced in enterprises of defense 
branches of the country’s industry. 

Recently, the production of equipment for the fruit and 
vegetable, starch hydrolysis, macaroni and preserve 
industries has been given to Minaviaprom [Ministry of 
the Aviation Industry]; the production of assemblies and 
flow lines for processing of cattle and poultry, ice cream 
production, and the manufacture of metal can packaging 
to Minoboronprom [Ministry of the Defense Industry]; 
the development of equipment for milk processing to 
Minatomprom [Ministry of the Nuclear Power 

Industry]; and the production of equipment for the 
bakery products, sugar, pastry, yeast, and vegetable oil 
and fat industries to Minobshchemash [Ministry of Gen¬ 
eral Machine Building]. Video tapes, laser disk players, 
and other electronics equipment comprise a substantial 
share in the production of new consumer goods by 
defense industry branches. 

Moscow enterprises are faced with having to assimilate 
much of the above enumerated production, and those 
which are already engaged in manufacturing technical 
products of a non-defense nature for consumer goods 
must expand their production. But, as the saying goes, 
soon the tale will be told. You see, conversion is fraught 
with the need to carry out major organizational and 
technical measures, requiring substantial capital invest¬ 
ments and time. Products that are economically advan¬ 
tageous to the defense enterprises are often unable to 
find consumers in Moscow, or to correspond to the 
actual needs of the city. What can be done here? 

In my view, it seems advisable to create city joint stock 
societies, which unite the interests of enterprises in the 
defense and non-defense branches of industry, to accel¬ 
erate and reduce the cost of the conversion processes. 
Profits from the sale of the product will be distributed in 
proportion to the contribution to the final product, and 
each enterprise can be a shareholder in several stock 
societies, involved with goods of different kinds. 

Then enterprises producing, for example, electronic cir¬ 
cuits, elements of cryogenic equipment, or microelec¬ 
tronic motors, will become not passive suppliers of parts, 
but active participants in the production of the end 
product, and interested in its sale in the city. Needless to 
say, this work must be appropriately stimulated by the 
Moscow City Ispolkom. 

Scientific research institutes and design bureaus of 
defense branches, included in such societies as stock¬ 
holders, will also be interested in maximum use of the 
capability of related branches, which are looking for and 
developing new consumer goods, and entirely civilian 
technological equipment. This promises them allow¬ 
ances from the sale of goods in the city. 

The creation of joint stock societies may take place on 
the basis of a unique auction of the guaranteed long term 
needs of the capital for one or another product. In this 
case, it is not excluded that various joint stock societies 
will take up the production of competing models of 
goods. What if they do? Economic competition should 
only be welcomed. It is another matter that the city must 
not stimulate their total production (leading to delivery 
outside the Moscow region). 

In a number of cases, enterprises of the city economy or 
non-defense branches, and in other cases defense 
industry branches, may act in the lead capacity in joint 
stock societies. Leadership would depend on the stock 
contribution, which is determined by functional and cost 
analysis of the production. In short, the most varied 
possibilities exist. 

7 December 1989 



The sphere of activity of joint stock societies is deter¬ 
mined by the actual tasks of the social and economic 
development of the city. This includes support for the 
implementation of the Comprehensive Program for Pro¬ 
duction of Consumer Goods in Moscow for the 19th 
Five Year Plan and until the Year 2000. In particular, I 
recall that it is anticipated that for 1990 the production 
of refrigerators will be increased to 295,000; that of radio 
receivers to 650,000; tape recorders to 285,000; televi¬ 
sion sets to 1,105,000 (including 725,000 color sets); 
washing machines to 310,000; furniture to the amount of 
up to 315 million rubles; enameled steel dishes up to 900 
tons; games and New Year’s tree decorations to the 
amount of up to 290 million rubles; and garden tools and 
implements to the amount of 26 million rubles. Taking 
into account that the program includes improving 
everyday electronic apparatuses, on the basis of using the 
latest achievements of microelectronics, organizing the 
series production of miniature stereophonic tape 
recorders, new generation color television sets with flat 
screens and stereophonic sound accompaniment, and 
many other things, the participation of enterprises in the 
defense branches of industry is becoming a most impor¬ 
tant factor in its realization. 

The state, the city, and enterprises of all branches, I 
believe, are interested in the creation and functioning of 
joint stock societies. How is this beneficial to the state? 
The production of consumer goods and other non¬ 
defense products will be organized quickly without sub¬ 
stantial capital investments. Why must the city not stay 
on the sidelines? It provides for the output of products 
that are acutely needed by the population and the city 

The interests of the enterprises are that, owing to coop¬ 
eration in production at specialized factories, the profit¬ 
ability of the end product will be higher than if it were 
produced in a single, non-specialized factory. Conse¬ 
quently, all stockholders will also receive higher profits. 

The interests of the ministries and departments will not 
be set aside. Participation of their enterprises in joint 
stock societies will raise the share of consumer goods, as 
it is said, in the branch slice. 

Joint stock societies can play an important role in 
implementation of “Progress-95,” the comprehensive 
territorial-branch program for intensification of the 
social and economic development of the city, since 
output of products needed by the city is being achieved 
essentially by carrying out organizational measures, with 
minimal additional expenditures. I believe that from 
discussions about conversion and plans for its imple¬ 
mentation, it is time to shift to action. Moscow residents, 
combining efforts regardless of departmental subordina¬ 
tion, can and must set the example in this respect. And 
so, who is first? 

Conversion Creates Problems at Leningrad 

in Russian 8 Sep 89 p 2 

[Article by correspondents V. Ganshin and L. Frolov: 
“Difficult Steps of Conversion”] 

[Text] A building slip at which the din of metal is not 
heard, the flame of the electric welder is not seen—this 
rarely happens. Nevertheless, this picture can be observed 
on the Leningrad wharves. What happened? 

Nothing has changed in the name of the Admiralteyskiy 
Association; however, this mighty shipbuilding firm, to 
use navy language, is sharply changing course. And not by 
its own choice. In the postwar decades several generations 
of great professionals were formed, who were equal to any 
task. And now, all at once, this is not so. 

Many orders, which determine the prospects of the 
enterprise, one could say, until the end of the century, 
have been cancelled! This is true even though the laying 
down of these ships even took place, and orders were 
placed at other enterprises throughout the country for 
components; however, matters went no further. On the 
captain’s bridge of the association is an understandable 
confusion. No, the Admiralteyskiy workers will not 
remain without work, but so many problems have arisen: 
what to do with half-built ships, how to settle accounts 
with subcontractor enterprises, what to do to retain their 
unique cadres? 

What is the reason for this situation? That can be 
answered in one word—conversion. The Ministry of the 
Shipbuilding Industry has been given the mission to 
assimilate output of more than 900 types of new prod¬ 
ucts. These include mechanized flow lines for the pro¬ 
duction of dry animal feeds and various foodstuffs, and 
packing assemblies. Other branches of industry have also 
received extensive tasks for output of non-military prod¬ 
ucts, since production of weapons and military equip¬ 
ment is being reduced by 19.5 percent. Factories that 
have long worked on defense needs are becoming sup¬ 
pliers of equipment for the agro-industrial complex, light 
industry, trade, and public catering bodies. Output of 
consumer goods and medical equipment will be consid¬ 

The Admiralteyskiy workers are called upon to make an 
important contribution to this process. Under the new 
conditions, they are faced with undergoing a test of their 
stability. The fate of a number of ships, which have 
already taken on clear contours, has been decided. They 
will never traverse the sea lanes. Notifications obtained 
from purchasers were terse and specific: financing is 
ceasing. This was thunder out of a clear blue sky. Its 
“echo” is even now rolling about the shops, disrupting 
the customary working rhythm, and causing stresses in 
the brigades and sections. In general, a tangle of prob¬ 
lems was formed unexpectedly, and their solutions have 



7 December 1989 

not yet been found. An outflow of cadres began; invalu¬ 
able specialists are leaving. The prestige of the associa¬ 
tion, which has built a multitude of ships of the most 
varied types and tonnages, is falling. 

Having unleashed conversion, the shipbuilders were also 
confronted with another serious factor: how to find an 
equilibrium between the already partially displaced pro¬ 
duction and a new specialization, in no way associated 
with the building of ships. 

The Leningrad workers were assigned, one might say in 
the fashion of a fire brigade, to begin series production of 
equipment for elevators and flour mills. We saw models 
of the new products; they are rather complex and labor 
intensive to manufacture. The Admiralteyskiy workers 
had no time for vacillation—it is necessary to deliver up 
to 50 such assemblies monthly. A completely unusual 
situation arose. An enterprise that had always produced 
“one-time” products—ships—was told to assimilate 
series output of mass machinebuilding production. 

The shipbuilders, of course, are not against the reorien¬ 
tation to civilian products. Everyone with whom we 
spoke on the wharves was unanimous: it is a necessary 
and important matter, but it requires serious prepara¬ 
tion, and we must not “turn around” by 180 degrees, 
while underway, production that took shape over 
decades, break the ties that have been set up, and destroy 
the technological rhythm. 

“How are we to ‘stay afloat’ just the same, in this 
unbelievably complex situation? I will tell you frankly, 
only due to the overtime and material supplementation 
of those who began to work on the new products,” states 
I. Litonov, association party committee secretary. “In a 
few days people cannot be retaught, new ones cannot be 
obtained, and this means that yesterday’s slipway 
workers, for example, must transition to a shop. And this 
already involves a conflict. The fact is that the wage rates 
of workers employed directly in shipbuilding are 10 
percent higher than those of persons working on 
machinebuilding orders. And then, the majority are 
confronting for the first time products not in our profile, 
and, therefore output falls and wages are reduced corre¬ 
spondingly. At the end of the month, it is necessary to 
seek out additional sums to pay overtime workers.” 

In this situation, the party committee must play an 
important role. Of course, the loss of wages is a painful 
matter, especially in the first stage of conversion. But, it 
is necessary that people understand that we are imple¬ 
menting our peace policy, not merely in words, but in 
deed. We affirm its principles not only at meetings, but 
in the factory shops, laboratories and design bureaus. 
Therefore, we are all conduits of conversion. 

There is no dispute; someone must take the first steps. 
But, they must be well thought out, analyzed, and 
adjusted. It would be advisable, probably, to organize a 
specialized shop, which would have the appropriate 
equipment and accessories, for today the manufacture of 

components and units for flour mill assemblies is scat¬ 
tered in various sections, and often is semi-homemade in 
nature. As a result, parts wander from shop to shop, and 
there are no well set up technological chains for intra¬ 
factory ties. Part of the collective, apparently, should be 
fully oriented on the new type of state order. It is no less 
important to eliminate the gap in wages between the 
defense workers and their comrades who have “taken off 
the shoulder boards.” 

And it is most important, in solving the problems of 
conversion, to effectively redesign and refit the old 
plants. As it is picking up speed, the shipworkers have 
been forced to adjust substantially the quite recently 
approved shipbuilding program. The construction offish 
industry bases and tankers is coming to the forefront. 
Output of consumer goods is being significantly 
expanded. The annual volume of their sale will exceed 15 
million rubles. 

The problems of the Admiralteyskiy workers are also 
quite familiar to other related enterprises in the city. Not 
long ago it was hard to imagine that the brand name of 
the famous shipbuilding association, Baltiyskiy Zavod, 
would appear on food kettles and machines for pro¬ 
ducing sausage, or that the Severnaya Verf factory had 
begun to produce products for the agrarian sector. And 
each of these collectives is experiencing similar difficul¬ 
ties, and the painful transition to the new tracks. 

Conversion: Policy of Scrapping Armored Vehicles 

90UM0078A Moscow KRASNAYA ZVEZDA in Russian 
31 Oct 89 First Edition p 2 

[Article by Captain A. Ostrovskiy: “Tanks Into Fit¬ 

[Text] I wandered around the shops of the Enakievskiy 
Metallurgical Works feeling both pride and anxiety. 
After his discharge into the reserves, my father, a combat 
veteran, worked here many years. My brother got his 
first job here. 

My father told me that immediately after the Great 
Patriotic War the blast furnaces were not “fed” with ore, 
but with scrap metal from dismantled cannons, combat 
vehicles, and other equipment. Now the factory is one of 
the country’s first to be connected with the conversion of 
military production—it has begun melting down tanks. 

But the factory workers do not understand why it is this 
way: The hi^-quality alloy armor will go into the 
production of construction fittings, I-beams, and angle 
pieces? As though the usual “crude” scrap were not good 
enough for that. And the price for the steel from the 
tanks is set at only 30 rubles per ton—hardly enough, 
probably, to cover the delivery costs borne by the Min¬ 
istry of Defense. 

“Maybe it would be better to convert the tanks into 
tractors and sell them on the national economy,” said A. 

7 December 1989 



Nikitchenko, chief of the impact machine workshop at 
the EMZ [Enakievskiy Metallurgical Works], sharing his 
doubts. “Even with the uneconomical engine they could 
be used for some sort of mobile work. Say, for cleaning 
up after natural disasters or putting out forest fires... I 
am sure that our factory would also purchase equipment 
with such excellent running gear.” 

The opinion of the metallurgical engineer was seconded 
by Lieutenant Colonel N. Demchenko, who had arrived 
at the factory with equipment: “This type of combat 
equipment could serve as a tractor in the North. It has 
been well protected against corrosion, and it runs like a 
clock in temperatures below zero...” 

The factory has concluded an agreement with the Min¬ 
istry of Defense to scrap 400 tanks. So that the landing of 
the impact machine shop, where the brigades of cutters 
do their work, does not become overstocked, the tanks 
will be delivered in monthly batches of 30. Dozens of 
tanks have been melted down. Is there perhaps some 
sense in stopping and finding a wiser use for the metal? 

Motor Vehicle Repair Enterprise Producing 

90UM0031A Moscow KRASNAYA ZVEZDA in Russian 
10 Oct 89 First Edition p 2 

[Article by Reserve Colonel F. Semyanovskiy, Moscow 
Military District: “Furniture from a Repair Plant”] 

[Text] Previously, this enterprise was exclusively 
engaged in repairing automobiles. Right now the main 
production has been crowded together in the shops. A 
place has been freed up for other production: uphol¬ 
stered furniture, of which there is a shortage in the 

“When we began producing furniture,” Plant Chief 
Colonel S. Kuzkin says with a smile, “we of course did 
not have any experience. We only had a plan for pro¬ 
ducing 170,000 rubles’ worth of consumer goods. We 
could not get drawings or equipment anywhere. So we 
started by buying a sofa at a commission store. We 
disassembled it, studied the technology of manufac¬ 
turing it, and we developed our item. As it turned out, it 
in no way lags behind those manufactured at special 

They had to purchase the fabric which is so necessary for 
producing upholstered furniture through the Oblast 
Administration of Gossnab. The plant concluded an 
agreement with a furniture factory located hundreds of 
kilometers from the enterprise to acquire porolon and 
particle board. Material suppliers were also found for 
seat covers for Zhiguli, Moskvich, and Volga light auto¬ 
mobiles. They are also manufactured here. 

It is true that the question is reasonably raised at the 
plant that this practice is dangerous and that at any time 
there may not be sufficient component materials for 
production. But, be that as it may, today the plant is 

already manufacturing 15-20 suites of upholstered fur¬ 
niture per month. It is being sold in garrison military 
exchange stores by contract. 

Conversion: Missile Design Bureau Producing 
Washing Machines 

90UM0031B Moscow PRA VDA in Russian 
6 Oct 89 Second Edition p 8 

[Article by PRA VDA Correspondent Yu. Shcherbinin, 
Volgograd: “Barrikady Is on that Side: Complete 

[Text] The Americans helped me get into a “closed” 
enterprise. Yes, this is just how it happened: The Amer¬ 
icans opened the path into this enterprise to Soviet 
journalists. Two years ago, they would not let me past the 
entrance. They convinced me: It was impossible to even 
mention the Barrikady enterprise in vain! But a year 
later, military inspectors from the U.S. headed by Gen¬ 
eral R. LaJoie, having arrived at the city on the Volga, 
“searched” this same Barrikady [enterprise] from head 
to foot. 

By that time, in the words of the American general, “the 
most unique medium range missiles in the world” were 
already being destroyed at the Kapustin Yar test range. 

The SS-20 launch complex is now a missile weapons 
museum exhibit. It also opened last year at Kapustin 
Yar. And if Designer Valerian Sobolev wants to recall his 
youth, he travels a little more than 100 kilometers from 
Volgograd to this military test range where the first 
ballistic missile was launched and where the brainchil¬ 
dren of his SS-20 Central Design Bureau are now being 
systematically destroyed. 

Valerian Sobolev, middle aged and average height, is 
unusually authoritative. He has the ability to listen to 
whom he is talking with and, what is 100 times better, to 
precisely formulate his thoughts and make a sound 
decision, advantages which always distinguish an intel¬ 
ligent man. Sobolev had a worthy opponent during the 
Congress of People’s Deputies elections—a professor of 
a polytechnic institute. A colleague. Valerian Markovich 
is also a doctor of science and a professor. Until recently, 
he combined the work of chief designer at Barrikady 
with that of department chairman at a polytechnic 

Deputy business forced him to sacrifice the department 
chairman’s position, although he continues to “advise” 
degree seekers. All members of his family—his wife, son, 
and daughter—are engineers. This happy family regards 
its head without deep emotion but with a sufficient 
amount of adoration to help in everything. 

Having become a people’s deputy, Sobolev did not 
change his telephone number but he turns off his home 



7 December 1989 

telephone after 2300 hours. In the eyes of the bureau¬ 
cratic system, he remains a closed chief designer, for 
whom even travel to a socialist country as a member of 
a delegation is a problem. 

But recently Sobolev found the time to meet with a 
PRAVDA correspondent. I cannot judge just what 
played the deciding role—glasnost or the chief designer’s 
prestige at the rank of people’s deputy. One way or 
another, I was allowed onto the plant’s ground in my car 
and was cheerfully shown the road to the designers 
building, respectfully emphasizing: “He is going to see 
Sobolev.” It is true that passage at each point was 
recorded by guards who passed me from hand to hand. 
The transmission conveyer also misfired just at the stairs 
leading directly to TsKB [Central Design Bureau]. 

“You are going to see Sobolev?” The guard was sur¬ 
prised. “That is not permitted.” 

I am familiar with this type of person. It is useless to 
argue. It is senseless to argue that you are not interested 
in special weapons. But suddenly the closed communi¬ 
cations began operating and the guard saluted. 

Of course, I was quite interested in finding out what 
replaced the SS-20.1 looked into the assembly shops and 
talked with workers and testers. But conversion proposes 
acquainting journalists with the past in the defense 
industry and only to some degree with its future civilian 

Sobolev’s intellect has also been subjected to conversion. 
He spent more time during the last year on the civil than 
on the defense industry. Is this beneficial for the 
country? I do not know. Another thing is indisputable: 
our market really needs the washing machines designed 
by the TsKB defense enterprise. 

The splendid technical data, 39 programmed operating 
modes, reliability, and universal application of the 
washing robot brought the Volgograd Ivolga to a higher 
level than the Vyatka-Avtomat which is popular in the 
Soviet Union. The new machine is also cheaper. For 
purchasers. And the enterprise will be given minus 1.5 
million rubles just this year for the washing machine. 
The powerful in intellect and technical level Barrikady 
Association, capable of producing truly unique special 
weapons, turned out to be helpless with regard to home 

The discussion of the planning bodies: If this can be, 
then the washing machine is based solely on speculative 
calculations. Having confounded Barrikady by conver¬ 
sion to the level of washing machines, the defense 
workers collective and the economy as a whole will be 
placed in a disadvantageous position. Just to give the 
enterprise a somewhat civilian view, one of the special 
weapons is being transferred to a native enterprise 
thousands of kilometers away. The assembly shop thus 
being vacated is being reconfigured to produce washing 
machines. Prospects: Next year, 50,000 units and two 

years from now, 100,000 units. We all know that com¬ 
plicated home appliances become profitable when mil¬ 
lions are produced. 

“If that were the future,” says V. Sobolev, “we would 
have designed a machine at the highest world level, for 
example, with the use of a computer. But the machine 
would cost about 900 rubles with a thousand unit pro¬ 
duction. Once again trifles. One hundred thousand 
washing machines over the next two years are not even 
enough for Volgograd Oblast. But the command system 
is strong and very fundamental,” 

Sobolev proposed: 

“We do not need restructuring. Give us the Volgograd 
Krasnaya Zarya Plant which will specialize in first 
generation washing machines. We will give the enter¬ 
prise new life. We will increase the technology twofold 
and we will increase power several times over....” 

The owner of the plant—Ministry of the Shipbuilding 
Industry—does not at all agree. They say they need the 
plant! It may be a poor one but this little box with a water 
area is a shortage item today. 

The 175,000 “Volzhankas” are not being delayed in 
stores. Does that mean chase junk while there is a 

“We basically have an incorrect approach to home 
appliances,” S. Frolikov, department chief of the Min¬ 
istry of the Defense Industry, is convinced. “Production 
of these same washing machines must be oriented to the 
growth of the housing industry. You understand that a 
gas stove, sink, and washing machine must also be 
considered as necessary attributes of a new apartment.” 

I understand. Moreover, I see: This relationship to the 
introduction of housing gives rise to long term orders for 
production of washing machines. That means we cannot 
get by with converted shops—we need plants. Today the 
most effective path is to buy licenses, build plants, and 
produce needed “appliances.” 

Where do we get hard currency? V. Sobolev has his 
opinion on this score. He has developed several types of 
machinery for the national economy based on a missile 
launcher. One of them is a pile driver. It is unique; there 
is no similar apparatus. I will not rave about its advan¬ 
tages; I will only say: It will cost about 800,000 dollars on 
the world market. 

Another example is a logrolling machine—230,000 dol¬ 
lars. We are proposing production of several types of 
special machinery for emergency situations, fire fighting 
equipment, and equipment safes. All of these are really 
unique; there is a huge demand, and they will be very 

“By next year, we will already be able to sell 10 machines 
of any type,” says V. Sobolev. “Let us say that we 
purchase 400,000 washing machines in Japan with the 
hard currency we earn. Everything, without additional 

7 December 1989 



expenditures, without lowering main production. And 
the main thing is that we will not need to transfer highly 
skilled experts to the assembly line. Another alternative 
is to acquire a plant.” 

I do not think that the chief designer wants to barricade 
Barrikady from consumer goods. A man of business and 
the future, he is seeking more rational and beneficial 
solutions to the problem. First of all, we need a conver¬ 
sion of thinking to do this. Not a battle cry but an 
organized beginning must be the foundation of the new 

“Unfortunately, there is no active conversion center in 
the country,” V. Sobolev is convinced. “No one is 
engaged in distributing or coordinating orders. This 
same Barrikady is supposed to manufacture one of six 
automatic production line machines to produce canned 
goods. And who will make the other five? How will they 


Gosplan Head on BSSR Approach to 

INDUSTRIYA in Russian 21 Nov 89 p 1 

[Interview with USSR People’s Deputy V. Kebich, 
chairman of BSSR Gosplan, by V. Roshchin, SOTSIAL¬ 
Minsk: “How Interests Coincide”] 

[Text] For many people, this resolution of USSR Council 
of Ministers was unexpected. In the sense that for a long 
time the press has been conducting a discussion of the 
granting of economic independence, of converting the 
Baltic republics to regional cost accountability, but the 
first republic to transfer to the new conditions for man¬ 
agement on the basis of self-government and self¬ 
financing would be Belorussia. Why did that happen? 
Doesn^t this mean that for Belorussians the demands were 
less radical than the demands of their northern neighbors? 
That was the question that began the discussion that our 
USSR People’s Deputy V. Kebich, chairman of BSSR 

[Vyacheslav Frantsevich Kebich] We chose our path. We 
consider it to be correct under the present economic 
conditions, although we do not preclude that there may 
also be other approaches. Unlike the Baltic republics, 
Belorussia is not striving for complete economic inde¬ 
pendence. It is necessary to look soberly at the situation, 
to take into consideration the tendencies in the develop¬ 
ment of the world economy. Our path is not isolation, 
but integration. 

We did not raise the question of transferring to the 
republic all the enterprises, all the projects in the 
national economy, which are on its territory. And there 

are weighty explanations for this. A large-scale machine- 
building complex has developed in the republic, a 
mighty chemical industry and light industry have been 
concentrated here, but it lacks its own fuel-and-energy, 
metallurgical, and, in general, raw-materials base. And 
so it would be at least unwise to disturb the very large 
intertwining of cooperative production ties that have 
already formed. Here the interests of the center and our 
own interests coincide. And, in general, we did not have 
any large discrepancies with the concept of the General 
Principles for restructuring the management of the 
economy and the social sphere in the union republics. 
This apparently also explains why our version was 
adopted by the government without any special frictions. 
The share of the output to be produced at the enterprises 
that have been transferred to the jurisdiction of the 
region will be 50 percent next year. At the first stage this 
is sufficient. 

[V. Roshchin] Was that figure estimated by both sides— 
if you will forgive my expression—^by eye? 

[V. Kebich] We arrived at the opinion that in the 
republic it is desirable to concentrate the administration 
of those enterprises that are linked with satisfying peo¬ 
ple’s needs, and that we should leave to the union 
agencies the management of the base branches. But in 
our republic almost half the production potential is 
made up of heavy industry. That is why this correlation 

Also, what does their resubordination give us? The very 
concept “subordination” is becoming an anachronism, 
when we speak of the complete independence of enter¬ 
prises. They have been given the legal right to decide for 
themselves the question of their subordination. They 
have the right to leave a ministry, to enter into associa¬ 
tions, consortiums... 

[V. Roshchin] And to be subordinate only to economic 

[V. Kebich] That’s correct. Lying at the base of our 
concept are the economic relations that the enterprises 
have with the region. This is how we pose the question: 
the functioning of any union production must be bene¬ 
ficial for the republic. Now they will deduct 20 percent 
from their profit (we insisted on 40, and differences of 
opinion remain here) to pay for the use of labor and 
natural resources. Thus, the local Soviets will have a 
self-interest in assuring that the union enterprises 
operate effectively. That is the advantage that we obtain: 
if you work better, you will live better. On the basis of 
guaranteed funds, rather than depending on whether the 
center will be charitable, whether it will provide the 
money or not. 

[V. Roshchin] In addition, so far as I know, all the output 
in excess of plan will remain at the disposal of the 
enterprises and can be used to satisfy the local needs... 



7 December 1989 

[V. Kebich] We hope that this will interest the collectives 
in assuring that the additional output produced is pri¬ 
marily consumer goods, food products, and many other 
articles for the local market. According to our forecasts, 
there will be an increase in the production of many 
commodities, as well as the per-capita meat and milk 
consumption. We must see real results in these areas by 
next year. 

[V. Roshchin] Vyacheslav Frantsevich, in the negotia¬ 
tions among the union and republic agencies concerning 
the delegating of rights to the outlyling areas, concerning 
the transferral of the administrative functions, there of 
course were compromises. But why is it that so many 
enterprises feel that as a result of the resubordination 
their interests will be infringed upon? 

[V. Kebich] I can easily understand the question, just as 
I can easily understand the protests from below. The 
crux of the matter here is really not so much one of 
infringements, as it is of the collectives’ fears. They are 
afraid that, in the technical progress, they will also lose 
their material support. There are no other motivations 
here. It is simply that the stereotypes dominate over the 
economic managers’ way of thinking. Because during 
their entire life, with the branch administration, the 
material-technical and financial resources used to be 
allocated in a first-priority manner to the ministries, and 
then only to the union republics. People still have the 
custom, which has been developed over a period of many 
years, of thinking that it is only the ministry that gives 
everything to them. And yet the system of material- 
technical supply will also be restructured. The republic 
and oblast agencies of supply will begin to go out directly 
to the enterprises regardless of their subordination. 

[V. Roshchin] Do you feel that in the catchy formula “a 
strong center makes a strong republic” the emphases 
have been placed correctly? Could it be that they ought 
to change places: first the strong republic?... 

[V. Kebich] I would have put in first place a strong 
enterprise. It produces everything. It must be said at first 
that it is the enterprise that loses or that will have 
anything, and only then the republic and the center. I 
hope very much that the new package of laws concerning 
property, land, the socialist enterprise and rent, the 
sin^e tax system, etc., will create the necessary condi¬ 
tions for deepening the economic reform in the primary 
production links, and will help us to get closer to 
complete cost accountability. 

[V. Roshchin] As everyone knows, Belorussia consumes 
much less than it produces. But there are fears that now 
its economic situation can worsen, irrespective of the 
production results. For example, because of the regula¬ 
tion of the income part of the budget on the part of the 
hi^er union levels. Or because of an increase in the 
prices of the initial materials that will have to be shipped 

[V. Kebich] As for our interrelationships with the union 
budget, there must be just one condition: the rigid 

stability of the quotas. It must be guaranteed by the state, 
otherwise not a single stone in our concepts will be left 
standing. Because we already have had bitter experience 
when the cost accountability at the enterprises was 
undermined by establishing differentiated quotas for 
them. The better the enterprise worked, the more it was 
plucked. If we continue to use these administrative 
levers, there can be no discussion of republic self¬ 
administration or self-financing. 

What will happen if the prices of metal rise? We made 
computations with a possible change in prices: the bal¬ 
ance is still in our favor. The republic will still continue 
to a greater extent to be one that ships things out, and if 
there is an increase in the price of raw materials, we can 
change the contract price also for the output that is 
produced from them. 

[V. Roshchin] In our discussion we seem to have over¬ 
looked a very important factor: the expansion of the 
rights of the local and republic agencies in planning. 

[V. Kebich] As far as the planning for the economy that 
is subordinate to the republic is concerned, everything 
here is quite clear and, most importantly, acceptable. 
The republic carries it out independently (which, inci¬ 
dentally, is what makes the Baltic model attractive— 
everything there belongs to the republic). The union 
agencies make known [to the enterprises] only the state 
production order for the shipment of output for union¬ 
wide needs, the limits of the material-technical resources 
that are being allocated in a centralized manner, and the 
state (centralized) capital investments. The republic 
resolves everything else by itself, with the participation, 
of course, of the local agencies and labor collectives. 

As for the enterprises of union subordination, one can 
see clearly here the center’s attempt to eliminate the 
republic agencies from using economic methods to 
administer them. We consider this to be deeply erro¬ 
neous. The right that has been retained for us—the right 
to coordinate with the enterprises of union subordina¬ 
tion the volumes of production of consumer goods and 
paid services for the public—is obviously inadequate. In 
our opinion, the republics must also have the right to 
receive a republic-level production order. 

To our great regret, USSR Minfin [Ministry of Finance] 
did not accept the form of interrelationships with the 
country’s budget that is proposed by us: the enterprises 
make settlements with the rayons and the oblasts; the 
rayons and oblast make settlements with the republic; 
and it is only the republic that makes settlements with 
the Union. This is obviously because of the fears that the 
financial agencies will lose control over certain branches. 
In our concept, it is stipulated that all the taxes are paid 
into all budgets at the same time. 

[V. Roshchin] Until now, Vyacheslav Frantsevich, we 
have spoken about things that you are confident about. 
But in every new matter there are quite a few things that 
are not completely clear, that cause doubt. It is as though 

7 December 1989 



our boat is moving through an unfamiliar fishing area 
and we do not know where dangerous reefs are waiting 
for us... 

[V. Kebich] I personally am quite aware that errors and 
miscalculations are possible. And I also have my doubts 
about certain things. Take, for example, the first rather 
dangerous barrier: what kinds of quotas should there be? 
We are still approaching this by the experimental path. 
And it is not precluded that all the quotas for the 
interrelationships with the union budget will be changed 
by the beginning of the 13th Five-Year Plan. That is why 
the first experience in Belorussia is so important. I want 
to emphasize that the experimental verification of our 
concept of self-government and self-financing will sub¬ 
sequently help to avoid larger miscalculations and errors. 

But, I repeat, there are indeed doubts. One problem that 
is very disturbing is the problem of material-technical 
support. There is probably no problem that is more 
important. I foresee rather large frictions in the interre¬ 
lationships with the center, and primarily in the area of 
financial policy. I think that the union ministries will 
continue to force their will on us. 

[V. Roshchin] How can that be expressed? 

[V. Kebich] In their forcing the enterprises to produce 
output that is not profitable for them. That will put them 
in a difficult situation. The apparatuses at the ministries 
have been preserved, and they will attempt, when 
forming quotas, to preserve for themselves the share that 
they have had up until now. The republic will have to 
withstand many “battles” in order to keep its own share 
and to defend the enterprises from denudation and 
prevent them from being without profit. Because they 
will certainly also be infringed upon by the local author¬ 
ities by means of various differentiated taxes. You 
cannot put up much of a fight against them: any limita¬ 
tions can be imposed. At the present time, by force of 
habit, we speak of bureaucratic methods “up above,” but 
under the new conditions those methods can also 
flourish at the lowest level. 

[V. Roshchin] What kind of regulators, then, can be used 

[V. Kebich] For the time being, they are the traditional 
ones: the intensification of the monitoring by the supe¬ 
rior agencies, the normal economic interrelationships. 
On the basis of those quotas which would put all the 
enterprises under identical conditions. 

And there is one last thing that is especially troubling. It 
will be difficult to speak not only about cost account¬ 
ability, but also about normal self-government and self¬ 
financing, if the wholesale and purchase prices remain 
what they currently are. They are not mutually advanta¬ 
geous. The system of subsidies so confuses us that at 
times it is impossible to evaluate the region’s economic 
status realistically. 

Nevertheless, all these references to barriers and reefs 
definitely do not mean that the republic has not been 
assuming the complete responsibility for developing and 
implementing the principles of territorial self- 
government and self-financing. 

Estonian Export Potential Examined 

Russian 12 Oct 89 p 3 

[Interview with Kh. Eller, administration chief, and Kh. 
Reedik, deputy chief of the export department, of the 
Administration for Foreign Economic Relations of 
ESSR Gosplan, by S. Yershova: “Window on Europe”; 
date and place not given] 

[Text] In recent days, several issues of SOVETSKAYA 
ESTONIYA have carried articles prepared by the Prob¬ 
lems Council of IMYe of ESSR Gosplan and devoted to 
the preparatory stage of the transition to republic cost 
accounting (khozraschet) (September-December 1989). 
They contain a special section covering the problems of 
developing foreign economic relations: creation of the 
republic foreign exchange budget, the drafting of legisla¬ 
tion on quotas and licenses, and increasing foreign 
exchange resources. What problems stand behind these 
terms, which are not very well-known? And how real are 
the prospects in this stage for increasing the republic’s 
foreign exchange income? 

To help readers get their bearings in this complicated 
situation, we are offering a summary of conversations 
which correspondent S. Yershova had on this topic with 
leading specialists of the Administration for Foreign 
Economic Relations of ESSR Gosplan, in particular with 
Kh. Eller, chief of the administration, and with Kh. 
Reedik, deputy chief of the export department. 

[Yershova] I would like to begin with a piece of news that 
is flattering for all of us. This summer, Estonian SSR for 
the first time became a participant in the annual inter¬ 
national fair in Sweden. What goods did our republic 
exhibit there? 

[Answer] Glass and ceramic dishware, nickel silver table 
utensils, canned fish products, and confectionery prod¬ 
ucts were displayed in the booth of the export-import 
association “Estimpeks.” A kiosk had very good sales to 
fair visitors of folk arts and crafts made by the associa¬ 
tion “Uku”—tablecloths, towels, embroidered articles, 
leather belts, small boxes and cases, eyeglass cases, and 
women’s finery; products of the Tallinn Ceramic Prod¬ 
ucts Plant, and also marshmallows, chocolate medal¬ 
lions, and candy made by “Kalev.” Goods with the 
Estonian ethnic flavor were in particularly great demand 
with the Swedish customers. 

[Yershova] And what were the specific results? 

[Answer] “Estimpeks” concluded more than a dozen 
export and import transactions in Sweden. But the 
benefit from taking part in such fairs goes far beyond 



7 December 1989 

that. During the international meetings, studies are 
made of the market and demand for Estonian goods, 
prices are revised, and personal business relations are 
developed with firms. In other words, this is a business¬ 
like preparation for the transition to foreign exchange 
cost accounting, or, as it is still referred to, to foreign 
exchange self-financing. What this term means in simple 
language is this: As of 1 January of next year, the 
republic must earn the foreign exchange for its own 
needs on its own. Whatever the revenues are from 
business deals with foreign firms, that is the amount (and 
no more than that) which can be used to purchase 
imported goods, raw materials, and equipment. That is 
why we must even now “open a window on Europe,” and 
seek new markets for selling Estonian products. 

[Yershova] The complexity of that task can be judged 
from the official figures, which were given in 
SOVETSKAYA ESTONIYA back at the end of 
December in an article entitled “Imports and Exports as 
Reflected in Statistics.” They showed that import deliv¬ 
eries in the republic exceed exports threefold. Which 
means that if it is to live within its means, Estonia will in 
coming years have to triple its export potential or 
minimize its purchases abroad? 

[Answer] First of all, the ratio “one to three” does not 
reflect the real picture altogether accurately. Whereas 
statistical reporting on exports does exist, even if it is 
insufficient, there has been practically no analysis of 
exports (neither for the Soviet Union as a whole, nor in 
a breakdown by republics). And there are quite a few 
“underwater rocks” hidden here. For example, there are 
what are referred to as “hidden” exports. An Estonian 
enterprise, say, uses products of the domestic chemical 
industry to paint its products. But chemical plants pur¬ 
chase abroad some of the components used in making 
that paint. To have absolutely accurate data, we need to 
know what the share of export costs is in each article. 

But still, even if it is not in the ratio of one to three, the 
balance is actually negative: it is heavy on the import 
side at present. And this places the republic in a very 
problematical position. We all have to display maximum 
thrift and economy. So that imported equipment is not 
standing around somewhere idle. To repeatedly think 
over the return from every business transaction before 
deciding on it. For example, Polish craftsmen are exten¬ 
sively involved in restoration work in Estonia. This after 
all is also an import, only in this case it is not goods that 
are being imported, but labor, yet the expenditures to 
pay for services are included in the same republic foreign 
exchange balance. Which means that we have to seek out 
opportunities to substitute domestic goods and services 
wherever possible for those we have been importing. To 
improve the quality of products produced in the republic 
so that we no longer need to purchase that assortment of 
goods abroad. 

[Yershova] Still, as they say, saving alone does not fill the 
stomach. How will the republic be able to increase its 

exports? After all, its opportunities are limited to a 
certain extent by state orders. It is they who have to be 
filled first of all. 

[Answer] This is probably where the forecasts are most 
optimistic. This year, the state orders amounted to only 
70 percent of the products produced in the republic; next 
year, their share will be reduced still more for Estonia. 
The question of where to obtain the raw materials to 
produce goods for export is another matter. USSR Gos- 
plan is concerned only with the state orders. But the 
republic associations, enterprises, and supply compo¬ 
nents are trying to conclude contracts by means of 
“horizontal” relations through intermediary organiza¬ 
tions in the other union republics and to establish direct 
contacts with manufacturing enterprises. Just as the 
Kirishi Combine (Leningrad Oblast), for example, will 
be delivering some asphalt to Estonia. The point of view 
of the republic is that the system of USSR Gossnab must 
be transformed from an agency distributing stocks to an 
organization operating as an intermediary. 

[Yershova] What specific measures are envisaged to 
increase Estonia’s export potential? 

[Answer] This is the concern of a working group that has 
now been created by the Estonian Council of Ministers 
to regulate foreign economic relations; it is headed by L. 
Tammevgali, first deputy chairman of ESSR Gosplan, 
This is at present the most strenuous time for the 
participants in its four subgroups. They are drafting 
legislation for the republic’s foreign economic activity 
and preparing the procedure for formation of ESSR’s 
advance foreign exchange estimate. After all, previously 
Estonia did not have its own advance foreign exchange 
estimate; Moscow planned and distributed everything 
for it. Proposals are being prepared to augment foreign 
exchange resources, to develop exporting and importing, 
to organize foreign exchange auctions in the republic, to 
expand foreign tourism, and considerations for reorga¬ 
nization of the information system are being taken up. 

In time, joint enterprises and firms will be potential 
sources of foreign exchange revenues for the republic. 
Their number is growing very significantly. From 2 in 
1987 to more than 80 (if we include both those in 
operation and also those awaiting official registration) at 
the present time. 

What is more, in the context of republic cost accounting 
Estonia does not intend to shut itself off from previous 
contacts through agreements already concluded or to be 
concluded by the USSR Government, union ministries, 
and foreign states. Plans call for maintaining them at the 
level of 1989. Consequently, we can count on foreign 
exchange revenues in the same volume through union 

[Yershova] Which means there is the basis for an affir¬ 
mative answer to the question of whether the republic 
can afford foreign exchange cost accounting? 

7 December 1989 



[Answer] Many things, a great many things, involved in 
that answer depend at present on the supreme legislative 
bodies of the USSR. The sphere of foreign economic 
relations is inseparable from the other sections of IMYe, 
legislation on foreign exchange self-fmancing must be 
incorporated into the general conception of republic cost 
accounting. And on that plane many ideas of the working 
group require revision of the nationwide legislation now 
in effect. Here is one example. Of what have our repub¬ 
lic’s foreign exchange revenues consisted up to this time? 
Of deductions from the foreign economic activity of 
enterprises operating on its territory, to some extent 
from all-union funds for centralized distribution. This is 
what this looked like in practice. The foreign exchange 
fund of the ESSR Council of Ministers received 20 
percent of the proceeds of enterprises under republic 
jurisdiction, 50 percent remained with the enterprises, 
and 30 percent was credited to the union foreign 
exchange fund. Organizations and associations subordi¬ 
nate to union ministries make a deduction to ESSR of 
only...5 percent of their income from exports. This was 
envisaged by a decree of the USSR Government. The 
lion’s share of foreign exchange proceeds went to all- 
union funds, bypassing the republic. 

To be sure, the ESSR Council of Ministers adopted a 
decree this year increasing by 5 percent the deductions of 
enterprises under union jurisdiction—for development 
of the republic infrastructure, health care, and so on. But 
that share is not enough either; after all, the resources go 
to meeting the needs of the entire population of Estonia, 
including those working at what are now “union” enter¬ 

None of this means, of course, that every union republic 
should not credit to the state some share of the foreign 
exchange to cover all-union expenditures, in particular 
those for defense, performance of nationwide programs 
(development of space exploration and health care), to 
maintain the diplomatic corps, and so on. But the 
percentage of those deductions must suit both sides. 
Otherwise, foreign exchange cost accounting may actu¬ 
ally prove to be something which Estonia cannot afford. 
That is the reason for preparing a draft of an agreement 
between the USSR Council of Ministers and the ESSR 
Council of Ministers on basic principles of foreign eco¬ 
nomic cooperation in 1990 and the period 1991-1995, 
which explicitly stipulates that foreign exchange pro¬ 
ceeds from exports of goods (jobs and services) of 
enterprises, associations, producer cooperatives, and 
other organizations located on the territory of Estonian 
SSR will go into their accounts in the appropriate 
republic bank. The rate of deductions made to the 
republic fund is set by the ESSR Council of Ministers. 
Funds for all-union purposes are credited from the 
republic foreign exchange fund to the union foreign 
exchange fund in the form of payment at a rate estab¬ 
lished in legislation. 

