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introduction of the provision on a mandatory expulsion in the future from the state property managers community those who were dismissed from their duties because of their unfair performance (with a detailed description of such abuses and a respective penalty), along with the creation of a database to store complete information on all the staff ever representing the government interests in the property management area (directors of FSUE, governmental representatives in AO, trust managers);

introduction of the provision of a compulsory information by directors of FSUE and governmental representatives in AO of their income and property as a variant of adoption of a special law on labor compensations for heads of public companies or amendments to the tax law. The enforcement of this particular measure with regard to heads of economic agents with the government share in them is under discussion (and can be related to the size of the government share).

Secondly, there exists a serious challenge in the unitary enterprises management area that fall under the RF Subjects property and municipal unitary enterprises (as of late 1999, their overall number made up some 65,000) as well as economic companies with the local governments share in their capital presents.

The problem is it is FSUE and AO whose shares constitute the federal property that falls within the purview of practically the whole legal base developed over 1999-2001. The exception is RF Government Resolution # 23 of January 11, 2000 On the register of economic efficiency indicators for federal state unitary enterprises and open-end joint-stock companies whose shares are in the federal property. The document recommends executive agencies in RF Subjects to organize the work on creation and conduct of registers of economic efficiency of state unitary enterprises owned by RF Subjects (as well as of open-end joint-stock companies, whose stock belong to RF Subjects).

It is evident that the priority mission is to spread all the management patterns and mechanisms emerged over the past three years onto the property of RF Subjects (in analogue to the federal property objects). This should concern, at least, the enterprises the federal center is going to assign to local governments. The respective Government resolution (# 1366 of December 9, 1999) relates the assignment of such FSUE=s to the ownership of RF Subjects just to decrease in the amount of funds the federal budget transfers to regions. Enterprises with arrears on compulsory payments to the federal budget and state off-budget funds, as well as backwages, outstanding over 3 months were bound to submit a business plan. The latter should provide for a liquidation of such arrears over a certain period of time (with concrete sources of funding of necessary measures), among other things. At the same time, the respective standard Framework Agreement and Assignment Deed approved by the Ministry of State Property with its Decree # 2-p of May 23, 2000, were not registered by the RF Ministry of Justice. So, the matter has been suspended so far.

The launch of the process should be preceded by a detailed examination of the actual state of affairs in the property relations area in a specific region, including the situation at the enterprises that have earlier been assigned to local governments. It would be appropriate to conjoin the possibility of assigning the federal property to the RF Subjects with the size of the RUSSIAN ECONOMY in trends and outlooks existing regional property (including stock packages), efficiency of privatization procedures and local property managers performance over the prior period, and to include all the above in official documents on interbudgetary relations.

Third, there exists a group of questions associated with the rate and quality of economic growth. It is not accidental then that the Concept regards encouraging production and its diversification, improvement of such enterprises financial and economic performance, attraction of investment, optimizing managerial costs, implementing institutional transformations in the economy as independent objectives in the state property management area.

The above objectives can be reached by the following means: the use of state-owned stock packages to secure credits and investment; capitalization of enterprises debts to the budget and an contribution with their land sites to AO=s authorized capital, with the consequent sale of, or trusting the newly issued stock; establishment of vertically-integrated corporate structures; enterprise restructuring with a separation of the property complex needed to solve problems of the national scale, and sales of other assets; and, finally, the use of various privatization procedures.

The nature of the above instruments and a well - known fact of the transition of a main mass of attractive enterprises to the non-government sector show that the above processes to a greater extent concern companies with the government share in their capital, while to a less unitary enterprises.

At the same time, one should take into account that any job on enterprise restructuring that implies separation of any production should involve a great deal of cautiousness and is time-consuming. That can be explained by the need of a thorough account of the whole set of related circumstances and primarily of evaluation of the possibility of downsizing the objects that once were built as a single technological complex. As well, it should imply studying into technical aspects of the problem. The task to create competitive holding structures with the governmental participation poses a serious challenge, too, as the account of the technical aspect of the problem (compatibility, inter-relation and mutually complementary functions of such integrated enterprises) is complemented by demand for concentration of governmentowned assets to the extent allowing exercise an efficient control with minimal managerial costs involved.

Obviously, these problems can be solved and visible results can be achieved only in the long run (within 5-7 years), when both unitary enterprises and companies partly owned by the state demonstrate a steady and qualitative implementation of their functions set while fixing them in the government ownership and a considerable increase in non-tax receipts to the budgets of all levels is ensured. By that time, by and large, a sound management system of stateowned assets in unitary enterprises and mixed companies should be built. The system should be based on an individual approach towards each such object and a program-targeted principle that implies a mandatory identification of objectives of the state participation in the given enterprises capital and, consequently, a strict formulation of tasks and a documentary fixing of means of influence on the given object, providing existence of efficient control instruments.

