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“Delayed catastrophe”: what consequences may the free circulation of farmland in Ukraine

2019-09-21T19:20:24.421Z

By October 1, the Ukrainian government should submit to the Verkhovna Rada several bills to ensure the country's economic growth. This is stated in the decree of Vladimir Zelensky. The most important measure in this direction will be the abolition of the moratorium on the purchase and sale of land and the introduction of free circulation of farmland, which earlier official Kiev regarded as a "threat to national security." According to opinion polls, the vast majority of citizens oppose the opening of the land market. Many farmers fear that Ukrainian black earth will ultimately be in the ownership of foreigners. The Ukrainian cabinet does not exclude such a scenario, although Zelensky promised not to give land to foreign investors. Experts believe that the liberalization of farmland turnover will only have a short-term positive effect and can lead to a socio-economic disaster in Ukraine.



President of Ukraine Vladimir Zelensky signed a decree "On urgent measures to ensure economic growth, stimulate regional development and prevent corruption." According to this document, the cabinet must develop a set of bills and submit them in the prescribed manner for consideration by the Verkhovna Rada.

In particular, before October 1, the government is obliged to prepare amendments on the free circulation of agricultural land, the legalization of the gambling business, and the regulation of amber production. By December 1, the Cabinet is obliged to develop a package of legal acts aimed at conducting a “big privatization” and withdrawing the income of citizens from the shadow.

Zelensky also instructed the executive branch to prepare lots by January 1, 2020 for the auctions “for the sale of special permits for the use of oil and gas resources” and an action plan for the formation of a competitive locomotive traction services market.

"Valuable resource"

The introduction of the land market in Ukraine is considered one of Zelensky’s most controversial economic initiatives. The President has repeatedly spoken about the need to lift the moratorium on the sale of land, which has been in force since 2002. The Ukrainian leader expects the Verkhovna Rada to approve the law on free circulation of farmland by December 1.

The last time the parliament extended a temporary ban on the sale of land in December 2018. The moratorium will be valid until the end of this year. As indicated in the explanatory note to the relevant bill, the creation of the land market may lead to the fact that the state will lose control over farmland.

“The abolition of martial law (valid until December 20, 2018. - RT ) and the economic crisis, a moratorium on the alienation of agricultural land without legislative regulation of the procedure for the circulation of agricultural land is a threat to both national and food security of our state, which could lose a valuable resource is Ukrainian agricultural land, ”the document said.

Another reason the moratorium was extended was the lack of a comprehensive land cadastre. Today it is 76% full. However, as expected in the party "Servant of the people", by mid-2020, this figure will approach 85%.

The vast majority of Ukrainians oppose the lifting of the moratorium. According to the June survey of the sociological group “Rating”, 68% of citizens are negative about the opening of the land market. Only 20% of respondents hold the opposite point of view. In the September opinion poll of the sociological service of the Razumkov Center, the figures are different, although society’s attitude to the acute issue as a whole remains the same: 49.1% opposed the lifting of the moratorium on market transactions with land, and only 31% of Ukrainians supported the corresponding proposal of the authorities.

On September 20, the All-Ukrainian Agrarian Council (EAC) announced the launch of more than two dozen protests against the free circulation of land. Agrarians fear that farmland will be bought up by legal entities established by foreigners.

  • Vladimir Zelensky at the conference "Effective Land Management" in Kiev
  • © president.gov.ua

Speaking at the conference “Effective Land Management” on September 19 in Kiev, Zelensky denied the likelihood of land absorption by foreign owners. Zelensky promised that the land would still belong to the citizens of the republic.

“In the model that we offer with the government, only Ukrainian citizens and Ukrainian companies will be able to buy or sell land. Horror stories about the Chinese, about the Arabs or about the aliens who will bring our land by cars - this is nonsense ... Earth is the property of citizens. Finally, they should have not a hybrid, but a full right of ownership to their native land, ”said Vladimir Zelensky.

According to him, the lack of a market does not allow Ukrainians to own, use and dispose of land. A similar situation, according to Zelensky, led to the spread of a variety of "gray schemes and frauds."

However, fears of Ukrainians about the possible transfer of farmland into the ownership of foreigners did not arise from scratch, experts say. In the program “Freedom of Speech” on the ICTV channel, the Prime Minister of Ukraine Alexey Goncharuk allowed the possibility of acquiring land by foreign individuals.

“We need to allow land transactions for everyone who has the opportunity to process it now, including for foreign citizens, but only if they register a legal entity in Ukraine and pay taxes here,” Goncharuk noted.

The government of the republic expects the opening of the land market will be an incentive for economic growth. According to Goncharuk, Ukrainians will compete on equal terms with foreigners. To do this, the Cabinet of Ministers promises a reduced credit rate for the purchase of land to individuals and legal entities of the country.

Currently, the details of the upcoming land reform are unknown. According to the leadership of the Ministry of Economy, Trade and Agriculture, 35 scenarios for the introduction of the farmland market are being considered.

“People will be left without land”

The introduction of free turnover of farmland is one of the requirements of international lenders of Ukraine. The main lobbyists of this measure are the International Monetary Fund and the World Bank.

For example, the IMF has traditionally linked land reform to Kiev's transfer of the next tranche. True, at present, according to Finance Minister Alexander Danilyuk, the opening of the farmland market is not included in the list of mandatory conditions for making payments to Ukraine. At the same time, the development of a draft law on land circulation is under the control of the World Bank.

  • Harvesting grain in Nikolaev, Ukraine
  • Reuters
  • © Vincent Mundy

In an interview with RT, the Deputy Dean of the HSE Faculty of World Economy and International Affairs, Andrei Suzdaltsev, suggested that due to the land reform, the Ukrainian government expects to raise additional funds to replenish the state treasury. For several years now, the country's budget has been making up for the payment of external debt. In 2020, almost half of Ukraine’s revenues (438 billion hryvnias) will be spent on these goals.

“Fertile chernozems are the only resource of Ukraine that can be sold more or less profitably. And I have no doubt that foreigners will take over the Ukrainian land. The bill, which is being prepared by the Cabinet, will certainly spell out conditions that will allow foreign firms to either openly buy farmland or control them through residents in Ukraine, ”Suzdaltsev explained.

The expert considers the “non-random” fact of the participation of representatives of international creditors in the development of a draft law on land circulation. As Suzdal'tsev predicts, Ukrainian chernozems can buy up American, European and Chinese companies. As a result, Ukraine will lose the opportunity to ensure its own food security.

Rostislav Ishchenko, the president of the Center for System Analysis and Forecasting, commented in a RT comment that 80% of Ukrainian agricultural land on a long-term lease is owned by about ten agricultural holdings. The reform that Zelensky is promoting will lead to the legalization of the existing order and at the same time worsen the situation of farmers and shareholders.

“The announced land reform means that holdings will buy land from current owners for little money. The budget will receive virtually nothing from this, except for taxes on sales transactions. As a result, the small and medium business in the village will be completely crushed, people will be left without land and will become dependent on agricultural holdings, ”stated Ishchenko.

The expert explained the participation of the IMF and the World Bank in the development of land reform by their desire to receive timely loan payments from Ukraine. According to him, international organizations in relations with all debtor countries demand to open a land market and carry out large-scale privatization.

“In my opinion, the intent of the lenders of Ukraine is to continue to receive money from Kiev by any means possible. Selling land and assets is the easiest way. True, the positive effect of these measures will be short-term, because a sustainable basis for economic growth is not created. For the state of Ukraine, the implementation of IMF councils threatens a delayed economic catastrophe, and for rural residents - inevitable poverty, ”Ishchenko summed up.

Source: russiart

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