Ukraine’s parliament moves to abolish moratorium on sale of agricultural land
Ukrainian parliamentarians have adopted in its first reading a draft bill aimed at removing a moratorium in place for over 18 years on selling agricultural land. The move has long been advocated by human rights groups, and made imperative by a recent European Court of Human Rights judgement against Ukraine, however President Volodymyr Zelensky and Prime Minister Oleksiy Honcharuk are probably more interested in the support the move has received from foreign investors and the international community..
After the vote on 13 November, Honcharuk asserted that “Ukraine has taken yet another step from the third world to the first, and this is only the beginning”. He further claimed that “the ‘guests from the past’ who are used to monopolies, schemes and ‘grey rules’ have got no chance against the future”.
In theory, this should be true since the ‘Servant of the People’ party of Honcharuk (and Zelensky) has an absolute majority in the Verkhovna Rada and does not need the agreement of other parties to push through abolition of the moratorium. The comfortable majority of 240 MPs was made up mainly of members of Servant of the People, as well as some independent MPs. None of the other factions voted in favour.
Public opinion, however, does not appear to favour the lifting of the moratorium and Zelensky has spoken of putting the question of opening up the land market to foreign buyers to a referendum which could well go against him.
11 draft bills were proposed, including a government bill. The bill adopted in its first reading was that drawn up by the parliamentary committee on agrarian policy.
The moratorium preventing either individuals or legal entities from selling or otherwise disposing of agricultural land, except through inheritance, exchanges or government appropriation, was first imposed in 2001. It was supposed to remain in force only until the beginning of 2005, however it has been extended every year since then.
It was purported aimed at protecting people who had received plots of agricultural land after the Soviet kolkhozes (collective farms) were dissolved. The argument given ever since for retaining it was that until the laws on a State land cadastre, on the land market and on land plot registration have been passed, land could be taken away from the poor and end up in the hands of oligarchs or even bought out by Russians, and that it will cease being used for agricultural purposes.
No progress at all was made on producing such legislation, and human rights groups constantly pointed out that the aim had not been achieved. Quite the contrary, since it was not at all clear that the moratorium had protected the rights of those owning small amounts of agricultural land. Instead, it had resulted in a shadow market flourishing in rural areas. Rural residents would sell their land shares for cheap; often falling victim to firms involved in land raiding which, under the protection of the courts, bought up the deeds to their land or local councils would change the designated purpose of hundreds of hectares of land in order to then sell them.
There has already been at least one European Court of Human Rights judgement against Ukraine over the moratorium. In the Case of Zelenchuk and Tsytsyura v. Ukraine from 22 May 2018, the Court accepted the arguments presented by the Government, however found that Ukraine’s agricultural land moratorium violates Protocol 1 to the European Convention on Human Rights. This states that “every natural or legal person is entitled to the peaceful enjoyment of his possessions”. The Court considered that Ukraine had not reached a fair balance between the claimants and the general interests of the community, and had exceeded its powers.
On that occasion, the Court did not award compensation, only ordered that the Government pay the applicants’ court fees. However, both Hanna Yudkivska, ECHR judge from Ukraine and Ivan Lishchyna, Deputy Justice Minister, warned back in 2018 that the Court could well begin awarding real damages to landowners over the moratorium.
Yudkivsa also pointed out that Ukraine is the only country among the 47 within the Council of Europe which has such an absolute ban on sale of agricultural land. The Court had heeded Ukraine’s arguments, she said, but had noted that the ban itself was supposed to be only until 2005. If the ban had been presented as needed until land legislation was in place, why was Ukraine doing nothing to ensure this happened?
In the worst-case scenario, 1.7 million aggrieved landowners could apply to the Court which would certainly begin awarding damages if Ukraine had done nothing.
On 18 January 2019, a coalition made up of groups representing agricultural business, NGOs fighting corruption and / or defending human rights and others issued an appeal to the then President Petro Poroshenko asking him to veto the latest extension to the moratorium. They named a figure of 6 million Ukrainian citizens whose rights, they alleged, were being infringed. A particularly poignant detail was that over half of the owners of plots of agricultural land were now over 50 and had been prevented from selling their own property for the last 18 years. Many of these people were in need, and were clearly not being served by the moratorium.
The appeal was ignored and the moratorium extended for another year.
The problem with gauging Ukrainians’ opinion on the subject is that it seems to depend how essentially the same questions are asked.
The Kyiv International Institute of Sociology (KIIS) conducted a survey from 30 November to 14 December 2018 which found that 66.3% of respondents believe that Ukrainian citizens should have the right to freely dispose of agricultural land which they possess, including by selling it. Only 17.1% thought that people should not have this right. Only a month earlier, KIIS had conducted a survey together with Rating and with the Razumkov Centre. That found that if people were asked how they would vote today on a referendum regarding the question of purchase / sale of agricultural land, 72% said they would vote against, and only 13% for it.
In late September 2019, a similar survey found that a smaller percentage, but still an absolute majority (52%) were against Zelensky’s proposal to lift the moratorium. 64% believed the question should be put to a referendum.
What is proposed
A seemingly important restriction proposed is that one single buyer could not purchase more than 0,5% of the entire agricultural land (around 210 thousand hectares). How much real protection that would provide would probably depend on the details preventing nominal owners used as a front.
In a video address on the eve of the voting in parliament, Zelensky promised that the question of whether foreign nationals or companies without foreigners among their founders would be allowed to buy agricultural land would be put to a referendum. Here too, of course, it is easy to have a Ukrainian nominal owner, whereas the real owner is foreign.
For the moment, the bill only allows foreign nationals to inherit property which must be sold within a year.
There is, however, a provision in the Transitional Provisions to the Land Code which states that until 2024 foreign individuals or legal entities will not be able to buy agricultural land in Ukraine, whether from the state or an individual.
The BBC Ukrainian Service reports that a large number of agricultural giants have long been in the Ukrainian market and are responsible for a major part of Ukraine’s grain export. It seems that those agricultural enterprises which have been in Ukraine for over three years and lease land, will be able to buy that land, and will even have a priority right to bid for it, once the law has come into force. The Verkhovna Rada’s Department for Expert Assessments pointed out that since a huge amount of agricultural land is leased by major enterprises with foreign capital, meeting the requirements of the law, the restrictions imposed by the bill would not apply.
Among the politicians objecting on 13 November was Yulia Tymoshenko from the Batkivshchyna Party who noted that the bill does not regulate the question of sale of land to Ukrainians with dual nationality. This is in principle illegal, but not at all uncommon. She pointed also to the fact that a single person would be able to own 200 – 210 thousand hectares of agricultural land and said, contradicting Honcharuk’s upbeat noises, that this would turn Ukraine into a “third-world country”.
If Servant of the People do not use their majority to simply push through a contentious bill, it looks as though the first reading, while an important step, is still very far from a lifting of the land moratorium.