Two principal means for privatisation of State-Owned Enterprises (SOES) in Central and Eastern Europe (CEE) are examined in this essay: the method of “coupon privatisation” and that of “spontaneous privatisation”. Czechoslovakia and Hungary are chosen as the representative country cases in which the alternative methods are applied for a comparative revelation. This study begins by recognising the fundamental qualitative differences in similar undertakings within the current context and those of the established market economies. It proceeds to outline the plethora of enterprise reform and tactics available, to specify the grounds for preferring the one method over other in the economies concerned, and therewith to furnish materials on the evolutionary path as witnessed by the intervening efforts and accomplishments. The issues of the ownership structure and management mechanism subject to shifting constraints during the privatisation process are dealt with next. It is argued that, independent of the alternative approaches, all reforming enterprises are bound to run into fulfillment of certain preconditions for reform programme design and implementation. Strategically, system reform, of which privatisation of SOEs is a part, would be safeguarded only if maximal macroeconomic stability and microeconomic efficiency are achieved. Whereas this is an unwarranted ideal process analysis according to which the detailed reform measures may be coordinated within a finite time frame becomes, then, a relevant concept. For that matter it is of great importance, technically and administratively, to monitor and regulate the chain of potential SOEs to be privatised on account of certain objectively constructed criteria. The excess banking liabilities and budget deficits are conceived together with inter-enterprise debts (triangle debts) as the three independent variables that meet this purpose. A crude base for evaluating the viability of the enterprise reform programme is laid down accordingly. The aim of this mental exercise therefore is to justify merely one of the main claims of this essay: namely privatisation is considered as an instrument of enterprise and system-wide reform not an end in itself. Furthermore, the current debate on the speed of privatisation is a pseudo problem. Being radical or evolutionary, the transformation of SOEs remains a constraint-eliminating dynamic process of incessant changes. The results of this study show that there is neither any cure-all panacea for enterprise reform nor that which may be indiscriminately applied to all economies in transition.
