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New Entrepreneurs Rush to Supply Consumers in Estonia, Latvia

May 10, 1987|WILLIAM J. EATON | Times Staff Writer

TALLINN, Soviet Union — Passengers arriving at the airport wait only a few minutes for taxis to whisk them to destinations in Tallinn, capital of the Estonian Soviet Republic.

This is in sharp contrast to the situation in Moscow, where travelers sometimes wait an hour or more for taxi service at airports and railroad stations.

The difference reflects the new competition from private taxis in Tallinn, which have been authorized under Soviet leader Mikhail S. Gorbachev's economic reorganization plan. The aim is to break the state monopoly over public services and make daily life a little better for the neglected consumer.

People are being encouraged to compete in such fields as construction, auto repair and cafe-restaurants. Some have organized themselves into cooperatives.

"Without competition, there will be no good service," concluded Egon Truve, an official of the Household Services Department in Tallinn. "That's the story of taxis."

250 Private Taxis

Until last December, 800 state-owned taxis enjoyed a monopoly here. Since then, 250 owners of private cars equipped with illuminated "express" signs have been licensed to operate as taxis.

Struve said customers are delighted with the faster response and more courteous service.

The taxi experiment is being duplicated in the Latvian capital of Riga, about 270 miles to the south, and other ventures are just getting under way. The Baltic republics, where Western influence is stronger than in most of the Soviet Union, have taken the lead in the Communist version of small business.

Officials in Latvia have approved the establishment of a private dating service, a salon for pets and horse-drawn carriage rides through the old part of Riga.

Also, if plans work out, Estonians will get faster, better service on household repairs, automobile servicing and housing construction.

The aim is not to displace the state-run enterprises but, by introducing an element of competition, jolt them into better performance, officials said.

Unwanted Tendencies

Strict controls against hired labor and private ownership of heavy equipment, they said, will prevent unwanted capitalistic tendencies from taking root. At best, according to an official estimate, the new methods will account for only 1% to 3% of total output.

Even so, state blessing for personal initiative to provide consumer services is a departure from historic reliance on a centrally planned and government-dominated economy.

Truve, speaking to reporters in Tallinn, said the government acknowledged that there were delays and other problems for individuals seeking to get construction work done.

"We concluded that the solution was to form cooperatives to provide services that the state did not," the official said.

As a result, at least three big cooperatives were set up to do renovation work and build houses and garages for the relatively large number of Estonian car owners.

Reko Ounap, a 24-year-old engineer, quit his job with the city to become chairman of a new cooperative. He said he could earn far more than his previous salary of 215 rubles a month (about $344 at the official exchange rate) by supervising a group of 35 construction workers.

Porcelain Shop

A different kind of cooperative is headed by Milvi Hansen, a Tallinn economist who is now in charge of a porcelain shop in the city's old quarter. The shop offers candlesticks, jewelry and even ceramic chandeliers that were designed by sculptor Andrei Anisimov. Prices range up to 2,200 rubles (about $3,520).

Hansen's cooperative, consisting of only five people, was formed because of the long friendship between her and the sculptor, she said in an interview.

In Riga, a clothing boutique is being run by a cooperative headed by the designer Beatrisa Dunska and her husband, Ugis Yankavs. It offers colorful, high-priced clothing, including shades of orange, yellow and chartreuse rarely seen on the streets of Moscow.

"Our clothing is like a painting, except that you wear it," Dunska said. "The store is like an art salon."

Her husband said that operating outside the state-run retail system means there are no constraints, and designers are free to think only of a customer's needs.

A Dynamic Ingredient

Valery Andreev, who is in charge of cooperatives and individual labor activity for the Riga City Council, said they would add a dynamic ingredient to the economy.

"With these new forms of work, we can get pensioners, housewives and students into the labor force to provide new services or increase the existing level of services," Andreev said in an interview.

Riga already has more than 1,000 people engaged in individual work, he said, and more than half of them are involved in sewing or knitting for private customers.

The new cooperatives will be encouraged by lower rates of taxation, officials said, rising from a maximum of 3% in the first year to 10% in the third year of operation.

Despite the enthusiasm for cooperatives, skeptical observers question how much they will change things. In Moscow, for example, a widely praised cooperative cafe was criticized recently by Trud, the labor union newspaper, for declining service and overly high prices.

Lack of Spare Parts

Car repair cooperatives, it is clear, will be hampered by the same lack of spare parts that affects state-run garages. And cooperative restaurants in Estonia will not be allowed to serve alcoholic beverages, a traditional drawing card.

Rules and tax rates for individuals setting up their own businesses are far from clear, and many people have been forced to wait for clarification before hanging out their shingles.

Yet thousands of people across the Soviet Union have applied for permission to operate under the new rules. As Valery Andreev remarked in Riga, "We believe development of cooperatives will be a permanent and dynamic process."

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