MOSCOW, OCT. 9 -- The legislature of the Russian republic defied Soviet President Mikhail Gorbachev today and declared that it would begin implementing a radical 500-day economic reform program on Nov. 1 whether or not the Kremlin allowed it.
After weeks of delay and debate, Gorbachev is scheduled to introduce his own plan to the national legislature, the Supreme Soviet, on Monday. Gorbachev has endorsed in principle the 500-Day Plan favored by the Russians to convert the economy to a market system, but he has also spoken of including more centralized elements supported by his prime minister, Nikolai Ryzhkov.
Russian Prime Minister Ivan Silayev said that no matter what Gorbachev and the Supreme Soviet decided, Russia would implement the 500-Day Plan, which envisages rapid privatization of property and enterprises. Without going into specifics, Silayev said the Russian leadership is prepared to take "extreme measures" to overcome any resistance from Moscow.
The economy is in horrendous condition in all 15 republics and the defiant tone of the Russian leadership underscores the increasing severity of the political debate. The author of the 500-Day program, presidential adviser Stanislav Shatalin, has said that Gorbachev favors the essentials of the plan but is reluctant to let go of some of the levers of centralized control or to lose Ryzhkov.
Some deputies in the Russian legislature were so angered by Gorbachev's hesitation that they proposed a nationwide strike on enterprises and collective farms to defy state authorities. Demonstrators in Moscow and other cities have called on Ryzhkov to step down.
But the firing or resignation of Ryzhkov and his cabinet would force Gorbachev to replace all the government ministers as well, including the heads of the KGB and the Defense Ministry and go through long and potentially embarrassing confirmation hearings.
Although there has been no movement to unseat Gorbachev, Russian President Boris Yeltsin, who left the Communist Party this year, is far more popular. In addition, most of the republics have also challenged the traditional levers of Kremlin control, by declaring independence or sovereignty.
In the Supreme Soviet, legislators began a first reading of a crucial bill to reorganize the Soviet banking system. Viktor Gerashchenko, the head of the state banking system Gosbank, told reporters that the legislation would give bankers, and not the state, the ability to control all monetary policy.
Until now, the state has had the power to print money at will, a situation that has led to a huge imbalance between the money supply, prices and the availability of consumer goods. The government newspaper Izvestia said in a front-page editorial in tonight's editions that without a bank reorganization law the Soviet Union "would never avoid stupid populist or simply unjustifiably expensive projects."
The new banking system would, in principle, resemble the Federal Reserve System in the United States. But the legislation would also give the constituent republics the ability to set up their own banks. The plan also envisages the rise of commercial banks and would allow foreign banks to operate in the Soviet Union.
Soviet banking officials have consulted closely with representatives from foreign banks, including Federal Reserve Chairman Alan Greenspan. Moscow is eager to join international economic organizations, including the International Monetary Fund, in order to bolster its status as a world trader.
Gerashchenko also said the Soviet Union would not be able to establish a freely convertible ruble in the near future but would adjust the commercial rate of exchange on Jan. 1. At present, the official exchange rate is 60 kopecks to the dollar; next year it will be 2 rubles, or 200 kopecks, to the dollar.
That rate does not reflect the "real," or street, rate. Black-market dealers now routinely trade at 15 or 20 rubles to the dollar. The new commercial rate will increase the cost of imports, Gerashchenko said, but will not cause Soviet businesses "suddenly to go begging for subsidies from the Finance Ministry."
The deputy head of the Supreme Soviet's planning and budget committee, Alexander Orlov, told reporters that the banking legislation was the "key start-up mechanism" for an eventual switch to a market economy.