AUCTION OF PART OF YUKOS SHARES POSTPONED.

This week’s projected sale of 8 percent of the shares in Russia’s oil giant, Yukos, has been postponed until early 1996. (9) The decision was made at the request of the company’s management, a Yukos spokesman said, because managers were afraid the shares would not reach their maximum price if offered for sale at the same time as the controversial auction at which, on December 8, a total of 78 percent of Yukos shares are scheduled to be sold. The Yukos auction is the latest in a series of "shares for loans" auctions through which the Russian government intends to divest itself of some of the shares it holds in the country’s largest and most valuable industrial enterprises. The idea is that the government borrows money from commercial banks against the security of state-owned assets, thereby raising capital without printing money and fueling inflation.

Under the Yukos privatization plan, 33 percent of the shares are to be offered for investment bidding on December 8, together with a collateral auction of 45 percent of the shares which will remain in the hands of the state. Of the 22 percent remaining, 14 percent will be distributed among managers and workers while the final 8 percent will, according to the new schedule, be sold at a special monetary auction sometime in the first quarter of 1996.

The whole privatization process has become increasingly controversial in recent weeks, with communist and nationalist candidates threatening that, if they are elected to the Duma December 17, they will try to re-nationalize property disposed of in this way. To make matters worse, several of Russia’s leading commercial banks have fallen out over the fairness of the auctions and are involved in an acrimonious dispute that can only discredit the process in the eyes of the general public. One of the banks at the center of this dispute, Menatep, has made no secret of its determination to gain control over Yukos. Accusing Menatep of malpractice, three other leading Russian banks have called on the government to cancel the auction. Rejecting their demand December 3, First Deputy Prime Minister Anatoly Chubais defended the government’s privatization program and reiterated that the sale would go ahead as planned. (10)

Ingush-Ossetian Tension.