THE SHATALIN PLAN

SOVIET PRESIDENT MIKHAIL GORBACHEV promised to present an economic reform program to the national Parliament by Monday. But there still is nothing to suggest that his latest hybrid of radical reform and central planning will provide an effective framework for transition to a market economy.

Worse, the Soviet government already has begun implementing its own economic program, before the Parliament even has had a chance to consider the new plan. Many of the country's 15 constituent republics are pursuing plans of their own. With so many cooks in the kitchen, the prospects for genuine economic reform seem bleak.Stanislav Shatalin, author of the most ambitious recipe for restructuring the Soviet economy, spent the past two weeks in New York, seeking the "moral and intellectual support" he deems necessary for his program to succeed. Mr. Shatalin's "500-day plan" emphasizes the need to turn the overvalued ruble into a hard currency, freely convertible into

dollars, marks and yen, along with the privatization of state property. His ideas are frankly incompatible with those put forth by Soviet Prime Minister Nikolai Ryzhkov, who would maintain some price controls and extensive government ownership of enterprises. Mr. Shatalin describes the alternatives as "two different blood types."

Mr. Shatalin's 500-day plan has one tremendous political point in its favor: It would allow considerable leeway for individual republics to decide how they want to get their economies back into shape. Since many Soviet republics have declared their political and economic independence from Moscow, reviving their moribund economies will be the first important item on their parliamentary agendas. The Russian Republic already has adopted Mr. Shatalin's program and will begin implementing it on Nov. 1. Other republics are considering following suit.

Mr. Shatalin offers a behind-the-scenes description of a meeting between Mr. Gorbachev's economic team, of which he is a member, and leaders of several republics. He says that republican leaders showed up at a dacha outside Moscow ready for a fight, angered by the prospect of economic reforms mandated by the central government. But what followed, he asserts, was less a heated political debate than a process of give and take in which republic leaders vented their views and useful compromises were reached based on economic reason.

The most difficult questions revolved around how to divide various economic functions. For instance, how would profits from private enterprises be taxed? Would each republic collectthese taxes to fund its contributions to the central government, or would it simply collect a federal tax and turn the money over to Moscow? The second option was agreed upon, giving the central government its own source of revenue, but the rates are subject to unanimous approval by the republics, limiting the Kremlin's ability to draw on the country's resources.

Another important debate at the dacha meeting concerned responsibility for the national debt. The group reached compromise again, determining a way to divide the debt among the republics and allowing each republic to take on its own new debt thereafter. That may allow irresponsible republic governments to get into trouble, but it will allow well-managed governments to borrow money for improving their decaying roads and communications systems.

The Russian Republic's 500-day plan cannot work without cooperation from the other republics and from Moscow. The biggest concern is that the desire for autarky will lead other republics to restrict the flow of capital and goods across their boundaries.

Mr. Shatalin's plan seems to be the only one that takes into account the need to coordinate the republics' economic activities, while respecting their separate needs and desires. Unfortunately, Mr. Gorbachev, ever the cautious politician, still seems afraid to endorse it.

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