The question of quotas and licenses is just as problem¬ 
atical at this point. At the present time, every union 
republic must obtain a permit or license from union 

ministries and departments to export a number of its 
goods or raw materials to the foreign market. For 
example, the license for timber and lumber and pulp and 
paper products (except for low-grade wood and waste 
from timber processing) is issued by the USSR Ministry 
of Timber Industry, for cement by the USSR Ministry of 
Construction Materials, for fish and fish products (with 
the exception of fish from internal waters) by the USSR 
Ministry of Fish Industry, and so on. This procedure is 
envisaged in a specific all-union decree regulating for¬ 
eign economic relations. This licensing is supposed to 
protect the domestic market and natural resources. But 
in fact the result is that the union republic is not anxious 
to dispose of its basic goods and resources. It ties the 
hands of entrepreneurial activity, and it imposes diffi¬ 
cult conditions on introduction of IMYe. Which is to say 
that this provision comes under Point 3 of the decree of 
the USSR Supreme Soviet entitled “On the Proposals of 
the Supreme Soviets of Lithuanian SSR, Latvian SSR, 
and Estonian SSR on Transition of These Republics to 
Cost Accounting,” which reads: “Legislative acts of the 
USSR regulating economic relations take effect on the 
territory of those republics insofar as they do not stand 
in the way of their transition to cost accounting.” In view 
of this point of the decree, a procedure has been pro¬ 
posed whereby restrictions on exports and imports in 
quantitative or value terms—quotas—would be estab¬ 
lished by the ESSR Council of Ministers. And licenses 
for the export and import of goods, services, and jobs 
would be issued to enterprises, associations, and pro¬ 
ducer cooperatives located on the territory of Estonia 
exclusively by the ESSR Council of Ministers or, by its 
order, by the relevant republic departments. 

It is quite clear that this kind of procedure will not be to 
the liking of union departments. Until the republic’s 
proposals take the form of legislation, we will not antic¬ 
ipate events, so as not to find ourselves in the position of 
drivers attempting to drive their cars in violation of 
traffic rules in effect. 

Price, Tax Reforms Important for Interrepublic 

904A0030B Novosibirsk EKONOMIKA I 
No 9, Sep 89 pp 29-46 

[Article by A.G. Granberg, corresponding member of the 
USSR Academy of Sciences, Novosibirsk: “The Eco¬ 
nomic Mechanism of Interrepublic and Interregional 

[Text] The center of gravity of the economic reform has 
shifted this year from enterprises to regions. Legislative 
bills have been drafted and have gone through extensive 
discussion concerning the principles for perestroyka of 
guidance of the economy and the social sphere in the 
union republics on the basis of an expansion of their 
sovereign rights, self-government, and self-financing and 
on local self-government and the local economy. The 



7 December 1989 

term “regional cost accounting” has gained extraordi¬ 
nary popularity. The new regional economic mechanism 
is supposed to be introduced as of the beginning of the 
13th FYP. But certain republics, oblasts, and cities are 
fully resolved to adopt it even beginning in 1990 in view 
of their own particular circumstances and interests. 

It is obvious that the restructuring of management 
cannot be done in every republic (region) in isolation, 
without taking into account the consequences for other 
republics (regions) and the entire national economy. 
Radical changes are required in interrepublic (interre¬ 
gional) relations, which are closely related to the polit¬ 
ical, social, and ethnic structure of society. The urgency 
of this direction of the reform has been emphasized in 
fierce discussions in the USSR Congress of People’s 
Deputies and the first sessions of the USSR Supreme 

Regional Division of Labor and Economic Interests 

The general pattern of development of both a national 
economy and the world economy is a deepening of the 
regional division of labor, in which the production of a 
particular product is concentrated in regions which have 
the most favorable conditions for it, and intensive 
exchange of the results of labor is organized among them. 

In view of its exceptional diversity of natural-geographic 
and socioeconomic conditions, it is particularly impor¬ 
tant for our country to utilize the advantages of the 
regional division of labor. As a general principle, then, it 
is not possible to organize the production of all the 
principal products in every region and to build a closed 
(autarkic) regional economy. Differentiation of produc¬ 
tion costs is an important factor in the regional division 
of labor in the USSR. For instance, interregional differ¬ 
ences in the production cost of petroleum go as high as 
5-6-fold, for natural gas as high as fivefold, for bitumi¬ 
nous or better coal more than 20-fold, for iron ore 
3-4-fold, and for skidding of timber 2-3-fold. There are 
sizable differences from region to region in the produc¬ 
tion costs of products of ferrous and nonferrous metal¬ 
lurgy, the chemical and petrochemical industries, the 
forest products industry, building materials, and food¬ 
stuffs. What is more, the conditions for expanding and 
deepening the regional division of labor are brought 
about by the accumulated professional know-how, ethnic 
traditions, and the new directions of NTP. 

With the exception of the largest republics (RSFSR, the 
Ukraine, and Kazakhstan), interrepublic turnover 
(including exports and imports) goes as high as 46-62 
percent of the gross social product produced in the 
republics and as high as 70-80 percent of industrial and 
agricultural production. Distribution among the union 
republics and the economic regions of the RSFSR 
involves 80 percent of the petroleum, 75 percent of the 
gas, more than 70 percent of the machines and equip¬ 
ment, about 50 percent of the manufactured fertilizer, 40 
percent of the ferrous metals, 30 percent of the coal, 

70-100 percent of the products of nonferrous metallurgy, 
and 30-50 percent of the products of light industry and 
the food industry. 

It might appear that the USSR economy uses interre¬ 
gional exchange to take advantage of the most unique 
peculiarities of the regional natural-economic complexes 
and the main advantages of production specialization. 
But the possibilities of economic cooperation are not 
being used effectively enough. Over the last 2 decades, 
the USSR has been lagging appreciably behind the EEC 
in its rates and forms of economic integration. 

As in the past, inefficient concentration of many produc¬ 
tion operations in the European part of the USSR, which 
has a shortage of fuel, water, and land, has been pre¬ 
served and is even being intensified. There is a sizable 
surplus of jobs in the industry of this region, whereas in 
Central Asia there is an acute shortage of jobs to employ 
the unused able-bodied population. The dominance of 
departmental interests over those of the national 
economy and the lag in development of the production 
and social infrastructure have been strong checks on the 
movement to Siberia of the branches that would round 
out the processing of raw materials and fuel. 

The location of new enterprises and expansion of 
existing ones that are pursued by central departments 
quite often in the face of multiannual plans have com¬ 
plicated the environmental situation in a number of 
regions, have given rise to excessive migrational flows, 
and have aggravated difficulties in the energy supply and 
operation of the transportation system. Because of the 
“residual” principle in development of the social sphere 
and the growing shortage of goods, regions have less 
motivation to develop branches oriented toward the 
nationwide market. Quite often this adverse trend is 
being ideologically supported by the nice-sounding prin¬ 
ciple of “self-support.” 

How is the all-union regional division of labor to be 
improved and deepened? Previously, reliance was put 
mainly on centralized planning. But even planning deci¬ 
sions that are ideal from the standpoint of the national 
economy are effectively blocked by the multitude of 
differently oriented departmental, local, and group inter¬ 
ests. There must be a restructuring, then, of relations 
among the center (and its functional bodies), regions, 
and enterprises on the principle of “a balance of inter¬ 

Three fundamental concepts in economic theory have 
paramount importance to analysis of interregional rela¬ 
tions as a system: the optimum, the nucleus, and equi¬ 
librium. Unfortunately, they have not been very popular 
in our literature on regional economics. But without 
them it clearly is not possible to conduct a strict analysis 
of the advantages and disadvantages and of the eco¬ 
nomic realizability of various alternatives of the regional 
division of labor and interregional relations. 

The optimum of a multiregional system is that set of 
variants of economic development which cannot be 

7 December 1989 



improved for certain regions without a deterioration of 
the position of others.^ All other variants are less effi¬ 
cient and can be left out of consideration in choosing a 
solution. The nucleus is that set of variants in whose 
accomplishment all regions are interested in the sense 
that it would be disadvantageous for them to drop out of 
the system and form coalitions.^ As a rule, the nucleus is 
a part of the optimum of the multiregional system. 
Economic equilibrium is a state in which variants of 
development preferable from the standpoint of indi¬ 
vidual regions offer in the aggregate a balanced solution 
for the entire economy assuming equivalents (in some 
sense) of interregional relations. 

Until recently, the requirements of taking into account 
and effectively combining the particular economic inter¬ 
ests of regions, of comparing their contributions to the 
all-union economy, and of establishing equivalent inter¬ 
regional relations met with suspicion of being veiled 
attempts to undermine faith in the unconditional dom¬ 
inating idea of the interests of the entire state and in the 
unselfish friendship of peoples. But at the 19th Party 
Conference it was precisely these issues that were 
referred to as the most relevant to stabilization and 
development of the USSR’s regional (nation-state) 
system. Research into interregional economic interac¬ 
tions is taking on a marked practical orientation. 

I will mention just one result which has been arrived at 
in the Institute for the Economics and Organization of 
Industrial Production of the Siberian Branch of the 
USSR Academy of Sciences. Multi variant calculations 
related to an interregional optimization model revealed 
a nucleus in a system of eight macroregions: the union 
republics of the European part of the USSR, the Euro¬ 
pean part of the RSFSR without the Urals, the Urals, 
Kazakhstan, Central Asia, Western Siberia, Eastern 
Siberia, the Far East. An analysis has shown that forma¬ 
tion of the nucleus is mainly governed by the intercom¬ 
plementarity of the economies of the macroregions 
thanks to the exchange of fuel, mineral raw materials, 
timber, cotton, food, specialized equipment, and one- 
of-a-kind machines. 

Why is this result fundamentally important? The exist¬ 
ence of a nucleus in the USSR economy means that all 
macroregions have an objective interest in bilateral and 
multilateral economic cooperation. Any autarkic and 
coalitional aspirations, then, are economically inadvis¬ 
able for all. Interregional relations have to be organized 
so that decisions concerning the nationwide regional 
distribution of labor are suitable to the nucleus. It makes 
sense to continue and deepen the research that has 
begun. The greatest bottleneck is the information sup¬ 
port for planning calculations. 

Economic Development and Satisfying the Needs of the 

The essence of restructuring the economic mechanism 
for regional development and interregional relations, in 
my view, is not as strictly revealed by the term “regional 

cost accounting” as by the demand uttered at the 27th 
party congress: to link more closely the efficiency of the 
region’s economy and the amounts of resources allocated 
to it for social purposes. 

It is a rather widespread assumption that the economic 
mechanism of interregional relations has to be built from 
scratch. This is not altogether correct. It is more accurate 
to speak about the weakness and incompleteness of the 
speciflc mechanism of these relations (including rela¬ 
tions “between the center and the regions”) and of the 
inappropriate impact on them of the cost accounting of 
enterprises, the financial and credit system, pricing, 
distribution of machines and equipment, and so on. 

Three types of regions have paramount importance to an 
analysis of the economy as a multiregional system: the 
union republic as a region of the first rank with the legal 
status of a state (independently of its economic and 
demographic potential); the autonomous republic, kray, 
and oblast—political administrative units at the first 
level within the republic; and the major economic region 
as a special (specialized) entity that can be managed. 
Analysis of the second and third type of regions is 
particularly relevant for the RSFSR. Because of the lack 
of comparable information, I will limit myself to exam¬ 
ining relations among the union republics. 

Today, rankings and quantitative relations of the 
national income produced and used, labor productivity 
and real personal income (including social services 
received) are the most universal characteristics of rela¬ 
tions between levels of economic development (UER). 
The national income produced by the republic reflects 
both the end result of reproduction on its territory and 
also the resource potential for performing social tasks. 
The indicator of the per capita national income pro¬ 
duced or the national income produced per person 
employed in physical production (the productivity of 
social labor) is used to compare the UER of the repub¬ 

The maximum gap between republics in per capita 
production of national income is now 1:2.8 (Latvia and 
Tajikistan). The reasons for such strong differentiation 
deserve special analysis, especially since optimistic 
assurances about practical solution of the problem of 
equalizing the UER of the union republics, which 
resounded, to be specific, at the 26th CPSU Congress, 
are not being borne out. 

The substantial differentiation of the UER can only 
partially be “written off’ to inaccuracies and errors in 
the indicator chosen, to “unfair” price relations, to the 
influence of the sectoral structure of production, to 
artificialities in the distribution of the turnover tax, and 
so on. The most obvious objective cause of the existing 
and intensifying differentiation of the republics with 
respect to per capita economic indicators is the polariza¬ 
tion of demographic trends.^ At present, the demo¬ 
graphic load per able-bodied person is 2 in the RSFSR 



7 December 1989 

and the Baltic republics and 3.1 in Central Asia (includ¬ 
ing 3.5 in Tajikistan). The share of persons employed in 
physical production in the size of labor resources is 56 
percent in Central Asia and Kazakhstan and 64 percent 
in the Baltic republics. That is why the transition to the 
indicator of the productivity of social labor reduces by 
approximately one-third the interrepublic differentia¬ 
tion: the maximum difference is 1:1.9 (once again 
between Latvia and Tajikistan). 

How strongly do these interrepublic differences affect 
satisfaction of the needs of the population? The regula¬ 
tors operative in the economy over the last 3 decades 
have maintained a constant relation between the 
national income produced and the national income used 
in the republics. The rankings of the republics in the per 
capita national income produced and national income 
used have coincided with the exception of one or two 
transpositions. Thanks to material resources brought in 
from other republics, Kazakhstan and Central Asia have 
come somewhat closer to the average union level, the 
maximum gap between republics with respect to the per 
capita national income used drops to 1:2.3-1:2.4. 

The forms of remuneration (individual and collective), 
which are related to the end results of activity, play an 
important role in supporting the dependent relationship 
between the efficiency of production and satisfaction of 
social needs. The highest average monthly wage of 
workers and employees was in Estonia in 1987 (229 
rubles), and the lowest was in Azerbaijan, Moldavia, and 
Tajikistan (165-167 rubles). Its relatively high level in 
the RSFSR (216 rubles) is mainly explained by its 
regional adjustment because of climatic conditions. For 
instance, the average wage in the Northern Economic 
Region was 274 rubles, in the Far Eastern it was 324, but 
in the Central Chernozem 186 rubles. Yet interrepublic 
differences in the wages of workers and employees (max¬ 
imum difference 1:1.4) are far smaller than those in labor 
productivity, indicating a substantial leveling tendency. 
On kolkhozes, where remuneration on the basis of end 
results is spreading more rapidly, the spread in remuner¬ 
ation is 1:2.2. 

We ought to expect that full cost accounting of enter¬ 
prises, supplemented (at least temporarily) by regulation 
of the relation between labor productivity and wages, 
will strengthen the connection between the net output 
and remuneration in regions. But it is still more impor¬ 
tant to take this connection to its logical end—satisfy 
consumer demand in accordance with income. 

When the consumer market is unsaturated, interrepublic 
differences in the consumption of goods and services 
reflect not only differentiation of levels of production 
and income, but also the influence of the organization of 
the trade sector and consumption that does not go 
through the market, especially foodstuffs. Market stocks 
are redistributed through the purchase of goods by 
inhabitants of other republics. According to my esti¬ 
mates, the annual flow of money into the Baltic republics 
and Belorussia from other republics amounts to at least 

1.5 million rubles; one-tenth of retail sales in Estonia are 
based on money “from other republics.” 

Under the influence of the growing shortage, attempts 
have been made in recent years to stimulate a growth of 
production of consumer goods at the local level. Regions 
have been allowed to commit to local purposes the 
above-plan output of consumer goods. But the good 
intentions are not always sustained by any means—the 
above-plan output is taken away on various pretexts. 
This detracts from the motivation of regions to augment 
their production. What is more, the incentives for devel¬ 
opment of production in the very procedure for crediting 
output to union-republic stocks (and the subsidies from 
them) have not been fully activated. 

For instance, deliveries of meat and dairy products to 
union-republic stock are planned with respect to the 
existing base without sufficiently taking into account the 
natural-economic potential of the regions. For example, 
in 25 oblasts and autonomous republics of the RSFSR 
which were suppliers in 1987, per capita consumption of 
meat products turned out to be lower than the average 
for the republic; in some of them, slightly more than half 
of the volume of production was used for consumption 
of the local population. At the same time, in 14 regions 
of the RSFSR receiving subsidies the level of consump¬ 
tion was higher than the average. Moreover, in some of 
them the conditions are favorable for increasing their 
own production. 

The paradoxes of the present economic mechanism are 
most manifest in the social sphere. Lithuania, which 
occupies fifth place with respect to per capita national 
income produced, is in first place with respect to its 
development. Kirghizia has a ranking that is three places 
higher than its position in the production of the national 
income, and Azerbaijan, Armenia, Turkmenia, and 
Estonia have a ranking that is two places lower. The 
discrepancies among the development of production, 
production efficiency, and the state of the social sphere 
are most acute within republics (especially in the 
RSFSR, where too much depends on the policy of central 
departments and the distribution of resources from the 
union budget). That is why one of the important tasks in 
restructuring the regional and interregional economic 
mechanism is to develop the social sphere mainly with 
financial resources created (“earned”) within the partic¬ 
ular area. 

The cost-plus mechanism for the formation of budgets 
does not motivate republics and regions to develop their 
own financial base. The share of revenues of republic 
budgets that are collected from the republic economy 
averages about 20 percent, varying from republic to 
republic between 12 percent (Kirghizia) and 30 percent 
(Ukraine). Union enterprises pay only 5 percent of their 
deductions from profit into republic budgets. The share 
of these revenues in republic budgets does not exceed 2 

7 December 1989 



In accordance with the “General Principles for Pere- 
stroyka, Management of the Economy and the Social 
Sphere in the Union Republics...” and the draft of the 
USSR Law on Local Self-Government and the Local 
Economy, every enterprise will deduct a portion of its 
income (profit) for the union, republic, and local bud¬ 
gets. The correlation between the efficiency of the 
region’s economy and the possibilities of satisfying the 
social requirements of the population is being consider¬ 
ably strengthened. But there have been serious objec¬ 
tions to the rules proposed for taxing enterprises subor¬ 
dinate to different levels. 

The present provision is that enterprises under union 
jurisdiction must pay 40 percent of all payments from 
profit into the republic budget, while those under 
republic jurisdiction pay as much as 90 percent. This 
differentiation of taxation is provoking republic and 
local soviets to fight for administrative subordination of 
enterprises on their territory and is putting regions with 
a differing sectoral structure of production in an unequal 
position. After all, when this taxation of a number of 
branches under union and union-republic jurisdiction is 
administered, the approximate share of industrial output 
at enterprises under republic and local jurisdiction will 
vary greatly from republic to republic: 27 percent in the 
RSFSR, 50-71 percent in the republics of the Transcau- 
casus, 57-72 percent in the Baltic republics, and 50-73 
percent in Central Asia and Kazakhstan. Taxation has to 
be uniform. Then the search for the best forms of the 
organization of production will be moved from the 
predominantly command-administrative sphere to the 
sphere of economic competition. 

Today, the centralized balancing of the revenues and 
expenditures of republic budgets occurs through differ¬ 
entiation of deductions from the turnover tax and the 
personal income tax. And if 100 percent of those deduc¬ 
tions is not enough to cover expenditures, the republic 
receives subsidies from the union budget. For instance, 
in 1989 Uzbekistan, Kazakhstan, Georgia, Kirghizia, 
Tajikistan, and Turkmenia kept the entire turnover tax 
collected on their territory, the RSFSR 85 percent, 
Belorussia 71 percent, the Ukraine 68 percent, and 
Latvia 57 percent. The most debatable issues in the 
restructuring of republic financial relations have pre¬ 
cisely to do with the turnover tax. 

In 1987, about 30 percent of the turnover tax was 
realized in the alcohol, liquor, and wine industries, 15 in 
the textile and knitwear industries, 17 in the petroleum, 
petroleum refining, chemical, and petrochemical 
industry, and 14 percent in machinebuilding and metal 
manufacturing. The turnover tax collected in a republic 
does not coincide with the value that corresponds to the 
taxable goods produced in it, since it is paid into the 
budget both by product manufacturers and also by trade 
organizations and sales organizations at the point of sale. 
When the turnover tax is paid by product manufacturers, 
then the republics in which they are located “get rich.” 
But when we transfer the taxpayer function to trade 

organizations, we weaken the already insignificant moti¬ 
vation of the republic to increase the output of consumer 
goods which have interrepublic importance. Republic 
differences in the share of the taxable goods produced 
and sold substantially distort the relation between the 
national income produced and the national income used. 

Because of the absence of stable rates of deductions of 
the turnover tax, which are set by USSR Minfin on the 
“residual” principle (except for the 100-percent collec¬ 
tion by the budgets of Kazakhstan and the Central Asian 
republics), the republics try to play down their ability to 
obtain revenues of their own (including revenues from 
the production of taxable consumer goods) in order to 
argue their need to raise the rate of deductions from the 
turnover tax. 

In order to eliminate the adverse consequences of redis¬ 
tribution of national income through the turnover tax, 
some financial experts propose establishing for all repub¬ 
lics a uniform share of deductions to the republic budget 
from the total amount of tax collected on the territory of 
the republic, a share that would be firmly fixed for a 
lengthy period of time. As the transition is being made to 
self-financing beginning in the 13th FYP as a temporary 
measure (in order not to disrupt the revenue and expen¬ 
diture base of budgets formed in the base year), it is 
recommended that the transition be made to a share of 
the deductions that would be uniform from year to year, 
but would be differentiated from republic to republic. 
On behalf of more uniform distribution of the turnover 
tax among the various commodity groups, the Central 
Asian republics propose transferring to the budgets of 
republics producing raw materials and supplies a portion 
of the turnover tax from cotton and woolen fabrics, 
knitwear, and products made from them, fur products, 
and wine products which they have produced and which 
are sold outside their territory. 

In my view, the “improvement” of the turnover tax will 
not produce satisfactory results. In economic terms, it is 
more sound to go back to the traditions of normal 
financial systems, abolishing the turnover tax and intro¬ 
ducing an excise tax on alcohol, tobacco, and jewelry, 
and possibly on cars and trucks as well. This tax should 
seemingly go only to the union budget and should be 
used above all to finance nationwide social programs. 

As a supplement to the measures envisaged in the 
“General Principles...,” there should be a legislative 
guarantee of the stability of republic budgets, they 
should be safeguarded against encroachments of the 
union budget, and the union budget should be safe¬ 
guarded against the economic actions of republics 
infringing on the interests of society as a whole. 

Equivalence and Relations in Redistribution 

Discussions of the optimality and fairness of interre¬ 
public (interregional) economic relations turn as a rule 
on equivalence. As a standard of market relations, it is 



7 December 1989 

frequently treated as a necessary condition for the tran¬ 
sition of the regions to self-government and self¬ 

But it follows from the theory of interregional (and 
international) economic relations (about which we have 
already spoken—the term “nucleus”) that mutual expe¬ 
diency of interregional exchange can be achieved even 
when exchange is not equivalent. The experience of the 
world economy indicates that international trade and 
financial connections have been developing very rapidly 
even when there were considerable (hundreds of millions 
of dollars) imbalances in the payments of many coun¬ 
tries. Equivalence of exchange is the ideal case of effec¬ 
tive relations based on compensation. So, it is not 
legitimate to reduce the problem of optimality and 
fairness of interregional relations solely to equivalence. 
Nevertheless, an analysis of these relations from the 
standpoint of equivalence is extremely important to an 
understanding of the economic mechanism that is in 
effect and to determining the directions of its restruc¬ 

The information available on the economy of the repub¬ 
lics and on interrepublic relations allows us to analyze 
three characteristics of equivalence: the relation between 
the national income produced and the national income 
used, the net result of the interrepublic exchange of 
products (supplemented in part by data on migration of 
personal money resources), and redistribution between 
union and republic budgets. 

The present economic mechanism maintains a high 
ranking correlation between the national income pro¬ 
duced and the national income used on the territory of 
the republics. For a majority of them, the difference 
between these indicators is relatively small and rarely 
changes sign. A stable positive difference between the 
national income used and the national income produced 
is maintained in Kazakhstan (19.8 percent in the 11th 
FYP and 17.2 percent in 1986) and Central Asia (6.0 and 
6.4 percent, respectively). But these calculations incor¬ 
porate not only random, but also systematic statistical 
errors, deficiencies of pricing, and defects in distribution 
of the turnover tax. 

In 1986 and 1987, Belorussia and Azerbaijan had a 
positive balance in exchange of the products of physical 
production (including exports and imports), while the 
other 13 republics showed a trade deficit. This paradox 
is explained by the way in which exports and imports are 
recorded. The balance of exports and imports in the 
USSR is positive when measured in foreign trade prices. 
But in the prices of the final sale (which is customary in 
the practice of constructing intersector balances) imports 
grow by tens of billions of rubles (by 34 billion rubles in 
1987), since consumer goods sold on the domestic 
market at higher prices, including the turnover tax and 
various markups, predominate in this figure. 

It is preferable, then, to analyze “pure” interrepublic 
exchange of domestic products. It is important to note 

that our country realizes the predominant share of its 
foreign exchange proceeds by exporting fuel and raw 
materials delivered mainly from the eastern regions of 
the RSFSR. The exports of this republic exceed by a 
factor of 2.5 the exports of all the other republics taken 
together. That is why most of the imports of all these 
republics are a consequence of the export of products 
produced in the RSFSR. 

In the interrepublic exchange of domestic products in 
1987, exports exceeded imports in the RSFSR, the 
Ukraine, Belorussia, Georgia, Azerbaijan, Moldavia, 
and Armenia. There was a negative net result in eight 
republics with differing levels of economic and social 
development: at one pole were Central Asia and Kaza¬ 
khstan, and at the other Lithuania, Latvia, and Estonia 
(in 1986, Latvia had a slight positive balance). The 
figures given reflect the movement of products through 
the channels of material and technical supply and sales, 
wholesale trade, and retail state and cooperative trade. 
But they do not fully take into account the movement of 
goods sold by private individuals, nor, most important, 
purchases of goods by visiting inhabitants of other 
republics. This interrepublic trade can be estimated from 
the interrepublic migration of money. If we add (sub¬ 
tract) these amounts to the recorded exports of products, 
then the balance in Georgia’s trade becomes negative, 
that of Latvia and Estonia becomes positive, and the 
negative result of Central Asia and Kazakhstan, which 
have been exporting money, grows still more. 

Discussion of the problem of the equivalence of interre¬ 
public relations usually turns on the question of “fair” 
prices. The pricing system in the USSR has never been 
oriented toward trade relations between republics 
(regions). That is why the prices in effect are not very 
suitable for measuring the equivalence of those relations. 
From the standpoint of the RSFSR, the prices of fuel and 
lumber are not profitable, and from that of Central Asia 
this is true of cotton and nonferrous metals, and from 
that of the Baltic republics this applies to meat and dairy 

Some scientific institutions are doing projects to reassess 
interrepublic relations. One possible approach here is to 
convert exports and imports of products in foreign trade 
(foreign exchange) prices. Calculations using this 
method have been done by the Council for Study of the 
Productive Forces of the USSR (using data for 1986). 
When the conversion is made to foreign trade prices, the 
results of the exchange of products improve for the 
RSFSR, the Ukraine, Azerbaijan, and Turkmenia, which 
have a sizable share of fuel and metals in the structure of 
their exports. There is a substantial deterioration of the 
position of republics exporting consumer goods and 
importing fuel and raw materials. The negative balance 
of the Baltic republics increases by a factor of 2.8 and 
reaches nearly 1,000 rubles per inhabitant per year 
(including exports and imports). While they do not claim 
to be accurate, these calculations provide food for 
thou^t about the possible consequences of a price 
revision for economic relations among the republics. 

7 December 1989 



Various computational procedures confirm that the 
RSFSR has a positive balance of trade in interrepublic 

Certain financial flows must correspond to the physical 
relations among the republics. They are difficult to 
analyze because we lack the necessary data. According to 
figures on republic budgets, in 1989 subsidies from the 
union budget went to Kazakhstan (19 percent of total 
revenues) and the Central Asian republics (14-21 per¬ 
cent). Those same republics have a stable negative result 
in interrepublic product exchange. For the other repub¬ 
lics, which do not formally receive subsidies, the picture 
is less clear. As noted above, a sizable portion of reve¬ 
nues from economic activity on the territory of every 
republic is collected into the union budget; what is more, 
the financial results of the republics are distorted by the 
differentiated deduction of the taxes on individuals and 
the turnover tax. 

Can all the republics make the full transition to self¬ 
financing in the near future; when will the net result of 
interrepublic exchange (payments) be nonnegative for 
every one of them? In other words, is regional economic 
equilibrium attainable in the context of expanding eco¬ 
nomic sovereignty of the republics? Assuming present 
prices are retained, the transition to full financial bal¬ 
ance of the republics is not realistic in my opinion. For 
many of them, it would have grave socioeconomic con¬ 
sequences. The main directions for the change of prices 
to reduce the imbalance of interrepublic trade and the 
republic budgets are well-known. But the fundamental 
question here is this: Is equivalence in interrepublic 
relations mandatory, or is a redistribution of the national 
income produced permitted? 

In the restructuring of the economic mechanism, 
emphasis is being put on distribution based on end 
results at the enterprise and in the region. But “regional 
cost accounting” does not preclude relations among 
regions based on redistribution. In a state that is a 
federal union, redistribution of financial resources and 
the physical resources that correspond to them is indis¬ 
pensable in the financing of statewide (“extraterrito¬ 
rial”) expenditures, for example, for defense; to finance 
regional programs of nationwide importance and regions 
with high investment activity; to reduce excessive 
(antagonistic) social differences and to ensure social 
guarantees for all members of society regardless of where 
they live and the work they do. 

Possibilities are now being explored for reducing state¬ 
wide expenditures; certain forms of them will evidently 
be transferred to the republic level. Later, regional pro¬ 
grams can be financed through long-term credit 
financing of investment projects from all-union funds; 
that is, there would be at least a partial transformation to 
dynamic equivalence. Social factors, then, will in future 
play a determining role in the relations of redistribution. 

Ensuring the guaranteed level of satisfaction of the 
material and nonmaterial needs is oriented above all 

toward families with many children, students, and pen¬ 
sioners. It follows, then, that redistribution of revenues 
among republics (regions) is above all a consequence of 
the differing regional concentration of various social 
groups. For example, in the USSR 15 percent of the 
population has an income amounting to less than 75 
rubles per family member (the subsistence minimum), 
and this percentage is about 50 in Central Asia, 29 in the 
RSFSR, and 1 percent in the Baltic republics. It is 
fundamentally important that redistribution not take 
place mechanically—from the “rich” to the “poor,” but 
through targeted programs financed from all-qnion 
(interrepublic) funds. The problem of providing assis¬ 
tance in development of health care and education to the 
republics and regions with high population growth rates 
is especially acute. 

How are all-union (interrepublic) funds to be built up 
without undermining the motivation of the regions to 
increase economic efficiency and augment their own 
revenues? In my opinion, the financial basis of these 
funds must be excise taxes (the transformed turnover 
tax) and differential rent on natural resources, that is, 
revenues not related to the efficiency of work activity. At 
the same time, it would be advisable to make the 
transition from outright grants to returnable subsidies 
and subsidies to republic (local) budgets for which pay¬ 
ment would be made, including earmarked subsidies. 
This would stimulate the regions to seek out their own 
sources of financing, and to curtail expenditures which 
have not been very effective. The budget of a given 
republic (region) could be subsidized (at interest) both by 
the union budget and also by other republics (regions), 
banks, and enterprises which have financial resources 
temporarily uncommitted. 

Toward the New All-Union Market 

The growing product shortage, the disruption of the 
financial and monetary system, and the unreliability of 
material and technical supply are having a disastrous 
effect on the intensity and structure of inteiregional 
relations. The all-union market is disintegrating, and 
there is a partial return to barter relations between 
enterprises and regions. In most regions, various mea¬ 
sures are being taken to stabilize and protect the local 
consumer market (ration coupons for goods for local 
inhabitants, bans on exporting products outside the 
region, and so on), work collectives are organizing 
internal distribution of products, and the creation of 
subsidiary farms and the earmarked manufacturing of 
goods for local needs are being encouraged. 

The Baltic republics are proposing the most radical 
measures. They have been discussing the possibilities of 
introducing separate republic foreign exchange, indepen¬ 
dent financial-and-credit systems, and the complete 
transition to contract prices in interrepublic relations. 
The reaction to these intentions has been mixed, even in 
the Baltic republics."* It is emphasized that Estonia, 
Lithuania, and Latvia have a lot to lose in the transition 
to equivalent relations with the other republics on the 



7 December 1989 

terms of the world market assuming the present eco¬ 
nomic structure and technical level of the economy. 

Whether it is advantageous or disadvantageous to 
change the republic economic mechanism—that is a 
problem in the jurisdiction of the given republic, pro¬ 
vided it does not infringe on the interests of other 
republics. But it is obvious that such unilateral actions as 
introducing one’s own foreign exchange, customs bar¬ 
riers, refusal to trade at all-union prices, affect all the 
republics and tend to disintegrate the all-union market. 
The world economy is traveling confidently along the 
road of internationalization; the countries of the EEC 
have concluded an agreement for full integration by 
1992, including freedom of movement within the com¬ 
munity of goods, services, capital, and citizens, and even 
a common European currency is being introduced (the 

How is a single market to be created that would unify 
regions in the context of their expanding economic 
independence? This problem requires thorough specific 
examination. But it is clear even today what the manda¬ 
tory requirements are: general stabilization of finances 
and the circulation of money in the country, a substan¬ 
tial reduction of the unsatisfied effective demand for 
machines and equipment, consumer goods, and services; 
universal introduction of payments to regulate labor 
resources and natural resources and environmental pro¬ 
tection; revision of the project of the reform of wholesale 
prices with an orientation toward creating normal con¬ 
ditions for optimum specialization of regions and inter¬ 
regional relations.^ The proposal of V.D. Belkin, P.A. 
Medvedev, and I.P. Nit on the introduction and gradual 
spread from region to region of “convertible” money 
deserves attention. 

Experiments with interregional and especially interre¬ 
public relations based on bartering are very risky; they 
could cause serious economic, social, and political defor¬ 
mations. That is why it is important to step up research 
on the simulation and forecasting of restructuring of the 
all-union market under changing economic conditions. 


1. This set is often called Pareto’s optimum (named after 
the Italian economist and mathematician V. Pareto, who 
introduced this term). 

2. This term was formulated by the English economist D. 
[sic] Edgeworth in the 19th century. 

3. According to the data of the USSR population census 
done in January 1989, over the last 10 years the popu¬ 
lation of the Ukraine has grown only 4 percent, that of 
Latvia 6 percent, that of the RSFSR, Belorussia, and 
Estonia 7 percent, but that of Turkmenia 28 percent, that 
of Uzbekistan 29 percent, and that of Tajikistan 34 

4. See, for example, M. Bronshteyn, “Regional Cost 
Accounting: Coolheadedness and Demonstrability Are 
Needed,” KOMMUNIST, No 5, 1989. 

5. See “Pricing of Fuel and Energy: EKO Round-Table 
Discussion,” EKO, No 8, 1989. 

COPYRIGHT: Izdatelstvo “Nauka”, “Ekonomika i 
organizatsiya promyshlennogo proizvodstva”, 1989 

UkSSR Council of Ministers Chairman on 
Economic Reform, Other Issues 

in Russian 3 Sep 89 p 1 

[Interview with V.A. Masol, member, Ukrainian CP 
Central Committee Politburo, chairman, UkSSR 
Council of Ministers, by unnamed RATAU correspon¬ 
dents: “For the Well-Being of the Peoples, In the Name 
of Brotherhood”] 

[Text] UkSSR Literature and Art Days in Kazakhstan 
comprise not only a good opportunity to exchange spiritual 
values and to enrich these fraternal cultures. They will 
also facilitate the improvement of inter-ethnic relations 
and increase the contributions made by our republics to 
the entire country’s integrated national-economic com¬ 

On the eve of these Days, some RATAU correspondents, 
at the request of KazTAG, interviewed V.A. Masol, a 
member of the Ukrainian CP Central Committee Polit¬ 
buro, and chairman of the UkSSR Council of Ministers. 
He replied to questions concerning the implementation of 
the tasks assigned by perestroyka in his republic, as well 
as with regard to how the party, soviet, and economic 
organs, along with the labor collectives, are solving urgent 
socioeconomic problems. 

[Correspondents] As you know, the principal intent of 
perestroyka is to raise people’s standard of living. But it 
is also undoubtedly true that no social issues can get off 
to a start unless the economy is developed intensively. 
Therefore, we’d like to hear, first of all, what paths the 
restructuring of the economy is taking in the Ukraine 
and how the tasks assigned by the five-year plan are 
being carried out. 

[V.A. Masol] An important feature of the changes taking 
place in our republic is the implementation of the 
important measures for restructuring the national 
economy. The proportionate share of resources being 
channeled into current consumption within the total 
volume of the national income will increase from 79.2 
percent in 1985 to 85.6 percent by the end of the 
five-year plan. During the last four years non¬ 
production-type construction will utilize capital invest¬ 
ments amounting to almost one-third more than were 
originally intended according to the five-year plan. 

We have succeeded in overcoming the residual principle 
of developing the material base of the socio-cultural 

7 December 1989 



sphere. This has allowed us to conduct housing construc¬ 
tion more intensively. Over a four-year period it will 
introduce 13 million square meters more than were 
provided for in the plans of the five-year plan. There has 
been a significant increase in the tasks assigned with 
regard to erecting general-education schools, children’s 
preschool institutions, hospitals, and polyclinics. 

Structural changes are also noticeable in the results of 
industrial work. During the last three years the volume 
of producer goods output has increased by 12.8 percent, 
while that of consumer goods increased by 14.1 percent. 

I’d like to emphasize the fact that, with regard to the 
basic indicators, our republic has achieved and, in some 
cases, even surpassed the milestones set by the five-year 
plan. We’ve managed not only to overcome the down¬ 
ward creep in the growth rate of production and labor 
productivity which characterized past years, but also to 
ensure the growth of our resource potential. 

Along certain lines, however, there is still, unfortunately, 
a serious lag. Therefore, we view the movements which 
have begun to appear in material production and the 
social sphere as signs that the restoration of health to the 
evolving situation has only just begun. 

[Correspondents] Tell us, Vitaliy Andreyevich, about 
how the economic reform is being carried out in practical 
terms. What kinds of problems and difficulties have 
arisen? What future prospects do you see? 

[V.A. Masol] In my opinion, the radical nature and 
depth of the economic reform, as well as the nature of the 
processes which it has brought about in the Ukraine, are 
nowadays, to a great extent, also characteristic of Kaza¬ 
khstan’s economy. We have almost everywhere the old 
forms of economic organization which are still in exist¬ 
ence and the new ones, which are gathering force. We’ve 
completed converting the enterprises and associations of 
all production sectors to full cost accounting and self- 
financing. Leasing relations are being utilized more and 
more extensively, as well as healthy cooperative forms of 
economic management. 

Upon the initiative of labor collectives, work is pro¬ 
ceeding forward on establishing associations, concerns, 
and other previously uncustomary organizational struc¬ 
tures. At enterprises and in associations there has been 
noticeable forward movement in developing progressive 
forms of cost accounting. Thus, approximately a thou¬ 
sand collectives are working in accordance with cost 
accounting’s second model, so far 135 industrial enter¬ 
prises and 11 construction trusts have converted to a 
leasing contract. 

With the development of the enterprises’ and associa¬ 
tions’ independence, there has also been a change in the 
principles of planning at all levels. The number of 
indicators to be approved in the republic’s state plan and 
to be brought to the ministries, departments, and oblis- 
polkoms, has decreased in comparison with last year by 

a factor of almost 4, while the proportion of state orders 
has been curtailed by a factor of 2-3. 

As to difficulties, certain of them have been engendered 
by our past, but some are connected with all sorts of 
twists and even distortions of the reform’s purposes and 
tasks, as well as by a misunderstanding of its essence. In 
many cases, half-heartedly undertaken solutions and our 
failure to finish up things have likewise been obstacles. 

I consider that, with the adoption by the First Session of 
the USSR Supreme Soviet of corrections and additions 
to the previously existing Law on Enterprises, we have 
taken a serious step toward expanding economic inde¬ 
pendence. On the other hand, the first steps towards 
independence for enterprises have already led to such 
negative factors as group egoism, a lowering of produc¬ 
tion plans, and attempts to place narrowly departmental 
interests above state-wide, nationwide interests. 

We likewise often encounter a situation whereby, under 
monopolistic conditions, the dictates of a production 
enterprise which is also the supplier bring about a 
one-sided advantage; it ratchets up the prices and 
obtains an essentially unearned profit. As a result, the 
payout of money increases, output is not stepped up, and 
the imbalance of the market becomes greater. It’s a 
serious problem, and it must be solved without delay, 
primarily within the labor collectives. 

Imperfections in the finance-credit mechanism and the 
system of price-formation constitute a serious brake on 
progress. The existing wholesale and requisition prices 
do not correspond to the needs of the reform, nor to the 
rigid conditions of the upcoming regional cost 
accounting. It’s also obvious that an unnormal situation 
has developed in the case of the requisition prices on 
agricultural produce. If we likewise add in here the 
relatively low prices on raw materials, fuel, and metal, 
then our problems in connection with converting to 
regional cost accounting become more understandable. 

The Ukraine stands firmly on positions of economic 
sovereignty. But, in our opinion, it still must be 
approached gradually, by means of attaining some sorts 
of compromises, by working out the appropriate legal 
statutes, rather than on a wave of emotion. We must 
avoid such miscalculations and poorly thought-through 
solutions which would become a cause of economic 
isolation and non-equivalent exchange among republics. 

[Correspondents] One of the most pressing problems is 
the food problem. How is it being solved in the Ukraine? 
What is being done to carry out the decisions of the 
March (1989) Plenum of the CPSU Central Committee? 

[V.A. Masol] Despite certain shifts, the acuteness of this 
problem is being reduced too slowly. In light of the 
decisions taken by the March Plenum of the Central 
Committee, we view the principal task as making sure 
that this republic’s population during the next few years 
senses a substantial addition to the food supply. 



