Leningrad's Aim: A Free Enterprise Citadel City Leaders Plan to Become a Free Zone for Foreign Firms and Local Entrepreneurs

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IN marbled halls redolent with the pungent odor of mink, Soviet auctioneers sell the fabled furs of Russia to the highest foreign bidder.

For almost 60 years, the annual fur auction in Leningrad's Palace of Fur has been an isolated island of capitalism in the communist sea. The fur market has been "like a country by itself," says New York furrier Ernest Kremnitzer, who has been coming since 1954.

Now the newly installed radical leaders of this former imperial Russian capital propose to make the entire city a citadel of free enterprise. Leningrad, along with five other Russian cities and regions, was declared a "free-enterprise zone" by the Russian Republic's parliament on July 14.

The free-enterprise zones are only one more challenge to the Kremlin's centralized rule over the vast empire known as the Soviet Union. From cities to entire republics, such as the Russian Republic, impatient local governments are no longer waiting for Moscow's promised reforms but are going off on their own. In the tiny offices of the Leningrad Soviet building on St. Isaac's Square, mostly young dreamers and movers are already hard at work on a variety of schemes to make the enterprise-zone goal a reality.

The ideas floating around range from making the city a pacesetter in creating a market economy to what appear to be wild fantasies of separating Leningrad from the rest of the nation.

"We will have our own currency," Alexander Trubachev, a young people's deputy in the Lensoviet, or city council, excitedly tells visitors. "For Leningraders, who will get money in Leningrad rubles, there will be Western goods in shops, goods produced in Leningrad, and goods produced in Russia, but only of the highest quality, paid for in Leningrad currency."

As for those unfortunates from outside the zone, there will be "special shops for `wooden rubles,' which will have supplies from other parts of Russia or partly from Leningrad," he says.

"The variety of goods will be lower and of lower quality," he adds, with evident disdain.

According to one version of this idea, the Leningrad "currency" will take the form of issuing special Eurocard credit cards to every Leningrader. The cards would be supported by a special regional ruble which is convertible into dollars and other hard currencies. The cards are "substitutes for fencing off the free zone with barbed wire," says Lensoviet deputy Pyotr Filippov, one of the heads of the group formulating reform plans.

More conventionally, the Lensoviet seeks to move more rapidly toward a market economy than the timetable envisioned by the Gorbachev government in Moscow or even by the more radical government of the Russian Republic, headed by populist Boris Yeltsin. There are plans to establish a stock market and a labor exchange, to take over and break up all the state owned enterprises, and to legalize all forms of private property.

The Leningrad city fathers are quite consciously seeking to follow in the footsteps of Peter the Great, the Czar who built the city on marshes along the Baltic Sea as Russia's "window to the West." They, too, are looking in that direction for foreign capital and trade. Foreign investors are welcomed and the city hopes to attract more dollar- and deutche mark-carrying tourists with modern shopping centers and maybe even a Leningrad branch of Disneyland.

The city offers two main attractions for investors, city officials say. It has a concentration of highly skilled workers and scientific researchers, drawn largely by high-technology defense and electronics industries that dominate the local economy.

And the classical Italian-designed architecture of Peter's Leningrad still displays its somewhat-faded charm along the canals and the banks of the River Neva, making it the largest tourist attraction in the country. …