During the most recent Russian-American summit in Vancouver, Canada in April 1993, President Clinton announced a major new initiative to assist Russia's transition to a market economy. In discussing how to aid the process of Russia's economic reform in ways of mutual benefit to both the United States and Russia, both President Yeltsin and President Clinton underscored the importance of promoting the conversion and privatization of state enterprises of the Russian military-industrial complex.
While most agree that conversion and privatization of these enterprises are laudable goals, few have discussed concrete methods of achieving these ends at the level of individual enterprises. By focusing on the actual experiences of one Russian enterprise that has both converted to almost 100% civilian production and, at the same time, become a private company, this report seeks to expand the discussion of the means and models for achieving conversion and privatization of the Russian military industrial complex.
This report covers work on conversion and privatization in the former Soviet Union that has been conducted over the past two years by the Center for International Security and Arms Control (CISAC) at Stanford University. In it, we explore the process of conversion and privatization through employee ownership. The report contains one chapter each on the major issues surrounding conversion and privatization, followed by a detailed explanation of the employee ownership method of privatization. The report concludes with the description and analysis of a case study of privatization through employee ownership: the Saratov Aviation Plant.