7 December 1989 

Let me note, by the way, that we have virtually solved 
the problem of providing supplies of flour, pastry, and 
macaroni items, as well as vegetable juices, vegetable oil, 
margarine, and eggs. In the very near future we must 
substantially improve the supply of meat and dairy 
products, and the assortment of fruit and vegetable 
products, along with significantly improving its quality. 

In agriculture a great deal of attention is being accorded 
to mastering intensive technologies, creating new species 
and hybrids, and to the organized conduct of the entire 
complex of operations. The early grain crops exceeded 
35 quintals per hectare, which is significantly more than 
in previous years. We have done well in fulfilling the 
plan for requisition of sugar beets and sugar production. 
This also pertains to sunflower seeds. 

In agro-industry we are placing great hopes on contract- 
type collectives. Nowadays they encompass approxi¬ 
mately 80 percent of the persons employed on kolkhozes 
and sovkhozes. The number of lease-type collectives 
exceeds 25,000. They have been given about 9 million 
hectares of arable land, 3 million head of cattle, 
including 1.2 million cows, one-fifth of the head of 
swine, and one-fourth of the sheep. 

Implementation of the comprehensive program for the 
restructuring of rural areas has been activated. 

[Correspondents] Of course, the problems of providing 
housing, consumer goods, the development of health 
care, and the restructuring of the entire service sphere 
are no less urgent.... 

[V.A. Masol] We’re devoting top priority to solving the 
housing problem. It is for this purpose that the Housing- 
2000 Program is being carried out. Before the end of this 
century we intend to provide every family with either an 
individual apartment or a private house. In order to do 
this, we are intensively developing our home-building 
base and capacity to turn out construction materials. A 
large portion of the housing is being erected by the 
economic-management method. Individual housing con¬ 
struction is growing at an accelerated pace. We are 
extensively engaged in the practice of creating young 
people’s housing-construction cooperatives, as well as 
planning-and-construction associations. 

In health care we obviously have common troubles. The 
principal reason for its lamentable status is the insuffi¬ 
ciency of budgetary allocations. We’re spending an insig¬ 
nificantly small amount of money on health care. Nev¬ 
ertheless, despite the still meager resources, we’re trying 
to find the funds to strengthen the treatment base and 
train skilled staff personnel. After thoroughly analyzing 
the status of medicine, we have come to the conclusion 
that the top-priority trend in health care should be 
placed on preventive work. We’ve recently worked out a 
comprehensive program for preventing diseases and 
forming a healthy life style for the period until the year 

As to increasing the production of consumer goods, we 
are lagging substantially behind the other union repub¬ 
lics. In order to correct the situation, a great deal of work 
is planned for restructuring the heavy-industry enter¬ 
prises and strengthening the material-and-technical base 
of the principal consumer-goods production sectors. 
Before the end of the next five-year plan we plan to 
construct or renovate more than 100 enterprises engaged 
in producing clothing and footwear; more than 60 enter¬ 
prises will be modernized on the basis of imported 

[Correspondents] Problems of ecology have also evi¬ 
dently become exacerbated in the Ukraine, What is being 
done specifically to restore the health of the environ¬ 

[V.A. Masol] Let me speak frankly: the situation with 
regard to ecology is quite complicated. And this has been 
caused, above all, by the fact that the technogenic loads 
have sharply increased, since as much as one-fourth of 
the country’s industrial and agrarian potential is concen¬ 
trated in our republic. In industry the Ukraine accounts 
for 47 percent of the All-Union mining of iron ore, more 
than a third of the steel and rolled metal, and a fourth of 
the coal mined in the USSR. Likewise affecting the 
ecological situation is the high degree of the territory’s 
agriculturalization, the dense transportation network, 
and the presence of many industrial cities. 

In recent times we have been attempting to correct the 
situation. We have succeeded in lessening certain unfa¬ 
vorable tendencies, and here and there even overcoming 
them. Over the period of the last three years, despite the 
constant growth of production, we have reduced the 
fencing-in of fresh water by 3 billion cubic meters. Under 
the conditions of this republic’s water shortage, that’s 
quite a bit. A great deal of work is being conducted on 
recultivating ruined lands. The amounts of harmful 
emissions into the atmosphere have been reduced some¬ 
what, but the ecological situation still remains quite 
complicated in many cities. 

We recently approved a program for restoring health to 
the air basin, especially in large cities. The main thrust in 
this program is to sharply reduce the harmful emissions 
from automotive transport. 

But, of course, the Chernobyl accident became a great 
common disaster affecting all of us. We’re profoundly 
grateful to all the Union republics, including the peoples 
of Kazakhstan, for their fraternal aid in eliminating the 
consequences of this catastrophe. We must again review 
all plans and designs from the viewpoint of ecology. 
Losses from the accident at Chernobyl were enormous. 
Suffice it to say that 190,000 hectares of land had to be 
taken out of the national-economic circulation. During a 
two-year period almost 11,000 farmstead-type homes, 
1500 apartments, and many social-type facilities were 
built in Kiev Oblast for the evacuees. 

7 December 1989 



We are now working to make sure that the transition is 
made in the sphere of land utilization from administra¬ 
tive to predominantly economic methods of running 
things. The following task has been assigned: with the 
help of the new economic mechanism, to make the 
protection of nature advantageous for every enterprise 
and for every working person. 

[Correspondents] Democratization has opened up room 
for people’s national self-awareness to grow. At the same 
time, problems of inter-ethnic relations and problems of 
developing a national culture have also been revealed.... 

[V.A. Masol] The successes achieved during the years of 
the Soviet regime in solving the nationality problem are 
indisputable. Nevertheless, as noted in the CPSU’s draft 
platform on nationality policy under present-day condi¬ 
tions, the dynamism and successes which characterized 
the initial phase in the formation of our multi-national 
state were essentially lost and interrupted by the depar¬ 
ture from Leninist principles during the following 

We have provided an honest and principled evaluation 
of the deformations in the nationality policy and their 
consequences. Taking this experience into account, we 
have adopted practical measures aimed at consistently 
implementing the Leninist principles of national con¬ 
struction. We wish, first of all, to create an integrated 
concept of the development of the Ukrainian people’s 
spiritual culture. It will consist of a comprehensive 
program for developing the Ukrainian national culture 
for the period to the year 2005, a plan for which is now 
in preparation. Also provided are measures that will 
allow us to preserve and multiply the cultural potential, 
to provide for the multi-faceted development of the 
Ukrainian language and literature, as well as all types of 
art and folk creativity. 

A widespread public resonance was evoked by the 
founding in our republic of the Society for the Ukrainian 
Language imeni Taras Shevchenko, which set as its 
principal task assisting in the development of the native 
language, as well as forming a feeling of love for the 
Ukrainian language and culture. In order to improve 
patriotic and international education, the Druzhba 
republic-level, cultural and educational center was 
founded. We intend to open centers in all oblasts. 

Legislation is being improved concerning matters of 
national relations and the development of national cul¬ 
tures. UkSSR Draft Laws and additions to the UkSSR 
Constitution are being prepared on granting Ukrainian 
the status of the state language, along with fully ensuring 
the principle of the national-Russian bilingualism, the 
free development and functioning of the languages of the 
national minorities living on the territory of our 

Like Kazakhstan, the Ukraine is a multi-national and 
multi-lingual republic. Members of more than 100 
nationalities live here. We are concerned that all of them 
have the opportunity to realize their national-cultural 
aspirations, particularly in the sphere of education, folk 
creativity, and the creation of focuses of culture. In 
places where national-ethnic groups live compactly 210 
schools are already in operation with instruction being 
given in the appropriate languages. More than 450 
departments for studying the languages of the national 
minorities have been opened in this republic’s educa¬ 
tional institutions. 

Of course, there are also problems in matters of inter¬ 
ethnic relations. In solving them, we proceed from the 
point that each person, no matter what nationality he 
may belong to, should feel himself to be a citizen with 
equal rights everywhere. In this regard, the example of 
the more than 7,000 Kazakhs living in the Ukraine is 
indicative. Of these, 42 have been elected as deputies of 
oblast, city, and village soviets. We are also striving to 
create favorable conditions for study in the Ukraine by 
Kazakh as well as other students. At VUZ’s where 600 
students from the fraternal republics are enrolled there 
are functioning Kazakh vocal and dance ensembles. 

Life is rich with many bright manifestations of friend¬ 
ship between peoples, the roots of which go back to the 
distant past. We are proud that the great son of the 
Ukraine—T.G. Shevchenko—stood at its sources. 

Contacts between the Ukraine and Kazakhstan in the 
field of culture, as well as economics, are developing 
fruitfully; the foremost place in this process undoubtedly 
belongs to such a form of cultural exchange as the 
Literature and Art Days. Last September the Days of 
Kazakh Literature and Art were held successfully in the 
Ukraine. Now we have prepared with great responsi¬ 
bility for the Days of our literature and art in Kaza¬ 
khstan. I’d like to wish the peoples of fraternal Kaza¬ 
khstan great successes in solving their complex 
socioeconomic problems. 



7 December 1989 


Preparation of Law on Leasing 

Improvements in Laws On Leasing Suggested 

904B0022A Moscow VESTNIK AGROPROMA in 
Russian No 36, 1 Sep 89 pp 2-3 

[Article by V. Gusakov, matriculant for doctor’s degree, 
All-Union Scientific Research Institute of Agricultural 
Economics: “What Should the Law On Leasing Be 

[Text] The ukase of the Presidium of the USSR Supreme 
Soviet entitled ‘‘On Leasing and Lease Relationships in 
the USSR” has already been in operation for several 
months. Beyond any doubt, this document has laid the 
foundation for competent and dynamic development of the 
diverse forms of organizational-production relationships, 
commencing with an individual peasant farm and ending 
with state and cooperative enterprises and their associa¬ 
tions. Nevertheless, the ukase has not solved all of the 
problems that have accumulated, problems associated 
with lease relationships. This is why many are resting 
their hopes with the law on leasing which is now in 

Our readers are turning to the editorial board with recom¬ 
mendations and changes concerning the status of this 
future legal document. 

Let us hear now from V. Gusakov, a matriculant for a 
doctor’s degree at VNIESKh [All-Union Scientific 
Research Institute of Agricultural Science]: 

The ukase entitled “On Leasing and Lease Relationships 
in the USSR” is the first legal document published over 
the past decade that touches upon the problems of 
ownership. And it would be wrong to expect that it 
would examine all of the peculiarities and nuances 
associated with the development of leases in actual 
practice. This is why, at the present time, during the 
period devoted to preparing the law on leases, I believe 
that we should take into account the experience accumu¬ 
lated in the development of lease relationships and 
analyze the status of the existing ukase. This will make it 
possible to prepare a thoroughly considered and weighed 
legal document. 

It is believed that a declaration with regard to increasing 
the responsibility of leaseholders for achieving high final 
results should ideally be avoided in the preamble to the 
law. This thought was borrowed from the arsenal of old 
administrative methods. The economic methods and 
levers are called upon to display such responsibility and 
interest under the new conditions. Moreover, as experi¬ 
ence has shown, an important reason why the kolkhozes 
and sovkhozes failed earlier to raise their production 
volumes and work efficiency lay in the orientation of 
plans handed down from above towards a maximum 
economic effect, plans which were not always supported 

by the resources allocated. Thus the plans turned out to 
be unrealistic. Any economic executive is aware that it is 
possible to produce as much as the available resources 
and means will allow. 

Production maximization without taking into account 
the true factors involved always results in an exhaustion 
of the production potential. It is no accident that expe¬ 
rienced specialists always base their optimum produc¬ 
tion level upon management. Its optimization attaches 
stability to the economic system, as well as the required 
dynamics and balance for its development and it 
strengthens the production-potential base of an enter¬ 

In the second point of the ukase, it is stated that 
leaseholders can be state organs or representatives to the 
USSR Council of Ministers or to a union or autonomous 
republic. However, many scientists and practical 
workers believe that within the country there must be 
one master for the land and other means of production— 
the people and in the form of fully competent represen¬ 
tatives—soviets of people’s deputies. During the March 
(1989) Plenum of the CPSU Central Committee, 
emphasis was also placed upon the fact that the soviets of 
people’s deputies and organs of Soviet authority must 
possess real and not proclaimed rights. To place them 
under the control of administrative organs— 
departments and ministries—is tantamount to deliber¬ 
ately assuming retention of the administrative- 
hierarchical system presently reigning over commodity 
producers, as well as strict control and command 
methods. The soviets of worker’s deputies permit a 
departure from administrative dictates and this must be 
recognized in a legislative manner. The power must 
belong to them. Thus, from a logical standpoint lease 
relationships should be controlled and regulated by the 
USSR Supreme Soviet, which from a legislative stand¬ 
point alone can prevent violations and distortions and 
create the conditions required for the establishment and 
spread of new forms. 

The system for regulating lease relationships is defined 
in the ukase. In particular, it is stated that leaseholders 
can be kolkhozes, sovkhozes, various enterprises, orga¬ 
nizations and individual executive agents. But in the 
process it is not stipulated that the kolkhozes and 
sovkhozes are not owners of land or water and other 
resources. They are held in the status of leaseholders of 
land, in like manner as working peasant farms. And they 
are not authorized to wilfully transfer land on the basis 
of a second lease without the consent of the true owner of 
the resource—the soviets of people’s deputies. 

If it is assumed that the kolkhozes and sovkhozes 
received such authorization from the soviets, then in 
such a case the sub-leaseholders (intraorganizational 
leasing and contractual collectives and individual users) 
must make a lease payment to the kolkhozes and 
sovkhozes, not in the full amount but only a portion of it, 
a payment which will compensate for the enterprise’s 
expenses for improving the land. The principal part of 

7 December 1989 



the payment, similar to a tax on income from economic 
operations, must be assigned to the budget of the soviets. 

When mastering an intraorganizational lease or a sub¬ 
lease, the danger exists of voluntarism being manifested 
by the leaders and specialists of enterprises and unjusti¬ 
fied restrictions being imposed upon commodity pro¬ 
ducers in selecting their operational direction, estab¬ 
lishing their production tasks or defining that portion of 
their income to be used for consumption. Numerous 
incidents involving the suppression of leases indicate a 
need for more thought to be given to this process. 
Through fault on the part of administrative workers, a 
lease may be authorized or prohibited, executive agents 
may be assigned unsound tasks and not only surplus 
product but also a portion of that which is needed may 
be taken away from leaseholders, thus effectively cutting 
back their wages. In many areas, the administrative staff 
appears as an obstacle in the path of progressive changes. 

The law should clearly define the system to be employed 
for an intraorganizational lease, the norms for regulating 
a sub-contract should be included and such concepts as 
“property,” “possession” and “use” should be clearly 

Actually, in establishing a lease payment for land and 
taking into account its quality and location, willingly or 
unwillingly we recognize the need for land value and 
price. In introducing the practice of purchase-sales of the 
means of production (fixed and working), it is hardly 
proper to exclude from this a land list. If after complete 
payment for value, all means of production become the 
property of the leaseholder, then the question might well 
be asked: why cannot this be extended to land, if not 
completely then at least partially, by assigning it for 
example for permanent use? Such practice is employed 
for example in the case of private plots, the use of which 
is not limited by periods. A breakdown between the right 
of management and ownership can severely restrain 
production efficiency and attach to labor a temporary 
business-like character. 

The establishment of prices for land will reduce the 
claims of many large agricultural enterprises for an 
expansion in their land utilization. It is no secret that 
while utilizing their land in an insufficiently efficient 
manner and at times even handling it in a barbarian 
fashion (neglect, contamination and others), the 
kolkhozes and sovkhozes nevertheless are continuing to 
hold onto vast areas and in this manner they are causing 
irreparable harm to the state. 

In my opinion, one point of the ukase, in which it is 
stated that peasants can be presented with tracts the 
dimensions of which are established in conformity with 
the legislation of union republics, is open for discussion. 
Let us reason as follows: does it make sense to restrict the 
size of tracts in a directive manner? The size of a tract of 
land in each specific case, similar to production volumes, 
can be limited only by the potential of a peasant, his 

individual labor and by the labor of able-bodied mem¬ 
bers of his family who have voluntarily expressed a 
desire to engage in peasant work, by the availability of 
material resources and funds, by taxes and a lease 
payment, by the prices for agricultural products and by 
demand and saturation of the market. That is, economic 
levers and cost accounting relationships and stimuli and 
not administrative methods must be placed in operation. 

Appropriate conditions must be created for those who 
wish to engage in peasant work. For it is precisely with 
the peasant farms and their associations that the hopes 
for enlivening the agrarian economy and providing it 
with diversity and competitive stability are associated to 
a large degree. Thus a need exists for legislative measures 
directed towards the formation of conditions for the 
normal functioning of working peasant farms and their 
productive cooperative associations and the formation 
of a network of service cooperatives, for the processing 
and sale of products and for the financing and crediting 
of private and family peasant production. This will make 
it possible to avoid a monopolistic influence on the 
producers of state service and processing enterprises and 
organizations and to raise both systems (state and coop¬ 
erative) to a qualitatively new level, one which will 
satisfy the diverse requirements of commodity pro¬ 

Unfortunately, when preparing the ukase on leasing it 
was not possible to avoid certain administrative intona¬ 
tions that infringe upon the interests of peasant farms. 
Thus, in Point 9 it is stated that in the case of an 
intraorganizational lease the question concerning a 
change or dissolution of an agreement is resolved by the 
council of a labor collective. However, it often happens 
that the councils of labor collectives include many indi¬ 
viduals who carry out the interests of the administration. 
They can scarcely endure seeing a public (and often 
backward) production operation standing alongside a 
leading and efficient peasant farm. It is believed that 
only soviets of people’s deputies can be masters of the 
situations on their territories. 

In my opinion, the freedom and independence of a lessee 
must not be limited by the conditions of an agreement or 
by the interests of the lessor. The timely and complete 
delivery of a lease payment for land and taxes, taking 
into account the profit obtained, must release a peasant 
completely from any and all subjective instructions and 
orders, provided his work is not in conflict with the 
norms for socialist management. 

The future law should reflect such important aspects as 
the regulation of rights when transferring a lease agree¬ 
ment over to another party, reimbursement for expenses 
sustained, the system to be employed for the formation 
and development of a network of cooperative service 
organizations and others. The problems concerned with 
the establishment of peasant farms based upon family 
and allied labor collectives and their associations must 
also be touched upon. The specifics of agriculture must 
be taken into account on a more extensive basis. 



7 December 1989 

Legal Problems Interfere With Implementation of 

904B0022B Moscow VESTNIK AGROPROM A in 
Russian No 40, 29 Sep 89 p 2 

[Article by 1. Kostik, scientific worker and Candidate of 
Legal Sciences at the All-Union Scientific Research 
Institute of the USSR Ministry of Internal Affairs: 
“Legal Outlines for an Intraorganizational Lease”] 

[Text] In the system of measures for improving produc¬ 
tion relationships within the APK [agro-industrial com¬ 
plex], greater importance is being attached to leasing. A 
draft law on leasing and leasing relationships is in 
preparation. However, a need exists for the scientific 
development of the entire complex of legal problems 
associated with its implementation. 

Intraorganizational leasing is being employed rather 
extensively. But it has not produced the desired results 
within the framework of the existing economic mecha¬ 
nism of the APK. This is apparent from the growth in 
prices at kolkhoz markets compared to the level for last 
year. Rather convincing in this regard is the fact that the 
labor productivity of lessees and the cropping power for 
grain crops and potatoes in leasing subunits in a number 
of oblasts, krays and autonomous republics of the 
RSFSR have turned out to be lower on the whole than at 
kolkhozes or sovkhozes. Nor has the introduction of 
leasing relationships brought about any noticeable 
reductions in losses, shortages or in the embezzlement of 
agricultural products. 

One reason for this—serious flaws in the legal regulation 
of leasing relationships. The radical economic reform 
signifies a forward step taken in the legal establishment 
of new economic mechanisms. The legal approach must 
be based upon the essence of the normative system that 
regulates all aspects of intraorganizational leasing. 

Almost 21,600 kolkhozes and sovkhozes are presently 
employing leasing principles in their practical work. 
Leasing relationships are being employed most exten¬ 
sively in Kazakhstan, the Ukraine and in Voronezh, 
Orel, Tula and other oblasts of the RSFSR. The weak 
aspects and shortcomings of intraorganizational leasing 
stand out rather clearly in all regions in which it has been 
mastered in an active manner. Many of these factors 
have turned out to be typical and common in nature. 

The principal document regulating the relationships of a 
lessor (sovkhoz or kolkhoz administration) with lessees 
is a lease agreement. It is usually concluded for a brief 
period, at best for 5 years. The actual agreement, in 
terms of both the lease period and also the amount of the 
lease payment, can be changed unilaterally by the admin¬ 
istration. Quite often the agreements do not set forth the 
specific conditions for material responsibility on the part 
of the administration or the lessee. The farms retain the 
function of planning the principal product nomenclature 
and production volume for the leasing subunits. 

As a rule, a lease agreement does not transform a lessee 
and lessor into equal partners who accept mutual obli¬ 
gations and mutual economic responsibility based upon 
commodity-money relationships. The administration of 
a farm unilaterally dictates the conditions of an agree¬ 
ment and actually bears no responsibility for any viola¬ 
tions of the agreement. At times, this absence of respon¬ 
sibility in favor of the lessor is spelled out in the 
agreement itself Indeed the leaders of a farm can not 
always supply the lessees with all of the needed resources 
(for example, the supplying of fuel, spare parts and 
mineral fertilizer). 

The lease contract being employed in managerial prac¬ 
tice is a special purpose lease that calls for a farm 
administration to issue a production program to collec¬ 
tives of lessees. This is a typical feature of existing lease 
relationships. The anti-expenditure mechanism is mas¬ 
tered more rapidly in lease collectives, however a lessee 
does not truly become the master of production organi- 
ption or of its results. The only source for increasing his 
income is labor intensification by extending the working 
time limits beyond the limits set forth in the norms for 
labor legislation and by lowering material expenditures. 
It is by no means an accident that the greatest results 
from a lease contract are achieved on low profitability 
and unprofitable farms, where the production expendi¬ 
tures are high and there are more non-productive 

The planning of production costs in the form of 
accounting prices infringes upon the interests of leasing 
subunits and leaves room for manipulating these prices 
in the interest of creating a reserve for liquidating losses 
from economic operations in other subunits. But a 
lowered accounting price level, at which the economic 
relationships between a farm and leasing collectives are 
held, not only reflects a desire on the part of the 
administration to transfer reimbursement for a portion 
of the losses caused by mismanagement to the shoulders 
of the lessee. Quite often the leadership of farms has not 
other levers available, since it must implement plans for 
the production of goods that were issued at a higher level 
not only without taking into account the cost accounting 
relationships but also without considering the conditions 
and economic obligations. 

Because of the above, it turns out in actual practice that 
a lease agreement is a formal document that does not 
affect the economic relationships between workers and 
an administration. A slightly improved conventional 
contract, with retention of the traditional system of 
administrative subordination, is being issued in all areas 
as a lease contract. 

Any other development of relationships can only 
summon forth resistance on the part of a farm adminis¬ 
tration and this is borne out by impressive objective 
factors. Despite political appeals and active publicizing 
of leases, the system of planned state purchases, trans¬ 
formed into state orders, has not been abolished. Nor has 
anybody abolished the dependence of a kolkhoz or 

7 December 1989 



sovkhoz administration upon the party, soviet or eco¬ 
nomic organs of administration. 

Thus a lack of desire or maliciousness on the part of farm 
leaders or specialists cannot be blamed as the reason for 
a slow-down in the use of intraorganizational leases. 
There is an objective economic dependence which pro¬ 
duces negative results. A slow-down expresses a lack of 
conformity of the ideals of leasing to the existing orga¬ 
nizational-legal forms for management. This is the result 
of an attempt to accustom leasing relationships to the 
command-administrative system for the management of 
agricultural production. 

The effect of a slow-down was initially embodied in the 
very legal regulation for leasing relationships. The nor¬ 
mative documents which regulate an intraorganizational 
lease only proclaim a partnership in the management of 
farms and lessees, while actually strengthening the dom¬ 
inant status of a lessor. All of the existing recommenda¬ 
tions for a lease contract and the normative documents, 
including the ukase entitled “On Leases and Lease 
Relationships in the USSR,” were developed in a 
manner such that the administration of farms and lessees 
operate under unequal economic and legal conditions. 
Moreover, their sphere of regulation does not go beyond 
the framework of production relationships on farms and 
hence the documents themselves do not restrict the 
influence of the commando-administrative system in the 
APK [agro-industrial complex]. In view of this fact, an 
intraorganizational lease does not have a legal basis 
capable of serving as an instrument for implementing the 
party’s agrarian policies. 

It is by no means an accident, despite the extensive 
spread of intraorganizational leasing, that the produc¬ 
tion of agricultural products and labor productivity are 
increasing at clearly low rates and that the anti¬ 
expenditure mechanism is operating poorly. Integration 
and cooperation among lessees are being carried out by a 
kolkhoz or sovkhoz, which is incapable in its operations 
of selling products, forming a wage fund or planning 
socio-economic development. Thus the “integrator” 
cannot avoid coercion or restriction of the rights of a 
lessee. Beyond any doubt, the sources for a slow-down 
are to be found in the organizational-legal principles of 
farm operations. And the principles of complete cost 
accounting for economic independence and self- 
government, in the form of an intraorganizational lease, 
cannot be realized owing to the absence of farm inde¬ 
pendence and also because cost accounting has not been 
disseminated throughout the entire network for the 
movement of agricultural products from the producer to 
the consumer. 

In order for a genuine and zealous master in the form of 
a lessee to be integrated with a collective farm on the 
basis of socialist ownership, in order to motivate an 
individual by strengthening his status in production 
relationships and in order to achieve true democratiza¬ 
tion not only of the economy but also of society on the 
whole through a lease contract, then the kolkhozes and 

sovkhozes must be given the right to determine indepen¬ 
dently their production program and to accept a state 
order exclusively on a voluntary basis. Until this is done, 
there will be no return from capital investments and the 
state will not realize the results expected. 

As mentioned by M.S. Gorbachev during the March 
(1989) Plenum of the CPSU Central Committee, we 
must seek out the sources of the present critical situation 
in the rural areas and in the country’s food supply and 
find methods for correcting it. In view of the fact that the 
legal regulation of leasing relationships must reach a 
level which predetermines a radical change in the 
existing intraorganizational relationships, it means very 
little to state that in previous years the agrarian policies 
were implemented without taking into account the need 
for improving the production-economic relationships. 
Importance is attached to soberly evaluating the inability 
of the entire administrative structure and the RAPO 
[rayon agro-industrial association] to change the situa¬ 
tion for the better. 

It is believed that the shortcomings in the practice of 
administering agricultural production are expressed 
most clearly in the tremendous losses in products pro¬ 
duced. Experience underscores the fact that planning 
from below should never be excluded from the sphere of 
production relationships, as is being done in the com¬ 
mand-administrative system. The increasing require¬ 
ments for converting over to planning, based upon the 
criteria for protecting the products produced, could not 
be realized by the USSR Gosagroprom system. The 
shortcomings in the practical use of the RAPO authority 
derived from the fact that these organizational forms of 
administration were mechanically combined with obso¬ 
lete and out-of-date methods for planning “from the 
level achieved,” thanks to which the most important 
channel for losses in agricultural products—lack of 
development of the production and social infrastructure 
within the APK framework—^was reproduced in the 
branch plans for enterprises and organizations that func¬ 
tion on territory lying within the jurisdiction of rayon 
soviets. These organs of power did not possess and do 
not possess real authority in the area of planning. Even 
the present search for new organizational structures 
within the APK is still not associated seriously with the 
authority of the rayon soviets. For its part, the oblast and 
kray soviet also did not possess any real potential for 
exerting a correcting influence on the economic activities 
of APK enterprises, in the interest of exerting their 
authority for ensuring protection for agricultural prod¬ 

The impression has formed that we are still not suffi¬ 
ciently aware of the harm being caused by the absence of 
an all-round approach for carrying out the reform in 
economic relationships within the APK. The functions 
of the disbanded USSR Gosagroprom have not been 
liquidated or changed, but rather they have simply been 
dispersed among the remaining central economic depart¬ 



7 December 1989 

Work is going forward in connection with the creation of 
new integrated agro-industrial formations: combines and 
associations. But old approaches are being retained in 
the new organizational structures. And this means that, 
one way or another, mismanagement in the processing 
industry is being covered by the operational results of the 
kolkhozes and sovkhozes. Lease relationships in the 
sphere devoted to the processing of agricultural products 
are taking hold in an unjustifiably slow manner. In this 
branch, where the losses for several of its types of 
products reach 30-50 percent, only a few dozen enter¬ 
prises are operating under leasing conditions. In the face 
of a very low level of mechanization for manual labor, 
which is on the order of40-60 percent for some branches 
and production operations, the modernization and 
replacement of obsolete and worn out equipment are 
being carried out in an extremely slow manner. 

Under these conditions, the radical economic reform 
requires detailed reinforcement in the law governing 
leases and leasing relationships, in other laws which 
regulate production relationships and in the principles 
for rejecting the system of non-economic coercion of 
farms and for establishing guarantees for converting over 
to APK administration based upon cost accounting. The 
expenditure tendencies in the APK can be halted only by 
an administrative mechanism which operates through 
the interests, independence and responsibility of collec¬ 
tives, an equivalent payment exchange and self-control 
over expenditures, which combines democratic princi¬ 
ples with the centralized regulation of production. Thus 
it would be ideal to establish simultaneously a complex 
of legal measures which would be capable of ensuring 
success in intraorganizational leasing. It is believed that 
the following is necessary in order to accomplish this: 

—^approve a lease form for the possession, use and 
disposal of land on a general basis. Towards this end, 
the law governing leases and leasing relationships 
must establish the fact that kolkhozes and sovkhozes 
lease the land from its owners—the local soviets; 

—the parameters for a lease agreement between a farm 
and a local soviet must be clearly established in the 
law governing leases. The right of a local organ of 
power to impose a production program upon a farm 
using administrative methods must be eliminated. 
The system of judicial procedures as outlined in the 
law must provide a guarantee that the farms will 
operate under conditions of complete cost accounting. 
The law must guarantee that a farm will be able to 
select its partners and the forms for the sale of its 

—in view of the fact that the old approaches for planning 
agricultural production cannot be changed without 
first establishing the principle of voluntariness in the 
acceptance by a farm of a state order for the sale of 
agricultural products, the practice of assigning state 
orders to farms through the allotment of planned tasks 
to the rayons must be abolished; 

—the law must not proclaim but rather it must establish 
the principles for converting over to economic 
methods of management and in the absence of incom¬ 
plete decisions and references to subsequent govern¬ 
mental regulation of specific problems—through state 
regulation of the limits for planned (purchase) prices 
and tax rates and the presentation of an interest rate 
for bank credit in order to encourage the production of 
the agricultural products needed for the state. In the 
interest of the consistent implementation of this prin¬ 
ciple, work must commence immediately on the prep¬ 
aration of a law governing the principles of state 
planning for economic and social development in the 
USSR. A review should be undertaken of the work 
being carried out on this draft law as a condition for 
determining the criteria for changing the functions of 
ministries and departments, including those of a gen¬ 
eral economic nature; 

—^to ensure inclusion in the laws governing leases and 
local self-government the right of local soviets to turn 
over the land of low profitability and unprofitable 
farms on a lease basis directly to the collectives of 
brigades, teams and families which could then, at their 
own discretion, cooperate on a voluntary basis or form 
leaseholder unions, including within the limits of 
farms reformed by local authorities; 

—importance is being attached at the present time, in 
the laws governing leasing, enterprises, cooperation 
and local self-government, to establishing those prin¬ 
ciples of planning which eliminate the command- 
administrative system. “Equally tense” plans must not 
be issued from the center, nor should all- 
encompassing so-called scientifically sound economic 
norms be established. The goal of feeding the country, 
pursued unsuccessfully using these measures, is prac¬ 
ticable only with complete cost accounting, freedom 
for the commodity producer and a thorough taking 
into account of the material interests of the labor 
collectives by the collectives themselves; 

—^the primary leasing subunits of farms must be recog¬ 
nized as socialist commodity producers and as farms 
for means of production and products produced and 
for all monetary earnings. The law must also contain 
adequate guarantees for protecting the status of the 
primary leasing subunits as independent cost 
accounting units, which are establishing their own 
interrelationships with partners for economic opera¬ 
tions on a contractual basis. 

The law governing leases should establish the principles 
for the wages of farm leaders and specialists from the 
cost accounting income of lessees, as clearly expressed in 
the system of judicial procedures of the given law. 

In order to ensure the effectiveness of an intraorganiza¬ 
tional lease, substantial importance is attached to 
strengthening in the law the judicial rules for the estab¬ 
lishment of accounting (contractual) prices. A legislator 
must not yield this important aspect of cost accounting 

7 December 1989 



to departmental instructions. Legal guarantees are 
needed to ensure that these prices will on the one hand 
ensure material interest by the leasing subunits in 
achieving efficient use of production resources and, on 
the other, implementing the cost accounting principles 
under conditions of self-recoupment and self-fmancing. 

The task of achieving complete cost accounting opera¬ 
tions among kolkhozes and sovkhozes also assumes the 
legislative establishment of lease relationships 
throughout the entire network of APK enterprises, rela¬ 
tionships which will ensure the movement of agricultural 
products from the producer to the consumer. The rela¬ 
tionships between them must be based upon a contract, 
cost accounting and upon absolute application of the 
principle of complete and immediate reimbursement for 
material losses occurring as a result of failure to observe 
contractual relationships. 

The realization in the law on leasing of these positions 
will define the place and role of lease relationships 
within the agricultural system and the entire APK on a 
genuine legal basis, one which will ensure cost 
accounting that is based upon unity and the interrela¬ 
tionship of economic interests at the level of farms and 
their primary subunits. If the kolkhozes and sovkhozes 
begin to live on their earned resources, then Gosplan and 
other departments will be better able to force them to 
produce goods in greater quantities, of better quality and 
with fewer expenditures. And then, in the absence of 
“concern” on the part of the command-administrative 
system, the country will be able to purchase the types and 
quantities of products needed for the establishment of a 
stable and adequate food fund. 

A complex of such legal measures will eliminate the lack 
of conformity of the ideals of leasing to the existing 
organizational-legal forms of management, as expressed 
in the antagonism between a lessor and a lessee. It 
ensures legal protection for the new method of labor 
organization, which frees the initiative of workers, it 
ensures true participation by workers and kolkhoz mem¬ 
bers in administering production, it provides broad 
opportunities for displaying independence, enterprise 
and initiative and for overcoming the alienation of 
workers from ownership and it confirms the new forms 
for realizing the rights of an owner through cost 
accounting relationships and a self-regulating economy. 


Krasnodar First Secretary on Lack of Progress in 

904B0045A Krasnodar SELSKIYE ZORI in Russian 
No 8, Aug 89 pp 4-11 

[Article by USSR People’s Deputy I. Polozkov, first 
secretary of the Krasnodar Kray CPSU Committee: 
“Concerning Food Sufficiency”] 

[Text] The process of revolutionary renewal of Soviet 
society, which was started on the party’s initiative, has 
entered a new, practical stage. The political and eco¬ 
nomic reforms are deepening, democratization of our 
life is expanding, and the activity of all social forces is 
growing. The Congress of USSR People’s Deputies, 
which opened an essentially new, brilliant page in the 
history of our motherland, was a persuasive demonstra¬ 
tion of real perestroyka. 

Many socioeconomic problems are concentrated today 
at the focus of perestroyka. But the most significant of 
them is the food problem, which was recognized to be the 
sorest point of our economy by the 19th All-Union Party 
Conference. It was to solving this problem that the 
March (1989) CPSU Central Committee Plenum was 
dedicated. It developed a new agrarian policy, one cor¬ 
responding to the period of perestroyka. Its implemen¬ 
tation is aimed at raising the agroindustrial complex to a 
qualitatively new rung of development in quick time. 

The country’s food supply is growing. But it is unable to 
keep up even with population growth. We are behind 
many developed countries in per-capita consumption of 
the principal foodstuffs. Measures implemented thus far 
to elevate agriculture have resulted in certain positive 
changes, but they have not had a systemic and integrated 
nature, and therefore they have not had a significant 
influence on stable development of the country’s agricul¬ 


Around 20 billion rubles, or 72 percent of capital invest¬ 
ments of the entire period since the October Revolution, 
have been invested into our kray’s agrarian sector in the 
last 20 years. However, the significant sums were frit¬ 
tered away on the creation of the offices and bases of 
Selkhoztekhnika [Agricultural Equipment Association], 
Transselkhoztekhnika [not further identified], Selenergo 
[not further identified], MSOs [interkolkhoz construc¬ 
tion organizations] and many other organizations whose 
activities not only failed to promote an increase in the 
earth’s life-giving forces and improvement of the peas¬ 
antry’s working conditions, but frequently even worked 
against them. 

All of this brought about the spending mentality and 
failed to provide an adequate return. In 20 years, gross 
production in the kray increased by only 43 percent. 
Moreover while in the 9th Five-Year Plan the increment 
was 17 percent, it was only 7 percent in the 10th, 11 in 
the 11th and around 6 in the present. As of the beginning 
of the 1980s the profitability of kolkhozes and sovkhozes 
decreased from 49 to 13 percent. The output-capital 
ratio plummeted. A parasitic psychology entrenched 
itself, and it became no longer shameful to live on the 

For example the Rossiya Kolkhoz in Abinskiy Rayon is 
operating normally, and it is living on its own money. 
Annual agricultural production here is 14,300 rubles per 
person, and profitability was raised to 57.5 percent. 



7 December 1989 

In the meantime, the Rodina Kolkhoz of the same rayon 
has been in debt for a long time. Its total loans have 
exceeded 8 million rubles. It is only owing to subsidies 
that it is able to cover its losses and bring its profitability 
up to 17 percent. Labor productivity is half that of its 
neighbor. At the same time the average monthly pay of 
the chairmen and main specialists of both kolkhozes is 
the same. Nor are production results having an effect on 
the earnings of machine operators and milkmaids, whose 
monthly incomes are 243 and 252 rubles respectively. 

The same situation is observed in a number of kolkhozes 
and sovkhozes of Beloglinskiy, Belorechenskiy, 
Novopokroyskiy, Teuchezhskiy and Shovgenovskiy 
rayons, and in Goryachiy Klyuch and Krasnodar, where 
despite millions of debt, average monthly pay is not any 
less than in strong farms living on earned money. 

The scale of dependency is also illustrated by the fact 
that 250 kolkhozes and sovkhozes and over 170 pro¬ 
cessing and service enterprises have accumulated 740 
million rubles of deferred indebtedness to the bank. 
Extinguishment of this debt would require 30 years at 
the present rate. Over a hundred farms are unable to 
conduct expanded reproduction without subsidies, while 
57 processing, construction and trade enterprises and 
organizations of the agroindustrial complex are oper¬ 
ating at a loss. And this is just in the Kuban! 

Of course, agricultural production in the kray is not 
marching in place. This made it possible to significantly 
increase the volume of agricultural products delivered to 
union republic funds, and to raise per-capita consump¬ 
tion of meat and meat products by 41 percent, milk and 
dairy products by 4, eggs by 65, sugar by 27 and 
vegetables by 6 percent. 

However, we fall short of sensible nutrition norms by 11 
kilograms of meat, 97 of milk, 21 of vegetables, 8 of 
fruits and berries, and 24 kilograms of potatoes. We are 
behind both the republic and the union level in relation 
to certain food products. 

The people are often perplexed by the extremely narrow 
assortment of food products and the sharply pronounced 
seasonality of the supply of fruits and vegetables. 
Shameful it may be to admit this, but the stores of our 
southern kray have not offered fresh cucumbers, rad¬ 
ishes, parsley, sorrel, lettuce and other greens for sale for 
over half a year. And in the meantime large amounts of 
heat are dumped by industrial production operations 
into the atmosphere in every city. The low culture of 
trade cannot withstand criticism. 

The agrarian policy developed by the March CPSU 
Central Committee Plenum is directed at satisfying the 
population’s demand in correspondence with sensible 
dimensions of consumption as early as in the next 
five-year plan; this will require increasing production of 
foodstuffs by a minimum of 26-30 percent. 

The integrated program to raise food production in our 
kray is based on fundamentally new production relations 

and on administrative restructuring in the agroindustrial 
complex, on scientifically substantiated farming and 
animal raising systems, on measures to reconstruct and 
reequip processing industry, and on radical measures for 
social improvement of rural areas. In addition to 
increasing deliveries of foodstuffs to union republic 
funds, we are to raise the level of local supply to 
scientifically substantiated nutrition norms. 

With regard for this, food production is to increase in 
our kray by not less than a fhctor of 1.3 by 1995. In this 
case, a decision was made to increase production of 
grain, expressed in terms of accounting weight, to 9 
million tons, oil crops to 750,000 tons, sugar beets to 6.6 
million tons, potatoes to 650,000 tons, vegetables to 1.25 
million tons, fruits and berries to 600,000 tons, meat to 
1 million tons, milk to 2.8 million tons, and eggs to 2.3 
billion units. These indicators are 10-40 percent higher 
than the mean annual level of the 11th Five-Year Plan. 

By 1995 we plan to increase the yield of grain and 
leguminous crops to 45 centners per hectare, sunflower 
to 25, sugar beets to 350, vegetables to 150, potatoes to 
110, and fruits and berries to 100 centners, and there are 
plans to raise the per-hectare yield of feed crops by a 

Especially complex tasks face stock breeders. In order to 
attain a farm production volume that would ensure 
fulfillment of the present, rather sizable state order, even 
assuming it does not increase, which is improbable for 
Krasnodar Kray, and to achieve a local supply rate of 
400 kilograms of milk per capita, calculations show that 
we would need to raise the milk yield by 400 kilograms 
by the end of the next five-year plan, while simulta¬ 
neously increasing the cow herds by 100,000 head in all 
categories of farms. Another way would be to get 4,300 
kilograms of milk from each cow in the existing herd. To 
support the meat program we would need to raise the 
average daily weight gain by not less than a third. Let me 
note in passing that it is extremely important for us to 
double production of organic fertilizers. 

Considering the provisions of the new agrarian policy, 
and heeding the opinions of kolkhozes, sovkhozes, pro¬ 
cessing enterprises, leaseholders and private farms, we 
need to organize extensive development of similar pro¬ 
grams for increasing food production and improving 
food supply to the population in every farm and rayon. 

