President Mikhail S. Gorbachev issued a series of economic decrees Friday that sharply devalue the ruble and allow 100 percent foreign ownership of companies in the Soviet Union.
Taking advantage of new powers given to him last month by the Soviet legislature, Gorbachev decreed the changes as part of his plan to convert this nation of 285 million residents to a market-based economy over a period of about two years.The new commercial exchange rate for the ruble will go into effect Nov. 1, cutting the value of the Soviet currency nearly 70 percent to spur exports and reduce imports, according to a decree published in the government newspaper Izvestia.
A second decree signed by Gorbachev permits Soviet citizens to buy shares in enterprises, purchase bonds and hold other securities, either singly or in registered groups, the official Soviet news agency Tass reported.
That decree also says foreign investors can establish enterprises in the Soviet Union, either in joint ventures with Soviet firms or with 100 percent foreign ownership. In the past, Soviet firms had to retain majority control.
Profits of foreign investors can be reinvested or transferred abroad under rules promulgated by the Soviet legislature, the decree said. It did now say when the new rules would be announced or when they would take effect.
"Foreign investors on Soviet territory will enjoy legal protection, and conditions cannot be less favorable than the corresponding conditions for the property of Soviet organizations, enterprises and citizens of the USSR," the decree said.
The decree on stock ownership will have little immediate impact, because the Soviet Union does not yet have a stock exchange. However, officials have been discussing opening an exchange and recently sought advice from visiting representatives of the New York Stock Exchange.
Devaluation of the ruble, though, affects only one of the two official exchange rates.
The new exchange rate for international commercial transactions under the decrees will be 1.8 rubles per U.S. dollar, compared to the current .56 rubles to the dollar. This is the rate used by Soviet and foreign companies.
The rate for foreign tourists exchanging money in the Soviet Union will remain unchanged at 6 rubles to the dollar. The Soviet government introduced the tourist rate this year largely to combat black market activity.
Both the official rates are set artificially by the Soviet government, and neither reflects the real worth of the ruble, either to companies trading commodities or tourists trying to buy Soviet wares such as a Matryoshka doll.
In another development, the timber-rich Chuvash region of the Russian republic declared itself sovereign Friday. On Thursday, the Union Republic of Kazakhstan passed a sovereignty declaration, becoming the 14th of 15 Soviet republics to seek at least partial independence from Moscow.