#5518
[Second Issue of the Day]
#7
Russian land reform is revolutionary
By ARIEL COHEN
WASHINGTON, Oct. 29 (UPI) -- Russian President Vladimir Putin signed a Land Code into law Friday, allowing private ownership and trade in land in Russia for the first time since Stalin's brutal collectivization of 1928-1932.
In many respects, private ownership of land did not exist in the Soviet era at all, and was only partial under the czars. Russian historian Richard Pipes of Harvard University believes that severe limitations on private land holdings and dependence on the czar's largesse stymied development of civil society and democracy.
The new legislation will affect only 2 percent of Russia's huge land mass, but the Land Code will cover the most lucrative share of the land — urban housing and industrial real estate.
Russia's politicians already are preparing the groundwork for the next step -- a law that will regulate buying and selling agricultural land. If successful, such legislation will resolve the most controversial issue -- and the biggest economic breakthrough -- in Putin's legislative agenda so far.
Putin has managed to achieve in the first 18 months of his presidency what his predecessor, Boris Yeltsin, failed to do in his nine years in power: Give the Russians property rights in the largest resource of their rich country, the land.
The political and economic repercussions of passing the Land Code will affect Russia for years to come. While its supporters insist that the new law will prevent further development of the black market in land, the critics warn that land privatization may follow the mass privatization model of the early 1990s. Back then, the most lucrative pieces of property fell into the hands of greedy political insiders.
The communists have made the Land Code and the Labor Code, which was adopted earlier this year, their political last stand. They fought against both these pieces of legislation, championed by the Kremlin -- and lost handily to a coalition of centrist, liberal and ultra-nationalist parties.
Russia's State Duma, the main house of parliament, from the populist and scandal-mongering Vladimir Zhirinovsky and his Liberal Democratic Party to the pro-Putin Unity party, to the pro-reform and westernized Union of Right Forces and Yabloko, all voted to pass the Land Code.
The Communists and their Agrarian Party allies only succeeded in sounding hysterical and old-fashioned when they loudly compared land sales to selling one's soul to the devil. And collective farm managers in the Orenburg region failed to convince the calm and businesslike Putin that scheming foreigners are standing in line to buy mother Russia's rich black earth.
"This law does not even address the sale of agricultural land," said Putin, a 1975 Leningrad law school grad who managed real estate in his native city for the late Mayor Anatoly Sobchak in the early 1990s.
Seventy percent of communist voters are over 55, and their number is rapidly shrinking due to the natural causes. In 1999, the communists lost their chokehold on the Duma and took a beating in their battle royal over the Land and Labor Codes. They appear unlikely to recover from these political defeats.
Not only the left, but formerly anti-communist nationalists, such as Nobel Prize winning author Alexander Solzhenitsyn, opposed the new law. The 80-year-old writer, despite his tremendous contribution to discrediting communism and exposing the Gulag prison camp system, all but rejects capitalism. Upon his return to Russia a few years ago, he failed to grasp the spirit of change overtaking his country. His social criticism now sounds increasingly carping, his dislike of the liberal West never abated, and younger, better educated Russians tend to treat him like a living fossil.
The rest of the nationalists (numerically a small part of the electorate) are split on the issue of private land holdings.
The law codifies increased respect for private property in Russia -- not a small achievement. German Gref, Minister of Economic Development, and author of the law, claims that foreign investment in Russia will grow rapidly as firms will feel more secure in the knowledge that the land attached to their factories and shopping centers belongs to them and to them only.
In 2001, foreign investment is expected to reach $5.5 billion -- over $4.5 billion in 2000. However, with $200-300 billion in Russian funds having been expatriated over the last 10 years, the land and real estate market may become an attractive investment target for Russian money parked in such offshore havens as Cyprus and the Jersey Isles.
In addition, the law will open the gates for the development of private housing and a mortgage industry, and will allow millions of Russians to improve their living conditions.
Today, Russians cannot borrow money secured by their apartments and houses. This is about to change. And a national land registry will be developed — an impressive undertaking, especially taking into account that Russia stretches eleven time zones and is the largest country on the planet.
Estimates of job growth in construction, banking, real estate and other related areas are in the millions.
Most importantly, however, the Land Code sets the scene for the final blow to the communist legacy: introduction of a specific law allowing the purchase and sale of agricultural land.
A number of myths and prejudices have been propagated by communists to forestall this step. However, Russia's desire to join the WTO and create a closer relationship with the European Union will force its leaders to improve the performance of its flagging agricultural sector.
The communists utterly destroyed Russian agriculture. In 1896, the Russian Empire supplied 25 percent of Britain's grain and 50 percent of its eggs. It exported grain to most of Europe and successfully competed against the United States and Argentina.
The reforms of Prime Minister Pyotr Stolypin in 1908-1912, which included agricultural land privatization, laid the foundations for the emergence of a strong agricultural sector based on individually owned farms, but these reforms were cut short by his assassination and the outbreak of World War I.
Since the 1917 Bolshevik Revolution, Russia lost millions of lives to manmade starvation, and since 1970s has been dependent on grain imports from abroad. Tiny private plots of land, 0.3 percent of the USSR's total arable land, provided more than 30 percent of its vegetables, meat and poultry.
Today in Russia there is more food -- and of better quality -- than ever under the communist rule. If Russia's arable land is privatized and its agriculture reformed, Russia once again may become a breadbasket for such countries as China.
Since 1991, with no sufficient legal infrastructure, there are 260,000 private farmers.
Putin and his advisers hope that Oct. 26 will be remembered for years to come as a different October Revolution from that of 1917, this time celebrating the establishment of property rights and capitalism on Russian soil rather than their abolition.
(Ariel Cohen, Ph.D., is research fellow at the Heritage Foundation.)
Back to the Top Next Article
- Back to the Top -