Haying generalized proposals submitted by local organi¬ 
zations, we intend to approve a kray-wide integrated 
program for increasing food supply at one of the next 
sessions of the kray’s Soviet of People’s Deputies. This 
program will become the basis for the work of the kray 
party organization and of soviet, public and business 
organs in fulfillment of the decisions of the March (1989) 
CPSU Central Committee Plenum. 


The March Plenum defined fundamental transformation 
of economic relations in the countryside as the key issue 

7 December 1989 



of modern agrarian policy. Radical restructuring of prop¬ 
erty relations and of production relations was raised for 
the first time to primary importance among the ways to 
solve economic problems. This marks a change in the 
party’s views on development of the whole economy. 
Unless this problem is solved fundamentally, neither 
capital investments nor new equipment and production 
procedures will have their needed impact. 

What this means is fully realizing Lenin’s idea of acti¬ 
vating the personal interest of peasants, decisively over¬ 
coming their alienation from property and clearing the 
way for independence, initiative and socialist enterprise. 
He who produces must become the proprietor of the land 
and of all other production resources. 

The time has come for every collective to live only on 
earned assets. This will motivate higher production at 
less cost. Interested demand for progressive scientific 
developments, production procedures and varieties, and 
for progressive experience, which has always been 
treated among business-minded people as money in the 
bank, will increase several times over. 

How is this to be achieved? The most effective and 
fastest way, the party Central Committee emphasizes 
and life assures us, is cost accounting, contracting and 
leasing, and real equality in the forms of socialist own¬ 
ership and in the forms of management. 

This is not the first year that the kray party organization 
is working to transform economic relations in the coun¬ 
tryside. Leasing relations are already being introduced 
by around 5,000 production subdivisions and over 500 
kolkhozes and sovkhozes. A third of the farmland, 
around 40 percent of farm animals and almost a billion 
and a half rubles’ worth of productive capital have been 
leased. Assimilation of contracting forms of labor orga¬ 
nization is continuing. 

There are many good examples of the work of leasing 
collectives. Among them are the Zhuk, Buri and Ovsiy- 
enko families from the Kanev Kolkhoz imeni Lenin, 
which harvested 350-400 centners of onions per hectare, 
the Popov team from Beloglinskiy Rayon, which 
attained milk yields of almost 5,000 kilograms, the 
Sharokhin family from Primorsko-Akhtarskiy Rayon 
and the Karkotsenko family from Slavyanskiy Rayon, 
which attained average daily farm animal weight gains 
up in the kilogram range, the Sukhovtsev and Chumanov 
families from the Pobeda Sovkhoz in Temryukskiy 
Rayon, which gathered 115-130 centners of grapes each, 
and many others. 

I think that the most important result of what has been 
done is that while in 1985 there were 44 farms operating 
at a loss, there was not a one in 1988, a year which was 
not any better in the Kuban. 

But were we to assess the scale of introduction of leasing 
relations in our kray today, we would have to say that 
these are just isolated islands, individual examples. We 
do not as yet have a mass transition to the new forms of 

management. Party organizations, executives and spe¬ 
cialists of over a hundred farms are displaying a com¬ 
plete lack of initiative, they are taking a wait-and-see 
position, and they are letting time slip away. 

What are the characteristic errors and mistakes in this 

First of all, in most cases the incompatibility between 
leasing as a new socioeconomic phenomenon and the 
firmly entrenched bureaucratic form of management, 
which is conservative by its nature, is not accounted for. 
Everyone is trying to fit leasing into the framework of the 
old internal structure of the farms and an obsolete 
system of management. 

When the Priazovskiy and Sladkovskiy sovkhozes of 
Slavyanskiy Rayon converted to leasing on their farms, 
they did not even change the structure of their produc¬ 
tion subdivisions. The size of the administrative staff 
remained the same. The tariff wage system and the 
practice of paying advances on the basis of piecework 
norms and rates were retained. And although a purchase 
and sales contract was signed, the economic relations 
inherent to this form of operation did not arise. The end 
result of the work showed that what was going on could 
not be defined in any way as leasing—it was not even a 
variant of contracting. Consequently it is no accident 
that neither farm fulfilled the profit plan last year. 

Second, party committees rarely display opposition to 
executives and specialists who, occasionally misled and 
more often unable to find their place in the new produc¬ 
tion relations but continuing to receive sizable salaries, 
create obstacles to introduction of leasing. Distorting the 
idea itself, they often attach the leasing label to ordinary 
payment on a contract basis, and sometimes even to 
piecework, adding in all kinds of extra payments for 
individual production operations. What I see as the 
objective of party organizations is to help specialists 
realize the irreversibility of the processes occurring in 
the country today, and begin working in a new way—^to 
take their place in contracting and leasing collectives. 
Party organizations must display concern for legal pro¬ 
tection of executives and specialists adopting and imple¬ 
menting business decisions. 

Decisively rejecting as unfounded the divergent point of 
view that the world level could be attained in farming 
and animal husbandry without the presence of highly 
qualified specialists, we are concurrently implementing 
measures to fundamentally change the professional 
training provided to graduates of our VUZes and tekh- 
nikums as well as to personnel in the major occupations, 
and to promote deep mastery of economic knowledge 
and work skills in the new conditions. 

Third, the development of leasing is severely retarded 
when not all subdivisions of the kolkhozes and 
sovkhozes but only a few of them convert to it. Such a 
partial transition brings about an imbalance of interests 
and leads to failure. 



7 December 1989 

I must also emphasize another widespread error over¬ 
looked by party committees—departure from the prin¬ 
ciples of voluntary formation of contracting and leasing 
collectives, and failure to observe their optimum size. 
There are 23 persons in an average leasing collective in 
the kray, while in Korenovskiy Rayon there are 34, in 
Tikhoretskiy and Ust-Labinskiy rayons there are 38, and 
in Sochi there are 40. 

We must of course account for the specific conditions, 
the degree of specialization, technological level and so 
on. But in any case we must create conditions excluding 
wage leveling and the possibility for hiding behind the 
back of a comrade, and conditions ensuring mutual 
control. For example, there are only 12 machine opera¬ 
tors in V. Ya. Pervitskiy’s team, which was the prototype 
of farm leasing and which has already been enjoying 
fabulous results for over a quarter of a century. This is 
perhaps the chief reason why the collective is working 
stably, and why responsibility is not diluted. 

We have now embarked upon wide introduction of 
leasing relations. But frankly speaking the road to leasing 
has not been easy; it has been very rough. You see, 
speaking in Lenin’s words, initially we wanted to “hook 
the interest of the peasant” by converting agricultural 
workers, and primarily executives and specialists, to 
wages based on gross income. It turned out that it was 
not all that difficult to “create” high wages for oneself 
under these conditions. Gross income can be increased 
by raising prices on products and by planting profitable 
crops; and there are many more such channels which do 
nothing to promote growth of agricultural production. 

Then we introduced the first model of cost accounting, 
seeing it almost as a panacea for all of our woes. Until, 
that is, we became practically convinced that with its 
rigid wage standards and other forms of material 
interest, it not only fails to promote release of the 
individual’s creative possibilities and capacities but also 
inhibits the desire to increase production. 

This model failed to withstand criticism, and everyone 
embarked upon introducing a second cost accounting 
model. But it was discovered that even it was not without 
fault. Collectives that had gone over to payment of wages 
on the basis of the remainder principle began cutting 
deductions in support of expansion of production, 
renewal of funds, social improvements and other social 
expenditures, thus swelling their wages. Numerous cases 
exist where labor collectives, executives and specialists 
working on the basis of the second wage model began 
abandoning the practices of introducing phosphorus 
fertilizers into the soil and carrying out protective oper¬ 
ations against pests and diseases, since under these 
conditions the amount of profit, and consequently the 
welfare of the people, was found to be dependent not on 
growth of yield per hectare and not on the gross food 
harvest, but on an apparent savings in the expenses of 
growing the food. But the country needs grain, meat and 
other foodstuffs, and the interests of the rural laborer 
must be directly dependent on increasing production of 

foodstuffs and raising the productivity of the field or 
farm. In a word, his interests must coincide with those of 
the collective and the society as a whole, rather than 
being concentrated only on obtaining profit, important 
though it may be. 

Having endured these stages, we arrived at leasing, 
which in the present stage of development of our rural 
economy is making it possible to achieve the most 
harmonious combination of the interests of the indi¬ 
vidual and society, and to stimulate growth of produc¬ 
tion and of the material interests of the collective. But 
even leasing must be approached responsibly and 

It is very important not to overlook failures in fulfilling 
contract obligations chiefly on the part of the adminis¬ 
tration. There is perhaps nothing to compare them with 
in terms of their destructiveness and the damage they do 
to the reputation of leasing. It is often said that leasing is 
something new, that there are many things which are 
unclear about it, and that there is little experience with 
it; but if that is the case, why has the family contract 
stalled as well? Especially in beet, vegetable, fruit and 
grape farming, in which the shortfall has become 
chronic. Nor is it working in animal husbandry in rayons 
characterized by low indicators. 

Take for example Kavkazskiy Rayon, which plays an 
extremely noticeable role in the kray’s economy, and in 
supplying food to the city of Kropotkin as well. How¬ 
ever, in 6 years of introduction of contracting forms of 
operation in the Kuban, they have not yet reached down 
to many of the local kolkhozes and sovkhozes. And it is 
no accident that last year the rayon was able to fulfill the 
plan for selling vegetables to the state by only 57 percent. 
And this year only 10 family contracts to grow these 
products have been signed, while not a single one has 
been signed in the imeni Kirov, imeni Michurin and 
Rodina kolkhozes. 

The possibilities of the family contract are being poorly 
utilized to grow vegetables in Abinskiy, Apsheronskiy 
and Teuchezhskiy rayons, where their yield does not 
exceed 75 centners per hectare, or to cultivate sugar beets 
in Labinskiy and Koshekhablskiy rayons, and potatoes 
in farms of Belorechenskiy, Severskiy and Oktyabrskiy 
rayons and Goryachiy Klyuch, which are harvesting only 
25-50 centners of tubers each. These rayons have never 
fulfilled the plans for purchasing the above-mentioned 
products in the current five-year plan. 

The kray’s party organizations are striving to attentively 
analyze who or what is hindering introduction of con¬ 
tracting and leasing at each farm. Now that the Pre¬ 
sidium of the USSR Supreme Soviet has adopted the 
ukase on leasing and other decrees, there are no longer 
any external obstacles. 

New product purchase prices and rental rates and a new 
procedure for paying wages out of cost accounting 
income are being introduced beginning next year. The 
principles of forming the state order and increasing the 

7 December 1989 



independence of farms in planning production structure 
and volume and selling their products have been deter¬ 
mined. The main thing today is to fully utilize these 
possibilities in every rayon and farm. 

It is important for specialists of the farms, rayon and 
kray services and scientific research organizations to 
accept much greater responsibility in this matter. We 
hope that by the beginning of the next year they will 
manage to work up the necessary foundation of stan¬ 
dards and provide every kolkhoz and sovkhoz with 
scientifically substantiated recommendations on intro¬ 
ducing the new economic mechanism, and that they will 
propose a number of variants of specific production 
contracts and calculations, and forms of leasing activity. 
That is, that they would help the kolkhozes and 
sovkhozes get leasing under way, and effect a new, 
decisive transition such that leasing principles would be 
utilized not just by individual collectives but by all 
subdivisions, and so that all mutually related cycles 
would fall within leasing relations. The experience of the 
Za Mir i Trud Kolkhoz of Pavlovskiy Rayon and the 
Kolkhoz imeni Kirov of Krasnoarmeyskiy Rayon is a 
good reference point in this regard; it is being widely 
publicized and studied in the kray. 

The Central Committee plenum posed the task of 
clearing a wide path for the most diverse forms of 
business management in the agrarian sector. There is 
something that must be said in this connection. An 
overblown notion is going around today that kolkhozes 
and sovkhozes have outlived their usefulness and that 
they are incapable of feeding the country. What is 
ignored intentionally or unintentionally in this case is 
the fact that for known reasons, the economic mecha¬ 
nism that had been created was unable to fully reveal the 
potentials embodied within the nature of the collective 
farm. A mass of examples in which kolkhozes enjoy good 
production indicators, are profitable, and possess large 
amounts of their own money even in the grip of author¬ 
itarian methods of management, ruinous commodity 
exchange and tyrannical supply practices, and in which 
growth of the number of kolkhoz farmers and improve¬ 
ments in villages and farmsteads are becoming the 
indicator by which the attitude of the people toward 
their farm is being judged, are discounted. 

But if we consider world experience in large-scale agri¬ 
cultural production in developed capitalist countries, it 
becomes quite obvious that small farms are operating 
wastefully or they are being transformed into “natural” 
or “family” farms, in which the farmer receives his 
principal income not from agricultural labor but from 
earnings on the side. Concurrently it is the large farms 
that are becoming increasingly more responsible for the 
growth in commodity production. This is illustrated well 
in Anatoliy Slutskiy’s article “Facts and Myths,” pub¬ 
lished in this year’s 1 July issue of SOVETSKAYA 
ROSSIYA. Even the experience of neighboring Czecho¬ 
slovakia, in which the food problem has been completely 
solved primarily through state farms, should teach us 

If we consider our own kray, then we would find that 
among all forms of management, whether we are talking 
about industry, construction or agriculture, kolkhozes 
remain the economically strongest. 

One of the clear examples is Pobeda Kolkhoz, Kanevskiy 
Rayon. Its collective of 3,000 workers produces 45,000 
tons of grain, 66,000 tons of sugar beets, 4,500 tons of 
sunflower, 4,800 tons of meat and 16,800 tons of milk 
each year on 19,000 hectares of farmland. This single 
kolkhoz provides meat and milk to a city with a popu¬ 
lation of 40,000-50,000, and grain to a population of 
200,000. The profitability of this stably developing farm 
is 60 percent, it has more than 30 million in unencum¬ 
bered funds in its account, and the average monthly pay 
of kolkhoz farmers is 338 rubles. The housing, cultural 
and personal needs of the people are being met thought¬ 
fully. Need we doubt the principle of organization and 
the very existence of such a kolkhoz? This question 
simply never comes up among kolkhoz farmers of 
Pobeda Kolkhoz. 

Nor are any such thoughts entertained by laborers of 
Ust-Labinskiy Rayon’s Kuban Kolkhoz, foasnoarmey- 
skiy Rayon’s Rossiya Kolkhoz, Novokubanskiy Rayon’s 
Rodina Kolkhoz, and hundreds of other farms. The fact 
that the leading kolkhozes have not exhausted their 
possibilities is another matter. They can and must seek 
ways to attain even higher summits in their develop¬ 

But it is the midsized farms that require special atten¬ 
tion, self-analysis and concrete actions, Tikhoretskiy 
Rayon’s Kolos Kolkhoz may be included among them. 
Three or four years ago it carried a debt exceeding 11 
million rubles. Changes began when the kolkhoz farmers 
came to believe the recommendations of the city party 
committee and elected Communist Aleksandr 
Andreyevich Khilchuk as their leader. A good specialist, 
he understood that the situation could be turned around 
and the farm could be pulled out of its depression only 
on the basis of fundamentally new production relations. 
The chairman persuaded the board, the specialists and 
the entire collective of this. 

Fifteen leasing collectives were created out of the bri¬ 
gades, farms, the garage and all other subdivisions; the 
administrative staff was reduced by 15 persons in this 
case. Essentially all land, all head of cattle and other 
production resources were leased out. Leaseholders were 
granted real independence in determining their numer¬ 
ical size, work schedule and distribution of cost 
accounting income. 

The kolkhoz broadened its ties with private farms. This 
year over a hundred contracts for raising 800 pigs were 
signed. Moreover not only kolkhoz farmers but also 
doctors, teachers and retired persons are fattening them. 
Subsidiary production operations and businesses are 
being organized. 

A unique association of people joining together into 
labor collectives, in which the individual is beginning to 



7 December 1989 

recognize himself to be a full-fledged proprietor, is 
evolving in the kolkhoz. And work has improved. Grain 
production increased by a third, vegetable production 
increased by 72 percent, and milk production increased 
by 60 percent. Cow productivity climbed by 977 kilo¬ 
grams to a figure of 3,357 kilograms. Profitability rose 
from 9 to 33 percent. The Kolos Kolkhoz paid off its 
delinquent loans and now possesses half a million in 
unencumbered money. 

Nor are there any obstacles to developing leasing rela¬ 
tions in the economic nature of sovkhozes, and espe¬ 
cially now that the right to elect labor collective councils 
and executives has been granted with publication of the 
Law on the State Enterprise. Democratization has also 
been extended here to wages, and the tariff system is 
being replaced by wages paid from cost accounting 
income. The sovkhozes are essentially adopting the 
operating principles of kolkhozes. It now depends on the 
resourcefulness of the executives and specialists and the 
aggressiveness of party organizations. 

Anapskiy Rayon’s Rossiya Sovkhoz is creatively uti¬ 
lizing the possibilities that have opened up. Three leasing 
collectives in vegetable farming and six collectives in 
animal husbandry and a breeding calf raising coopera¬ 
tive have been created here. Individual and family 
contracts have taken on great importance: Two hundred 
twenty-four contracts were signed to grow vegetables, 
including a hundred by urban residents and workers at 
health resorts and schools. The number of persons 
employed in production at the sovkhoz was reduced by 
70, and its effectiveness is growing. Thus the produc¬ 
tivity of the milking herd has attained 3,565 kilograms of 
milk, last year production expenses were decreased by 
840,000 rubles, and profitability climbed from 5 to 34 

Such examples (there are many of them) show that the 
objective result of this process is that kolkhozes and 
sovkhozes, which represent different forms of owner¬ 
ship, are converging to become associations of lease¬ 
holders and cooperative workers. And it is the duty of 
party organizations to promote development of these 
processes in every way possible. The kolkhozes and 
sovkhozes must become the principal leasing agents in 
agricultural production, and they must assume the 
responsibility of providing leaseholders with the mate¬ 
rials and equipment they need, for marketing the prod¬ 
ucts and for developing the production and social infra¬ 
structure. It is their job to train the leaseholders, to 
provide agronomic, zooveterinary and other forms of 
services, to afford legal protection to primary leasing 
collectives, and to organize scientific support. 

The kray party committee is doing everything it can to 
support those economically strong farms which take on 
the unique role of providing bank loans to the weak 
farms, and which lease part of their land, going as far as 
annexing farms which have lost their prospects for 
independent development. A large number of progres¬ 
sive kolkhozes and sovkhozes have already done this. 

Agricultural firms, agricultural combines and agricul¬ 
tural shops of industrial and other enterprises are 
receiving the breath of life concurrently with develop¬ 
ment of kolkhozes and sovkhozes. The kray already has 
some experience in organizing them. Agricultural firms 
have been created out of Kanevskiy Rayon’s Pobeda 
Kolkhoz, Mostovskiy Rayon’s Kolkhoz imeni XXII 
Syezda KPSS, Kurganinskiy Rayon’s Zarya Kolkhoz, 
Korenovskiy Rayon’s Mayak Kommunizma, imeni 
Lenin and imeni Kirov kolkhozes, Otradnenskiy 
Rayon’s Kolkhoz imeni Michurin, Krasnoarmeyskiy 
Rayon’s Rossiya Kolkhoz and Krasnoarmeyskiy 
Breeding Plant, and Novorossiyskiy Rayon’s Abrau- 
Dyurso Sovkhoz. 

The initial experience shows that this is an effective form 
of management, in which production, procurement, pro¬ 
cessing, storage and sales of products are brought 
together in a realistic way into a unified production 
process. Losses of raw materials are decreasing dramat¬ 
ically, and production is becoming wasteless. Creation of 
agricultural firms is a dependable means of solving the 
problem of the territory’s self-support. 

In compliance with decisions of the Central Committee 
plenum, the first steps have been made to create peasant 
farms operating on a leasing basis, especially in regions 
of fine-contour land use. 

Solution of the food problem depends in many ways on 
processing sectors. However, the new economic mecha¬ 
nism is being assimilated extremely sluggishly in this 
area. Cost accounting has not reached a third of the 
workers, and only a fifth of the people are working in 
contracting brigades. Except for two shops—^the corru¬ 
gated packaging and transportation shops of the Krymsk 
Cannery, not one of the 300 enterprises has introduced 
leasing. Only the Krasnodar Poultry Factory, the Tuapse 
Vegetable Oil Packing Plant and the Medvedov Slaugh¬ 
terhouse of the Kuban Agroindustrial Combine are 
drafting standards for the transition to leasing. 

The kray has begun work in accordance with decisions of 
the Central Committee plenum to fundamentally reor¬ 
ganize management in the agroindustrial complex, 
directed at totally excluding authoritarian methods of 
leadership from above. Agroindustrial combines have 
been created in four of our rayons, and agroindustrial 
associations have been created in two. The rest of the 
rayons have elected agroindustrial association councils 
supported by hired working organs operating on a cost 
accounting basis. Producing, processing and service 
enterprises, rural construction organizations and coop¬ 
eratives are joining the associations on a voluntary basis. 
All of them are maintaining their economic indepen¬ 
dence and their rights as legal persons. 

The kray agroindustrial committee has been abolished as 
an organ of state control. A cooperative association—a 
kray agroindustrial union—was formed as an organ to 
coordinate the business relations of enterprises and 
organizations of the agroindustrial combines in regard to 

7 December 1989 



matters of production, procurement, processing, product 
marketing, scientific support and external relations. 
Cost-accounting cooperative state organizations have 
been created on a voluntary basis to perform technical 
repair functions and provide construction services. 

Now that the transition has been made to regional cost 
accounting and to self-sufficiency of administrative ter¬ 
ritories in relation to food, the role of all units of the 
soviets of people’s deputies is growing immeasurably. 
They have been given the responsibility for placing and 
fulfilling state orders, and solving all problems con¬ 
cerned with supplying food to the population. The 
soviets have the ri^t to form new agroindustrial orga¬ 
nizations and improve existing ones, and deepen inte¬ 
grative ties between agriculture and processing industry. 
They set rental rates for every farm, which remain fixed 
over a period of 5 years, and the maximum retail prices 
on fruits, vegetables and potatoes. They have been given 
the responsibility for seeing that land and other natural 
resources are utilized sensibly, that the rights of lease¬ 
holders are protected and that social and cultural ser¬ 
vices are developed in rural areas. They are also called 
upon to strictly monitor fulfillment of contracting obli¬ 
gations, and to prevent inflation of prices and rates for 
services in rural areas. 

Political leadership of the entire effort to establish the 
new system for managing the agroindustrial complex is 
conferred upon city and rayon party committees. We 
cannot allow bureaucratization and a return to the old, 
outdated methods of leadership, we cannot permit our¬ 
selves to interfere incompetently in the current affairs of 
the farms and leaseholders, nor can we ignore attempts 
to do so by other officials of any rank. 


In the present stage of perestroyka, constant concern for 
more effective utilization of the countryside’s available 
potential is acquiring decisive significance. It is impos¬ 
sible to dramatically increase and qualitatively change 
productive capital in a short time, because this problem 
is in an extremely neglected state in the country. Power 
per agricultural worker is 32 horsepower in the kray 
today. This is more than two times less than required. 
But even this power is not invested in the machinery and 
motorized equipment needed by the grain grower. 

I could cite at least one example. This year the Krymskiy 
Agroindustrial Combine acquired six pea harvesting 
combines from America’s well-known FMS [not further 
identified]. Our equipment harvested 57 centners of seed 
peas per hectare from a field of the Put k Kommunizmu 
Kolkhoz, while the foreign combine was able to harvest 
107 centners. As we can see, the difference is significant. 
If we add to this that the American machine frees 400 
persons and harvests 12 hectares in a day in any weather, 
and if we consider that as the moisture content of the 
field increases, it works even better, we can see the sort 
of benefits introducing modem equipment would offer 
to agriculture. 

The figures used by today’s statistics to determine horse¬ 
power at the disposal of the grain grower are collected by 
considering random machine units which are not related 
to each other by the nature of their production processes. 
And if we also consider their extremely low quality, then 
this indicator is simply deceiving. 

The capital investments that are to be allocated for these 
purposes in the immediate future are small, just 19 
percent more than in the current five-year plan. And of 
course, they will be directed primarily at bringing up the 
regions farthest behind, and at reequipping processing 
industry. Therefore we will have to place our main 
reliance on making better use of the land, equipment and 
other production resources. 

And the reserves in this area are enormous. For example, 
even in rayons that were well equipped in the past, such 
as Novokubanskiy Rayon, fixed capital increased by 
almost 51 percent in the last decade, while gross produc¬ 
tion increased by only 33 percent; the corresponding 
figures are 49 and 27 percent for Bryukhovetskiy Rayon, 
46 and 22 percent for Kanevskiy Rayon, and 44 and 18 
percent for Timashevskiy Rayon. 

It is very important today to realize the obvious fact that 
the payoff from the available potential may be raised 
significantly primarily by competently utilizing the new 
economic mechanism. 

Take, for example, Timashevskiy Rayon’s Put k Kom¬ 
munizmu Kolkhoz and Dinskiy Rayon’s Zavety Lenina 
Kolkhoz, which share a common boundary. In 3 years 
their average yield of sugar beets was respectively 407 
and 200 centners per hectare, including 527 and 150 
centners last year. The average labor expenditures over 3 
years were 0.25 and 1.28 man-hours per centner of sugar 
beets, production cost was 1.84 and over 4 rubles, and 
profitability was 131 and 7 percent. The Put k Kommu¬ 
nizmu Kolkhoz fulfilled the plans for the 3 years and for 
last year, while the Zavety Lenina Kolkhoz has been 
regularly failing the plans. 

Why the difference? Sugar beet production is organized 
at the Put k Kommunizmu Kolkhoz on the basis of 
collective contracts. This encourages contracting collec¬ 
tives to constantly improve labor organization, wages 
and the procedures for cultivating this crop, and to study 
Soviet and foreign experience. It has introduced row 
plowing, planting with slit trenchers, multiple harrowing 
before and after sprouting, adjusting plant density with 
thinning harrows, and threefold ridging. It has now been 
already 5 years that the machine operators have been 
cultivating sugar beets on a total area of 1,400 hectares 
without manual labor. 

The Zavety Lenina Kolkhoz also employs contracts, but 
only in formal terms. Therefore, much is being done in 
the old way, owing to which the sugar beets become 
infested with weeds each year, and their yield decreases 



7 December 1989 

It is because people are working differently under the 
same conditions that the results of their business prac¬ 
tices are so different. This is yet another argument in the 
favor of leasing and contracting for all farms and their 

The kray has drawn up a program for raising fertility. 
Plans have been made for building standard, very simple 
manure storehouses in every farm, creating fertility 
detachments, and organizing production of organic fer¬ 
tilizers on a scientific basis with the goal of introducing 
not less than 40 million tons of fertilizers into the soil 
annually. But many rayons are not carrying out the 
program for building manure storehouses and increasing 
organic fertilizer production. Moreover introduction of 
local fertilizers has decreased in recent years. 

The fact that cases of rejection of mineral fertilizers have 
grown more frequent also indicates a decrease in atten¬ 
tion to maintaining soil fertility. One of the main reasons 
for this is failure of the program for construction of 
storage space, and the preference for receiving organic 
fertilizer on the day it is to be applied. Thus, rejection of 
nitrogen fertilizers in the fourth quarter of last year 
threw early spring top dressing of winter crops off 
schedule in a number of rayons. 

The program for raising land fertility, which foresees 
that every hectare of farmland must receive not less than 
12 tons of organic fertilizer, has to be kept under 
unweakening attention. We have made it our goal to 
build standard or very simple manure storehouses at 
each farm, create fertility shops and detachments out¬ 
fitted with the needed equipment, and ensure a high 
technological and organizational level in the production 
of organic fertilizers under laboratory control. Well 
trained, highly responsible people are being put to work 
in this area, and their work is being organized on a cost 
accounting and leasing basis. 

The fact that we have still been unable to put a stop to 
the squandering of farmland is troubling. The following 
figures show that such squandering occurs: In the period 
since 1961, 56,000 hectares have been reserved in the 
kray just for industrial construction. Almost 20,000 
hectares have been converted into hayfields and pastures 
owing to erosion. And at the same time, in order to 
maintain the farmland balance, significant amounts of 
money have been spent to develop poorer land. It is high 
time for the soviets of people’s deputies to raise the 
responsibility of land users for the decrease in humus 
content, to resolutely curtail the faulty practice of 
wasting land, and to assume strict responsibility for 
increasing the effectiveness of improved land. 

There is no one who doesn’t clearly see that production 
of animal products cannot be increased without funda¬ 
mentally reinforcing the feed base; nonetheless forage 
quality and making up the protein shortage are still 
problems at many farms. Last year almost half of the hay 
and haylage and a third of the silage in the kray was third 
class or unrated. Peas and soy are being planted in 

insufficient quantities in many areas from one year to 
the next. Alfalfa seed growing is poorly organized, and 
the value of multi-ingredient mixtures and triticale is 
understated. And because of poor feed, even the existing 
genetic potential of the herd is only 70-80 percent 

Intensive production methods are being introduced too 
slowly at large livestock complexes, and breeding work 
requires improvement. The flawed practice of cutting 
the dairy herd without guaranteed recovery of its size by 
the addition of highly productive animals is still con¬ 
tinuing. And this is in a situation where the effort to 
qualitatively improve the herd is now one of the main 
and most promising directions of work. 

Science must become a participant of the fundamental 
economic transformations of the agrarian sector, and of 
its material, technical and technological reequipment. 
The kray party committee has begun the work of restruc¬ 
turing agrarian science and strengthening its ties with 
production. The priority directions of scientific support 
to the agroindustrial complex have been determined. 
Scientific-production associations and systems are being 
organized. More than 200 kolkhozes and sovkhozes and 
74 industrial enterprises have already been incorporated 
into 42 systems. Forty-five base farms and 19 enterprises 
have been determined. The tie between science and 
production is being maintained by around 300 science 
organizers who underwent specialized retraining during 
the winter. 

Continuing the search for ways to raise the effectiveness 
of scientific support, we are making an effort to see that 
the scientific-production systems would assume the full 
responsibility for selection of new varieties of crops and 
animal breeds and types, for seed production, for devel¬ 
opment of production procedures, for equipment 
improvement and for personnel training. Progress is 
hindered by the fact that priority has not yet been placed 
on providing material and technical resources and new 
equipment and instruments to scientific-production 
associations. Nor has a solution been found for the 
problem of planning these associations as single wholes. 

The main task is to organically unite the new economic 
mechanism with the scientific-technical revolution, and 
to establish direct ties between scientific collectives and 
production. Introduction of scientific recommendations 
and developments must be organized only on a cost 
accounting basis, and pay must be based on actual 
economic impact. 


The CPSU Central Committee Plenum made ensuring 
attainment of a qualitatively new technological level in 
food production one of the objectives of the highest 
priority. The plan is to significantly correct the state of 
affairs by the end of the current five-year plan, and to 
fundamentally complete reequipment of not only large 
enterprises but also medium and low capacity enter¬ 
prises on a modem basis in the 13th Five-Year Plan. 

7 December 1989 



There has been much talk about all of this. But no 
noticeable changes have occurred in the kray. Why? The 
free-ride mentality, lack of initiative and an indifferent 
attitude toward processing sectors have not been sur¬ 
mounted. The Tikhoretsk Meat Packing Combine has 
been under construction since 1976, the Adlerskiy Dairy 
Combine has been under construction for 10 years, and 
reconstruction of the Krymsk Canning Combine is drag¬ 
ging on into its 12th year. The standard construction 
times have been exceeded by a factor of 3-4. Introduc¬ 
tion of capacities at the above-mentioned enterprises as 
well as at the Labinsk Cheesemaking Plant, the Krasn¬ 
odar Poultry Combine and a number of other enterprises 
has failed at the fault of builders, and of the clients as 
well. Reconstruction of dairies in Anapa, Apsheronsk 
and Goryachiy Klyuch is being postponed from one 
five-year plan to the next. Despite the acute shortage of 
children’s dairy products, cottage cheese, sour cream and 
other products, this is the fourth year that the issue of 
initiating the second generation of the dairy combine’s 
reconstruction in Krasnodar has not been resolved. Half 
a million rubles were allocated for the current year. But 
this is only a 16th of the estimated cost. 

The kray’s industry is providing entirely inadequate 
assistance to solving the problems of the food sector. 
Executives of enterprises in Krasnodar, Armavir, 
Tikhoretsk, Kropotkin and Novorossiysk evade the 
problem, they fail to display any kind of initiative in this 
matter, and sometimes they simply even ignore the 
problem. It is precisely for this reason that market 
shelves are poorly stocked by goods manufactured from 
unfunded raw materials. Around half of by-products and 
a significant fraction of dietary bone and other raw 
materials are still not being utilized for these purposes. 
Although consumption of fat-free dairy products did 
increase in the kray from 4.5 to 14.4 kilograms per 
capita, it is still 6 kilograms less than for the country as 
a whole. While such production totals 77 kilograms per 
each resident in Leningradskiy Rayon, it is only 3.2 
kilograms in Krasnodar and around 6 kilograms in 
Gelendzhik. Collectives of the Krasnodar Compressor 
Plant, the Machine Tool Building Association imeni 
Kalinin, the Armavir Vesoizmeritel Association and 
others could do a great deal to reequip food production, 
but they have yet to show concern for doing so. 

Nor are the kolkhozes and sovkhozes themselves doing 
very much to develop processing. Each of them could 
make significantly more both for themselves and for the 
kray’s agroindustrial complex as a whole. But the kray’s 
agroindustrial union is not yet providing adequate orga¬ 
nizational support. In the meantime, because of the 
absence of the necessary daily output capacities in can¬ 
ning enterprises, a significant quantity of fruits and 
vegetables are lost irretrievably in both good and bad 
years. It is also time to put an end to seasonality in 
processing. We recognize that there is a need for working 
more vigorously to raise the kray’s food and processing 
industry to a level which would ensure deep processing 
of all agricultural raw material and expansion of the 

assortment of high quality products through the con¬ 
struction of kolkhoz and sovkhoz shops and subsidiary 
production operations, and for bringing them as close as 
possible to the raw materials. 

One of the urgent tasks is to build the simplest store¬ 
houses, salting and fermenting shops, bakeries, smoke¬ 
houses and slaughterhouses, and to make wide use of the 
possibilities of public food service enterprises for baking 
bread and bakery goods. We need to achieve a funda¬ 
mental turning point in every rayon, in every population 
center in supplying people with these products as early as 
this year. All the more so because we already have such 
experience in Pavlovskiy and Bryukhovetskiy rayons. 

The problem of territorial self-sufficiency is also directly 
related to issues associated with developing the private 
farms of citizens and garden and orchard associations. 
Production is increasing in this sector at an extremely 
low rate. And a stable tendency for reduction of farm 
herds and for decline of production has evolved in many 
rayons. The entire problem is that unless the executive 
committees of local soviets intervene, farm directors do 
not allocate pastures to animals privately owned by the 
public, they do not provide feed for the animals and they 
do not sell young animals. 

The kray kolkhoz council, for example, could have an 
influence on the state of affairs. But what are the odds of 
its doing so if its leader—Beysug Kolkhoz chairman G. 
G. Golovenko—himself pays no attention at all to this. 
Last year hayfields and pastures were not reserved for 
private farm animals at the kolkhoz. The owners of these 
animals had to buy 4.3 tons of grain forage, 8.6 tons of 
straw, 4 tons of silage, 900 kilograms of hay and the same 
amount of squash. Now there are only six head of cattle, 
including two cows, left in the 100 yards of the Brink- 
ovskiy Village Soviet with a population of 5,000, in 
which this kolkhoz is located. 

Little concern is also shown for development of private 
farms in Krasnoarmeyskiy, Slavyanskiy, Temryukskiy, 
Uspenskiy, Tikhoretskiy, Novopokrovskiy and a 
number of other rayons. Providing citizens with young 
farm animals and pigs remains a problem. We feel that 
the solution would be to reestablish dairy and pig 
breeding stock farms in each farm prior to the end of the 
present year in order to reach this objective. Today, after 
all, 125 out of 700 agricultural enterprises do not have 
any cows, and 204 do not have pigs. The kolkhozes and 
sovkhozes need to expand the practice of providing 
payment for labor in kind, ^f paying a larger part of the 
wages of willing workersTn young animals and birds, 
coarse and succulent ie^d and grain forage. Creation of 
special cost accounting units or brigades headed by 
specialists in servicing the private farms of citizens 
deserves support. 

The kray consumer union and many rayon consumer 
unions are eliminating shortcomings in this area too 
slowly. Village consumer unions are being revived in 



7 December 1989 

every farmstead in the kray, and over 400 selkoopzagot- 
promtorgs [not further identified] have been created. 
They provide a possibility for improving the organiza¬ 
tion of procurement of products from the population, 
their processing, and sale of finished products to rural 
inhabitants. But not all of the reserves are being utilized 
completely in this area. Only half of the private farms are 
working on the basis of contracts. Purchases of surplus 
products are poorly stimulated by reciprocal sales of 
scarce goods. The system for providing processing points 
with simplest equipment is poorly organized. 

The subsidiary farms of industrial enterprises and orga¬ 
nizations are still in a state of chronic backwardness. 
Last year they sold only 12 kilograms of meat and 14 
kilograms of milk per worker. Executives of enterprises 
and of labor collective councils exhibit no concern at all 
for highly productive use of land, farm animals and 
ponds assigned to them. The productivity of farmland 
and animals at subsidiary farms of the kray’s industrial 
enterprises is two to three times lower on the average 
than in neighboring kolkhozes and sovkhozes. And in the 
meantime the conditions do allow the agricultural pro¬ 
duction shops to put out a minimum of 30 kilograms of 
meat and 50 kilograms of milk for each worker employed 
by the enterprises. 


One of the most important directions of present agrarian 
policy is reorientation of the attention of the party and 
all the people toward fundamental reconstruction of the 
living and working conditions of the peasants. In our 
kray, 903 million rubles, or 35 percent of the total 
volume of capital investments, have been allocated in 
the current five-year plan to solving the social problems 
of rural areas. Over a million square meters of housing 
space, schools with a capacity of 7,934 students, chil¬ 
dren’s preschool institutions with a capacity of 12,135 
children, hospitals with a capacity of 1,025 beds, and 
1,485 kilometers of paved motor highways have been 
placed into operation. 

Rural population centers in Leningradskiy, 
B^ukhovetskiy and Kanevskiy rayons, homesteads of 
Timashevskiy Rayon’s Sadovod Sovkhoz, Krasnoarmey- 
skiy Rayon’s Krasnoarmeyskiy Sovkhoz, Yeyskiy 
Rayon’s Oktyabrskiy Sovkhoz, Gulkevichskiy Rayon’s 
Gulkevichskiy Sovkhoz, Kalininskiy Rayon’s Oktyabr 
and Druzhba kolkhozes, Vyselkovskiy Rayon’s Kolkhoz 
imeni Chemyavskiy, Slavyanskiy Rayon’s Ordynskoye 
Experimental Farm, Dinskiy Rayon’s village of Kras- 
noselskoye, and others are being restructured thought¬ 
fully, with good esthetic taste. 

At the same time the medical, trade, cultural and per¬ 
sonal services to the rural population remain signifi¬ 
cantly worse than urban services. The sorest point in 
personal services is the extremely low level of gasifica¬ 
tion. Less than 20 percent of housing is presently gas¬ 
ified. Even homes belonging to kolkhozes and sovkhozes 
are provided with only 65 and 50 percent of their water 

pipeline and sewer needs respectively. The number of 
families on the housing waiting list is over 100,000. 
One-third of the children do not have the possibility for 
attending children’s preschool institutions. 

One out of every 10 schools is in a dilapidated state, and 
there is no central heating in 244 schools. Many popu¬ 
lation centers are not linked by paved roads. Over a 
hundred homesteads are not connected to the radio relay 
network, 146 population centers do not have telephones, 
133 have no clubs, and 60 have no libraries. 

A rural social improvement section was included in the 
program drawn up by the kray for increasing the food 
supply. The main priorities are attached to housing 
construction and municipal improvement. In order to 
solve the rural housing problem by 1998—the target 
determined by a government decree, we will have to 
place 4.4 million square meters of housing space into 
operation. We hope to make fuller use of the free assets 
of the farms by way of the financial and accounting 
centers of agroindustrial associations, and the savings of 
private citizens, to build private homes. 

Experience in recruiting the population’s earned savings 
already exists, particularly in Kurganinskiy Rayon, 
where an association of depositors has been created 
under the agroindustrial bank, a special account has been 
opened, and it is used to finance various needs of the 
citizens, including construction of private homes. This 
experience is also very important to other rayons, since 
private builders applied for over 30 million rubles of 
loans in the kray for 1989, and the savings bank can 
provide only around 4 million. 

Capacities for producing construction materials are 
being created very slowly in the kray. As a result last year 
the demand of private builders in rural areas for wall 
materials could be only 60 percent satisfied, the demand 
for roofing shingles was 87 percent satisfied, and the 
demand for lumber was 13 percent satisfied. The situa¬ 
tion must be rectified immediately. 

The kray agroindustrial union foresees a brick plant at 
every farm. It also plans to build two plants by 1991 with 
an overall output capacity of 55 million bricks per year, 
and another two producing gas silicate concrete, and to 
increase the annual output of the Gulkevichi Agroindus¬ 
trial Construction Combine to 50,000 square meters of 
housing space by 1990. In the 13th Five-Year Plan the 
output of the Verkhnebakanskiy Cement Plant will be 
doubled, and that of the Afipskiy Agroindustrial Con¬ 
struction Combine will grow by a factor of 2.5. The 
agroindustrial union will make a proportionate contri¬ 
bution to erecting a shop in Armavir producing porce¬ 
lain plumbing fixtures and tile, and a linoleum shop in 
Krasnodar, with the goal of having them provide 
250,000 square meters of tile and 500,000 square meters 
of linoleum to rural areas each year. 

Tens of thousands of persons from the kray’s rural areas 
go to work at plants and factories of Krasnodar, Armavir 
and other cities every day. At the same time these 

7 December 1989 



enterprises are not doing anything to build children’s 
nurseries, schools, hospitals and other social, cultural 
and personal service facilities in the population centers 
from which they derive their manpower. It appears to me 
that the time has come to put an end to such uncompen¬ 
sated distraction of manpower from the countryside into 
the city, to exploitation of the already weak social 
infrastructure of villages and farmsteads. Every enter¬ 
prise must assume active, proportionate participation in 
the construction of housing, schools and preschool insti¬ 
tutions at the places of residence of the manpower—in a 
word, in improving the life and personal services of its 
own people. A broader effort should be made to locate 
production shops and affiliates in the villages. 

In a word, it is time not only to ensure social equality 
between the city and countryside, but also to create, by 
joint effort, living conditions for rural inhabitants that 
are better than those of the urban population. 

