#7
The Guardian (UK)
27 June 2002
Russia puts its farmland on the market
Putin's reform bars foreigners, but perhaps not for long
Ian Traynor in Moscow
Russia stepped into the unfamiliar world of private farming when the lower house of parliament, the duma, passed legislation yesterday burying the era of communist collectivisation and creating a free market in farmland.
The law regulating the sale of about 404m hectares (1bn acres) of agricultural land bars foreigners from ownership, restricting them to leases for a maximum of 49 years. It awaits the formal endorsement of the upper chamber and President Vladimir Putin.
Historically the issue of land ownership in Russia has caused revolutions, disasters and atrocities. But the Kremlin-backed bill sailed smoothly through the chamber yesterday, completing its third and final reading with a comfortable majority of 258 to 149 votes.
At least two-thirds of Russian farmland - about a quarter of the vast country - remains in the hands of the state or is formally owned by collective farms, a hangover from the communist era.
Agriculture is in critical condition, a huge drain on the budget, its yields and productivity less than a quarter of west European levels.
The land reform law is the latest example of President Putin's gradualist approach to the structural overhaul of the economy, and will provide no quick fix, given the scale of the crisis.
The Kremlin sees it as crucial to Russia's prospects and integration into world economic trends. But the divisive potential of the issue in a country with no living memory of sizeable private farming will make its implementation trickier than its enactment.
The communists in parlia ment and the farming lobby bitterly oppose all notions of a free market in farmland and have done much in the past 10 years to frustrate attempts to establish a land market.
So while Russia engaged in a chaotic and highly corrupt experiment in capitalism, free markets, and industrial asset-stripping through the 90s, the farming sector remained bogged down in the past, the collective and state farms formally intact but, in terms of output, collapsing.
The new law leaves much power in the hands of the regional and local authorities which control the farmland, many of which oppose the legislation. They will be in a strong position to thwart the project.
"What is taking place now is not only the crudest violation of the law, but also the preparation for battles over the division of land in every region, especially in the [fertile] southern regions," the communist leader Gennady Zyuganov complained.
The local authorities are required to ensure that no more than 10% of the farmland in their area falls into the hands of a single owner, and are given broad powers to define what constitutes farm land and decide whether it should continue to be used for farming or devoted to other purposes.
The draft law allowed foreign purchases of farmland, but since there was little sign of domestic interest and a fear that foreigners with deeper pockets would outbid Russians, it was amended to proscribe foreign ownership.
Mr Putin made it clear last week that he supported the restrictions on foreign purchases. Since provincial Russians translate "farmland for sale" into "the motherland for sale", Mr Putin clearly calculated that letting foreigners buy farms could cost him votes and boost support for the communists.
Moscow pundits believe the law will usher in a slow revolution and that the curbs on foreigners may be lifted after the next presidential and parliamentary elections in 2004.
Pro-market liberals complained that the restrictions on foreigners were meaningless, since anyone determined to own a slice of Russia could operate through Russian frontmen. This is true, but the foreigners' ban is a potent political signal that should help protect the Kremlin from criticism.
Last year Mr Putin pushed through legislation allowing non-agricultural land sales. The new law complements that, and helps to establish property rights and land ownership rights in Russia.
"No country in the world can make market reforms successful without this," said Vladimir Pekhtin of Unity, Mr Putin's parliamentary vehicle.
"Private ownership of farmland is the most important condition for increasing the involvement of various levels of society in the economy."
Back to the Top
Next Article
June 27, 2002:
#6325
- Back to the Top -