1. Archive

Soviets crack down on speculators

Warning that half the consumer goods produced in the Soviet Union now reach their buyers through the black market, the government Monday demanded tough new legislation against speculators, and police announced a nationwide crackdown on the "shadow economy." Valentina Semenko, secretary of the legal affairs committee of the Supreme Soviet, the national legislature, said the black marketeers, some of them organized in Mafia-like gangs but many others functioning as individual operators, were rapidly taking control of major aspects of the disintegrating Soviet economy.

With their economic power, the black marketeers are driving up prices, she said, and that is contributing substantially to growing social unrest and an increase in crime here.

"The scale of organized crime is beyond our predictions," Vladimir Kryuchkov, chairman of the KGB, or State Security Committee, told a news conference. "Gangs have appeared with ties _ roots, even _ in the shadow economy. They have vast material resources and funds for investment. They even have the ability to gain political power."

Kryuchkov said there is real concern at top levels of the Soviet leadership that organized crime could subvert the development of a market economy, which is to replace state ownership, central planning and government management over the next two years.

"I believe that the shadow economy will be supplanted by law and market relations," Vadim Bakatin, the Soviet interior minister, told the news conference. "But it is clear that we will have to get through a transition.

"We will have to have intermediate legislation for this period to support economic development while we hold criminal tendencies in check. Theft and embezzlement should not have a place in the new economy, let alone be the heart of it."

Bakatin and Kryuchkov said their agencies, among the most powerful in the Soviet Union, would unite against economic crime, especially that of the hundreds of rapidly growing gangs.

"We have got to come to grips with them because our state suffers great losses," Kryuchkov said, noting that the gangs had begun operating nationwide and even abroad. "You just cannot imagine how much is involved. I estimate it runs into the billions of dollars."

The government's most immediate concern, officials said, is to curb consumer prices, which are rising an estimated 6 percent to 8 percent a month when black market sales are included.

Semenko, speaking to the Supreme Soviet, said the government wants stronger laws to prevent speculators from buying goods in short supply _ now virtually everything _ at low, state-controlled prices and reselling them on the open market.

Under the legislation introduced Monday, anyone convicted of "speculation," which is defined as buying goods at controlled prices and reselling them at a profit, could be imprisoned for up to three years, with confiscation of their property. Major operators could receive 10-year sentences.

Vasily Trushin, the deputy interior minister, told the deputies that in a survey on Aug. 1 only 20 of 1,100 basic goods were readily available in Soviet stores and that supplies had deteriorated sharply since then. The shortages, he said, show the results of speculation.

Although the legislation won preliminary approval, it was questioned by a number of deputies, who thought it contradicted in concept and practice the development of a market economy. The law, once enacted, will punish the very actions _ buying low and selling high _ that provide the dynamism of the market.

Andrei Orlov, the parliamentary observer for the news agency Tass, commented that the bill would probably be debated hotly because fundamental principles are involved and the question of prices is extremely sensitive.

"Soviet people often describe some businessmen as profiteers," Orlov wrote in a brief analysis, "although for any Western businessmen their activities were reasonable."