The decisions of the March Central Committee plenum 
make more energetic solution of ecological problems one 
of the priority objectives. There is good reason for 
attaching such importance to the issue. Increasing inten¬ 
sification of production, and especially its chemicaliza¬ 
tion, is unfortunately accompanied by aggravation of the 
ecological situation. This is an objective process, and it 
should be noted in passing that we are far behind the 
leaders in the level of use of mineral fertilizers and plant 
protection resources. It all rests with how well chemical¬ 
ization resources are used, with use of nature in general, 
and with the level of responsibility of the people and 
their civic-mindedness. 

This issue was examined, as we know, at a session of the 
kray Soviet of People’s Deputies. A program of nature 
protection measures was approved at that same session. 
Its practical implementation has been started. This year 
the area of rice cultivated without herbicides was 
expanded significantly. The air basin is improving due to 
reduction of aircraft chemical spraying. The responsi¬ 
bility of business executives for violating ecological rules 
was increased. 

Rigid rules for storing and using fertilizers and plant 
protection resources must be introduced into literally 
every farm, these chemicals must be kept out of rivers 
and other bodies of water, and the sphere of application 
of biological plant protection resources and ecologically 
clean procedures and processes must be expanded more 


The March CPSU Plenum demanded that the party 
committees devote their main attention to augmenting 
the role of the primary party organizations of the farms, 
enterprises and organizations of the agroindustrial com¬ 
plex, especially the economically weak ones. They must 
concentrate the efforts of communists on what is most 
important. And what is most important today is to move 
perestroyka forward in all collectives. To introduce 

leasing, contracting, scientific accomplishments and pro¬ 
gressive production procedures, to provide a wide assort¬ 
ment of food to the people, and to improve their living 
conditions. This is the principal yardstick of the effec¬ 
tiveness of party organizations. The time has come for 
practical actions, and the work of every organ, of every 
executive, of every worker must be assessed on the basis 
of deeds rather than words. 

The new agrarian policy requires renewal of more than 
just the organization and technology of agricultural 
production. Party committees are doing much to elimi¬ 
nate the old stereotypes from the people’s psychology 
and to confirm, in their consciousness, the need for 
radical changes in the countryside, and an understanding 
that this can be done only through hard work. We believe 
that this should all begin with raising the overall excel¬ 
lence of labor, personal life and human relations in the 
countryside and introducing a way of life corresponding 
to a position of the peasant as the proprietor of his land. 

Party organizations are striving to make every person 
aware of the meaning behind the decisions of the March 
(1989) Central Committee plenum and of its fundamen¬ 
tally important approaches to solving the food problem, 
to reveal effective economic practice and make it avail¬ 
able to all people, and to utilize all resources of ideolog¬ 
ical work in this effort—party training, on-the-job eco¬ 
nomic training, lecture propaganda, mass political and 
cultural educational work and visual agitation; the orga¬ 
nization of socialist competition must be improved. 

Party committees and soviet and trade union organiza¬ 
tions are also concerned with attaining fundamental 
improvement in the work of cultural institutions. Expe¬ 
rience shows that this can be achieved by creating, in all 
populated places, rural cultural centers providing a 
common area for culture clubs, libraries, museums, 
music lounges, video clubs and art galleries. The main 
thing is for them to really unite the area’s intelligentsia 
and to act as the bearers of high spirituality. 

The rural school has an important role to play in renewal 
of life in the agrarian sector. A good caretaker must be 
concerned with his succession. No matter what leasing or 
cooperative relations we might introduce, and no matter 
how we might stimulate the work of the peasants, if we 
can’t teach the child, young families will leave the 
farmstead or village. 

This year has already entered the account books as a 
period of implementation of agrarian policy. Party com¬ 
mittees are striving to organize their work in such a way 
as to ensure organic unification of independence with 
conscious labor and production discipline, and to clearly 
see the dividing line between democracy and laissez- 
faire, work with the sleeves rolled down. And unfortu¬ 
nately, such facts are not sporadic. Take for example the 
first quarter of this year, in which 339 farms decreased 
the volume of meat sold to the state, while 284 decreased 
the volume of milk. And one cannot explain this away 



7 December 1989 

with last year’s weather, because other farms experi¬ 
encing the same conditions not only did not reduce but 
even increased their production. The differences in the 
progress of farming operations also suggest that this is 

We cannot and must not condone any longer the cases of 
mismanagement which are literally compromising pere- 
stroyka and inflicting enormous economic and moral 
harm. I would like to lay special emphasis upon the fact 
that by itself, the transition to new production relations 
will not automatically improve the attitude toward work, 
that leasing collectives require daily party attention and 
support. Only under this condition can we count on 
fulfilling the quotas of the food program. 

The kray party organization is assuming difficult tasks. 
Persistently fulfilling state orders and solving the prob¬ 
lems of providing food to the kray’s population are key 
problems today, and no one has the right to stand on the 
sidelines. After all, if we are unable to deal with these 
problems, the trust placed by the people in the party will 
be significantly undermined. An awareness of this must 
penetrate into every communist today. Not stopping 
half-way, stubbornly moving forward, measuring every 
step against the interests of the people and socialism— 
these are the primary duties of each of us as individuals 
and as a body. 


Rail Transport Problems Disrupt Produce 

Grain Delivery Problems at Ports 

904B0025A Kiev SILSKI VISTI in Ukrainian 
19 Sep 89 pi 

[Article by G. Melnychuk: “There is Grain, but No 
Organization: Ships with grain from the last harvest 
remain standing in port; railway workers to blame”] 

[Text] A bountiful grain harvest was grown this year in 
the republic. The trick was to get it on the road, to keep 
it safe, not to waste a single kernel, because we know the 
price of grain purchased abroad. All services—transport, 
processing—have to operate precisely and smoothly. 
There should be a green light all the way: the grain is 

Similar tasks confront the riverboatmen in particular. 
This year their job is to transport 400,000 tons of grain. 
If one considers the peculiarities of navigation, how 
important the length of daylight is, then one can under¬ 
stand the value of each second. Unfortunately, instead of 
quickly unloading and taking on a new load of grain, 
ships are standing at the docks of the Kiev river port for 
many days. 

Reports like this evoke something akin to anger among 
some of the workers responsible for transporting the 

grain, especially those on the Southwest railroad, 
because, as they assert, the ships are standing for objec¬ 
tive reasons. 

But the crews of the steamers that carry grain on the 
Dnepr are unable to concur. Because [they believe] they 
are dealing, not with some one-time occurrence, but with 
the working style of the railroad workers. 

Here are the facts. The steamer “Kura” arrived at the 
capital harbor from Gola Prystan’, delivering 600 tons of 
barley. Three ships stood in line ahead of it for 
unloading. Now, finally, it is time to process the “Kura.” 
First, two railroad cars arrived, then six, and then they 
waited for two days... then three cars. The steamer stood 
at the port of Kiev for eight days. 

And this ship does not hold the “record” for standing in 
the capital harbor. At the end of August and the begin¬ 
ning of September, the steamer “Arkhangelsk,” with 
almost two thousand tons of wheat, took eleven days to 
unload! And they should have been able to do it in 30 
hours. And in this case, the railroad cars were placed 
under the grain sporadically, a very small number at a 

It is not hard to calculate how many of the crews from 
the “Kura,” the “Archangelsk,” and other ships that 
were and are standing in the harbor with their grain 
could have brought additional grain given a normal 
organization of labor. And who has penetrated the 
ethical tricks of the ships’ commands, who are supposed 
to fulfill the plan, to receive the proper wages? 

Similar situations obtained in Dnepropetrovsk, Zapor¬ 
ozhye, and Kherson. There, too, ships with grain are 
standing for want of railroad cars. Various railways serve 
these ports, but the weak points are the same, common to 
the entire railroad industry. 

And for years there have been but very few changes for 
the better, although agreements on labor cooperation 
among collectives from connecting modes of transporta¬ 
tion have been concluded. In fact, nobody is being 
questioned seriously about the failure to implement 
them. There are no cars, so, well, there are no cars. They 
say there are objective reasons. But why should that 
affect the work of the crews? Why should somebody’s 
lack of organization become a roadblock on the grain 

It was sad to see mountains of golden grain on the 
threshing floors of the southern oblasts this summer. The 
grain farmers wondered, inquired why it was not being 
lifted up the elevator. And the answer they heard was: 
they won’t accept it there because there are no railroad 
cars. A closed circle. It was closed in the Dnepr basin, 
where nobody bears personal responsibility for 
numerous ships with grain standing at port. 

Perhaps it is time to ask? 

7 December 1989 



Produce Transport Delays Detailed 

904B0025B Kiev SILSKI VISTl in Ukrainian 
13 Oct 89 p I 

[Article by M. Nechypurenko, O. Grygoryev, and S. 
Shandar: “The Sidings of Diseconomy: A Problem 
Awaiting a Solution”; first paragraph is source introduc¬ 

[Text] The editors have been receiving terrifying letters: 
vegetables, fruit, and other field produce is rotting, while 
railway workers are not making sure that it is transported 
to consumers. These complaints are justified: everything 
grown should be shipped. But are only the railway 
workers at fault? Our correspondents report on this 

The repercussions of the events on the Azerbaijan rail¬ 
road and the blockade of Armenia also had a negative 
effect on the flow of traffic on the Don basin railroads. 
More than five thousand cars, with freight for the 
republics, have fallen prey to this inevitable misfortune 
and are on sidings. Waiting for the freight are the 
Donetsk building contractors in Armenia, who are 
rebuilding the villages there. Normally, these cars would 
also be used to carry the harvest, much of which is still in 
the fields. 

But it is not just freight in transit that is laid over in these 
cars. Every year, a considerable quantity of potatoes is 
brought from the Sumy, Zhitomir, Rovno, and other 
oblasts, but the majority of consumers were in no hurry 
to unload the produce in a timely manner. Later, in 
September, 777 care sat on sidings in the Donetsk oblast, 
441 in the Voroshilovgrad oblast. 

The excessive layovers in freight transport are on the 
consciences of the directors of the Donetsk wholesale- 
retail combine, and also of the “Beshevskiy” collective 
farm in the Starobeshevskiy rayon, the “Yamskiy” col¬ 
lective farm in the Artemovskiy rayon, the “Stavki” 
collective farm in the Krasnolimanskiy rayon, and the 
“Primorskiy” collective farm in the Novoazovskiy 
rayon, who received seed potatoes. It does not bother 
them that it is their fault the care are standing on sidings, 
waiting to supply workers and city dwellers with their 
own produce, while those on farms cannot wait to get 
care. And the railroad workers do not pay the fines for 
the excessive layovers out of their own pockets. 

The unloading situation did not improve in October, 
either. The routing schedules from 526 care were col¬ 
lected. The perpetrators: the same Donets wholesale- 
retail combine from the Ordzhonikidze collective farm 
in the Volnovaskiy rayon, and the Artemovskiy whole- 
sale-retail combine. 

And it is not just cars with potatoes that are experiencing 
delays. Managers are in no hurry to remove mineral 
products, building materials, or spare parts from them. 
Workers at the Stanichno-Luganskiy raysilgoskhimiyi 
[rayon agrochemical enterprise], which is located in the 

Voroshilovgrad rayon, took ten times longer than neces¬ 
sary to unload the fertilizer at the Olkhovo station. 

The director of the Mospinsk poultry plant, V. M. Smyk, 
was even surprised when they asked him why care with 
the mixed feed are being unloaded, not in three hours, as 
the standards prescribe, but in four days. 

This is the pace of “work” in the Donetsk area as well: 
especially at the raysilgoskhimiyi in the Oleksan- 
drovskiy, Maryinskiy, and Shakhtarekiy rayons and at 
the rayagroprompostach [rayon agricultural industry 
supply depot] in the Shakhtarskiy rayon. 

Unloading also proceeds too slowly at the “Artemsil” 
produce processing conglomerate, the Slovyanskiy oil 
and lard combine, the “Teplychniy” collective farm in 
the Donetsk rayon, and at the the “Dobropolskiy” 
collective farm in the Dobropolskiy rayon. The list of 
locations could be extended. Needing to have discipline 
and order imposed from without, here they ignore the 
elementary rules of active partnership. 

* * * 

The Rovno division of the Lvov railway serves two 
oblasts: the Rovno oblast and the Volynskaya oblast. 
Everyday, hundreds of cars laden with freight for the 
national economy are dispatched to customers from the 
station yards. The incoming flow of freight: 50,300 tons 
of various staples, industrial goods, agricultural wares, 
and building materials. 

“Is that a lot or a little?” asks the division director, V. B. 
Oliynyk. “As it is, it is quite a lot, but there are not 
enough cars. Here, take a look at these telegrams and 

There is a pile of them. “Not enough cars,” “We cannot 
ship time-sensitive freight,” “Due to the lack of cars, the 
production plan has been interrupted” ... 

The cars are delayed longest due to the Zdolbunovskiy 
cement-slate combine, commercial organizations, sil- 
gospkhimiyi [rural agrochemical enterprises], and 
timber processing enterprises in the Rovno and Volyn¬ 
skaya oblasts. 

It takes too long to liberate the freight at organizations in 
the agricultural industiy complex in these oblasts. Here 
is the latest fact. Artificial fertilizer consigned to the Red 
Army collective farm in the Dubnovskiy rayon of the 
Rovno oblast arrived by rail. It took a week to unload it 
at the Smyga station. That is how the head of shipping, 
V. M. Berchun, “organized” this work. 

Excessive layovers have already become systemic for 
cars with produce for the Rovno wholesale-retail pro¬ 
duce combine. 

Cars parked at railroad stations in the Gorokhovskiy 
rayon of the Volynskaya oblast have been herded onto 
sidings for a long time. 



7 December 1989 

These facts have not been appreciated adequately by 
local Soviet agencies. What is more, those who have 
disrupted the railway employees’ working pace have 
surfaced among them as welt. How, for example, can the 
directors of the Rozhyshchenskiy rayon executive com¬ 
mittee in the Volynskaya oblast call somebody else to 
order when a car with direct freight for them has been 
laid over two days more than the norm? 

Here again are the sources of the delays. It was the fault 
of the director of the Rovno rayon civil engineering 
directorate, F. I. Rusin, that two tanks of asphalt have 
been standing at the Lyubomyr station for more than two 

For a long time now there has been no way to unload the 
car from the Kovelskiy furniture factory. And at this 
very moment their colleagues at the “Volynderev” fur¬ 
niture-carpentry conglomerate are sounding the alarm, 
“Allot us even one car, we’re overstocked ...” 

Altogether, close to 200 cars a day are delayed exces¬ 
sively on sectional railroads. 

* * * 

The situation is no better at many stations on the Odessa 
railroad. All of “records” for car layovers were broken at 
Pervomayskiy plant in the Nikolayev oblast. Two refrig¬ 
erator compartments of eggs delivered to the station 
from the “Yuzhna” poultry plant in the Crimea for the 
May First meat combine have been standing here since 7 
September. Eight cars turned up unclaimed, because the 
food processing workers there refused to unload them, 
their reason being that the production was over and 
above plan. For that reason, the stationmaster, Ye. Ya. 
Gavryshchuk, and the responsible employees from the 
Odessa railway sent a telegram to the administration, to 
the republic People’s Control Commission, to Derzha- 
groprom [The State Agricultural Industry Agency] of the 
Ukrainian SSR, to the Nikolayev oblast committee of 
the [Communist] party, the oblast executive committee, 
the oblast agricultural industry agency, and the procura¬ 
tor’s office. All of them declined, however, and the eggs 
are losing their nutritional value and are spoiling. 

Wagons with produce for the Voznesensk meat combine 
take more than 16 hours to unload instead of the 
standard 9.64. It is the combine’s fault that 201 cars went 
unused over a nine month period. A similar attitude 
prevails at the Cherkass meat combine, where the lay¬ 
over for cars is one and one-half times the norm. 

A tank of asphalt that arrived at Chervonoznamyanka 
[Red Banner] station near Odessa consigned to the 
Ivanov rayshlyakhbuddilnytsa [rayon road agency] has 
not been unloaded for a month now. Here, too, three 
gondola cars of potatoes have been standing since 7 
October. The potatoes arrived consigned to the Ivanov 
rayzagotkontora [rayon provisioning office], but they 

turned out to be “unnecessary.” Community provi¬ 
sioning contractors for the Odessa district heating con¬ 
struction project did not begin unloading two gondola 
cars of potatoes at the Vygoda station for a week. 

Though the standard is 3.2 hours, it took 5.8 hours to 
unload cars for the Odessa oblplodoovochtorg [oblast 
produce and fruit marketing enterprise] at the Zastava-1 
station. The commercial organization was fined 4,877 
karbovantsy for nine months. But the directors of the 
produce and fruit marketing enterprise were deaf to 
orders to accelerate the unloading. 

Among the most vicious violators of the unloading 
schedules are employees of the Odessa superphosphate 
factory. Though the standard is 13.45, they held up 
wagons for up to 17.74 hours. It was their fault that 1,819 
cars were unavailable this year. They paid 383,000 
karbovantsy in fines for their efforts. As you can see, this 
is a fat sum, but it did not bother the factory directors 
much: they did not pay it out of their own pockets. 

This is also the opinion of V. S. Gorbatko, director of a 
factory near the port of Odessa. Here, carloads of raw 
materials with an unloading standard of 9.29 hours are 
unloaded in 14.65 hours. The fine, which exceeds 31,000 
karbovantsy, is a mere trifle to him. 

V. B. Kyforenko, director of the unloading department 
of the Odessa railway, notes: over the course of this year, 
because of those who violate the standards requirements, 
9,517 cars and gondolas were unavailable on the tracks. 
Of these, 1,571 were in September. 

The cars are delayed, and at the present time there are 
not enough cars to transport fruit, sugar beets, potatoes, 
and fuel for the winter. 

Sugar Beet Processing Problems Detailed 

Early Resolution Doubtful 

904B003IA Moscow SELSKAYA ZHIZN in Russian 
9 Sep 89 p 1 

[TASS correspondent report: “A Bitter Aftertaste to the 
Sweet Harvest”] 

[Text] The sugar shortage, like a disease that has been 
allowed to fester, has amazed the city and everywhere 
else. For the first time many have experienced the 
“delights” of the coupon system. The more the farther. 
They have stopped bringing around tea in the coupe 
wagons of company trains because there is no sugar. 
Candy has disappeared from store shelves. The problem 
has set our teeth on edge to such a degree that there is 
nowhere else to go. 

Alas, there have been no new contributions to finding a 
solution to the problem of how to harvest and process 
sugar beets without losses. The harvest season has 
already arrived. How have sugar beet farmers prepared 
for it? 

7 December 1989 



Kiev. This year the Ukraine’s sugar plants will process 
1,000 tons of raw material per day more than in past 
years and they plan to produce an additional 5,000 tons 
of sugar. This will be facilitated by the increase in the 
total capacities of enterprises for processing of 4,400 
tons of beets daily. A total of 192 plants have been put 
into operation. Workers are ready to process beets in 
Vinnitsa, Kiev, Rovno, Lvov and Volyna oblasts. There 
are problems, however. The delivery of spare parts and 
equipment is interrupted regularly. Only in late August 
was there a realization of funds from the first half year by 
the enterprises of Dnepropetrovsk Oblast— 
Novomoskovskiy Pipe Plant, Nikopolskiy Southern Pipe 
Plant and Dnepropetrovsk Pipe and Rolling Plant imeni 
Lenin. Most of the pipes that were retained are ear¬ 
marked for the repair of engineering networks. 

This year an unfavorable condition may develop in some 
plants of Khmelnitskiy Oblast. They are 100 or more 
years old. Workers themselves take care of ongoing 
repairs and of improving and expanding production. 
The capital that is allocated hardly suffices for the 
development of capacities. Thus there is no capital left to 
maintain old equipment in a dependable state. 

Kishivev. At Gindeshtskiy Plant, workers planned to 
report on their readiness to process the harvest, when 
suddenly...the roof fell in. 

It is no secret that in the republic most of the enterprises 
are in need of renovation. The oldest of the 11 sugar 
plants in Moldavia—Rybnitskiy—is almost a 100 years 
old. Beltskiy Plant was built in 1930. The age of many of 
the others is also considerable. This is why interruptions 
in material-technical supply and the underdelivery of 
spare parts, pipes and metal will have a negative effect 
on the processing of sugar beets. 

The situation is exacerbated also by the fact that today 
Krasnodar Compressor Plant has refused to supply com¬ 
pressor equipment parts that are difficult to manufacture 
and that Belgorodskiy Boiler Construction Plant has not 
shipped the necessary number of units. Repair timeta¬ 
bles are being interrupted due to the underdelivery of 
equipment for a cleaning station and of continuously- 
operating centrifuges for the production divisions of 
shops. Whereas in 1986 idleness in the republic’s sugar 
plants was calculated to be 27 so-called plant-days due to 
the wearing out of equipment, a year later it was 45. Last 
season this indicator equalled 52.5. It was based on 880 

Stoppages mean losses. During the last 3 years, the 
branch has not supplied the state with 263,000 tons of 
sugar worth 155 million rubles. 

Barnaul. In the Altay region there are four sugar plants 
and 23 beet-reception points. Preparing them for opera¬ 
tions was more difficult this year than ever before. Many 
types of equipment for the sugar industry have been 
removed from production in recent years. Nothing is 
being manufactured to replace them. For example, for 3 
years we did not receive scales to weigh and pack ready 

products. We do not have compressors or new bearings. 
In the center allocations are not made to meet the needs 
of Altay beet farmers in terms of shut-off steel fittings, 
some types of pumps, centrifuges and many other items. 
With the aid of the kray agroprom [agroindustrial asso¬ 
ciation] all of these things had to be acquired where 
possible. An enormous load was put on technical special¬ 
ists, who sometimes became suppliers to the detriment 
of timetables and quality of preparing enterprises. 

Stavropol. In the kray, harvesting began earlier than 
usual. Making corrections gave rise to the bitter experi¬ 
ence of last season, when a large share of the sweet 
harvest disappeared under the snow. The reason for this 
was the extremely run down condition of the processing 
industry. For example, Izobilnenskiy Sugar Plant, which 
services over half of the beet-sowing enterprises in the 
kray, is capable of receiving an amount for processing 
daily that is less by a factor of 1.5 than required. 

Of course it is too bad because the sugar beets that are 
dug up ahead of time mean underproduction of sugar. 
But farmers have decided that there are fewer losses if 
the harvest schedule is altered than if the harvesting 
operations are delayed until the snows come. Losses can 
be totally eliminated only when the sugar plants here 
become truly effective enterprises. 

The picture that is being painted is not a satisfying one 
by far. Incidentally, saying that this year’s sugar season is 
bound for failure is premature. Everything will depend 
on how well the technical “field-plant” chain operates 
and on whether transportation workers let us down. Of 
course this has a great deal to do with processing 
enterprises. They must be supplied with all that is 
necessary as a priority. It is time to understand that no 
one will solve our problems for us. 

* ie * 

The following participated in the investigation: Ye. 
Zakharyansk, V. Shevchenko, A. Yurkin, Ye. Tsorina, V. 
Pavlov, N. Styazhkin and N. Stepanchenko. 

Problems in Central Chernozem 

904B0031B Moscow SELSKAYA ZHIZN in Russian 
12 Oct 89 p 1 

[Article by Yu. Baklanov: “How Much Sugar is Left”] 

[Text] A year ago I was witness to a disagreement about 
the tactics for harvesting sugar beets. Lipetsk oblagro- 
prom [oblast agroindustrial association] was trying to 
prove that earlier harvesting of the root crop ultimately 
yields a larger sugar output. In Voronezh, workers pre¬ 
ferred to wait. Life has confirmed the correctness of the 
Lipetsk workers, who not only dealt successfully with the 
3-year plan for sugar production but also overfulfilled it. 
Having achieved the processing of 90 percent of the 
harvest prior to 1 January, they recieved several million 
rubles of above-plan profits from their good sugar 



7 December 1989 

“The decrease in expenditures had an effect on profit¬ 
ability too,” said A. Azarenkov, chairman of the oblast 
cooperative for the food and processing industry. “After 
all, in September significantly fewer resources are 
required for sugar production than during the winter 

This year Dobrinskiy Sugar Plant began its new season in 
late August. In order to compensate for the underpro¬ 
duction of the harvest and sugar content, sovkhozes and 
kolkhozes are paid 20 percent supplements to procure¬ 
ment prices. Today the oblast’s farmers are close to 
fulfilling the plans for the sale of root crops in a volume 
of 1.72 million tons. Plans have been fulfilled in Dank- 
ovskiy, Zadonskiy, Stanovlyanskiy and Chaplyginskiy 
rayons. Here it is planned to buy no fewer than 400,000 
tons of products above the plan. The largest yield is being 
produced in Volovskiy and Dobrinskiy rayons, espe¬ 
cially in Rodina Kolkhoz and Kolkhoz imeni Chapayev. 

Voronezh workers have begun to harvest beets earlier 
than usual too. Their reasons? Last winter at the end of 
the processing season, sugar output fell in the oblast by 
half, and for the last batches of sugar beets it decreased to 
4 percent. It was calculated in the oblast that if the 
season were curtailed to 100 days, according to planned 
productivity it would be possible to have an additional 
8,000 tons of sugar. 

But right now this is wishful thinking—the production 
capacities of plants do not secure the processing of beets 
within the optimal period. This is especially true this 
year, when farmers have raised a record harvest—on 
each of 199,000 hectares they plan to harvest over 280 
quintals of root crops. These calculations justify them¬ 
selves. The beet farmers of Novousmanskiy Rayon, who 
were first in the oblast to complete harvesting, collected 
320 quintals of root crops per hectare. Each hectare in 
Kashirskiy Rayon yields over 300 quintals, and the yield 
is slightly less in Anninskiy, Liskinskiy and Talovskiy 
rayons. Yield could have been even greater if beet 
farmers had at their disposal precise sowers, convenient 
cultivators, equipment for seed farming, effective means 
for protecting plants and plants of the same size with a 
high level of seed germination. 

But with current beet yields it is not possible to avoid 
sugar losses. We still have a long way to go before we 
reach complete accord between beet farmers and sugar 
refiners. Their economic interests are different. First 
payment is made for tonnage, for sugar content, and for 
exceeding the average annual sales level for root crops. 
Processors are interested in the greatest sugar output and 
in preventing losses of the raw materials that have 
already been received. It is true that in Voronezh Oblast 
talks are being held about the creation of a scientific- 
production system, Sakhar, will include beet-sowing 
enterprises, all 12 sugar plants and the All-Russian Nil 
[Scientific Research Institute] of Beets and Sugar. But as 
of yet there have been no definite recommendations. 

Moreover, farmers worry about whether they will lose a 
portion of their growing income since the branch is on 
the rise. 

The main reason for losses is the prolonged processing 
period due to the shortage of capacities and the absence 
of good conditions for storing beets, including active 
ventilation systems and dependable roofs. In plants and 
at beet points there is a shortage of concrete platforms. 

The problems that have been accumulating for decades 
were not dealt with seriously by anyone. Discussions 
about them began only after coupons for sugar were 
introduced. In Voronezh Oblast the age of half the plants 
exceeds 150 years and 70 percent of the equipment is 
worn out. Renovation and building will require 350 
million rubles, and loan debts exceed the cost of fixed 
capital by a factor of 1.5 as it is. The construction of a 
new plant, Number 11, has turned into a long-term 
building project. The construction of Lebedyanskiy 
Plant in Lipetsk Oblast is taking too long. 

The growth in gross yield has posed a problem for 
Lipetsk workers as concerns the building of still another 
enterprise for processing beets from the southwestern 
rayons of the oblast. But where can they get capital for 
building and technical reequipping if Minfin [Ministry 
of Finance] has until now taken over 80 percent of the 
profits from the sugar industry into its own budget? At 
the same time it returned considerable capital in the 
form of subsidies. What is the purpose of this pumping 
of money back and forth? With this kind of limited cost 
accounting, we cannot speak about the modem tech¬ 
nology that has already been assimilated in foreign 
countries. It foresees the automation of production on 
the basis of microprocessor technology, a practically 
waste-free storage of beets in normal storehouses with an 
optimal microclimate. We still have not only plant walls 
dating to the last century but also elements of our 
great-grandfathers’ technology. 

“Right now microprocessors are beyond us; somehow we 
will deal with this harvest without ChP [extraordinary 
events],” comments V. Fusov, senior engineer of Voron- 
ezhsakharagroprom [Voronezh Sugar Agroindustrial 

Storehouses in Pereleshinskiy Plant are stuffed with 
ready sugar—there is nothing with which to ship it out. 
And not only sugar. Judging by the harvest, beet farmers 
will sell half a million tons of root crops above the plan. 
Due to the shortage of capacities, the beets are being sent 
for processing to the Northern Caucasus; moreover, 
according to the schedule, 180 railroad cars must be 
loaded each day. But this number of cars was provided 
only during the first 4 days of October. 

Due to the non-delivery of cars, Lipetsk sugar refiners 
are being hindered in shipping the ready product to 
Altay Kray, Kemerovo, Omsk, Orenburg and other 
oblasts. Can it be that in Siberia sugar has already ceased 
being in short supply? 

7 December 1989 



New Sugar Plant 

Russian 16 Sep 89 Second Edition p 1 

[Article by N. Bulavintsev, Penza Oblast: “New Sugar 

[Text] The first 100 tons of sugar were produced at the 
new sugar plant that has opened in Zemetchino. The 
enterprise’s collective has pledged to fulfill its annual 
quota ahead of schedule and to produce no fewer than 
500 tons of sugar above the plan. 

Today hourly production is about 2.5 tons of sugar beets. 
During the first days of operation of the new plant, about 
1,000 tons have already been produced. 

Belgorod Oblast Progress 

Russian 6 Oct 89 Second Edition p 1 

[TASS article, Belgorod: “The Sugar Conveyor”] 

[Text] The “plantation - sugar plant” conveyor has 
begun operating at full capacity in Belgorod Oblast, one 
of the largest beet growing regions in the Central Cher¬ 
nozem. Oblast kolkhozes and sovkhozes have begun the 
mass harvesting of sweet roots. Oblast sugar plants are 
joining in the processing of the new harvest. 

In order to harvest the complete harvest without losses, 
kolkhozes and sovkhozes together with processing enter¬ 
prises have developed precise schedules for harvesting 
and shipping the beets. The schedules have been com¬ 
posed on the assumption that the harvested root crops 
will be shipped to sugar plants immediately. Rayon 
state-cooperative agroindustrial associations have orga¬ 
nized precise work of all harvest participants. This is also 
being helped by the special repair brigades created in the 

Belgorod Oblast Problems 

Russian No 39, 22 Sep 89 p 3 

[Untitled article, Belgorod Oblast] 

[Text] In the oblast, sugar beets occupy about 10 percent 
of the arable land—150,000 hectares. This is one of the 
largest beet fields in the Russian Federation. However, 
the capacities of the existing 11 sugar plants clearly do 
not correspond to such a high level of development of 
beet farming. The duration of processing of root crops at 
these plants reaches 135 and more days. On this basis we 
have been faced with above-norm losses of raw materials 
during storage and a decrease in the output of the end 
product. For this reason, during the 11th Five-Year Plan 
alone, the oblast underproduced 50,000 tons of sugar. 

Sugar Beet Harvest Transport, Distribution 
Problems in Ukraine 

Harvest Lags 

904B0023A Kiev PRA VDA UKRAINY in Russian 
26 Sep 89 p 1 

[Article by A. Gorobets: “September’s Severe Lesson”] 

[Text] In our republic there has never been such an 
unpropitious start to the sugar refining season. The 
debut was totally ruined by the September rains. And 
here is the result—I quote from an official report by 
Ukrsvekloagroprom [Ukrainian Sugar Beet Agroindus¬ 
trial Association], precisely adhering to the style of the 

“In connection with the delays in harvesting beets due to 
unfavorable weather conditions, the start of operations 
of 105 sugar plants was delayed (of 192 existing in the 
Ukraine—A. G.). In a number of oblasts, due to the 
unavailability of raw materials, the operation of sugar 
plants was halted after a short time (1-7 days) and plants 
remained idle for 4-11 days. This includes 29 plants in 
Vinnitsa Oblast, five—Kirovograd, six—Poltava, 
three—Khmelnitskiy and four in Cherkassy Oblast. Here 
losses in each enterprise comprised up to 150,000 

Experienced sugar refiners say that halting the opera¬ 
tions of a plant results in a significant underproduction 
of the end product—sugar, the price of which is very high 
under today’s coupon system of distribution. After all, if 
in each operation the end colors the operation, in sugar 
production it is the reverse—the beginning does this. 
The operation of the enterprise is always accompanied 
by technological difficulties and the tying up of the 
capacities of individual lines and networks, which in the 
final analysis results in a loss of sugar. Moreover, the lost 
quantities are large. If we consider that this year repeat 
start-ups have been necessary in 47 plants it is not 
difficult to guess how much of the sweet product has 
found its way into water reservoirs. 

Everyone knows that the shorter the sugar-refining 
season, the greater the output of sugar. Today already we 
must regret the fact that the season has already been 
prolonged. It is equivalent to the idling of almost two 
plants during the entire season. 

Under such circumstances it is difficult to draw any sort 
of conclusion. The selection of practices is up to highly- 
trained specialists. They will probably have their say. 
But still we note some kind of bowing of today’s practical 
workers before so-called “objective reasons.” They say 
that the rains started and this is why the plants stopped 
operations. However, it is no secret that previously we 
have had wet Septembers, and sometimes with more 
precipitation than this year. Yet during the last two 
decades, as calculated by specialists of Ukrsvekolosa- 
kharagroprom, there have been fewer than 10 cessations 
of operations due to the shipment of smaller amounts of 



7 December 1989 

raw materials than expected. This year sugar refining 
stopped simultaneously in 47 enterprieses! 

It is difficult to believe, but this event did not arouse 
special concern or alarm locally, among communists, in 
soviet and economic organs and in UkSSR Gosagroprom 
[State Agroindustrial Committee]. It is as if nothing 
unusual had occurred—the plants stop operations, then 
they start up again...Direct losses to enterprises due to 
this alone comprised over 5 million rubles. Thousands of 
tons of raw beets were irretrievably wasted while the 
technology was shaping up. 

Who should bring suit against whom in this regard? 

I am convinced that a suit must be brought against the 
lack of organization, against decreased demandingness 
of each other and first and foremost against the imper¬ 
fections in economic interrelations between producers 
and processors. After all, today what is the basis for the 
partnership of the kolkhoz and the plant, for example? It 
is the contract agreement that hardly corresponds to the 
demands of the times and the September schedule 
assigned from above for delivering beets to the root crop 
storage areas of processing enterprises. 

The schedule was interrupted by the rains and plants 
remained without raw materials. It is as if no one is at 
fault for this—you cannot bring suit against the “heav¬ 
enly buro.” 

And now let us imagine for a moment that the September 
schedule for bringing in raw materials was confirmed not 
by the command but by the economic method. In other 
words, the contract stipulates that on a certain day the 
kolkhoz must deliver a certain quantity of beets, a 
certain quantity of something else...In the case of under¬ 
supply or above-norm supplies the enterprise pays fines. 
But this kind of raw material is paid for not according to 
the regular rate but with a certain supplement in order to 
provide incentives. 

How would the kolkhoz chairman act in this case? 
Evidently he would always have a small beet field as an 
NZ [emergency supply] for bad weather. Just in case, he 
would introduce simple technology accompanied by dig¬ 
ging from underneath. If rains began and it was impos¬ 
sible to harvest raw materials from the main beet fields, 
the possibility would exist to organize the loading of 
beets manually; after all, torrential rainfall does not 
occur every day, and not even every year, in early fall. 

Alas, today it is not economical to manage things in the 
old way—to bring in a volitional, command schedule for 
shipping raw materials to plants. This method discred¬ 
ited itself long ago, as did the entire command- 
distribution system for administrative management. It is 
too bad that they just cannot seem to understand that in 
the republic’s Gosagroprom or in the rayon executive 
committees of the beet-sowing zone. 

September’s severe lesson obviously did not teach the 
directors of soviet and economic organs anything. They 

did not understand that for the republic’s economy 
September sugar was more bitter than bitter radishes. 

Rail Transport Problems 

904B0023B Moscow GUDOK in Russian 20 Oct 89 p 1 
[Article by V. Denisenko, Kiev: “Sweet Bitter Taste”] 

[Text] Interruptions involving sugar have become 
common in Kiev. In late September many city residents 
were not able to use their coupons to obtain sugar. 
Meanwhile, the refined product literally flooded pro¬ 
cessing enterprises. Not only storehouses but also pas¬ 
sageways, utility facilities and corridors were covered 
with sugar...Today in expectation of being shipped out, 
700 tons of sugar have accumulated in the republic. 

But this is not everything. Due to the shortage of storage 
facilities Shepetovskiy, Druzhbinskiy, Berdichevskiy 
and Gorodishchenskiy refining plants were forced to halt 
operations. It is impossible to store their products in the 
open, and the secondary startup of operations leads to 
additional losses of raw materials and sugar. 

If they have not yet stopped operations, those on the 
verge of doing this include Orzhitskiy, Lokhvitskiy, 
Vladimir-Volynskiy, Ternopolskiy, Pervomaysk- 
Nikolayevskiy and a dozen other plants. Old stocks of 
sugar have exceeded all tolerable limits here. 

The reason is the same everywhere—the absence of 
covered railroad cars. In September, railroad workers 
owed over 1,500 units, and in the first 10 days of 
October—over 500. This is why, for example, although 
60,000 tons of refined sugar are produced only one-third 
is shipped out. 

“Transportation workers have pulled the rug out from 
under us,” says B. Krinitskiy, deputy director of the 
Ukrsveklosakharagroprom [Ukrainian Sugar Beet and 
Sugar Agroindustrial Association] central board. “Previ¬ 
ously all kinds of things happened but there has never 
been such a problem with dispatching sugar.” 

B. Krinitskiy said further that over 60 percent of the 
sugar is sent by the central board outside the republic 
and since agreements on deliveries are systematically 
unfulfilled, several candy factories in various parts of the 
country are in danger of closing and interruptions in the 
marketplace are increasing. Moreover, the central board 
will have to pay consumers large fines. 

There is no sugar in the free marketplace and there is a 
sea of sugar in storehouses. That is the paradox. Inciden¬ 
tally, would it have been any different if railroad workers 
and sugar refiners had prepared poorly for the “sugar 
season?” Many storehouses in processing enterprises 
need repairs and loading areas need to be expanded. 
Also, by September old production had still not been 
shipped out to other regions and capacities had not been 
made available. 

7 December 1989 



In turn, railroad workers are unsatisfactorily preparing a 
covered empty car for the capricious freight. For 
example, on the Southwestern, of seven points only one, 
Fastovskiy, corresponds to requirements. At other 
points, cars are poorly cleaned. As a result, of the 20 cars 
that are supplied often only four or five are selected. But 
even these points are not loaded efficiently at the height 
of the season. Collectives allow them to remain idle for 
10“20 hours. 

Undoubtedly we can agree that within the railroad’s 
work fleet during the last 2 months there has been an 
undercalculation of a total of over 40,000 covered cars as 
compared to the plan. Moreover, each day plants receive 
300 cars fewer than the norm carrying local freight. 
However, even under these conditions 85 units could not 
be unloaded per rotation. 

The situation is no better on other railroads in the 
Ukraine. Many hundreds of cars are not unloaded. In 
Crimea Oblast alone each day 300 covered cars are 
“lost” daily. The situation is the same in Kharkov, 
Voroshilovgrad, Odessa and other oblasts. 

Locally no one takes the initiative and everyone acts 
irresponsibly toward the means of transportation. This is 
why the gap between shipment plans and their fulfill¬ 
ment is growing. During the first 10 days of October the 
Southwestern, Odessa and Southern railroads did not 
provide 200 cars to ship sugar, and in Lvov—almost 

We must note that complex problems exist in the repub¬ 
lic’s railroads in terms of unloading food freight and 
consumer goods as well. Plans to ship children’s foods, 
soap and tobacco items are fulfilled by only 40-50 

The most alarming thing is the fact that we are talking 
about those goods that are in short supply in stores. 
Freight yards are crowded with containers. In the 
Crimea, for example, there are already 2,500 of them, 
i.e., in excess of the norm by a factor of 2.5. A similar 
situation exists in the ports of Odessa, Ilichev, Nikolayev 
and Izmailov. 

In today’s complicated circumstances, when at the fault 
of the republic’s Gosagroprom, oblagroprom and rail¬ 
road workers themselves hundreds of thousands of cars 
are being transformed into storehouses on wheels, it 
turns out that unloading in the evenings and nights is 
poorly organized and freight does not leave the station. 
But one thing we do have a surplus of, and that is the 
so-called “objective reasons.” 

In the Ukraine, the sugar season began badly. The 
unfavorable fall weather in many beet-growing regions 
delayed harvesting by a week, and the longer the sugar 
refining season, the more losses of the end product. 

As a result, there was also a change in the schedule for the 
start-up of every second sugar-refining plant in the 
republic out of a total of 200. Moreover, 17 enterprises 

in Kirovograd, Poltava, Khmelnitskiy and Cherkassy 
oblasts and 29 in Vinnitsa, having worked for several 
days after start-up, halted operations for a long period of 

Direct losses to processors equal a total of 5 million 
rubles. But yet another account exists—every repeat 
startup of an enterprise results in great losses of sugar, 
which you cannot find in the stores even during daylight 
hours using a bright light... 

In general, farmers and sugar refiners are calculating 
their losses and have somehow forgotten about the 
situation of seed farmers, even though the transportation 
conveyor, which ties the station beet points with the 
field, also remained idle. The shipping schedule worked 
out by transportation workers burst like a soap bubble 
and now railroad workers must make a great effort to 
achieve well-paced plant operation and to avoid the loss 
of the valuable product. 

Let us take, for example, the Southwestern railroad, 
which by 15 December is to ship 18,379 cars full of raw 
materials. Preparations were made ahead of time here 
for the harvest and the errors of the past season were 
taken into account. The shipment technology was elab¬ 
orated, using shipment routes. Circular fans were added 
to the sides of all gondola cars. 

Yet, despite the fact that measures were taken, well¬ 
paced unloading began late in September. This is why 
with a plan of 3,294 cars, during 16 days only 2,982 cars 
were sent out. Left at station points were 17,340 tons of 
raw materials. In October the situation appeared to 
stabilize, but as of yet railroad workers have not been 
successful in making up for the September debt. 