Naturally, the implementation of all the aforementioned measures, along with a sound staff policy pursued by sectoral and functional management agencies, does not guarantee absolute protection of the state acting as a principal from potential offensive acts of the manager as an agent. This notwithstanding, it appears that such measures can considerably lower an integrated risk of bankruptcy of unitary and mixed enterprises, inhibit stripping them off assets and eventually lower costs in the public entrepreneurship area.

INSTITUTE FOR THE ECONOMY IN TRNSITION http://www.iet.ru In all fairness, it should be noted that such negative effects caused by the functioning of an economic institution as poor current performance indicators, stripping an enterprise off its assets, false bankruptcy, etc. in principle appear characteristic of economic agents of other organizational and legal forms, too. For instance, in Russian economy, many privatized companies do not perform as expected, nor they proved to be manageable even under new, private owners. This manifests a universal nature of difficulties arising in the relationship between managers and owners in the transitional conditions.

With all their similarity, the processes of improvement of management of unitary enterprises and economic companies with the government participation and the legal regulation of the state property rights towards these different kinds of objects have their own specifics, which allows better understanding of the nature of challenges facing them.

Overall, one should recognize that currently the 1999Concept needs a serious update, primarily from the perspective of shaping a single public property (asset) management system, which would allow to ensure a material provision of implementation of public functions and optimization of the federal propertys structure. The idea of shaping such a single system basing on a classification of the federal property and improvement of new mechanisms of managing federal property objects should become a core one in the course of furthering the legal base of privatization and public property management.

Unitary enterprises It was in 1999 (in the frame of the Concept) that unitary enterprises along with government-owned stock packages (shares) in economic companies (primarily AO=s) and real estate were for the first time singled out as a separate object of the government policy. Accordingly, it was for the first time ever that the number of FSUE=s became known 13,786, which was roughly twice lower than as of January 1, 1998 (29,666). By summer 2000, there were 11, 200 unitary enterprises, as of September 1, 2001 9,855, and as of January 1, 2002 9, (or at some 32% less than stipulated in the Concept)7. Such a decline in the absolute number of FSUE=s is explained by the implementation of a complex of measures provided by the Concept. They are aimed at contraction in their number (reorganization, privatization, liquidation), while at the moment it is impossible to unambiguously argue that in the future the vector of quantitative dynamics of FSUE=s will be heading steadily for a decrease in their number.

The data in Table 3 (though its covers different dates) clearly show differences between the federal unitary enterprises on the one hand, and regional and municipal ones, on the other.

Obviously the problems related to management of budget institutions (reforming the budget network in the social sphere sub-sectors), natural monopolies reform (associated with antimonopoly regulation, encouragement of competition, and corporate governance), restructuring the bloc of law enforcement and military agencies and sales of property freed due to that (associated with the military reform) also bear their great functional specificity, which is related to the nature of the respective agencies operations. However, the present paper does not deal with them.

The process of creation of the Register of Federal Unitary Enterprises has been far from completion. This can be attributed primarily to the absence of a distinct division of powers and rights for a certain property between different tiers of the government and, in a number of cases, to the fact that regional administrations and unitary enterprises there are keen to avoid the application of accounting and control procedures on the part of federal agencies. For example, according to the Department for Accounting the Government Property of the RF Ministry of State Property, by mid-2000 in 69 Russian regions there were found 1,232 legal entities having the status of federal enterprises in the region but not included into to the respective federal agencies lists.

RUSSIAN ECONOMY in trends and outlooks They both prove to be very closely associated with the level and limits of the respective government tiers competence.

As concerns the structure of regional and municipal unitary enterprises, it is the housing sector that has the greatest proportional weight (27.6%), followed by trade and public catering (25.2%). As long as all economic agents of this particular organizational and legal form are concerned, the overall proportion of both sectors stands nearly 53%. By contrast, their share in the group of federal unitary enterprises is just 11.4%, while the proportional weight of agrarian and forestry sectors is notably big there (14.6% vs. 5.4% in the group of regional and municipal unitary enterprises), followed by sectors for transport and communication (vs.4.9%). However, it is other sectors whose respective rate is especially great (almost 33% vs. 12.2%), of which almost 2/3 falls on science and scientific services. The proportional weight of industrial and building sectors in the group of federal unitary enterprises (some 30% in all) does not bear a fundamental difference from the respective proportion of these sectors in the group of regional and municipal enterprises (24%).

Under a detailed disaggregating of the sectoral FSUE structure, it becomes evident that as of early 2002, it was the proportion of science and scientific services that was the greatest one (15.2%), followed by agrarian sector and forestry (14.6%), transport and communication (11%). An absolute number of enterprises in these particular sectors exceeds 1,000. This group is closely followed by the construction sector (10.5%) and trade and public catering (9.7%) that currently comprise 988 and 909 FSUE=s, respectively. As concerns the industrial sector whose share in the overall number of existing FSUE=s roughly accounts for 1/5, it is machine engineering and metal processing whose share is the largest (some 48%, or 9.4% o the overall number of FSUE in the economy), followed by enterprises dealing with material and technical supply and sales (7.4%), while the proportional weight of all other sectors does not exceed 2.5%.

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