UARU
Why Ukraine’s Land Market Won’t Bring Significant Changes But It’s Good That It Was Approved (OP-ED)
3 April, 2020
E902f2c974a473a17
President of Ukraine Volodymyr Zelenskyy in the parliament, March 31, 2020 REUTERS, STRINGER

Editor's Note: The following is an op-ed by Hromadske's incoming editor-in-chief Natalia Guzenko. The views and opinions expressed in it are those of the author and do not necessarily reflect the views of the publication.

The near-legendary epic in the history of Ukrainian parliamentarism – the extension of the moratorium on the land market – has finally ended on March 30.

It all started on October 5, 2001, when President Leonid Kuchma signed the Land Code of Ukraine, which reads as follows: "Until the entry into force of the law on the circulation of agricultural land, the purchase and sale of agricultural land shall not be allowed." Or "not earlier than January 1, 2005".

When it wasn’t clear who will become the president of Ukraine – Viktor Yushchenko or Viktor Yanukovych – the ban was prolonged. There was no law at the time, no one wanted neither to work on it nor to aggravate a population already divided into two camps.

The reasons were similar after this: the elections, the financial crisis of 2008-2009, then new elections, then Euromaidan protests, the elections again. Politicians were writing bills on the land market, some bills were even brought to parliament, but the issue was always "ill-timed."

In the meantime, the agrarian sector evolved. Businesses, communities, and officials adapted to the fact that "agricultural land is not for sale", and found many ways to circumvent the law and learned to live in the present conditions. Meanwhile, politicians taught the nation to believe that the "sale of Ukrainian land is the worst disaster" that can happen if their opponents came to power.

This lasted until 2018 when President Petro Poroshenko’s entourage began talking more and more often about the need to abolish the moratorium. They even made this point in the election program. Likewise did Volodymyr Zelenskyy. So for the first time, the authorities publicly promised to introduce a land market.

The summer of 2019 was probably the best time for land reform. The “Servants of the People” had the support of the population, and their majority in the parliament was promising the reforms in “turbo-regime”. At the time, the issue could have been solved in a matter of weeks.

But the authorities did not take into account that during the years of the moratorium, the land market became almost a sacred concept connected to a lot of fears and rooted economic ties. And those who wanted to open the market did everything to make this task a real challenge.

First, before even presenting a bill, they started talking about as much openness of the market as possible. Second, they did not promise farmers any protection or preferences. Third, they acted too slowly, if they really wanted to change the world.

Sometime in the middle of autumn, the situation changed, but too late – even those farmers, who had agreed in the summer to the need to have a land market, categorically stated: "not with this government".

The president and all the "Servants of the People" like to please the general public. And they don’t like mass demonstrations against them. Therefore, the initial bill providing for an open model land market was replaced with a conservative one: only individuals can buy land and only up to 100 hectares. But even this bill was only approved in late March when the land issue was obscured by the coronavirus outbreak.

READ MORE: The Who, What, When, And How Much of Ukraine’s New Land Market Reform

President Zelenskyy urged MPs to support the bill because the IMF would only give Ukraine money if it sees reforms in the country, and land reform is one of the most important ones. However, in this form, it is unlikely to lead to economic growth.

First, 100 hectares is not enough for full-fledged agribusiness – neither for profitable horticulture nor for livestock. This is enough only for those who want to buy land for a fruit garden, a berry patch, or a greenhouse. Or for a small plot to create land reclamation systems, seed cultivation, etc. – things that require a lot of investment and where people are now trying to sign long-term lease agreements.

But this won't work for transparent and honest campaigns. Because – and this is our second point – only individuals can buy land. So companies that want to own land will be buying lands for their owners or executives, or through a strawman, and then "rent" it for their needs. These false buyers will be almost the only farmers who will buy this land, because real farmers are unlikely to have enough money, especially given that the money promised to them by the government for cheaper loans is likely to be spent for other needs of the quarantined economy. 

But the land will become a way to get a decent "zero" declaration for former judges, prosecutors, and corrupt officials.

This land market model won’t also mean growth for communities – the sale of municipal and state land remains forbidden. And that is probably the most incomprehensible rule since the use of state land is the least efficient and the most corrupt. And communities that have received land in recent years cannot use it at their own discretion, even to sell it to farmers who work in the same village.

So the president can only hope that the IMF will consider this reform a reform.

After all, it is a reform. And actually, it isn’t bad that the parliament was forced to support the bill.

Because, first, the reform is not limited to this law – there are many others that regulate the activity of cadastral bodies, the relations of local authorities with landowners, and so on.

And secondly, although the law is likely to be amended several times, it already exists, as well as the opportunity to buy and sell at least some land – at least for some people. 

And everyone will see that the sky has not fallen.

/ by Natalia Guzenko, translated by Vladyslav Kudryk