In other railroads in the Ukraine, and first and foremost 
the Southern, the situation is even more alarming. In the 
Poltava area the harvesting of sugar beets began on 20 
August, but had to be halted because of the rain. Then 
the beets began to grow intensively. However, railroad 
workers were not able to take care of the influx of beets 
and in a month did not provide 2,120 cars. At the station 
points of Poltava and Kharkov oblasts in September 
instead of a 3-5 day supply a 42-day supply accumulated! 

In the Ukraine as a whole at points 2 million tons of root 
crops dug out in September have accumulated, including 
a million tons of beets, which are not subject to long¬ 
term storage. 

In the Ukraine a good harvest of sugar beets has been 
thrown out. In October railroad workers are to ship over 
3 million tons of root crops and over I million tons of 
sugar. But will they be able to accomplish this? 



7 December 1989 


Livestock Feed Problems Retard Agricultural 

904B0018A Moscow PRA VDA in Russian 23 Aug 89 
Second Edition p 2 

[Article by A. Kosynkin, candidate of economic sciences, 
Moscow: “We Are Trampling Our Treasures”] 

[Text] Among the problems facing the agroindustrial 
complex, the most urgent is that of feed. Due to its 
shortage, the country is forced to import grain, meat and 
butter. The forage shortage is the most serious hindrance 
in the food business. It did not appear suddenly, today, 
and even not during the period of stagnation, but much 

Even D. I. Mendeleyev wrote about the fact that 
“nowhere would farming achieve perfection, i.e., large 
yields, without the help of industry...” And here is the 
opinion of yet another important scientist and agricul¬ 
tural specialist, Academician D. N. Pryanishnikov: “A 
great deal is said here about ‘the industrialization of 
farming,’ but not enough attention has yet been given to 
‘the agrarization of industry itself,’ or if you wish ‘the 
agriculturization of industry...’ The obsolete technology 
is the reason that our harvests are half those of France, 
one-third those of Germany and one-fourth those of 
Denmark... Up until now our grain exports were a 
function of our industrial backwardness and not of 
agricultural progress.” 

Perhaps the figures and the relations have changed. But 
we know that the tendency remains—today the avail¬ 
ability of funds and energy to our villagers is lower by a 
factor of 3-4 than to farmers in the U.S. and Western 
Europe. Whereas all of the technological processes are 
completely mechanized, in our country only fragments 
of the process are. Living conditions and comforts are 
also not to our advantage. These are the main reasons for 
the shortage in food products. Seeing the shortage as the 
result of laziness on the part of our peasants, as some 
economists and journalists do, is a useless waste of time. 
The village is not overfed with capital. It is shortchanged 
in this regard, as was painfully stated at the congress of 

Scientists and practical workers are making an effort to 
find reserves and ways to bring the agroindustrial com¬ 
plex out of its difficities. There are many opportunities 
here. This includes the redistribution of capital to the 
advantage of the village. 

Are there methods by which it would be possible to 
supply the country with meat, milk and other livestock 
products with minimum expenditures and more rapidly? 
There are—giving livestock 40-45 quintals of feed units 
instead of the 28 provided today. 

Let us look at our green open spaces—at our long-term 
cultivated haylands and pastures. We think that if capital 
expenditures are invested here once it will be possible to 
produce a good return for 20-30 years. Moreover, the 
production cost of feeds is lower by a factor of 2-3 than 
if the feeds are cultivated on plowed land. This kind of 
approach to the matter enabled many countries in 
Europe to sharply decrease the labor intensiveness of 
feed production, to curtail the sowing of forage crops on 
fields and to increase the area in grains by doing this. 
There is no need to say that the improvement of 
meadows is of primary importance for the food business. 

What is the picture today? Even in rayons with adequate 
and surplus moisture—the RSFSR Non-Chemozem 
Zone, Belorussia, Lithuania, Latvia and Estonia— 
cultivated meadows comprise 5.8 million hectares, or 
one-fourth of all haylands and pastures. 

In general, for the last several years quotas have not been 
fulfilled relating to the introduction of long-term pas¬ 
tures and to increasing the fertility of haylands. The 
creation of about 1,000 water reservoirs has resulted in 
the curtailment of flood meadows by 6.5 million hect¬ 
ares. Their productivity has decreased by a factor of 2-3 
in places where the river current has been regulated. 

Still we have colossal riches—320 million hectares of 
natural haylands and pastures. On the average for the 
country, they yield 2.6-3.0 quintals of feed units per 
hectare. In other words, productivity remains on the 
level of 1956-1960. 

According to data from the VNII [All-Union Scientific 
Research Institute] of Feeds, surface improvements, 
including the cutting of hillocks, the collection of rocks, 
the cleaning up of shrubs, cultivation, the application of 
fertilizer and resowing of grasses, will allow us to 
increase production output per hectare by a factor of 2-3 
within a short period of time. Radical reclamation 
provides the opportunity to produce 40-50 quintals of 
hay per hectare. Long-term irrigated haylands and pas¬ 
tures already provide for a yield of 80-90 quintals. 

This is a dependable means of solving the feed, and 
consequently, the food problem. Moreover, this can be 
done without a supplementary increase in sowing area. It 
is a path that has been tested by world practice. Each 
year the United States procures 140-150 million tons of 
hay. We procure only 56-70. The U.S. feeds 270-295 
million tons of feed units of pasture grasses to animals. 
We feed 68-70 million tons to ours. In other words, we 
provide less hay by a factor of 2.5 and one fourth the 
pasture grasses per standard cow. 

Because of this we utilize the genetic potential of animals 
poorly. Specialists feel that already today the produc¬ 
tivity of the dairy herd can be on the level of 3,500-4,000 
kilograms. In a number of cases our actual productivity 
is about half this. In calves we underproduce 40-50 
percent of weight gain; in sheep—43-48 percent. There is 

7 December 1989 



no need to comment on this. We are trampling our 
treasures without paying any attention to them, without 
noting their value. 

What is the situation like today on feed lands? 

Surface reclamation is required by 160 million hectares. 
Whereas in the enterprises of the Tatar ASSR, Sverd¬ 
lovsk, Omsk, Vitebsk and several other oblasts and 
regions of the country, the situation in this regard is not 
too bad, in general the volume of work has decreased in 
recent years. 

Of course, kolkhozes and sovkhozes do not have enough 
manpower or technology. It would be a good thing if 
specialized reclamation enterprises took such concerns 
upon themselves. 

Whereas in Rostov Oblast during the last 8 years radical 
reclamation of feed lands has been carried out on an area 
of 254,000 hectares, and in Volgograd Oblast—on 
170,000, in Dagestan ASSR compared to a plan of 
152,000 hectares work has been carried out only on 
9,000 hectares. In North Osetiya ASSR the respective 
figures are 32,000 and 4,000, in Tomsk Oblast—81,000 
and 5,000 and in Chita Oblast—217,000 and 37,000 

In addition, in every enterprise there are lands that do 
not require complicated work. It is possible for farmers 
to improve them through their own efforts. This is done, 
for example, in Moscow and Tyumen oblasts. In Ivanovo 
Oblast in 5 years radical reclamation and reseeding have 
been carried out on an area of over 35,000 hectares, and 
surface reclamation—on 150,000 hectares. Productivity 
has increased by a factor of 1.5-2. Capital expenditures 
for radical reclamation equal 150-500 rubles per hectare 
and are repaid in the course of 3-4 years. These technol¬ 
ogies have been developed by scientific institutions and 
have been tested in a number of enterprises in Orel, 
Kursk and Poltava oblasts. 

However, throughout the country the reclamation of 
natural lands is proceeding slowly. Extremely little atten¬ 
tion is being given to the development of long-term 
cultivated haylands and pastures, especially irrigated. It 
is these kinds of lands that provide the most inexpensive 
feed and the cheapest products for Borets Kolkhoz of 
Moscow Oblast, Detskoselskiy Sovkhoz of Leningrad 
Oblast and Bortnichiy Sovkhoz of Kiev Oblast. In the 
summer alone the livestock farmers here produce 2,500- 
3,000 kilograms of milk per cow with a production cost 
of 14-18 rubles per quintal, as well as inexpensive meat. 

Today within the country there are about 2,500 
kolkhozes and sovkhozes in which dairy productivity 
exceeds 4,000 kilograms. All of them have a good feed 
base, a mandatory element of which is highly productive 
haylands and pastures. In general, the share of radically 
reclaimed haylands and pastures continues to remain 
extremely low—about 7 percent of total area, whereas in 
developed countries this figure is 36-70 percent. 

Are hopes again being placed on concentrated feeds? 
Until when? In comparison with the Seventh Five-Year 
Plan their allocation for the dairy herd has increased 
from 7.6 to 29 million tons, or by a factor of 4.1, whereas 
during this time production output has increased by a 
factor of only 2.1. The expenditure of concentrated feeds 
for calves increased by a factor of almost 6 but beef 
production increased by a factor of only 2.2. Thus, the 
expenditure of very expensive concentrates that are in 
short supply is increasing two or three times as quickly as 
the return from them in terms of milk and meat. In 
livestock raising this path is ruinous. 

By turning its attention to haylands and pastures, the 
village can not only bring the branch out of its impasse 
but also free plowland for grain crops. 

Thus, while increasing grain production it is necessary to 
seriously deal with improving natural feed lands on a 
large scale. 

In its social-political and social-economic significance 
this program could be equivalent to the current program 
to reequip enterprises of the processing industry or it can 
somehow approach the program to raise the virgin lands. 
Correspondingly it must have material-technical and 
organizational support. In connection with this it would 
be possible to move toward purposeful stimulation of 
enterprises to improve the fertility of meadows and 
pastures, providing them with preferential credit, a large 
portion of which can be repaid by means of the state 
budget if work quality is good. 

We should consider reorienting the services of USSR 
Minvodstroy [Ministry of Hydraulic Engineering Con¬ 
struction] to work on the radical reclamation of 
meadows and pastures. Local organizations of the 
former Selkhoztekhnika [Agricultural Equipment Asso¬ 
ciation] and Selkhozkhimiya [Agricultural Chemical 
Association] also have considerable possibilities for this. 

It is important to strengthen the course toward diverse 
forms of property by large-scale measures to improve the 
use of land. 


Defense Industry Converting to Farm Machinery 

Russian 12 Oct 89 Second Edition p 1 

[Article by N. Zheleznov, TASS columnist: “How the 
Program Is Being Fulfilled”] 

[Text] The state program announced in 1987 for pro¬ 
viding new equipment for the processing branches of the 
agro-industrial complex is growing stronger but not at 
rates that would make it possible next year to remove the 
strain in the supply of food products. That is the general 
tone of the meeting held on 11 October by the State 



7 December 1989 

Commission of the USSR Council of Ministers on Mil¬ 
itary-Industrial Questions at which discussions were 
held on the contribution of the defense branches of 
industry to the development of the agro-industrial com¬ 

The country has been creating a defense capability over 
many decades, not taking costs and expenditures into 
account. The Soviet people denied themselves a lot of 
things, and now they have a right to count on a return 
from this sector of the economy and on its help in 
resolving perestroyka’s important social tasks. Managers 
of branches who spoke at the meeting, reporting on the 
progress of fulfillment of the program for this year, cited 
what appeared to be comforting data on the amount of 
new equipment for milk plants and refrigerators, and for 
vegetable storage facilities and grain combines. But all of 
their speeches, strange as it may seem, ended with one 
refrain: if something did not go right, then the parts 
producing factories were to blame. The USSR Ministry 
of General Machine Building was instructed, for 
example, to create a large series complex for the produc¬ 
tion of powdered potatoes. Everyone knows that pota¬ 
toes are the main item of our losses in vegetable stores. 
But very few know that in our country only 1.5 percent of 
the tubers go into processing, while in the United States 
50 percent of the tubers are processed. Six plants, which 
obligated themselves to establish enterprises in the min¬ 
istry next year, must increase the percentage of potatoes 
processed in the country by a factor of 6 immediately. 

Indeed, our space industry is ready to accomplish such a 
“revolution” on the store counters, just as it is com¬ 
pletely within the power of the heads of former rocket 
shops to equip milk plants with first-class equipment for 
the output of homogenized milk, to create series produc¬ 
tion of cereal mini-plants, and to arrange an all-union 
conveyer line for the output of Russian meat dumplings. 
But as was shown in the discussion, in which, in addition 
to members of the state commission, managers of enter¬ 
prises, chief designers, and party committee secretaries 
took part, the linkup of the defense complex with science 
and the practical work of the processing branch is 
slipping now not because of the technological design 
part, but rather because of the paper bureaucracy. I.S. 
Belousov, the chairman of the state commission and 
deputy chairman of the USSR Council of Ministers, 
emphasized that the defense complex is able fully and in 
time to insure a sharp change for the better in the harvest 
processing industry. All that has to be done, he said, is to 
adopt emergency measures today that correspond to that 
tense situation that has developed in the country in 

But emergency measures, a list of which is shown in the 
resolution adopted at the meeting, first and foremost 
affect thousands of people—engineers and workers who, 
even without this, are experiencing great difficulties in 
the conditions of converting defense branches to 
peaceful production, arranging new production, and 
mastering new professions. Many of them know what 
continuous work for several days in a row means before 

turning over an important defense order. And now, as a 
representative of the city of Votkinsk assured the mem¬ 
bers of the commission, the people are ready to work 
because of the cause which is so important for pere- 
stroyka. But to maintain their enthusiasm and to stimu¬ 
late their efforts under conditions of the recent tax on the 
wage fund becomes rather difficult. 

Under these conditions, the participants of the meeting 
emphasized, a special responsibility rests with the party 
committees of the ministries, enterprises. Nil (scientific 
research institutes), and KBs (design bureaus) of the 
defense industry. 

O.D. Baklanov and Ye.S. Stroyev, secretaries of the 
CPSU Central Committee, took part in the meeting. 

Inferior Rostov Combines Cause Grain Losses 

INDUSTRIYA in Russian 15 Aug 89 p 1 

[Article by Ye. Boshnyakov, Candidate of Technical 
Sciences: “Grain in the Field, Dollars Abroad”] 

[Text] A few statistics. Last year the USSR imported 
approximately 38 million tons of grain from abroad, 
approximately seven and one half billion dollars worth. 
We could have used this money there for purchasing 
consumer goods; on the internal market, the treasury 
would have earned not less than 70 billion rubles. Let us 
compare: the entire increase in domestic (that is, low 
quality) TNP this year will amount to 15 billion rubles. 
Another 37 billion rubles will enter the retail network for 
imported consumer goods. 

At first glance, there would seem to be enough. But 
something is needed. And the livestock and poultry must 
be fed. According to the most humble computations, we 
require for our Food Program 250-255 million tons of 
grain annually, and the average gross yield is 200-210 
million tons. Thus there is a shortage of 40-50 million 
tons—another Ukraine with the Kuban region. It is here 
that the State of Iowa comes to our assistance. 

Meanwhile, our combines are leaving 40-50 million tons 
of grain out on the fields—and this is during fine 
weather, as was the case with the 1986 harvest. So much 
for the grain! In addition, 20-30 million tons of chaff are 
left to rot out on the fields and this is equivalent to 10-15 
million tons of first class seed. It is shameful to recall the 
statistics on alfalfa, clover and other fodder grasses: the 
combines leave from one third to one half of these crops 
out on the fields. The losses in com and peas are 
somewhat less. Thus livestock die each spring from a 
shortage of fodder. 

Could it be that there is a shortage of combines? Or are 
they losing more grain than the foreign combines? No, 
objective data underscores the fact that this is not the 
case. Our pool of combines is larger than any other 
similar pool in the world. But the highly praised “John 

7 December 1989 



attachments for PPB-06A row-crop cultivators and for 
PLDG-10 stubble breakers, and the ShChN-2-140 slit¬ 
ter-mole plow. The combined soil tilling unit of AKP-2.5 
and AKP-5 types is the best implement for graded soil 
tillage for secondary and winter crops without a furrow 
slice inversion. For loading tractors of category 5 it is 
efficient to use the paired hitch of the AKP-2.5 unit. 

On the whole, the existing machine system does not yet 
meet the requirements for an overall mechanization of 
processes of cultivating and harvesting agricultural 
crops. Out of the 880 items recommended for use in the 
central chernozem zone 523 machines are in production, 
124 machines are recommended for production, and 233 
machines still remain at the stage of development. Thus, 
the practical realization of the machine system lags 
significantly behind the rates of its development. Fur¬ 
thermore, the part of machinery that is received on 
kolkhozes and sovkhozes does not meet modem agricul¬ 
tural requirements. Its reliability is low and technolog¬ 
ical sets of machines are not complete. 

2 . 

For the further efficient development of overall mecha¬ 
nization in plant growing, first of all, it is necessary to 
reduce the delivery of wheel-type tractors to the central 
chernozem zone and to increase the delivery of general- 
purpose caterpillar tractors of category 3. Out of equiv¬ 
alent machines (T-150 and DT-175S) it is advisable to 
deliver to this region T-150 caterpillar machines unified 
with the wheel modification widely used here. For these 
tractors it is necessary to increase the delivery of ZAU-3 
loaders of motor-vehicle drills, PFP-2 frontal loaders, 
KShU-12 and KShU-18 wide-cut cultivators for contin¬ 
uous soil tillage, AKP-2.5 and AKP-5 combined soil 
tilling units, AIR-20 and UTM-30 machines for the 
preparation of mineral fertilizers, PRT-10 machines for 
the application of solid organic fertilizers, OPSh-15 
low-capacity sprayers, APZh-12 and STK-5 units for the 
preparation of working fluids, implements for protecting 
soil against water erosion (attachments for PRNT-60000 
plows and ShChN-2-140 slitters), and fodder and com 
harvesting machines: Ye-303 mowers, Ye-281 combines, 
and UVS-16 ventillation installations. 

For overall mechanization it is necessary to accelerate 
the placement of more efficient, new technical facilities 
in production: DT-175S caterpillar tractors of class 5 
(T-250) and a high-clearance modification with frontal 
and rear mountings for agricultural machines, hitchless 
row grain and fertilizer drills, machines for the applica¬ 
tion of mineral and organic fertilizers (of RUM-5-03 and 
STT-10 types), which ensure their more uniform distri¬ 
bution on the soil surface, high-capacity combines of 
Don-1500 and Don-1200 types, technical complexes for 
drying seed and forage grain, and machines for the 
cultivation of high-stem row crops according to a 12-row 

Today the need for plow tractors is close to saturation. 
However, serious changes in their structure are needed. 

The demand for T-150K in this region has been almost 
met and during subsequent years deliveries should be at 
the annual writing off level. 

I would like to note that a shortage of universal row-crop 
tractors is felt in the region. A total of 6,500 additional 
units are needed annually. Special attention should be 
paid to this. 

The available pool of grain harvesting combines is suf¬ 
ficiently high. The load of grain crop harvesting areas per 
combine is 115 hectares. With the growth of deliveries of 
Don-1500 combines a smaller number of them will be 
needed. However, it is not yet possible to fully change 
over to these machines: Farms still have many unamor¬ 
tized SK-5 and SK-6 units and to this day the industry 
has not organized the output of trailed harvesters for 
windrowing grain crops. In the future it will be necessary 
to change over to the delivery of machinery in accor¬ 
dance with normatives, especially as these deliveries will 

The reliability of agricultural equipment, as well as its 
efficient use on kolkhozes and sovkhozes, remains an 
indispensable condition for the further development of 
overall mechanization in plant growing. 

And last: It is necessary to urgently solve problems of 
supply of spare parts, development of the repair and 
technical base, and organization of technical servicing 
and storage of machines. 


The potentials of the recommended machine system are 
fully manifested by its realization in production in 
combination with new forms of organization of equip¬ 
ment use. 

An efficient machine use is a complex multilevel system 
of measures of an engineering, economic, and agronomic 
nature. The more intensive the technologies, the higher 
the yield of resources. The scale of application of these 
technologies fully depends on the possibility of fulfilling 
all agricultural methods in a full volume and on the dates 

The formation of labor collectives working on brigade 
contract principles represents the best conditions for the 
use of machinery. The voluntary nature of unification, 
self-administration, and collective responsibility for the 
final result are the chief things in them. During the 
harvesting period the need for manpower doubles or 
triples. Therefore, larger temporary collectives are 
formed on the basis of harvesting-transport complexes. 

As a scientific analysis and advanced experience show, a 
further intensification in the division and cooperation of 
labor should follow the line of establishing a system of 
machine operating collectives, one part of which special¬ 
izes in raising grain crops, the second part, in industrial 
crops, and the third part, in fodder crops. These collec¬ 
tives should work in uniform cooperation with machine 



7 December 1989 

operators specializing in engineering-technical or trans¬ 
port servicing. During the most intense periods the 
efforts of all are united. 

Such cooperation should be definitely based on system¬ 
atic cost-accounting contractual and, to an ever greater 
extent, leasing contractual relations. 


The following are the basic directions in the develop¬ 
ment of new mobile power engineering: an efficient 
power saturation, which makes it possible to reduce the 
list of tractors by ballasting and placing the cultivation of 
row crops on the basis of general-purpose mobile power 
facilities, as well as reducing over a long-term period the 
need for machine operators to one-third or one-fourth 
through the development of monoblocks out of two 
tractors with remote control, which increases labor pro¬ 
ductivity 1.8-fold and reduces operating costs by 20 

The use of nontraditional types of energy in the central 
chernozem zone also makes sense. Here solar energy has 
priority both in its reserves and in the readiness of 
technical facilities. 

A number of helium installations for heat and hot water 
supply for animal husbandry, hay drying, and heating 
water for household needs, which were developed by 
VNIPTIMESKh [All-Union Scientific Planning-Design 
and Technological Institute of Mechanization and Elec¬ 
trification of Agriculture] and other organizations, 
should find extensive application on the kolkhozes and 
sovkhozes of this zone. 

It is most advisable to use solar energy in such produc¬ 
tion facilities as summer milking places, farrowing 
houses, areas for hay drying, and shower installations on 
farms, in field camps, and in shops. For example, on the 
kolkhozes and sovkhozes of this region, usually, hay is 
dried in June-July, when solar radiation reaches the 
maximum amount. Our calculations show that 30 to 40 
percent of the total energy necessary for heat supply can 
be obtained precisely from solar radiation and the 
remaining 60 to 70 percent, from basic energy sources. 

Ozone-air mixtures as a working element affecting mate¬ 
rials and biological objects represent one of the prom¬ 
ising directions in the intensification of some technolog¬ 
ical processes in plant growing. This is due to the fact 
that they take an active part in the occurrence of bio¬ 
chemical processes, which are the basis for metabolism 
and energy exchange in materials and biochemical 
objects. Such mixtures can be used in the storage of 
agricultural products and in the drying of materials and 

For example, the drying and preservation of moist grain 
with an ozone-air mixture lowers specific energy expen¬ 
ditures to one-third or one-fourth as compared with 
drying without ozone or in warm dryers. The treatment 
of seed wheat and barley grain with ozone contributes to 

the disinfection of grain against covered and loose smut 
and to an increase of up to 20 percent in the harvest. Air 
ozonization in poultry breeding houses increases egg 
production and the live weight of poultry rises by 150 

For these purposes VNIPTIMESKh has developed 
small-size ozonizing installations, which make it possible 
to lower microbe contamination in livestock bams by 70 
to 80 percent and to increase animal productivity by 10 
to 12 percent. Ozonizing installations can be produced 
by local industry according to the planning documents 
available at the institute. 

Equipment Problems Hurt Feed Procurement 

Equipment Problems 

904B0007A Moscow SELSKAYA ZHIZN in Russian 
23 Aug 89 p } 

[Article by Yu. Baklanov: “What Shall We Use to 
Harvest Com?”] 

[Text] When should com be harvested for silage? The 
answer is when the ears have reached the milky-wax 
stage of ripeness. 

But as before, machine operators are hurrying, all 
because there is a shortage of feed-harvesting technology. 
A great deal of criticism has been directed at machine 
builders but the situation has not improved. It is tme 
that KSK-100 combines are no longer in short supply. 
But they cannot produce a good harvest without losses. 

In Lipetsk Oblast, just as a year ago, machine operators 
have begun harvesting corn ahead of the optimal 
schedule. One operator does this because crops have 
been damaged by a hurricane, another—due to the 
shortage of machinery. And they bring excessive 
amounts of water to the silage storage facility. 

“What can we do,” says V. I. Pigarev, chairman of 
Kolkhoz imeni Vladimir Ilich of Volovskiy Rayon, “if 
all we have for 500 hectares is just two KSK-100 com¬ 
bines? The machine operators have made them more 
dependable. But we cannot get by without losses. In 
places where the harvest reaches 400 quintals of green 
mass, cutting should already be higher, otherwise 
mowing will be impossible. It would be good to have at 
least two KSS-2.6 machines.” 

A small harvest is not good; neither is a large harvest— 
losses are then doubled, both in the fields and during 
silage operations. S. N. Nikitin, chairman of Krasnyy 
Oktyabr Kolkhoz of Belgorod Oblast said the following 
on this subject: 

“What we have is not silage, but a beer that hurts the 
cows. We are using a different approach. On 650 hect¬ 
ares of com fields we have 10 combines; we are even 
using two SK-1.8 machines that have been written off. 
We purchased two new KSK-IOOA to supplement our 

7 December 1989 



existing four. These machines break down often; thus 
some will operate and others will be used for spare parts 
if necessary. Of course all of this is to the disadvantage of 
the kolkhoz. If the technology were more dependable 
half the combines would suffice. But we cannot acquire 
KSS-2.5 combines, which are simple to operate, any¬ 

In Lipetsk Oblast the kolkhozes and sovkhozes received 
only 21 KSS-2.6 machines by the start of harvesting, 
although they had ordered 400. The workers of Lipetsk 
Oblast and their neighbors in the Chernozem region look 
with envy upon Voronezh, where industrial enterprises 
have organized the production of KSS-2.6 combines 
cooperatively. Since 1985, 1,215 combines have been 
manufactured. But demand for these machines even in 
local enterprises is so great that I. A. Vinogradov, 
chairman of the oblast APK [Agro-industrial complex], 
characterizes the situation involving harvesting silage 
crops as most difficult. 

Everyone everj^here talked about the shortage of feed¬ 
harvesting equipment. I asked N. A. Pugin, minister of 
automobile and agricultural machine building, to com¬ 
ment on the existing situation: 

“Measures to secure the village with new technology are 
already being taken. Rostselmash [Rostov Agricultural 
Machinery Association] has manufactured the first 
group, several hundred new, highly productive Don-680 
machines for harvesting and chopping all types of grasses 
and com. Gomselmash [Gomel Agricultural Machinery 
Association] is assimilating the production of the pow¬ 
erful Polesye complex. Using a purchased Austrian 
license we will begin to manufacture combines of the 
Champion brand, which have proven themselves well in 
various regions of the country.” 

Yes, farmers must know precisely what the new feed¬ 
harvesting machines are capable of and how many the 
Rostov and Gomel plants will be able to produce in the 
near future as well as how many KSS-2.6 combines 
Uralmash [Urals Machinery Association] will produce. 
Already today it is clear that Polesye will not be afford¬ 
able by everyone, and that it is not suitable for all types 
of soil. 

We must include in our calculations agroprom and 
inter-departmental cooperative plants, as is done in 
Voronezh. V. A. Tikhonov, VASKhNIL [All-Union 
Academy of Agricultural Sciences imeni V. I. Lenin] 
academician and chairman of the USSR Union of Asso¬ 
ciated Cooperatives, proposes the creation for this pur¬ 
pose of cooperative enterprises, which in his opinion will 
successfully compete with government enterprises. 

In Lipetsk, Kursk and Tambov people would be pleased 
to participate in regional unification of efforts for this 
kind of help for the village. 

“We asked the workers of Voronezh to join the efforts of 
enterprises to produce silage-harvesting combines, but 
were rejected,” says A. 1. Seleznev, first secretary of the 

Kursk party obkom. “We are trying to manufacture them 
ourselves and will make about 15. But we do not have 
the means to process the intake beater. The city does not 
have such machine tools. The workers of Sverdlovsk are 
helping out.” 

The directors of Lipetsk sovkhozes and kolkhozes are 
also posing the question of local production of a simple 
and dependable machine. But is it wise to begin from the 
beginning everywhere? After all, this will result in addi¬ 
tional expenditures! Why are Voronezh workers opposed 
to uniting efforts? 

“Because this machine is not advantageous for us, and 
we have had enough of cooperation just within our own 
city,” says I. G. Lychagin, party committee secretary of 
the Voronezh Aviation Production Association. “We 
have done extensive work to assimilate the manufacture 
of the combine. When we did not have our own machine 
tool to process the intake beater we went to other 
enterprises. It was very difficult to acquire this machine 
tool and to build two special buildings for the final 
assembly of the combines. We make some of the parts in 
general plant shops. We have improved the technology of 
Uralmash and, according to the responses of farmers, we 
are making a better-quality machine. But about 30 
enterprises are involved in the production of outfitting 
equipment. The impression develops that this combine 
is not needed for anyone except aviation builders. The 
city plan is 400 combines. During the third quarter we 
have so far been able to assemble 15 out of 100. First one 
plant lets us down, then another.” 

Under conditions of cost accounting it is naturally not 
advantageous for anyone to work to his own detriment. 
But right now the shortage of technology is resulting in 
great losses of feed. 

Inferior Equipment, Official Indifference 

Russian 15 Jun 89 p 2 

[Article by Yu. Belyayev: “Priority...Excuses—Where is 
the Technology for Meadows and Pastures?”] 

[Text] For a long time farmers have dreamed of a sower 
that would be capable of sowing only 1-2 kilograms of 
seed. Current technology pours the seed out, as if from a 
ripped bag; to be precise, at the rate of at least 6 
kilograms per hectare. As a result expenditures increase 
sharply, and there is no advantage to the additional 
expenditures—plants cannot become properly bushy, 
and yield decreases sharply. 

Unfortunately, dreams remain dreams. No one has ever 
laid eyes on a sower like this, although it exists not only 
in the dreams of farmers but also since 1986—as a 
specific assignment. USSR GKNT [State Committee on 
Science and Technology of the USSR Council of Minis¬ 
ters] assigned this to USSR Minselkhozmash [Ministry 



7 December 1989 

of Agricultural Machine Building] as part of the fulfill¬ 
ment of the general scientific-technical program on feed 

There are many such cases. 

At the VNII [All-Union Scientific Research Institute] of 
Feeds, I saw an amazing meadow—created 52 years ago; 
it has not been subject to any sorts of “makeovers.” It is 
mowed only twice during the mowing season, yielding 
65-70 quintals of hay per hectare. It is also fertilized. On 
this kind of meadow, in the words of Professor A. A. 
Kutuzova, by applying 1 kilogram of nitrogen, you 
produce 1 kilogram of sweet butter. But throughout the 
country, of over 300 million hectares, only about 7 
percent of natural feed lands have been improved. 

It is clear that this kind of genuinely modern meadow 
cannot be created without modem equipment. But that 
is precisely the problem—that even today we have 
nothing with which to plow and sow the meadow. The 
situation that has developed in the pasturing enterprise 
has long been recognized and understood extensively. 
Next year the resolution of the USSR Council of Minis¬ 
ters on measures to improve the productivity of natural 
haylands and pastures runs out, as does the national 
scientific-technical program on feed production that was 
passed to develop this resolution. 

Alas, little has changed since that time. The arsenals of 
scientists and designers have a solid scientific-technical 
reserve that would enable us to double and triple the 
pace of cultivation and the return on natural feed lands. 
But it is lying there untouched. In the VNII of Feeds, I 
was given the following figures. The quota on producing 
machines that is essential for improving natural hay- 
lands and pastures has been fulfilled by only 32 percent. 
The main supplier of the equipment—USSR Min- 
selkhozmash—has manufactured only 6 of 16 types. 

In travelling through departmental labyrinths, I heard on 
more than one occasion that for the implementation of a 
national program on feed production more favorable 
conditions have been created then ever before because 
scientists, designers, technologists and machine builders 
have never been so closely allied. Why then does this 
conceptually vital program have one foot in the grave? 
The response I received was: The new content has been 
stifled within the framework of old, departmental 
approaches. Moreover, the culprit was more precisely 
identified—USSR MinavtosellAozmash, or as it was 
referred to in conversation, “the ministry of a thousand 

I cannot say that our long discussion with V. V. Khay- 
dukov, director of the Main Production Administration, 
and with his co-workers was terribly analytical. From the 
ministry’s aggressive monologue, it was clear that their 
figures were up to date. All orders from Gosagroprom, 
with the exception of a series of shredding machines, 
were fulfilled. Yes, the output volume for pasture equip¬ 
ment today is several times smaller than indicated by the 
resolution’s quota, but this speaks only of the “average 

randomness” of the assignment. After all, clarified our 
collocuters, you know hov/ resolutions were created 
during the period of stagnation. As for the complaints of 
the VNII of Feeds, VIM [All-Union Order of the Labor 
Red Banner Scientific Research Institute for the Mech¬ 
anization of Agriculture] and Gosagroprom—these 
groups are not familiar with the local situation. Actually, 
there is enough equipment for improving meadows and 

So it turns out that there is enough equipment and that 
concludes the matter—they can see better than anyone 
what the village needs. This is why orders can be 
considered to be fulfilled, even if not 125,000 grain and 
grass sowers are produced as originally planned, but a 
much smaller number. 

The ministry’s myth about the up-to-date figures is 
constructed not only on direct trickery, of course. There 
are also excuses that are even more masterful. That fact 
is that orders are accepted only for equipment that is 
already being manufactured, and this is why state agro¬ 
industrial association workers simply do not have the 
opportunity to officially make their needs known within 
this framework. A large portion of real demand essen¬ 
tially remains unordered and is stored in resolutions and 
in letters of complaint. 

Minavtoselkhozmash comes to life, aquiring energy and 
resourcefulness, only if the opportunity arises to manu¬ 
facture heavier and simpler technology. Enterprises are 
relentlessly sent brush-marsh plows; machine builders 
could care less that they are useful only if supplemented 
by a whole series of other machines, none of which are 
available in the village. As for multi-operational units, 
they are either produced poorly or not at all. 

Minavtoselkhozmash has brought its skill in dawdling 
and excuses to a virtuoso level. A mounted shredder has 
been awaiting the conveyor for 9 years, but the ministry 
feels that this is the way things should be—there are 
substitutes for it, they say. Which ones? One of the 
machines is over twice as heavy and about three times as 
slow—using it is a disadvantage. The second is ear¬ 
marked for a completely different purpose—meeting the 
first bush threatens breakdown. For the sake of fairness 
I must mention that Minavtoselkhozmash has planned 
the production of a better mounted shredder. However, 
it has assigned Serdobskselmash, the building of which 
has been stopped, to take these orders. 

O. Marchenko, director of the feed production depart¬ 
ment of the All-Union Scientific Research Institute for 
the Mechanization of Agriculture (VIM), honestly says 
the following about this: 

“Utilizing the right of a monopoly, the ministry prefers 
to manufacture old, primarily single-operation 
machines, limiting itself only to cosmetic improvements. 
This is more advantageous for the department.” 

Not only Minavtoselkhozmash has failed to carry out the 
government resolution. By 1990, we were to have almost 

7 December 1989 



half a million electric fences for cultivated pastures. But 
Minelektrotekhprom [Ministry of the Electrical Equip¬ 
ment Industry] and Minkhimprom [Ministry of the 
Chemical Industry] were so “busy” that in the course of 
almost 6 years only 10 electrical fences will have been 
manufactured, and all of this will be done in the last 
quarter of this year. 

If the technology developed by the VNII of Feeds were 
actually manufactured, it would be possible to produce 
13-14 million tons of feed units from cultivated pastures 
alone. But try to produce anything if, due to the small 
nomenclature, there are only fiberglass benches. 

The former ministry of tractor and agricultural machine 
building, having become part of Minavtoselkhozmash, 
already last year was to provide pasture farmers with 
machine units having a low standard pressure on the soil 
for work on tidal flood meadows. But the ministry was 
able to push away the machines; it took upon itself only 
the development of a source of energy, moving back the 
introduction schedule to 1994. As a result, the absence of 
meadow-sparing equipment, especially of means of 
transportation, reduces to nothing the advantages of the 
use of grass stands for several cuttings. 

The representatives of our agro-industrial complex, of 
course, tried to act upon intractable Minselkhozmash. 
Here are the minutes of the workers’ meeting in USSR 
Gosagroprom. Here are the minutes of other meetings. 
Here is a letter from USSR Gosagroprom and VIM to 
the party committee of Minselkhozmash. Here is an 
open letter by participants in the scientific-technical 
conference to 1. Silayev, deputy chairman of the USSR 
Council of Ministers. Here is a letter by A. Olyashev, the 
director of the subdivision of feed production of USSR 
Gosagroprom, today eliminated, and chairman of the 
coordination council, to L. Yefremov, former deputy 
chairman of USSR GKNT. I quote: “USSR Minselkhoz¬ 
mash, as the head organization for the production of 
machines to improve natural feed lands, has not fulfilled 
its quotas in the established volumes. The production of 
new types of pasture machinery is being organized 
extremely unsatisfactorily.” 

I asked Anatoliy Ivanovich what kind of coordination 
council this was that does not coordinate the interaction 
of partners, what kind of interdepartmental organization 
it was that is in no condition to eliminate departmental 
disagreements? The answer is grievous: 

“First of all, both the council and the commission are 
purely symbolic organs without resources, rights or 
authority. We felt our helplessness immediately. Sec¬ 
ondly, no sooner was the ink dry than the departments 
began to criticize the resolution that was passed and 
supposedly forced upon them for interfering with depart¬ 
mental cost accounting. Each began to pull the blanket 
over himself The inconsistency of USSR Goskomitet 
[State Committee] on Science and Technology facilitated 
this and the resolution turned out to be fairly disempow- 
ered. Thirdly, at the same time that this program was in 

effect there was a program on the mechanization of 
agricultural production, and in the shadow of priorities 
such as the Don-1500 grain harvesting combine and the 
KSK-IOOA feed harvester, the need for equipment for 
intensive technologies and other problems within the 
pasture food production industry were lost. 

Clearly there was no group of executors. Gosagroprom as 
a purchaser of technology essentially gave in to Minav¬ 
toselkhozmash and it, taking advantage of its position as 
a monopoly, told the client to take what was offered. In 
addition USSR Goskomitet on Science and Technology 
exacerbated the situation by making a decision on eight 
of the more promising aspects of the program “with the 
goal of focusing efforts on priority directions in the 
transition from a state level to branch control.” In other 
words, departments began to control themselves. 

Today USSR Gosplan and USSR Goskomitet on Science 
and Technology are examining “Special-Purpose Pro¬ 
grams for Realizing Eight Priority Directions in the 
Development of New Generations of Technology for 
Thorough Modernization of the Agro-Industrial Com¬ 
plex in 1989-1995.” I saw this small “double volume” in 
the offices of O. Marchenko, the director of priorities 
development, and V. Zhukov, deputy director of the 
USSR Main Scientific-Technical Administration; it 
requires about 7 billion rubles for the implementation of 
elaborations and promises to repay each rouble at double 
the cost. In the opinion of V. Kubyshev, VASKhNIL 
Vice President, the program of action based on priorities 
actually answers current peasant needs. It would be 
unforgiveable if it meets the same fate as all the pre¬ 
ceding resolutions. This is why it is very important not 
only to indicate goals but also to create mechanisms to 
finally force machine builders to get into line in terms of 
orders for the development and production of new 
technology for farmers. What would these mechanisms 
consist o^ Regional cost accounting? Direct ties with 
consumers? Additional incentives? 

Probably they will consist of the first, the second and the 
third. In VIM’s opinion, we cannot at all exclude com¬ 
petition. It would be expedient to create an association, 
possibly a government cooperative association, that 
would unite agrarian science, a number of design orga¬ 
nizations, former repair enterprises of USSR Gosagro¬ 
prom, and available capacities of USSR Minavtoselmash 
and USSR MVD [Ministry of Internal Affairs]. This 
kind of association could be a direct competitor against 
today’s plants-monopolies. Perhaps this will shake the 
latter up? 

Spare Parts Supply Problems in Kazakhstan 

Supply Problems Hamper Harvest 

904B0006A Moscow SELSKAYA ZHIZN in Russian 
23 Jul 89 p 1 

[Article by V. Savelyev, Tselinograd Oblast: “Industry 
Dictates: No Bearings, No Rollers”] 



7 December 1989 

[Text] The ceaseless telephone calls, dozens of visits 
from sovkhozes and the bundles of telegrams. The situ¬ 
ation in the oblast association Agropromtekhnika [Agri¬ 
cultural industrial equipment association] is urgent. 
Everyone is concerned about one question: When will 
spare parts be supplied? 

“The situation is desperate,” says A. lokhim, chief 
specialist in the association. “Supplier plants are not 
taking into consideration the interests of the village.” 

How did this happen? As long ago as March of last year 
a document appeared with the signatures of the 
chairman of USSR Gossnab [Central Supply Adminis¬ 
tration] and the USSR Senior Arbitrator, stating that as 
a result of extensive work by early 1988 contracts 
between consumers and suppliers would encompass 99.3 
percent of the annual volume of supplies of products 
earmarked for production-technical purposes. This “pro¬ 
vides stability of supplies to the consumer.” Thus Gos¬ 
snab and Gosarbitrazh felt it was essential to utilize 
“positive experience” and proposed, for the develop¬ 
ment of long-term economic ties, “the extension to 
1989-1990 of contracts dealing with product supplies.” 

The document was sent to ministries and offices and was 
passed, and with special pleasure in plants. And why not? 
There would be no need to worry about supplies—there 
was a 3-year program on a firm contractual foundation 
and work could be done in peace. 

Everything is in confusion and no one wants to listen. 
After the dissolution of Turgay Oblast five rayons moved 
into Tselinograd Oblast. The fleet of agricultural equip¬ 
ment increased by one-third. Naturally, Tselinograd 
informed suppliers about the change in order to receive 
the funds that had gone to Turgay Oblast. The plants 
grew stubborn. At the Kurskiy, Kuybyshevskiy, Proko- 
pyevskiy and other bearing plants workers pointed 
directly to the directives of Gossnab and Gosarbitrazh, 
which propose deliveries at 1988 levels and no more. 

In February the Tselinograd executive committee sent a 
letter to the USSR Council of Ministers with a request to 
give an order to the corresponding ministries and depart¬ 
ments to consider the expansion of the oblast’s bound¬ 
aries and to increase funds respectively using the Turgay 
funds. The letter reached V. Murakhovskiy, who sent it 
to E. Gukasov of Kazakhstan’s Gosagroprom [Agroin¬ 
dustrial Committee]. The circle was closed. 

