MOSCOW, DEC. 6 -- Russian President Boris Yeltsin said today that his giant republic will end price controls on most goods as of Dec. 16, and leaders of six other republics indicated their willingness to take some first steps along the same path.
Yeltsin's statement to journalists finally fixed a day of reckoning for the radical plan of economic restructuring that many Russians are dreading and that Yeltsin has said is an essential first step to undoing the damage of 74 years of Communist rule. Prices on most foods and other items are expected to skyrocket by 400 or 500 percent when government ceilings are lifted.
The agreement by Russia and six other republics today to allow prices for a few basic necessities to rise only to set ceilings shows the extent to which Russia is setting the pace and extent of economic transformation throughout much of the disintegrating Soviet Union.
The movement on price liberalization comes as the food situation throughout the country, but especially in Moscow and St. Petersburg, has seriously worsened. Soviet President Mikhail Gorbachev warned today that Moscow was on the verge of running out of meat, sugar and vegetable oil and requested urgent help from the Ukraine, Byelorussia, Kazakhstan and Moldavia. Demonstrators, enraged by the empty shelves in most stores, angrily protested outside Moscow's city hall today.
Yeltsin told the news agency Interfax that he has ordered an increase in pensions as of Dec. 1, apparently to help retired people weather the upcoming price shocks.
Yeltsin had previously announced that Russia would decontrol prices as the key element of a transition to a market-based economy, but had delayed setting a date for the step at the request of neighboring republics. Their officials expressed fear that Russians, faced with price hikes, will cross into other republics where they can buy more cheaply from stores that already are mostly empty. In addition, producers in the neighboring republics that do not raise prices are likely to sell their goods instead in Russia, further diminishing supplies in republics that let prices rise.
"It will be a hard period," Yeltsin said, referring to the effect on people after the Dec. 16 freeing of prices, according to central television news. The television network said leaders of six republics -- Armenia, Georgia, the Ukraine, Uzbekistan, Kirghizia and Tajikistan -- who met with Yeltsin today to discuss economic issues recognized they had to begin coordinating their economic moves with Russia because otherwise their stores "will be cleared of whatever goods they have."
The six republics had apparently hoped Russia would delay decontrolling prices. But today, faced with Russia's decision, they agreed with a proposal that lets prices for some essential goods rise only to a set maximum. According to the Tass news agency, the price cap agreement covers "such consumer goods as bread, milk, baby food, sugar, salt, matches, vodka, gasoline and passenger transport services and communications."
Soviet Prime Minister Ivan Silayev said on television tonight that "the danger of the destruction of economic union enabled us to find acceptable decisions on the most complicated issues."
On Saturday, Yeltsin will travel to Minsk to sign a bilateral economic treaty with Byelorussia and to hold a "Slavic summit" with newly elected Ukrainian President Leonid Kravchuk and Byelorussian President Stanislav Shushkevich. Today, Kravchuk suggested that the three Slavic republics create their own loose economic confederation.
In a related development today, the Russian parliament approved a value-added tax of 28 percent on goods purchased starting Dec. 16. Deputy Prime Minister Yegor Gaidar, Yeltsin's chief economic adviser, said the new tax will bring in an additional 950 billion rubles to help the hard-pressed Russian government pay for social programs as the economy declines. Gaidar also said the government is hoping to stimulate businesses and will not increase taxes on business profits.