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.

The war in El Salvador is over. On January 16, 1992, in Mexico Citys ornate Chapultepec Castle the government of President Alfredo Cristiani and the rebel Farabundo Martí National Liberation Front (FMLN) formally signed a comprehensive peace treaty, putting an end to 12 years of conflict.

As 1992 began, the scene of Americas most prolonged military involvement since Vietnam presented images unimaginable just a few months before. In Mexico City, after unexpectedly signing the peace agreement in person, President Cristiani strode across the podium to shake hands with all five FMLN commanders as participants on both sides cried openly. In El Salvador a sea of FMLN flags filled San Salvadors Civic Plaza in front of the Metropolitan Cathedral, where the army once massacred political dissidents; the cathedral itself was draped with an enormous banner of the assassinated Archbishop Oscar Arnulfo Romero. A ceremony held to observe the commencement of the formal ceasefire was especially poignant: army officers and rebel commanders stood together at attention to sing the Salvadoran anthem on a dais decorated with the flags of El Salvador, the ruling Nationalist Republican Alliance (ARENA) and the FMLN. The rival commandants then accompanied President Cristiani to light an eternal flame in commemoration of the more than 75,000 Salvadorans who died in the tiny countrys war.