Incidentally, let us leave untouched the geographical 
details that are mysteries to plant workers. Something 
else is incomprehensible. How was it possible that plans 
were made for supplies of spare parts by plants on the 
same level and in the same nomenclature for a period of 
3 years? The equipment fleet is constantly changing. 
Today one thing breaks down. Next year something else 
breaks down. It so happens that for this year plants do 
not plan to supply Tselinograd with 88 types of bearings 
in a quantity of 36,500. What should be done? 

The dictates of the plants-suppliers result in chaos during 
the repair of combines, tractors and trucks and during the 
constant interruptions of the most important field opera¬ 
tions, Here is the situation that developed in the oblast 
during the spring. It was necessary to sow over 5 million 
hectares of various crops. For this 20,000 tractors were 
needed. Of the Kirovets model alone there were over 7,500 
units. Before sowing, their repair simply came to a halt, 
although even during the winter in their shops metal 
workers did their best. Among others the Saratov GPZ-3 
was a disappointment. Last year it revoked its contractual 
obligations and did not supply half of the fund. Now in the 
course of the year it has not supplied a single bearing. 
Essentially, it left the oblast without spare parts, which are 
in short supply, for 8 months. 

When it is advantageous for suppliers they pull out a 
copy of the original of March 1988. When it is not 
advantageous they hide it. Tselinograd workers asked 
that same GPZ-3 for 5,500 bearings for the primary 
repair of the K-701 motor. The plant agreed to supply 
580. However, Volga workers intend to send a bunch of 
bearings for secondary repairs, which are not needed in 
Tselinograd. About 200 have already arrived—at 17 
rubles apiece. They are lying on our shelves. 

The tractor situation is being repeated today, when the 
time has come to harvest these 5 million hectares of 
grains. Last year the oblast did not need No. 1580209 
bearings for the Niva and did not order any. But this year 
it ordered 3,000 from the Moscow GPZ-1. Kazakhstan’s 
Gosagroprom established a limit of 1,440, but the 
Moscow workers refused completely—if you didn’t take 
any last year, you won’t get any this year or next. 

Once again the oblast needs 13,000 running bearings for 
the Niva combine. Allocated funds comprise 8,750 and 
the Kharkov GPZ-3 has accepted an order based on last 
year’s (without the former Turgay rayons) in an amount 
that is half of the need. On the other hand the GPZ-3 has 
decided to allocate 5,940 of another type of bearing if 
there is an oblast need and with a fund of 2,300 and has 
already delivered most of the shipment. Incidentally, in 
Vologda the GPZ-23 is not far behind Kharkov workers. 
Tselinograd requested about 2,000 No. 203 bearings 
from them. They said they would supply 69,300, four 
times last year’s supply. Look at how wonderful things 
are—in Alma-Ata, in Kharkov and in Vologda they 
know better than we in Tselinograd how many and what 
we need! When will this dictatorship end? 

Follow-Up Commentary 

904B0006B Moscow SELSKAYA ZHIZN in Russian 
3 Sep 89 p 2 

[Article: ‘“Industry Dictates: No Bearings, No Rollers’”] 

[Text] An article entitled “Industry Dictates: No Bear¬ 
ings, No Rollers” was published in SELSKAYA ZHIZN 
on 23 July. It discussed the fact that in the virgin lands of 
Kazakhstan an extreme situation had developed 
regarding the availability of spare parts. As reported by 

7 December 1989 



Yu. G. Matveyev, USSR Senior State Arbitrator, the 
article correctly posed the problems related to the dic¬ 
tates of suppliers concerning the development of eco¬ 
nomic ties with consumers. The noted shortcomings in 
contract work did actually exist in 1989. As for the 

recommendations noted in the article regarding length¬ 
ening the period of effect of agreements dealing with the 
delivery of products to 1989-1990, letters from Gossnab 
and USSR Gosarbitrazh [State Arbitration Committee] 
have recognized these contracts as expired. 



7 December 1989 

Consumer Interests Addressed in Turkmenistan 

Food Shortages Tied to 1st Secretary’s Absence 

Russian 31 Oct 89 p 3 

[Article by M. Meleshenko, Turkmen SSR: “Now the 
Top Man Will Arrive”] 

[Text] At the entrance to the food store on Svoboda 
Prospect a fellow in a white lab coat sped past me like a 
bullet. “He’ll be here in just a minute,” he yelled as soon 
as he got inside the door and disappeared into the 
building, which looked like an excited beehive. 

On that day, alarm gripped almost the entire trade 
network of the Turkmen capital. Only in contrast to the 
usual, the unhealthy agitation reigned not among the 
people standing in the meters-long lines and not for the 
reason of goods in short supply appearing on the shelves. 
The salespeople were nervous. Trade workers of all ranks 
and colors, including the representatives of the republic’s 
trade ministry, were moving along the depressingly bare 
store windows in an obviously dejected state of mind. 
With the speed of lightning the news that S. A. Niyazov, 
first secretary of the republic’s CP Central Committee, 
was visiting local stores spread through Ashkhabad’s 
trade network at a time when stores were totally empty... 

Until recently, the residents of Ashkhabad and of a 
number of other cities in the republic felt it was a sin to 
complain about poor supplies of meat products—almost 
without interruptions the trade network received several 
types of sausages, poultry, sweet butter and sugar; in 
other words, many of those goods that today in other 
regions of the country are issued only with coupons. 
Luckily, the people here know only through hearsay 
about all of the expenses, inconveniences and simply 
humiliating circumstances in which the consumer finds 
himself under the coupon system. 

But this summer the local trade network clearly ran into 
trouble. For several weeks, meat disappeared from stores 
and the supply of dairy products deteriorated. Ashkha¬ 
bad, the city boundaries of which literally touch the 
lands of large vegetable-raising enterprises, began sud¬ 
denly to experience a serious shortage of “vitaminous” 
production at the very height of the harvesting season. 
Prices in the market jumped sharply—2 rubles for a 
kilogram of potatoes, grapes and carrots; 3 and more for 
a kilogram of cucumbers, apples and pears... In general, 
the markets are southern but the prices are out of this 
world, and this is at the peak of the season when on 
vegetable plantations and in the republic’s orchards and 
vineyards signs are hung up at the very height of the 
season saying, “Take them—I do not want them.” 

The empty counters in food stores, and prices that have 
never before been seen here for vegetables, potatoes and 
fruit, have resulted in the justified indignation of people. 

In the corresponding instances, the corresponding com¬ 
plaints poured in. And evidently in response to them the 
republic’s administration decided to survey trade enter¬ 
prises. This was done, as is to be expected, with a request 
for an explanation by the guilty parties—the directors of 
the state trade network, of consumers cooperatives, of 
the agricultural sector and of ente^rises of the food 
industry. The discussion was exhaustive and demanding. 
Many had to blush because of their inefficiency, help¬ 
lessness, incompetency and simple laziness. Literally, the 
very next day Ashkhbad residents felt the results of this 
action. Products appeared in stores. In the most popu¬ 
lated areas of the city, fruit and vegetables were sold 
from kolkhoz and sovkhoz cars at purely symbolic 
prices—10, 20 and 30 kopecks per kilogram... 

My friend Grigoriy Kolodin, SELSKAYA ZHIZN corre¬ 
spondent, and I walked through the grocery stores and 
markets of Askhabad and could not stop being sur¬ 
prised—^where did all of this come from? After all, just 
yesterday there was not a trace of it. It turns out that the 
interference of just one person can so cardinally, so 
swiftly, change for the better something that just a few 
hours ago seemed so unshakeable, not subject to any 
changes in connection with “objective” reasons—the 
meat combine is being repaired, deliveries have 
decreased, there are problems with transportation, farms 
are experiencing a fodder shortage, we do not have the 
manpower to perform harvest operations. Yet here sud¬ 
denly, “Everything is done!” 

We wondered why things were not like this everywhere 
in the country. Why is it necessary that the top man 
make a trip here so that a building which has been in 
need of repair for decades be put into good condition? 
Why, in order to have public transport function cor¬ 
rectly, do we need a special passenger in the guise of the 
first secretary of the party obkom? Why, in order to have 
products, the taste of which was forgotten long ago by 
residents, appear in abundance in some village stores, is 
the interest of the secretary of the CPSU Central Com¬ 
mittee necessary? Why does the secretary of the repub¬ 
lic’s CP Central Committee, substituting for just a few 
hours for the trade minister, the director of the city trade 
administration, and hundreds of trade organization 
workers, have the ability to untie the knot of supplying 
the population with food products, even for a short 
period of time, whereas responsible parties (who are paid 
wages and accelerated piece rates to do this) cannot? 

No, I do not want to say with this that the CC secretary 
is wonderful—he came, he saw, he supplied eveiyone! 
On the contrary, I want to once again focus attention on 
the vicious circle, on the sad phenomenon of our lives— 
everything is decided by the “top man.” 

Why is it that, despite the party’s long-ago proclamation 
of “influencing but not substituting,” party committees 
continue to substitute? Alas, is it because our managers 
are helpless? Or is it because councils are just barely 
acquiring power? These are not the only reasons. 
Another is that right now, judging by everything, it is 

7 December 1989 



easier to substitute than to influence. Because it is much 
more difficult to operate according to a purely party 
method and to introduce those other, spiritual forms, 
those which must be characteristic of the party and 
spiritual institutions of our society. From time to time 
we hear the common statement that we must improve 
socialist competition among beet farmers and sugar 
refiners and then there will be no sugar shortage. 

Some may think that I am criticizing the first secretary 
for an unsuitable work style. No, I am not criticizing 
him; if you will, I am protecting him...from an unsuitable 
work style. Probably it is not his fault, but our common 
problem—^that the republic’s party leader is forced by 
circumstance sometimes to substitute for people’s con¬ 
trol, the inspector auditor, the city trade director, and so 
forth. And did it happen in just this case? 

I remember one meeting of the members of the buro of 
the Turkmen CP Central Committee with the republic’s 
youth. A young Komsomol member was interested in 
why until now the promise of the CC secretary had not 
been fulfilled within a certain period of time to renovate 
the institute she studied in. Immediately, the chairman 
of the Ashkhabad city executive committee was told to 
complete the renovation of the institute within one 
month. No sooner, no later—in one month! Most of all, 
I was surprised that no one was surprised about this 
order, which after all was not supported legally in any 
way. Let us finally decide whether that CC secretary has 
the right, even if he is the top man, to give such 
commands to the representative of Soviet power, even if 
the latter is a rank worker? That is the essence of the 

Moreover, such commands can be heard everywhere and 
not only in Turkmenistan; they can be heard in the fifth 
year of perestroyka, which has as one of its mottoes: “Do 
not dare to command!” 

Several weeks after the unexpected abundance that 
showered Ashkhabad, in its stores once again there were 
no sausages, no tomatoes and no chickens...Perhaps it is 
accidental, but this shortage coincided with the depar¬ 
ture to Moscow of the republic’s administration for a 
session of the USSR Supreme Soviet. Once again, I and 
my aforementioned friend surveyed the trade enterprises 
and markets that we had visited before. A different 
question struck us now: Where did everything go? 

And then we were comforted by the thought—don’t 
worry, don’t worry; when the top man comes... 

Consumer Monitoring Club 

904D0016B Ashkhabad TURKMENSKAYA ISKRA in 
Russian 10 Oct 89 p 3 

[Bylaws for Consumer Club: “Regulations of a Corre¬ 
spondence Club of Consumers Associated with the Edi¬ 
torial Board of TURKMENSKAYA ISKRA and the 
Turkmen Trade Union Council”] 

[Text] Our consumer correspondence club is just begin¬ 
ning its work and is not yet registered. In order to 
become an officially recognized organization, we must 
pass our regulations and program. Today we are pub¬ 
lishing the draft of our club’s regulations, with the hope 
that you will participate most fervently in its discussion. 
In the course of two weeks, you can write to the editors 
with your remarks and proposals, or call telephone 
number 6-87-72. We await your responses, proposals 
and desires with impatience! 

I. General Conditions. 

The correspondence club of consumers is an indepen¬ 
dent, self-governing, self-contained social organization, 
unifying its activists on a voluntary basis with the goal of 
mutual protection of the rights and interests of citizens 
as consumers of goods and services. 

In its activities, the club is guided by the USSR Consti¬ 
tution, the Constitution of the Turkmen SSR, laws that 
are in effect and the current Regulations. The club bases 
its activities on a close interaction with local Soviets of 
People’s Deputies, party trade unions and other public 
organizations, organs of internal affairs, people’s con¬ 
trol, state inspectorates, educational institutions, organs 
of mass information and other organizations. 

II. Club Goals and Purpose. 

The club’s goals and purpose include: 

1. Support of perestroyka in the sphere of consumer 
goods and services, protection of consumer rights and 
interests of citizens, of consumer demand for quality 
consumer goods and services and of a high level of 
quality in handling customers. The struggle to expand 
the assortment and high quality of consumer goods, and 
against careless and shoddy workers. 

2. Propaganda of legal information on the rights of 
consumers and obligations of goods producers, of the 
trade network, of the administrative organs. Propaganda 
of economic quality of consumption, efficient means of 
implementing the family budget and of running the 

3. Aid in the creation and development of clubs, soci¬ 
eties, unions and other formations that protect the rights 
of consumers; assistance in developing the public active¬ 
ness of the population in defending consumer rights. 

4. The achievement of the aforementioned goals by 
means of dealing with the following tasks: 

—To study public opinion about consumer characteris¬ 
tics, assortment and quality of goods and saturation of 
the consumer market with these goods, about the level 
of trade, household, municipal and other forms of 
services to the population, as well as about the level of 
prices for goods and services and the ecological con¬ 
dition of the environment; 



7 December 1989 

—^To participate in consultations and testing of con¬ 
sumer goods carried out by government and other 
organs, to provide an objective assessment of the 
quality and assortment of consumer goods and ser¬ 
vices. To participate in the organization of public 
control in adhering to the rules of trade and services, 
in the control of justified wholesale prices and current 
price lists for the goods and services; of adherance to 
the principles of social justice within the consumer 

—^To provide legal information, information about 
goods and other consultation to readers of our news¬ 

—^To support and propagandize the positive experience 
of enterprises that produce consumer goods on the 
level of the international standard, and the experience 
of organizing trade and providing goods and services 
to the population in terms of transportation, within 
the sphere of municipal and communal services, 
health services and so forth. 

—^To participate in the preparation of proposals for 
drafts of ongoing and future plans of economic and 
social development in the region and in branches of 
the national economy on the territory of the Turkmen 
SSR on questions of increasing the output and 
improving the quality of goods and services. 

—To introduce proposals to organs of government, 
economic and public administration on passing mea¬ 
sures to expand production and improve quality of 
goods and services, to halt the production of poor- 
quality articles and products and of those that bring 
harm to the healthy population and also to revoke 
prices that have been elevated by goods producers and 
to confiscate profits received by illegal production 
means; to improve trade, household and other services 
to citizens; 

—^To protect the interests of low-income families, inva¬ 
lids, children, retired persons and families with many 

—^To elucidate on the pages of TURKMENSKAYA 
ISKRA and through other means of mass information 
the results of club activities, and to make known 
information about the real consumer characteristics 
and assortment of goods and services, about cases in 
which goods and services do not correspond to 
hygienic and consumer standards, norms or stated 
claims, about “the flushing out” of the inexpensive 
assortment, about cases in which the rules of Soviet 
trade are violated and other cases of mass or ill- 
intentioned violation of the rights and interests of 
consumers. To organize consumer conferences with 
workers of enterprises that produce food products and 
consumer goods, workers in the sphere of consumer 
services, representatives of local organs of government 
administration, departments, and leading specialists 
on questions of protecting the interests and rights of 

—^To exchange information on work experience with 
other public consumer organizations in the USSR and 
to publish it on the pages of the newspaper. 

III. Club Structure. 

The club council includes the representatives of the 
newspaper editorial board, TSPS [Turkmen Trade 
Union Council], organs of people’s control, internal 
affairs, office of the prosecutor, ministries, departments, 
enterprises and organizations and activists from among 
the newspaper’s readership. 

The chairman of the club council is selected from among 
the members of the club council for a 1-year period. 

Any resident of our republic who is prepared to partici¬ 
pate in the work of our club can become a member. 

The more active members can become, upon the deci¬ 
sion of the club council, club activists who will partici¬ 
pate in surveys, raids and other measures carried out by 
the club council. 

IV. Rights and Obligations of Council Members and 
Activists of the Consumer Correspondence Club, 

Club members and activists of the correspondence club 
have the right: 

—^To participate in any measure carried out by the club; 

—^To elect and be elected to the council of the correspon¬ 
dence club; 

—^To participate in club administration, in the develop¬ 
ment of its decisions and in their implementation; 

—^To bring up for club discussion any proposals and 
initiatives that do not contradict the club regulations. 

Council members and activists of the correspondence 
club of consumers have the obligation to: 

—^Adhere to club regulations; 

—Participate in the implementation of tasks and mea¬ 
sures being put forth by the club council, in the 
preparation of publications, and in the development 
of prospective plans for club work; 

—^To report on all violations of consumer rights known 
to them; 

—^To propagandize club activities among the popula¬ 

—^To coordinate their actions as regards solutions to the 
problems facing the club with the club council and to 
inform the latter about the results of this work. 

A person may leave the club voluntarily. Activists can be 
excluded from the ranks of the club only on the basis of 
a decision by the club council in this regard. 

7 December 1989 




Output of Soaps, Detergents Increases, 

Distribution Problems Remain 


[Editorial Report] Kiev PRAVDA UKRAINY in Rus¬ 
sian on 4 November 1989 carries on page 3 a 400-word 
report of a joint meeting of the Ukrainian CP Central 
Committee Commission on Party Control, the Central 
Committee Socioeconomic Department, and the Ukrai¬ 
nian Committee on People’s Control (place and date of 
meeting not given). According to reports presented at the 
meeting, in the third quarter of 1989 the republic’s 
enterprises exceeded the state order for soaps and deter¬ 
gents by the following amounts: 6,300 tons of household 
soap, 1,300 tons of toilet soap, and 900 tons of laundry 
powder. Together with imported goods, the republic’s 
total volume of soaps and detergents in the third quarter 
grew by 37,200 tons, which is 1.5 times greater than 
preliminary allocations called for. Nevertheless, the 
commission noted that shortcomings in distribution and 
in the supply of raw materials still hinder the provision 
of soaps and detergents to the populace. 

Firm Stores, Other Trade, Production Problems 

Russian No 15, Aug 89 pp 11-15 

[Article prepared by trade and industry departments: 
“Cultural Wares 90’’] 

[Text] Alas, at the 31st Interrepublic Wholesale Trade 
Fair for 1990 Cultural and Service Wares, trade and 
industry have once again not found a common language. 
The main battles raged in two areas: production volume 
and firm trade. At one of the fairs, A. Chepik, USSR 
deputy minister of trade, expressed definite anxiety about 
trade: The production of radios and television sets, bicy¬ 
cles and other cultural and service wares is either 
remaining at last year’s level or is declining. This is a 
consequence of the expanding network of firm stores 
which in a number of instances are not performing their 
direct function. 

It is planned to produce 880,000 television sets fewer than 
the USSR Gosplan control Hgures call for, 1,800,000 
fewer radio receivers, 86,000 fewer motorcycles, 220 mil¬ 
lion fewer galvanized products, and 87.7 million rubles 
fewer paper products. Trade is opposed to these reduc¬ 
tions. What is responsible for the complaints (in our 
opinion justified) trade is making to industry representa¬ 
tives? Let us listen to them. 

£. Etenko, chief. Administration for the Organization of 
Trade, Market Research and Advertising, Orbit: Every¬ 
body noted that at this fair there were many interesting 
new radios and color television sets. New combination 
radio and tape recorders produced by the Vega PO 

[Production Association] in Berdsk and the Radiotekh- 
nika PO in Riga deserve attention. Consumers would be 
satisfied if these models were to be produced in large 
numbers. Unfortunately, due to parts and fittings short¬ 
ages it is not possible to significantly increase their 
production. One can understand the Ministry of the 
Electronics Industry, which should be concerned with 
these questions. It does not have enough capacity; there 
are not always sufficient materials. 

Now something about firm trade. Undoubtedly, it 
should be expanded. Complicated products should be 
sold by those who make them, i.e., firm stores. Compli¬ 
cated household products must not be sold on the shelves 
of country stores right next to herring. We now have 65 
Orbit firm stores, plus Elektron and Radiotekhnika firm 
stores. I hope that over the long term firm trade will sell 
all radio and television products in the country. 

V. Kevorkov, chief of the Office of Advertising and 
Market Research, Zvezda PO, Zagorsk: Manufacturing 
plants have, in addition to firm stores, their so-called 
owned stores such as Regonda, Temp, Rubin and others. 
It is undoubtedly advantageous for enterprises to have 
their own stores, as they eliminate problems with short¬ 
ages, quality and fines. These stores will not fine their 
enteiprises for low quality products. It seems to me that 
the idea of enterprise-owned stores is not generally 
compatible with the idea of firm trade. All stocks are 
scattered. As a result, stores everywhere are empty. It is 
also unwise, in that state trade is left with practically 

Compared to last year, we saw practically no fundamen¬ 
tally new products at this fair. Most of the interesting 
models are still in the future. True, TV sets were better 
represented than other groups. However, here too, there 
was no decisive move ahead. The colossal consumer 
goods famine definitely creates an undesirable situation. 
Everything is snapped up and producers fall under the 
illusion that all their products are excellent. Why move 
ahead, if everything produced is applauded? There are 
no economic levers to stimulate work. Upon delivering 
their wares, enterprises receive full payment right away. 
A more flexible system is needed. 

The very idea of a fair presupposes freedom to buy and 
sell. However, under present conditions, free fairs are 
impossible: two or three enterprises sell all their products 
in a few days and the rest of the time they sit and, 
figuratively speaking, suck their thumbs. Trade can be 
free only if the market is saturated. This requires sharply 
increasing production volume. This is just what is 
impossible in the immediate future. The Ministry of the 
Electronics Industry has a monopoly in the production 
of components. The ministry knows well that it can 
always sell its output; therefore, its strategy is deter¬ 
mined only by its own advantage. It is totally uncon¬ 
cerned about producers and customers. 


7 December 1989 

I do not think that the situation will change next year; the 
same problems remain unsolved year after year. More 
accurately, they are solved at various levels, but still 

£. Khodukin, sector head, TSKTB [Central design and 
technological office] ^^Velostroyeniye’’ [Bicycle manufac¬ 
turing]: Our firm stores are not working as they should. 
Service is nonexistent. The goods—we are talking about 
bicycles—should be ready for the customer to ride. But 
what happens? Women are sold unassembled bicycles 
from which even the packing grease has not been 
removed. This is to say nothing of the fact that such 
stores are obligated to have mechanics to attach baggage 
racks, lights, etc. 

What about volume? State orders are more than we can 
handle. I see the solution in restructuring work on the 
Western model. There, a great many firms participate in 
the production of a bicycle. Some do one thing, others 
another. Special attention is given to accessories. What 
about here? Take, for example, the Kharkov Bicycle 
Plant. Should it be expanded to increase production? 
How much bigger can it get? There are already 4,000 
people working here. Where can the plant go? 

M. Faynshteyn, chief, Supply Department, Radiotekh- 
nika PO, Riga: Today we cannot get along without 
expanding firm trade. Complicated appliances must be 
sold in specialized stores. Here the question resounds: 
What about rural dwellers? I answer that, if necessary, 
we will go to them. We will deliver to customers within 
a 200-kilometer radius and will guarantee servicing. 

Furthermore, we do not need the wholesale level as such. 
I am the producer, I produce; that means I should also 
sell my product. We must allow free trade in the direct 
sense, so that others will not distribute, but I myself will 
find the customer. I produce, I look for customers and I 
set the price. 

Moreover, with today’s cost accounting we all do what 
we consider to be profitable for ourselves. We are 
scolded, but we can stand it. We now have 9 stores of our 
own; by 1990, there will be 23. We plan to sell 35-40 
percent of our products. The tendency to develop firm 
stores remains and will continue. We will not deviate 
from this. 

At Somebody Else’s Expense 

They say that experience teaches you not to repeat 
errors. Is this so? Last year was the first time the 
wholesale fair for radio and television products was held 
early in the year—in February. The fair showed that 
industry is not ready for wholesale trade. 

It does not even have to be guessed how this dispute 
between trade and producers turned out or who was the 
victor: Perhaps only in a firm store can one purchase 
simply a television without selecting a brand or even 
getting a new model. 

“However, last year firm trade was delayed somewhat,” 
thinks A. Musayelyan, director of Azerkulttorg [Azerba¬ 
ijan Cultural Trade]. “At this fair, the Orbit firm store in 
Baku received twice as many television sets. We are not 
opposed to expanding their network if that does not take 
away market stocks. The television sets sold by the Orbit 
were above-plan production.” 

It is difficult not to agree with the Azerkulttorg director. 
The concentration of sales at “selected” oblast or kray 
centers makes it harder for inhabitants of other cities 
and villages not on the service list to buy such produts. 
Incidentally, where is this secret list of lucky cities in 
which firm stores are being built? 

S. Bzhikhatlov, director of Roskulttorga, the Kabardino- 
Balkar Wholesale Enteiprise, explains: In our republic 
there is one firm store, in Nalchik. Last year at the fair 
our base was allocated 7,574 television sets of various 
brands. For 1990 it only received 1,370. That is whole¬ 
sale trade shorted us 6,204 sets. Now compare the stocks 
for Orbit: in 1989 they totaled 11,686, in 1990—13,614 
sets. What will I take back to the republic? What can I 
say to inhabitants of, for example, Ternauz, the miners 
and other toilers; or those of Prokhladnyy, who grow 
grain? Go to Nalchik? 

This situation is more the rule than the exception. A 
Radiotekhnka firm store has been working for 2 years 
now in Petrozavodsk, Karelia. It has no warehouse 
facilities because they did not build a new store, but used 
the old one, which had previously belonged to the 
Promtovary Association. This year some of the televi¬ 
sion sets intended for firm trade were in the wholesale 
base warehouse. There were not more than 7,000 TV sets 
for the rest of the town. What kind of social justice is it 
when only inhabitants of Petrozavodsk can sign up for 
television sets? 

“Customers are indifferent about where they buy a 
television set because they are in short supply and you 
have to stand in the same line, whether you go to a firm 
store or to an ordinary store,” says A. Martin, director of 
Estkulttorg. How are firm stores distinguished from 
others? A firm store should have standards, such that the 
customer could see its advantages: longer warranties, 
lower prices or a bigger selection. 

It must be noted that inhabitants of Estonia are more 
fortunate than the public in other republics. The man¬ 
agers of state trade, Orbit and the consumers’ coopera¬ 
tive locally distribute among themselves the television 
sets intended for the republic. Unfortunately, however, 
this does not hold for other regions. The selection of 
radios and similar products in large city department 
stores is declining. There are none available because 
most of them are going to firm trade. In practice it turns 
out that firm trade is developing at the expense of state 
trade. The latter is forced to give ground. Thus, the 
Igrushki store on the outskirts of Kishinev disappeared 
and a new firm store, the Alfa, appeared. It gets almost 

7 December 1989 



60 percent of the stocks. The firm network is supplied at 
the expense of state trade stocks. In the end the customer 
is forgotten. 

Perhaps, however, we should not complain about this. 
The firm store has a future and is needed as a testing 
ground for innovations. 

Let us walk through the exposition of sample wares from 

For Decorating Stands 

A festive mood reigns in the small Luzhnikov sports 
arena. The announcer’s voice is constantly advertising 
the models shown; colorful posters and brochures deco¬ 
rate every stand. Let us try to understand what is 
happening here. 

“Many new models are represented here,” our guide A. 
Volodin, chief of the Department for Assortment and 
Quality at the Moscow Interoblast Enterprise for Whole¬ 
sale Trade in Cultural Wares, began explaining to us. 
“However, I estimate that around 60 percent of the 
models sold will not be here before 1992.” 

“On the stands are fourth generation television sets. 
However, these are not working models. They will not 
appear in 1990, even though managers of the Rubin and 
Temp production associations announced on television 
that the market is on the point of being overloaded with 
these units. In specifications now being filled out for next 
year, the Rubin Production Association writes: color 
televisions. Well, not at all fancy, nothing is written 
about the brand. From their perspective they are acting 
very intelligently: They are playing it safe so they will not 
have to pay fines for violating delivery contracts. Rubin 
is now offering an average of 4 to 8 models; previously 
there were 12. All of them are for the future. 

“The Elektron fourth generation television has a pseu¬ 
dostereo and is multi-system; the components are PAL - 
SEKAM. Almost everything is for the future. They will 
not be on the market soon. Even then, the production 
plan, 50,000 units, is simply miserly. Look at the prices, 
the cheapest is 760 rubles, the price goes up to 790, 890 
and higher. 

“The famous Shilyalisy: 32 TTs-401 is the most popular 
and most scarce television set. Its planned production is 
also 50,000 units. Incidentally, according to my esti¬ 
mates, the plant exports up to 70 percent of its annual 

“Radiotekhnika is showing the old Riga-310 combine 
that has been produced for many years. And this is one 
of the largest producers of consumer radio-electronics. 

“The Vega plant is also a leading producer of radio¬ 
electronics. The Vega-338 is already sold out. The Vega- 
339 is an interesting development, but it has no sales 
plan or price. Again, this item is for the future. It is not 
known when it will appear on the shelves. 

“Laser games have been repeatedly shown at wholesale 
fairs, but are not being sold due to the lack of laser disks 
for the game. It is only now that the a solution is being 
found to the question of Leningrad plants cooperating to 
produce laser disks. Therefore, this product still has no 
price and is exhibited only for decorative purposes. 

“Minradioprom is showing two-cassette tape recorders. 
The Amfiton is a radio-tape recorder with a 5-band 
equalizer and a two-cassette tape mechanism. The only 
thing for which they should be praised is that they are 
trying to saturate the market. 

“There is no need to point out anything else at this 
exposition. This year the fair had far fewer models than 
last year. 

“Now something about firm trade. I think that in its 
present form it is not necessary; there is already a 
widespread state retail trade network. Why transfer 
stocks? If a television set is sold in a firm store, it would 
be good to increase its warranty and improve service. 
Then firm stores will make sense. Now they feel privi¬ 
leged; they are the first to obtain new wares simply to 
fulfill the turnover plan. They win at this game. But with 
regard to the rest we do not operate any worse than 
them,” concluded A. Volodin. 

“It should be added, that while the exposition was well 
decorated, there were not enough radio product catalogs 
for wholesale workers. There is no comprehensive cat¬ 
alog, something very much needed for work with 
retailers, at fairs and on the spot. Wholesalers could not 
even get individual catalogs from Orbit, Radiotekhnika 
and the TsRKO Rassvet.” 

Purchase by Protocol 

In your opinion, who is most important at a wholesale 
fair, the seller, the customer? Don’t be suprised—^the 
arbitrator was most important at this fair. 

Perhaps there was not a single organization or wholesale 
enterprise which did not stand in line for a lawyer. One 
can hardly count how many dispute protocols were 
handled by arbitrators. Sometimes, after getting a refusal 
from one lawyer, an industrial seller deftly turned to 

These disputes were also due to poorly organized distri¬ 
bution of wares. Wholesale organizations and industrial 
enterprises should have been obligated to strictly main¬ 
tain existing long-term economic ties for deliveries. 

The instructions were given, but alas, long term ties were 
broken. Apparently this is because there is no economic 
interest in maintaining them. This is not the partners, 
either industry or trade, but antagonistic forces. Produc¬ 
tion enterprises are now concerned about obtaining 
foreign exchange. They want to export a large share of 
their products (as at the last fair). They are greatly helped 
in this by the Law on State Enterprises (Associations), to 
which they refer. 



7 December 1989 

The Leningrad Interoblast Enterprise for Wholesale 
Trade in Cultural Wares has three groups of distributed 
wares: television sets, radio receivers and galvanized 

“For the sake of order all other goods were made 
distributable,” says M. Drobotova, deputy director of the 
base. “It turned out that the plant will not sell. We went 
to an arbitrator and explained that we receive distrib¬ 
uted goods. They answered: ‘These goods are not distrib¬ 
utable. Take the 1989 level.”’ 

“That is totally absurd,” O. Khankov, chief of the Depart¬ 
ment for Radio Products and Musical Instruments at the 
Leningrad Base, gets into the conversation. “On the one 
hand, to issue a document means that the enterprise is 
obligated to supply us, but it is not subordinate to the 
document. We turn to arbitrators and get the answer: 
This document is void, bring last year’s specifications. 
Does this mean that in order to prove long term eco¬ 
nomic ties I should bring all documents to the fair?” 

“It is a very difficult fair,” says A. Musayelyan (Azerkult- 
torg [Azerbaijan Cultural Wares Trade Organization]). 
“Many republics are not providing wares, in spite of the 
fair committee’s ruling on working with existing eco¬ 
nomic ties.” 

The fair is on the skids, due to a shortage of wares. Is it 
worth having it under such conditions, or would it not be 
better, as wholesalers think, to simply exchange specifi¬ 
cations through the mail than to spend too much money? 

A. Martin (Estkulttorg) explains: “For 15 years I have 
been going to the interrepublic fair. It is time to change 
its organization. Everything, stocks and distribution, is 
done in the old way. Unfortunately, all commercial life is 
led by production—^trade workers can do nothing. Given 
such organization, I think that we could do 75 percent of 
the work at home by exchanging specifications. 

“I am not opposed to fairs; they are necessary. However, 
they should not take place in March, but during the 
second half of the year, as we are now working on 1990, 
but still do not know what the market situation will be. 
Producers are also not ready, as they do not know where 
they will obtain materials and how much they will 
obtain. It could turn out that in the second half of the 
year the necessary materials will not be available.” 


Competition has finally appeared. The alternative, how¬ 
ever feeble, for industry will be cooperation. This has 
undoubtedly made wholesalers happy. Cooperatives 
have been offering a wide variety of wares, for hunting, 
fishing, music, games, watch bands; one simply cannot 
name them all. 

They must be given their due; they participate in market 
competition, quickly undertaking the manufacture of 

goods in demand. This is something which cannot be 
said for our industry, which has been rocking to and 
from for a long time. 

Here is another example. At last year’s fair, trade 
workers showed great interest in Kuznetsov’s ipplicator 
[as transliterated—not further identified]. This year sev¬ 
eral cooperatives in various regions have already mas¬ 
tered it. This year at the fair all sorts of massagers were 
offered: rugs, a set of massage underwear or simply a 
collection of miraculous knobbed buttons (if you want, 
you can stick them on yourself). 

Practically all wholesale organizations have started 
working with cooperatives, thus saving themselves from 
the scarcity of wares. 

Volumes and distribution—the most popular words at the 
fair—have become the talk of the town. They are behind 
all the misfortunes not only among purchasers, but also in 
trade and industry. 

Volumes conceal prices, which are increasing too quickly 
and are not eliminating the shortages. They will not break 
the shelves with abundant goods, even though the volume 
plans are being filled by industry and trade. 

To no lesser extent, distribution conceals what wares one 
will be able to purchase in a republic. This is why 
inhabitants of Moldavia are surprised that VCR’s are not 
sold there, while the population of Tajikistan, completely 
supplied, goes to other regions for wares not available in 
their republic. 

All the shortcomings in our economy are revealed at a 
wholesale fair. If they had been immediately analysed, 
perhaps the fair would not have been similar to last 
year’s, which had the same problem. 

COPYRIGHT: Kommercheskiy vestnik. No 15, 1989 


Workers Use Strike Threat To Resolve Poor 
Housing Complaints 

18300839 Frunze SOVETSKAYA KIRGIZIYA in 
Russian 14 Sep 89 p 3 

[Article by N. Zenkov, SOVETSKAYA KIRGIZIYA 
special correspondent: “Alarms of ‘Makmalzoloto,’ 
Chronicle of a Conflict Which Should Not Have Been”] 

[Text] Summer has turned into autumn and the slopes of 
the mountains, as in spring, are covered by the velvet of 
various grasses. Makmal. This is where it turns out the 
poetic name of the gold mining combine comes from. It 
blended in well with the surrounding blue-green land¬ 
scape and white city of miners of this precious metal. It 
stands on the edge of Kazarman, the administrative 
center of Toguz-Torouskiy Rayon. Wide streets, well- 
constructed multi-apartment homes, and a large store— 
it seems that everything here meets contemporary 
demands. But the wind will return (and this occurs 

7 December 1989 



several times a day) and the illusion of well-being is 
dissipated: Acrid smoke from the local boiler covers the 
whole surrounding area in an instant. It becomes diffi¬ 
cult to breathe. 

The residents have enough unpleasantness even without 
the wind. There is not always hot water. During the 
winter, central heat is frequently out of order and for 
long periods of time. And the frosts here are no laughing 
matter: up to 40 degrees. However there is not even 
enough such housing for almost one fifth of the workers. 
The new ones are poorly constructed. This year Chuys- 
troy Trust was supposed to commission two 48- 
apartment buildings but did not commission even one. 

There is also no system for allocating housing. Empty 
apartments are filled according to Deputy Combine 
Director K. Kerimkulov’s instructions without regard 
for the waiting list. This is done with the tacit approval 
of the trade union committee. 

A school, hospital, kindergarten, and dormitory for 
miners were commissioned with a lot of unfinished 
items. We cannot understand just why Makmalzoloto’s 
leaders accepted them from that same Chuystroy. It is 
difficult to treat people and to teach children in them. 
One can rarely buy fruits or vegetables in the stores even 
during the summer. 

Gold miners are not reticent people. They complained to 
the combine director, to the party committee, to the 
party raykom, to oblast organizations, and they wrote to 
newspapers about the unsettled state of life. Visiting 
committees as a rule certified the validity of the com¬ 
plaints and proposed elimination of shortcomings. And 
they left. The combine’s leaders not only did not elimi¬ 
nate anything but, as if wishing to prove their invulner¬ 
ability to the people, did not even yield on small things. 

They only took steps against those who dared to wash 
their dirty linen in public. They created a situation so 
intense that they were forced to leave the enterprise or to 
deviate from their principles. Incidentally, 
SOVETSKAYA KIRGIZIYA (No.’s 112 and 154) wrote 
precisely about this twice just this year. While examining 
the last article, “Thus, Just Who Scored a Victory?”, the 
combine’s party committee decided to establish a com¬ 
mittee to study and verify cases without personally 
determining its composition. We are particularly sur¬ 
prised by the paragraph where the party committee 
receives comrade Aldzhambayev’s announcement (with¬ 
out any commentary) that he is presenting materials to 
the court on Mirzakhodzhayev whom even the news¬ 
paper defended from organizational persecution. They 
say we know our own! 

Generally, the obstinate are at the center of attention. 
And it was as if the director had not noticed the 
shortcomings discovered by the people’s inspectors in 
the operation of the personnel department. Although 
many cases were really outrageous. 

Thus, salaries were set too high for eleven managers, 
including the head bookkeeper. At the same time, appro¬ 
priate documents were not formulated about the nature 
of the labor of enrichment plant’s workers (here it is 
called the gold recovery plant) and as a result, they are 
not enjoying the benefits prescribed by law. The require¬ 
ments of labor safety rules and production hygiene were 
continuously and grossly violated. The air tightness of a 
portion of the pipeline was disrupted at this very factory 
due to miscalculations during design and the subsequent 
improper operation of technological equipment. Leakage 
of chemical reagent vapors which are harmful to health 
occurs as a result of which people in certain sectors have 
to wear gas masks while working. Makmal workers have 
repeatedly raised the question about all of these short¬ 
comings at workers meetings but without success. 

The party raykom made attempts to look into the state of 
affairs at the combine. This spring, management actions 
were conducted at its behest on the open-pit mine. Much 
of what the miners complained about was substantiated. 
They also verified that work discipline was slack. There 
were frequent instances of drunkenness, even at the work 
place. As a result, the volume of strip mining and also 
geological survey of reserves dropped sharply during the 
first quarter. Of course, the miners’ salaries also 
decreased. The shop transitioned to a collective contract 
and cost accounting. No matter how much they verified, 
the enterprise’s leaders were not chided for these mat¬ 

Protected from criticism, the combine’s leaders became 
increasingly divorced from the collective and its needs. 
They rarely visited the shops and sections and they did 
not talk with people. But having heard the statements 
and demands at workers meetings, they generously 
promised to look into them and to take steps. And they 
immediately forgot about them. 

Everyone’s patience comes to an end. Therefore, it is no 
surprise that at the beginning of August, the open-pit 
mine workers presented an ultimatum to the combine’s 
directors: If steps are not taken within an established 
time period, they will cease working. 

The transport shop, enrichment plant, and other subdi¬ 
vision collectives joined with the miners. Demands were 
jointly developed. Here are the first points: Relieve 
Combine Director I. Aldzhambayev, his deputy K. Ker- 
imkulov, and A. Yakin from their posts, since they have 
lost the trust of the collective; re-elect the STK [Tech¬ 
nical Supervisory Service] staff who are not carrying out 
their functions and T. Turdymamatov, party committee 
secretary. All enterprises will transfer to lease contracts 
as of January 1990. At the same time, review deduction 
norms currently in effect as incorrect (the collective is 
currently collecting 87 percent of profits, and its own 
assets have ceased to be sufficient even for payment of 
salaries). Reduce overblown management apparatus and 
deprive bureaucrats of undeserved bonuses and salaries. 



Demands were also set forth to accelerate construction of 
housing, to put the assignment of housing in order, to 
improve municipal and domestic services, to improve 
the ecological situation in the housing area and in the 
plant, and to normalize businesses. Time periods were 
established for fulfilling the demands. 

A joint committee promoting restructuring of the Mak- 
malzoloto combine which was elected at meetings of the 
enterprise’s subdivisions took responsibility for the 
movement’s leadership and for monitoring fulfillment of 
the proposed conditions. B. Kadyrshayev, a mining shop 
geologist, became its chairman, and Geologist R. Bely- 
alov, secretary of the shop party organization, became 
his assistant. 

Ye. Donchenko, secretary of the Oshskiy Party Obkom, 
E. Begimkulov, first deputy chairman of the Oblis- 
polkom, and responsible officials of the Kirgiziya Com¬ 
munist Party Central Committee, the party obkom, and 
the Glavalmazzoloto Oblast Trade Union immediately 
arrived in Kazarman. Study of the situation showed: the 
majority of the demands are just. Some of them were 
immediately solved. Negotiations began on others. Time 
periods for fulfillment were established for some points, 
compromise decisions were made on others, and every¬ 
thing was recorded in the protocol. 

Tensions subsided. The committee promoting restruc¬ 
turing decided to delay the planned warning strike and 
afterward not to conduct it at all. 

Nevertheless the days of tension did not pass without a 
trace. In July and August, the enterprise did not fulfill 
the production and sales plans. 

A workers’ collective representatives conference took 
place on 19 August. It sort of summed up the conflict, 
although officially the main issue on the agenda was a 
report on fulfillment of the enterprise’s collective agree¬ 
ment during the first half of the year. Eyewitnesses assert 
that it was more stormily and actively conducted than 
any previous meeting. And not altogether smoothly. 

As a whole, the conference resolved all issues specifically 
and in a businesslike manner. The delegates approved L 
Aldzhambayev’s request to be discharged. The com¬ 
mittee was manned through selection of a new enterprise 
leader on a competitive basis. The committee’s demand 
for dismissal of his assistants was approved. A report on 
measures taken for resolving other issues was approved 
including a decision of the party raykom buro on con¬ 
ducting a report back-election meeting at the combine in 
September, At the same time, it was emphasized in many 
speeches that successfully overcoming deficiencies in 
production activity and in the social sphere depends to a 
significant degree on the miners, machine operators, and 
enrichment plant workers themselves, and on their dis¬ 
cipline and conscientiousness. 

The workers’ collective soviet was elected. Almost all 
members of the joint committee promoting restructuring 
became members of it. And the issue on the socio¬ 
economic development plan had to be delayed, since it 
was not ready. The management and trade union appa¬ 
ratus once again did not regard their assignment with the 
proper responsibility. 

We need to assume that what occurred at the combine 
will be subjected to objective and comprehensive anal¬ 
ysis. However, we can already now say: the conflict 
would not have occurred if the combine’s leaders had 
shed their ambitions, had constantly associated with the 
collective, knew their needs and aspirations, and were 
concerned with establishment of optimal living and 
working conditions. Alas, there was none of this. Even 
during the enterprise’s alarming days of August, the 
director and the party organization preferred to sit in 
their offices, although they knew that people anxiously 
awaited them in the sections and in the shops. 

FROM THE EDITOR: This article had already been 
prepared for press when an answer to the article, “Thus, 
Just Who Scored a Victory?” (SOVETSKAYA KIRGIZ¬ 
IYA, 5 July), arrived from the Kirgiziya CP Oshskiy 
Obkom, which confirmed the correctness of foreman A. 
Mirzakhodzhayev’s complaints. The answer will be pub¬ 
lished in a future issue of the newspaper. 

7 December 1989 




International Machine Building Concern Created 

INDUSTRIYA in Russian 21 Nov 89 p 2 

[Article by V. Vasilyeva: “Muses and Machines”] 

(Excerpts] A presentation by the newly-created concern 
“InterKONT” took place in the press center of the USSR 
Ministry of Foreign Affairs. This is an international 
association for the development and production of 
equipment complexes for science-intensive technology. 
The initiator in creating the concern and its chief ideo¬ 
logue is the Cherkassk Scientific-Production Association 

More than 40 participants, including 10 from foreign 
countries, make up “InterKONT.” These include scien¬ 
tific institutes, industrial enterprises, transport and con¬ 
struction organizations, kolkhozes and sovkhozes, med¬ 
ical and trade institutions, joint enterprises, and 
cooperatives. Its geography is varied—in the Soviet 
Union alone, it ranges from Brest to Kamchatka. Among 
the foreign partners are firms from West Germany and a 
Spanish association of machine builders. 

“The main goal of the concern,” said InterKONT Pres¬ 
ident and Member of the USSR Supreme Soviet A. 
Chabanov,“ is to achieve a breakthrough in Soviet 

machine building, and to attain a stable position in the 
world market. We also want to develop machines which 
are competitive in scientific ideas, high quality metals 
and plastics, reliable electronics, and modem designs as 
well as a social infrastmcture. Today it is impossible to 
increase labor quality without improving the quality of 

“The antimonopoly stance of the concern should be 
emphasized. In each of its production units, including 
agriculture, we intend to become serious, competetive, 
specialized enterprises and organizations. 

“One of the main programs of InterKONT is ecology. 
We plan to create large-scale production of equipment 
for purifying industrial wastes. We already have some 
interesting developments.” 

[Passage omitted] 

The enterprises and firms joining InterKONT indepen¬ 
dently decide questions on the form of their participa¬ 
tion in the concern’s activities. Soviet participants have 
the right, according to the decision of the labor collec¬ 
tives, either to end their ministry or departmental sub¬ 
ordination, or to participate in the concern as an asso¬ 
ciate member. 

General Director of the concern Yu. Lavrovskiy empha¬ 
sized: “InterKONT is not an administrative creation but 
an economically managed mechanism which will work 
for maximum profits.” 



7 December 1989 


Jan-Sep Rail Performance Reported 

904H0022A Moscow GUDOK in Russian 
18 Oct 89 pp 7-2 

[Unattributed report on rail performance from materials 
of the statistical administration of the Ministry of Rail¬ 
ways: “Our Rhythm: Results of Branch Operation for 9 

[Text] Many collectives of the branch, working at a tense 
rate, achieved an increase in the effectiveness and 
improvement of the quality of their work. This enabled 
them to cope successfully with the plan for 9 months. 
The overall plan for shipments was overfulfilled by 
railroad workers of the October, Belorussian, Moscow, 
Dnepr, East Siberian, Odessa, Southern, Southeastern, 
Baykal-Amur, and Baltic railroads. 

The harvest is being completed in all regions. This is a 
busy time for the railroad workers. The assignment for 
shipping grain products has not only been fulfilled but 
considerably overfulfilled. More than 9 million tons of 
grain and milling products have been delivered to the 
consumers and the elevators. The shipments of fruits 
and vegetables, sugar beets, and other products of the 
agroindustrial complex are being provided at a high 

The results could have been considerably better if the 
normal operation of the transportation conveyor had not 
been disrupted by strikes and interethnic conflicts in a 
number of regions of the country, especially during the 
third quarter. In practice, the recent losses have led to an 
underfulfillment of the assignments for the 9 months. On 
the whole, the arrears in the network amounted to almost 
22 million tons. Other indicators were also below those 
established by the plans. 

During 9 months of this year, 3,007,000 tons of cargo 
have been shipped, which is 0.7 percent less than the 
plan. As compared to the same period of last year, the 
overall volume of shipments decreased by 69.6 million 
tons. The losses were especially large in the third quarter, 
when the 36 million tons were not shipped. 

Of the 14 cargoes on the list for the state order, the plan 
was underfulfilled for coal, petroleum and petroleum 
products, iron and manganese ore, chemical and mineral 
fertilizers, timber cargoes, and flux. At the same time 
they provided for above-plan shipments of a number of 
the most important products for local planning which are 
necessary for solving the food problem and other socio¬ 
economic problems. 

In the third quarter, the fulfillment of the plan both as a 
whole and for the various items on the list deteriorated 
sharply. Of the overall shortage of shipments of 36 
million tons as compared to the plan, 15.3 million tons, 
or 43 percent, were from the state order. And the plan 
was fulfilled for only four of them—coke, paper, mixed 

feeds, grain, and milling products. For all of these, except 
the last, there was a reduction of the volumes of ship¬ 
ments as compared to the third quarter of last year. 

The branch sustained large losses because of strikes and 
social disturbances in the Baltic republics, Moldavia, 
Azerbaijan, and the Transcaucasus. A large number of 
trains accumulated on the railroads of these regions and 
the approaches to them, and the working fleet of cars 
stood idle, being transformed into warehouses on wheels. 
All this not only brought about interruptions in trans¬ 
portation work but also lowered the level of cargo work 
of industrial enterprises of a number of branches of the 
national economy. 

During the 9 months, the plan for shipments for cargoes 
included in the state order (total) was fulfilled by 18 
railroads. But the quality of the work with cargo on the 
list left something to be desired. 

The level of dispatch routing amounted to 40.9 percent, 
as compared to the 42.3 percent achieved during 9 
months of last year. It decreased for all freight with the 
exception of coke, flux, industrial raw material, chemi¬ 
cals and soda; transshipments from water transporta¬ 
tion, and the majority of the network roads, above all the 
Moscow, Gorkiy, Northern, Donetsk, Transcaucasian, 
Volga, Southern Ural, Western Siberian, Krasnoyarsk, 
East Siberian, Transbaykal, and Baykal-Amur within a 
range of 2 percent and more. 

The unloading of cars was extremely unsatisfactory this 
year, with the exception of January and February. The 
volume of dispatches since the beginning of the year 
decreased by 6,900 cars, as compared to the plan, and by 
4,200 (2.1 percent), as compared to the corresponding 
period of last year, while the local dispatches increased 
by 7,400 cars (1.7 percent). One of the reasons for the 
unsatisfactory loading was the poor organization of 
cargo work during the first half of the day. Its level was 
28.1 percent, which is 2,200 cars less than were unloaded 
during this same period of last year. The number of cars 
left unloaded by the recipients is continuing to increase. 

During the last period of the year, cargo turnover 
amounted to 2.89 trillion tariff ton-kilometers, which is 
55 billion or 1.9 percent less than the plan. The main 
cause of this situation lies in the reduction of the 
volumes of shipments. During January-August, the 
assignment for cargo turnover was fulfilled by 12 rail¬ 

The greatest arrears were allowed by the Tselina and 
Sverdlovsk railroads—6 percent of the assignment; Lvov 
and Southern Ural—5 percent; and Kemerovo, East 
Siberian, and Far Eastern—3 percent. 

The average daily overall movement of cars during the 
past 9 months was at the level of 98.6 percent of the 
norm and 99.7 percent of the corresponding period of 
last year. As before, a strained situation with respect to 
the fulfillment of this indicator has developed on the 
railroads of the eastern part of the USSR. Not a single 

7 December 1989 



one of them fulfilled the norm, and on the Transbaykal 
and Far Eastern railroads the movement did not even 
reach 90 percent. Of the railroads of the European part 
of the country, the ones that are in the worst condition 
are the Azerbaijan—89.9 percent, and the Transcauca¬ 
sian—90.5 percent of the norm. While in August on 
these railroads the movement of cars was fulfilled at the 
level of 78-80 percent, in September on the Transcauca¬ 
sian it was 47.5 percent and the Azerbaijan—41.9 per¬ 
cent. All this also had a negative effect on the North 
Caucasus railroad where the movement of cars as com¬ 
pared to August decreased by more than 1,000 cars and 
in September amounted to only 82.6 percent of the 
norm. There was a similar situation in September on the 
Moldavian Railroad where this indicator was 63.5 per¬ 
cent of the norm. On the whole, just for the four railroads 
that were mentioned, almost 10,000 cars were not 
moved during September. 

In spite of the surplus of transit cargo, the transfer of 
frei^t cars in the network continues to drop by almost 3 

The movement of empty cars is deteriorating. In Sep¬ 
tember, just the railroads that ship coal failed to receive 
more than 65,000 flat cars, including the Donetsk— 
25,000, Kemerovo—20,000, and Tselina and North¬ 
ern—10,000 each. The greatest arrears in the movement 
of flat cars were found on the following railroads: Mol¬ 
davian, Lvov, Southwestern, Transcaucasian, Central 
Asian, Baltic, Belorussian, and Southeastern. 

Difficulties in operation work, especially in the third 
quarter, affected the quality of the utilization of the 
rolling stock. 

The turnover of freight cars has slowed down since the 
beginning of the year by 6.7 hours, and 4.8 hours (72 
percent) of this slowdown was caused by the cargo part, 
which led to increasing operational expenditures by 100 
million rubles. The increase in the turnover time was 
caused mainly by the increase in the amount of idle time 
at technical stations by 3.7 hours, while the number of 
transit cars decreased by 1.2 percent. This can be 
explained to a certain degree by the increased idle time 
of cars without processing, that is, the large number of 
abandoned cars. 

The amount of idle time during cargo operations and at 
technical stations increased most significantly (by 7-14 
percent) on the Moldavian, Baltic, North Caucasus, and 
Volga railroads. The situation deteriorated because of 
interruptions during the third quarter on the Gorkiy, 
Donetsk, Azerbaijan, Sverdlovsk, and a number of other 

At the same time the turnover of cars was accelerated on 
the Alma-Ata, Central Asian, Krasnoyarsk, East Sibe¬ 
rian, and Kemerovo railroads. But the normative assign¬ 
ment was not fulfilled by the last two. These railroads 
increased the productivity of the cars, while in the 
network as a whole its level decreased by 3 percent. 

The average weight of a train was 3,114 tons. This is 14 
tons less than last year. The weight of a train increased as 
compared to the same period of last year on the Krasno¬ 
yarsk, Volga, and Baykal-Amur railroads, which pro¬ 
vided for overfulfillment of the normative assignment, 
as well as on the Kuybyshev, Dnepr, Central Asian, West 
Kazakhstan, Transbaykal, and Alma-Ata lines. 

The statistical load per car as a result of the better 
utilization of the space and weight capacities increased 
by 170 kilograms, as compared to the assignment, and by 
150 kilograms, as compared to the corresponding period 
of last year, with a 0.4 percent reduction of the propor¬ 
tion of heavy cargoes in the overall volume dispatched. 
All railroads, except for the Moldavian, Azerbaijan, 
Transbaykal, and Southwestern, fulfilled the plan for 
statistical loading. 

Discipline for fulfillment of the traffic schedule became 
weaker. The movement of cargo trains according to the 
schedule and with a reduction of delay amounted to 74.6 
percent, which is somewhat higher than last year’s level. 
But the overall delay time grew by 127,000 hours. 

The passenger turnover assignment has been underful¬ 
filled since the beginning of the year by 5.1 billion 
passenger-kilometers, or 1.6 percent. In the third 
quarter, respectively, by 8.2 billion passenger- 
kilometers, or by 6.2 percent. During January-August, 14 
railroads fulfilled the state order. The greatest arrears 
were allowed in the Transcaucasus, Northern Caucasus, 
Moldavian, Baltic, Volga, and Southeastern. 

In January-September, rail transportation services were 
used by 3.350 million passengers, which was 1.4 percent 
less than the same period of last year. In July-August, the 
number of passengers decreased by 27 million, as com¬ 
pared to an analogous period of last year. A certain role 
here was played by the unfavorable ecological and polit¬ 
ical situation in a number of regions of the country. All 
this caused many people to refuse to take trips. 

In August, there was a considerable reduction of the 
volume of passenger transportation on railroads serving 
the health resort zones of the country: Transcaucasus— 
25 percent. North Caucasus—19 percent, Baltic—13 
percent, and Dnepr and Moldavian—12 percent each. 

There was an average of 31.2 people in each car, 
including on the Baykal-Amur—only 21, Transcauca¬ 
sus—23.8, Moldavian—27.9, and Sverdlovsk—29.1. 

The schedule of passenger trains was fulfilled for depar¬ 
tures by 96.2 percent, movement—93.2 percent, and 
arrivals—85.2 percent, which was worse than last year 
by 1.2 percent, 0.6 percent, and 1.8 percent, respectively. 
The movement of the trains on schedule became worse 
on 19 railroads. 

Industrial rail transportation enterprises overfulfilled 
the 2-month plan by 8.4 million tons, or 1.6 percent. The 
increase, as compared to the corresponding period of last 
year, was 21.7 million tons, or 4.3 percent. The plan for 



7 December 1989 

shipments was not fulfilled by Novosibirsk, Perm, Vol¬ 
gograd, Vladimir, Groznyy, Turkmen, and Armenian 

The assignment for the volume of loading and unloading 
work was fulfilled by 102.9 percent. They processed 8.8 
million tons of cargo in excess of the plan. The last four 
of the above associations did not fulfill the plan, nor did 
the Kaliningrad, Kuybyshev, Sverdlovsk, or Kemerovo 

The plan for profit was fulfilled by all associations with 
the exception of the Belorussian. On the whole, the main 
administration received 80.5 million rubles in profit, 
and above-plan profit amounted to 19 million rubles. 

The subways fulfilled the 9-month plan for passenger 
transportation by 100.3 percent. The assignment for 
transporting passengers was not fulfilled by the Moscow, 
Kharkov, and Tashkent subways. On the whole, for the 
main administration the volume of transportation 
increased by 9.38 million passengers, as compared to the 
corresponding period of last year. The overfulfillment of 
the plan, as compared to last year, produced an addi¬ 
tional 814,000 rubles in revenue. The savings on oper¬ 
ating capital amounted to 5,734,000 rubles. The assign¬ 
ment for labor productivity in operations activity was 
fulfilled by 109.5 percent. 

The operation of industrial enterprises. This year there 
was a stable tendency toward reduction of industrial 
production. The volume of output from enterprises of 
the branch decreased by 0.3 percent, as compared to last 
year’s level, and if products from cooperatives are not 
included—by almost 1 percent. This is the first time 
there has been a reduction of production during the 
current five-year plan. Delivery discipline continues to 
deteriorate. As compared to the results of 9 months of 
last year, the number of enterprises not fulfilling the 
conditions of the agreements increased by a factor of 1.5, 
and their indebtedness to the consumers increased by a 
factor of 2.5. According to the agreements that were 
concluded, they failed to deliver 42 million rubles’ worth 
of products. Every third enterprise of the branch failed to 
meet its commitments for deliveries. 

Practically half of the plants of the main administration 
for repair of rolling stock and production of spare parts 
failed to fulfill their commitments. The indebtedness to 
the customers, as compared to the results of the first half 
of the year, increased up to 17.8 million rubles, of which 
7.2 million were from car repair plants, 5.6 million 
rubles—from locomotive repair, and 4.9 million 
rubles—from smelting and machine plants. 

Contractual commitments were fulfilled on a level lower 
than the branch average by plants of the Soyuzzhel- 
doravtomatizatsiya Scientific Production Association— 
by 97.4 percent. Every third plant, a total of six plants of 
the association, are in arrears. 

Industrial enterprises of the railroads allowed contrac¬ 
tual discipline to deteriorate significantly. During Janu- 
ary-September, the only enterprises to meet their 
delivery commitments were those of the Dnepr, South 
Urals, Krasnoyarsk, and Far Eastern railroads. One- 
third of the enterprises of the network failed to deliver 
18.3 million rubles’ worth of products, 14.6 million 
rubles of which were accounted for by plants of the route 
service. The main reason for the arrears was the reduc¬ 
tion of production by almost 16 percent, as compared to 
last year’s level, by plants for processing railroad ties 
with anthracene. 

The Remputmash production association improved its 
work somewhat during the third quarter. But three 
plants of the association are continuing to lag behind the 
plan for deliveries by 531,000 rubles (0.8 percent). Plants 
of the main administrations of the cargo and locomotive 
enterprises and worker supply provided for 100-percent 
fulfillment of their delivery commitments. 

Plants of the TsTVR [Main Administration for Repair of 
Rolling Stock and Production of Spare Parts] over 9 
months cut the output from capital repair of cargo cars 
by 4 percent, steam engines—by 8 percent, electric 
locomotives—^by 7 percent, and electric sections—2.5 
percent, while the planned assignments were overful¬ 
filled for the last two kinds of rolling stock. The output of 
passenger cars from capital repair increased by 1.1 
percent, but this was not enough to fulfill the plan for 9 

The arrears in the repair of cargo cars, as compared to 
the plan, increased to 3,000 units. Nine of the 15 plants 
failed to fulfill the assignment that was set. 

As of I September, rail transportation had failed to 
receive 92,000 cubic meters of timber for car construc¬ 
tion and 8,000 tons of rolled ferrous metals. The deliv¬ 
eries of the basic industrial rubber items for automotive 
brake and diesel plants and bearings and spare parts for 
diesels fell below the plan by 20-80 percent. 

In January-September, from state centralized capital 
investments and their own funds the enterprises assimi¬ 
lated 5,155,000,000 rubles (96.8 percent of the 9-month 
limit). For construction and installation work they 
assimilated 2,073,000,000 rubles (98.2 percent of the 
planned amount). 

A total of 680 million rubles were used for facilities for 
nonindustrial purposes (with an increase of 90 million 
rubles). Still the level of assimilation of capital this year 
was almost 6 percent lower than last year. Housing 
construction is lagging behind the plan by more than 6 
percent. On the whole, from its own sources of financing, 
the Ministry of Railways has introduced an overall area 
of 1,121,000 square meters in residential buildings (an 
increase of 3.4 percent as compared to last year). Only 
the Tselina Railroad is close to fulfillment of the annual 
plan. They have failed to fulfill the assignment for 

7 December 1989 



introducing hospitals and poly clinics, children’s pre¬ 
school institutions, general educational schools, clubs, 
and houses of culture. 

They have put into operation 261 kilometers of second 
tracks (94.4 percent of the plan), electrified 230 kilome¬ 
ters (102 percent) of railroad lines, equipped 502 kilo¬ 
meters (91.8 percent) with automatic block systems, and 
constructed 225 kilometers (79.8 percent) of new lines. 

The delivery of locomotives is unsatisfactory. As com¬ 
pared to the plan, they failed to receive 68 mainline 
electric locomotives and 5 steam engines. Industrial 
enterprises produced 44,200 freight cars, or 96.5 percent 
of the number planned. The Dneprodzerzhinsk plants 
failing to deliver 819 flatcars and 70 bitumen tank cars, 
the Stakhanov plant—57 ore cars, and the Altay plant— 
200 covered cars. Of the 1,382 open cars that were not 
delivered to the railroads by domestic plants, 1,207 were 
to be from Uralvagonzavod, and the Bryansk plant failed 
to deliver 13 five-car sections. They received 1,518 
passenger cars (96 percent of the plan) and 65,100 
container units (101.1 percent of the plan). 

As a result of the underfulfillment of the plan for 
shipment of both general and especially important cargo, 
shortcomings in providing for safety of movement and 
maintenance of technical equipment, and large unpro¬ 
ductive expenditures and losses caused during July- 
September by the strikes and interethnic conflicts in 
various regions of the country, many railroads and the 
branch as a whole failed to fulfill their assignments for 
technical and economic indicators and the utilization of 
rolling stock. 

The cost of shipments increased by 2.7 percent. They 
failed to receive 250 million rubles in above-plan profit. 
Labor productivity is ahead of last year’s level by 0.2 
percent and ahead of the planned assignment by 0.8 
percent. According to figures for January-August, the 
assignment for this indicator is being fulfilled by by 23 
mainlines. It is higher than last year’s level on 21 

The average monthly wages of workers employed in 
shipments increased by 14 rubles, or 5 percent. Here one 
should note the increase on all railroads, with the largest 
being on the Transcaucasus, Baykal-Amur, and October, 
and the least on the Donetsk and South Urals. 

The shortcomings in the organization of operational 
work contributed to increasing overtime hours and 
unproductive idle time in a number of enterprises. There 
was an almost 2.5-fold increase in violations of working 
conditions by locomotive brigades, and 83 percent of the 
overall increase in the network came from the Azerbai¬ 
jan, North Caucasus, Southern, Sverdlovsk, South¬ 
eastern, Baltic, and West Kazakhstan railroads. 

The interests of the country’s economy insistently 
demand that in the fourth quarter the railroads sharply 
increase their rates of shipments. They must do every¬ 
thing possible to consign fuel-energy, ore-metallurgical, 

timber, and agricultural freight. It is necessary to 
improve their work, search out internal reserves, and use 
them for full satisfaction of the needs of the population 
and the country’s national economy for shipments. 

Railroad Line Enterprises^ Rights Published 

904H000JA Moscow GUDOK in Russian 29 Sep 89 p 1 

[Article: “The Rights of Line Enterprises”] 

[Text] On the pages of GUDOK there is often sh^ 
criticism of the situation of the railroad workers, in which 
line transport enterprises—^roundhouses, stations, track 
sections, etc.—have practically no economic independence 
and cannot solve social and other problems without the 
permission of the road division. 

Suggestions on ofTering line enterprises economic and 
financial independence have recently been arriving at the 
Ministry of Railways and the Central Committee of the 
sector’s trade union. 

Because of this, the Ministry of Railways considered it 
necessary, through a directive from the minister, coordi¬ 
nated with the Central Committee of the trade union, to 
inform all the work collectives that both enterprises and 
structural units (henceforth called—^line enterprises) can 
he included in the railroad or railroad division. The status 
of railroad stations, roundhouses, all types of track sec¬ 
tions and other enterprises is determined by the Statute on 
them, approved by the railroad or road division on the 
basis of their subordination. They are granted the fol¬ 
lowing rights: 

1. To draw up plans for economic and social develop¬ 
ment in accordance with the control figures, state orders, 
approved indicators, limits and norms brought to them. 

2. To use, at their own discretion, the basic production 
funds assigned to them, including transferring to other 
enterprises and organizations, selling, exchanging, 
leasing, offering free for temporary use buildings, struc¬ 
tures, equipment, means of transport (except rolling 
stock), and inventory, as well as to write them off the 
balance if they are worn out or obsolete. 

3. To make independent use of working capital assigned 
to line enterprises for the purpose of production and 
social development. Working capital cannot be with¬ 
drawn by higher organizations without the consent of the 
line enterprise. 

4. To solve problems of organization and wages, 
including determining the forms and the systems of 
wages, offering, in consideration of specific work condi¬ 
tions, additional benefits to workers and employees, 
introducing additional payment for combining occupa¬ 
tions (positions), expanding the zone of service or 
increasing the amount of work fulfilled without 
restricting the amounts of these additional wages, 
through and within the limits of the economic wage 
fund, determine the total number of workers, their 



7 December 1989 

vocational and qualificational composition, approve 
staffs and, in accordance with the current legislation, 
carry out hiring and firing. 

5. To have a separate accounting balance. 

6. To open current and other accounts at banking insti¬ 
tutions to improve and formulate operations in accor¬ 
dance with the instructions and provisions of USSR 
Gosbank. To have at their disposal, independently, 
funds kept in accounts in banking institutions. 

7. To have an enterprise savings bank. Cash operations, 
their formulation and accounting should be carried out 
in full accordance with the Statute on Carrying Out Cash 

8. To conduct independently: 

—accounts with suppliers and contractors for commod¬ 
ity-material valuables, work performed and services 
rendered. The forms of accounts are determined in 
accordance with the statutes in force; 

—accounts with workers and employees with respect to 
wages and other payments; 

—accounts, with a budget for taxes, with workers and 
employees, according to the sums of credit and deposit 
liabilities with elapsed periods of limitations, etc.; 

—^accounts with various debtors and creditors for any 
type of operations, with a bank for loans issued to 
workers and employees, with debtors for housing- 
municipal services, with budgetary institutions of 
learning and health, scientific-research institutes, etc. 

9. To make use of bank loans for production and social 

—for seasonal above-norm stocks of raw material, basic 
and auxiliary materials, fuel, uncompleted produc¬ 
tion, finished products and other types of material 

—^for non-seasonal stocks of commodity-material valu¬ 

—to make up temporarily for a lack of internal working 

—for wage payment; 

—for other purposes in cases specified by the appro¬ 
priate instructions of USSR Gosbank. 

Line enterprises should solve all problems related to 
loans at the credit institution where the current account 
was opened. 

10. Line enterprises form funds for material incentive 
and social development independently, in accordance 
with the economic norms approved for them, on the 
basis of the financial results of their activity. 

The resources for these funds are expended according to 
an estimate. The plan of the estimate is taken for 
discussion by the work collective of the line enterprise, 
and after its approval, is affirmed by the joint decision of 
the administration, council of the work collective and 
trade union committee. 

With the consent of the work collective, line enterprises 
have the right to direct some of the resources of the 
material incentive fund (wage fund) to the fund for social 

The resources for the economic incentive fund may not 
be withdrawn by the road division without the consent of 
the work collectives, their wage earners. 

The specific nature of the work of railroad transport, 
namely, the common technology of the transport pro¬ 
cess, maintenance of available housing of civil structures 
on the track sections for all line enterprises, the financing 
of all-division institutions, namely: pioneer camps, a 
recreation base, and sports and cultural-educational 
organizations by a road division, make it necessary to 
concentrate the fund for the development of production, 
science and equipment and the fund for social develop¬ 
ment on the level of the road division. 

For the purpose of further expanding economic indepen¬ 
dence for the work collectives of line enterprises, the 
Ministry of Railways considers it expedient for the road 
and division chiefs to carry out the following additional 
measures in this direction: 

1. Grant line enterprises the right to conclude economic 
agreements with other enterprises and organizations; 

2. Statutes on line enterprises and the Statutes on orga¬ 
nizing cost accounting are to be worked out and 
approved with obligatory consideration of the opinion of 
the work collectives; 

3. Leave at the disposal of the line enterprises, to direct 
to the fund for the development of production, science 
and equipment, part of the above-plan profit (according 
to the all-division norm) and also above-plan lease 
payments and proceeds from the sale of abandoned 

4. The fund for social development in the road division to 
finance housing and social construction, subsidize operation 
of the housing fund, maintain pioneer camps, rest homes, 
boarding houses, sports structures and other cultural- 
everyday facilities of line and road significance, and other 
social needs can be centralized only with the consent of the 
work collective, in accordance with the principle of a partial 
share in the expenditures. At the same time, the work 
collective giving consent to centralize part of this fund 
should be granted the appropriate amount of housing in 
newly built houses, places in child care centers newly put 
into operation, travel authorization for pioneer camps, 
boarding houses, rest bases, etc. 

7 December 1989 



The Ministry of Railways recommends, in consideration 
of what has been set forth, that the norms of line 
enterprises for 1990 be more precisely defined. The use 
of funds for the development of production, science and 
equipment and social development for measures of an 
all-division nature should be discussed at a joint meeting 
of councils of work collectives, the appropriate trade 
union committees and directors of line enterprise 
included in the road division. In this case, the proportion 
of the fund for the development of production, science 
and equipment, transferred by the road division for the 
disposal of the line enterprises, should be determined. 
Each worker of the line enterprise should be notified of 
the decisions made. 

It should be borne in mind that a “locomotive round¬ 
house,” a “car depot,” a “station,” “track section,” etc., 
are called line enterprises, just as before. 

Chief Interviewed on RAM’s Future 

904H0001B Moscow GUDOK in Russian 
30 Sep 89 pp 1‘2 

[Interview with Valeriy Aleksandrovich Gorbunov, chief 
of the Baykal-Amur Mainline, by T. Andreyev, GUDOK 
correspondent: “BAM: Its Launching Will Save Mil¬ 
lions”; Tynda, date not given] 

[Text] The Baykal-Amur Railroad imeni Lenin 
Komsomol has retained the Challenge Red Banner of the 
Ministry of Railways and the Central Committee of the 
sectorial trade union for the second quarter. It is not about 
labor victories and not about holidays, however, but about 
the workdays that I spoke with Valeriy Aleksandrovich 
Gorbunov, chief of the country’s youngest mainline, about 
the most critical period^—preparing to turn the road over 
for continuous operation. 

[Andreyev] Valeriy Aleksandrovich, many of our readers 
wonder: why does BAM have to be put into continuous 
operation ahead of schedule? I think that they fear that 
this might be the usual show, after which the defects will 
have to be put right, the workmanship faults elimi¬ 

[Gorbunov] No, we wish to do this, not for the sake of 
the report, and not to show off an ahead-of-schedule 
launching somewhere; experience has made us revise the 
periods. The practical work in construction in preceding 
years showed that introducing objects at the end of the 
year is usually accompanied by great expense: the quality 
is not right, and it is very difficult in winter, in intensely 
cold weather, to launch any system, be it heat supply or 
water supply. It is quite different when objects are turned 
over at a warmer time of year, and there is a possibility 
of bringing them up to standard. It was therefore decided 
to launch the road for continuous operation not in 
December, but in October of this year, so that there 
would be time to make the final adjustments in transport 
technology and to check the reliability of all the devices 
and systems. In addition, you must remember that the 
earlier we open up continuous train traffic along BAM, 

the faster the road will begin to pay back the millions 
that have been causing so much talk in the country. 

I will bring in a few figures. If we turn over BAM on 31 
December, the loss from maintaining it will be 250-260 
million rubles, but if we launch it on the first of October, 
which we are striving for, despite all the difficulties, it 
will be much less—215-220 million. In my opinion, the 
difference is appreciable. 

Finally, we are approaching that happy day for which the 
BAM workers have been waiting for 15 years: through 
passenger train traffic will be opened. Through its release 
to the west of the country, the inhabitants of the BAM 
zone can travel not along the Transsiberian, but along 
the shorter route through Tayshet, along their own 

[Andreyev] Did you not make a slip when you said “we 
will turn over”? This sounds unusual from the lips of the 
chief of the road. The construction workers have always 
done the turning over, while the railroad workers put the 
objects into operation. Is the customary system on BAM 
turning out to be violated? 

[Gorbunov] When the Baykal-Amur road was just being 
developed, the words “we are turning over” was not in 
the vocabulary of the railroad workers. As applied to 
construction, we usually used the verbs “we will accept” 
or “we will not accept.” Every year the fixed capital was 
accepted, evaluated as sums of 800 million to a billion 
rubles. They were “frozen,” because there was no 
through train traffic. The desire to introduce them into 
the work more quickly made us change our attitude 
toward the construction process. The operators began to 
take an active part in it. We became partners with equal 
rights with the construction workers. Many years of 
businesslike friendship—I am not afraid of this word, I 
mean precisely, friendship—helped us to overfulfill the 
plans for utilizing the capital investments allotted by the 
state every year. 

[Andreyev] Right now several thousand railroad workers 
are working on the BAM complexes being launched. 
They are track workers, transport workers, signal men, 
power engineers.... People who, on the one hand, super¬ 
vise the construction, and on the other—install the 
equipment with their own hands. They work with the 
construction workers from dawn to dusk. Is it not likely 
to be advantageous for both of them? 

[Gorbunov] Our participation is valuable for the con¬ 
struction workers particularly because they do not have 
to alter anything afterwards. After all, the boss is along¬ 
side, and if something is not just so—he makes a 
suggestion. If he lets something slip, there is no one to 
blame but himself. He himself will make the alteration. 
True, we have people who are afraid to get their hands 
dirty, and want everything handed to them on a platter. 
We say this, however: either change your attitude or your 
work place. The time has passed when it is possible to 
stand aside and wait until everything is done for you. 



7 December 1989 

Moreover, we are well aware that if someone has come to 
a project for the first time and wishes to start to operate 
it immediately, nothing will come of it. But if he takes 
part in the construction process, understands the blue¬ 
prints, becomes familiar with the technological chart or 
system, then the transition from turning over the project 
to operating it is made without any particular difficul¬ 
ties. A great deal here, of course, depends on the person, 
his personal qualities and attitudes toward work. Fortu¬ 
nately, we have a majority of highly skilled specialists 
working for us, 

[Andreyev] Just what contribution are they making to 
launching BAM? 

[Gorbunov] Their main purpose was to finalize, start up 
and adjust the equipment for very complex projects for 
water supply, purification structures and boiler houses. 
The work is not simple. There are purification structures 
on the road with equipment the like of which, perhaps, 
you can find nowhere else—even at specialized enter¬ 
prises. Take our boiler houses: each one is a small plant. 
For example, at the Tynda KVTK-100—^this is a boiler 
house at the level of the Ministry of Power and Electri¬ 
fication, and the latter, it is true, does not want to take on 
its servicing, even though it is obliged to, according to 
the regulations. Everyone who has been at this boiler 
house marvels, they say, how can the railroad workers 
cope with this big clumsy thing? And there is nowhere for 
us to put it. 

The difficulties with equipment, however, are not com¬ 
pletely settled. Quite often there is not enough of it, and 
our specialists have to seek new solutions instead of the 
planned ones. Power engineers have recently had this 
situation arise. At a number of substations, special 
panels were needed for the protection system, but the 
plant did not supply them. There was no time to wait 
and, just imagine, our engineers solved this complex 
problem: they worked out their own system, found the 

There are many such examples. The equipment situation 
is very difficult this year. We have received many 
refusals from suppliers. We even had to create from 
workers in various services a so-called “fast reaction 
group.” If the suppliers fail—our specialist goes to the 
plant. His task is to solve the problem. Perhaps to find a 
different, more reliable supplier, perhaps to come to an 
agreement with the designers on substituting some 
equipment for other equipment. In contrast to the usual 
“fixer” he seeks an engineering solution. 

We have learned how to monitor the delivery of freight 
as well. How did it go before? We got a telegram from a 
plant: the order was filled, everything had been shipped. 
We waited a month, another..., then we began to inves¬ 
tigate—where was the car held up? We wasted our time 
and our nerves. Now the tracking system has been put in 
order. It is even a pity that BAM is completed and all this 
accumulated experience will be wasted, forgotten.... 

[Andreyev] You spoke of a purposeful friendship with 
the construction workers. Some people are inclined to 
see in it, however, mutual connivance: the railroad 
workers, they say, simply close their eyes to construction 
rejects and imperfections. How do you feel about this? 

[Gorbunov] There can be no question of any connivance. 
Is any one of us, really, an enemy to himself? After all, we 
are accepting a road on which we have to operate. How 
can we close our eyes to any defects? It is a different 
matter that problems can be solved in a different way. 
You can go on the principle: it is written in the docu¬ 
mentation and in actions, your difficulties have nothing 
to do with me. Or you can sit down and think out 
together how best to act, where additional resources can 
be found, and ultimately postpone the deadline for doing 
it. There were never any idylls in our relations with the 
contractor, but experience helped us to work out inter¬ 
relations which, as it turned out, were convenient for 
everyone. Of course, if it happens that we cannot find a 
common language, we look for an arbitrator, to settle our 
dispute. It was that way with the Mogot station, when 
deformations of a number of its objects began. We took 
a long time to clear up who was to blame for that. We 
appealed to USSR Gosstroy. They created a special 
commission, entrusted it with investigating and then 
gave it to us equally: the construction workers—for the 
defects, to us—for poor operation, and left us to get out 
of the mess ourselves. It was then that we realized that to 
tear at each other’s forelocks and break our lances— 
made little sense. It was better to sit down at the 
negotiation table. We asked the Ministry of Railways to 
allot resources. The Ministry of Transport Construction 
took on the performance of the work and Mogot is now 
practically restored. 

Here is another example. Last year, at the launching of 
the Khani-Chara section, a serious situation formed. It 
turned out not to be ready by the deadline. It was not 
Bamtransstroy that was to blame for this, although it was 
the general contractor, but rather, the adoptive organi¬ 
zations, which could not concentrate enou^ forces at 
the objects being introduced. All the deadlines passed, 
the workers grew apathetic and work on the launching 
was beginning to come to a standstill. Then we went, 
together with the management of the association and the 
state commission, to the site, gathered the people and 
explained the problem to them, and encouraged them. 
On the first of November, even though at first it seemed 
unrealizable, the launching was turned over, and more¬ 
over, with a “good” rating. 

[Andreyev] Launching all of BAM is a great and joyous 
event, but we will probably not beat any drums? After 
all, a great deal of work still remains to be done to finish 
building the road. Approximately how much time will 
this take? 

[Gorbunov] On the first of January of next year we will 
have a billion rubles for construction and installation left 
unutilized, according to the technical plan. Judging by 
this year’s rates, it would take a maximum of four years 

7 December 1989 



to finish building BAM. According to unofficial data, 
however, the planning organs will take half of the capital 
investments for part “A” next year, and consequently, 
we will not introduce a number of very important objects 
and will operate an unfinished road. What does this 
mean? For example, there will no traction substations— 
there will not be enough electric power—^the train weight 
will have to be reduced, and a large number of locomo¬ 
tives and brigades will be needed. In the end, every ton of 
freight transported will cost more. So, which is better: to 
complete BAM and operate under the optimum eco¬ 
nomic conditions, gradually increasing the potential and 
making transport less expensive, or drag out a pitiful 
existence under the burden of tremendous operating 
expenditures: Indeed, we know: the country has no 
resources. It is precisely for that reason that the business 
begun must be completed properly, or else finishing the 
construction will drag out for 10 years and much more 
will be spent on it. 

[Andreyev] BAM will be turned over as a volume of 
launched complexes, but not as a technical project. Will 
normal conditions of work and everyday life be provided 
for the railroad workers after its launching? 

[Gorbunov] There is a whole group of problems here. On 
the whole, the conditions of life and everyday life at 
BAM are better than on other roads. According to 
statistics, we will have more square meters of housing, 
spaces at hospitals and polyclinics, kindergartens and 
schools per worker. All the same, though, these indica¬ 
tors do not correspond to the norms. We will not be able 
to provide all the workers with well-appointed housing. 
This problem is practically solved at line stations, but at 
the major ones—^Tynda, Severobaykalsk, the Urals, 
Berkakit—^things remain quite serious. This is because of 
miscalculation on the part of the planners. The families 
of the railroad workers and the high birth rate were not 
taken into account. We are now attempting to solve this 
problem, not only through BAM estimates—^we are also 
constructing housing by our own efforts, and are creating 
an internal building industry base. There are already 
three construction-installation trains on the road, and in 
a year a road trust will appear. True, construction rates 
are still low, but after all, the funds are low. Therefore, 
we are explaining to the people: we will do good work— 
we will begin to build more and live better. 

As for work conditions, we should not complain about 
that. The passenger and track facilities are an exception. 
The former were not specified in the plan, and for the 
second—^there proved to be no base for track mainte¬ 
nance. Through the BAM estimates, we managed to find 
some reserves, but we simply cannot manage to create 
powerful modem bases by the time the railroad is 

[Andreyev] The opening of continuous train traffic along 
a new mainline is awaited, I think, by more than just the 
BAM workers. Everyone would like to know: how will 
this event take place? 

[Gorbunov] I think it will be an everyday event. BAM, 
after all, is not unknown. Trains have been running along 
it for a long time. We have already put freight trains 
through from Komsomolsk to Ust-Kuta and back. But 
while before there were two consists a day mnning, now 
there will be twenty. We already have a traffic schedule. 
As soon as we accept the road for operation, part of the 
freight flow will be diverted to BAM from the Transsi- 
berian. We will give a respite to our neighbors—^the 
Transbaykal road, which is at this point beginning to 
gasp for breath. 

Finally, our problem will not diminish with the launching 
of BAM. First of all, we are already planning a sharp 
curtailment next year in the subsidy received from the 
state. We must make the road profitable as soon as 
possible. This is a very complex problem. A great deal will 
depend on the Ministry of Railways: will it provide us 
work, will the wheels turn—^will the revenues be good, will 
the collective stand on its own feet quickly, and will it 
acquire independence. We want to exceed the neighboring 
mainlines, two years after the launching, in qualitative 
indicators—^the use of cars and locomotives, the section 
speed and other things, although it is difficult to vie with 
them—^they have double-track, we have single-track. We 
have modem equipment, however, and we have excellent 
specialists, so that the task is fully within our power. If we 
look even farther into the future, in 1995 we are planning 
to go to Yakutsk along the Amur-Yakutsk mainline. It will 
provide a solid increase in our freight and will increase the 
income of the collective. BAM will not always be catching 
up with the Transsiberian. I believe that this road has a 
great future, in that it will provide an impetus for the 
development of the entire Far East. 



18 ;? 


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