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Russia: Government Takes Uncertain Road To Land Privatization, Part 1

With President Vladimir Putin and his government showing signs of backing a new land code, Russia may finally be moving toward long-awaited -- and long-needed -- land reform. In this first of a two-part feature, RFE/RL Moscow correspondent Sophie Lambroschini examines the still unresolved debate between collectivist-minded leftists and free-market supporters over the reform of agrarian land. In part two, she'll look at how the legal vacuum around land ownership has opened the way to large-scale bribery and other criminal abuses.

Moscow, 9 February 2001 (RFE/RL) -- After years of political deadlock, Russia now seems to be heading toward enacting much-needed reform of its motley and incomplete land-ownership legislation.

Last month (Jan 30), at a meeting with influential regional governors, President Vladimir Putin said he recognized the need for what he called "coherent land legislation" and urged the quick passing of a federal land code.

That view was supported today by Economic Development Minister German Gref, who said the government has now agreed on how to split up rights to land management -- including agrarian land -- between federal and regional authorities. He did not provide any details.

In recent weeks, Gref has spoken out in support of a new land code. He says the country's failure to enact land reform has been a major obstacle to both domestic and foreign investment.

Prime Minister Mikhail Kasyanov has also recently spoken out in support of privatizing land and other property.

He said this yesterday in Moscow:

"It is very important that after the 1998 [financial] crisis, new possibilities have emerged for dealing with property, which we feel will be better managed by private entrepreneurs."

Since 1993 Russia has officially allowed private land ownership. But beyond a constitutional pledge to ensure the privatization of land, there are few laws on the books to implement the provision. That has left farmers in a legal limbo and politicians entrenched in ideological warfare.

Dmitry Yegursky grows potatoes and raises pigs on a farm near Moscow. He describes Russian farmers' problems this way:

"[A farmer] has a land-ownership certificate, but he doesn't have the real mechanisms needed to work the land. Property in itself doesn't give you anything. You need a series of laws to help work the land. First of all, [a farmer] needs long-term credits to build a home, to build a farm, to buy equipment. Under the existing legislation, land cannot be used as collateral. A peasant cannot get credit on the basis of his land. Therefore, his hands are tied, his legs are tied -- he can't work."

The 1993 Russian Constitution, imposed by then-President Boris Yeltsin over communist opposition, clearly broke with Soviet collectivism. Private land ownership was given the same status as state and municipal ownership. The constitution also guaranteed citizens the freedom to dispose of land as they wished, providing it did not harm others or the environment.

That same year, a presidential decree spelled out rights for general land ownership. And in subsequent years, federal and regional legislation -- some of it contradictory -- has provided a basis for full ownership, but only in certain cases and regions.

The crucial question remains unresolved: whether or not to privatize all or only some of Russia's estimated 200 million hectares of agricultural land. Today, less than 10 percent of it is worked by some 260,000 farmers, many of them simple vegetable gardeners. Few laws exist on private farming, meaning in practice there is no legal framework on key principles and limitations of land ownership -- either for Russians or for foreigners. There is also no overall federal legislation regulating leasing land. Nor is there any federal law that adequately regulates the sale of agricultural land. At present, land can only legally be sold to the state, usually at below market prices.

As a result, regional or local legislation is often in conflict with one or more of several federal laws allowing ownership of some kinds of agricultural plots in some regions. Thus a Russian farmer today is not allowed to be the sole owner of land in the Moscow region because the regional government has prohibited the sale of agricultural land until the adoption of federal legislation. But in the Saratov region, 800 kilometers south of Moscow, a farmer is allowed both to own and sell land.

The adoption of a federal land code would help resolve issues like foreign investment in land as well as those involving industrial and agricultural land ownership. Gref said today he expects the government's proposal for a new land code to be presented to the State Duma in the spring. He also said the government plans to prepare a special law on land acquisition and sale that could be adopted as soon as next year.

Speaking at a roundtable with Russian government officials this week, Samara Governor Konstantin Titov insisted that any new reform law must prescribe land regulations in great detail.

"It should be a very concrete law. It should clearly lay out [the government's] position on the acquisition and sale of agricultural and other lands. [This should be] in accordance with the tasks we have set for ourselves to develop the economy of our country, and its key sector -- agricultural produce."

Judging by the flurry of recent interviews, statements, and roundtables, the ideological debate on land reform is still raging among Russia's politicians. On one hand, there are leftist Duma groups and some regional governors who fear that Russia's land, if privatized, would be looted by unscrupulous capitalists. On the other hand, there are liberal, free market-oriented Duma deputies and investor-friendly officials from regions such as Tatarstan, Saratov, Samara, and Nizhny Novgorod.

Advocates of reform note that current productivity in Saratov's private homesteads is five times higher than in collective farms, and therefore attract more investment. They also cite a first attempt to privatize Russian agricultural land -- made before the 1917 Bolshevik coup d'etat -- which converted traditional communes to private farms and resulted in a 46 percent increase in produce.

Opponents of agricultural land reform avoid economic arguments, sticking mostly to ideology to make their case. Communists and nationalists appeal to patriotic feelings by suggesting Russia's communal tradition is a key to the Russian people's identity. Tula Governor Vasily Starodubtsev, an Agrarian Party deputy and long-time opponent of agricultural land privatization, likes to say that "to a Russian, selling land is like selling his own mother."

Some Agrarian deputies also fear wide-scale land speculation by what they call potential "land oligarchs," who would buy up estates and use them for "speculation" rather than develop their agricultural potential. The Agrarians point to the oligarchs who took over Russia's lucrative energy resources in the 1990s as an example to be avoided.

But reform advocates argue that similar abuses could result from the current legal vacuum on land status, which leaves great power in the hands of local officials. Yury Chernichenko, head of the Russian Peasant Party, says the shortcomings of Russia's land market today have more to do with he calls the prevailing "bureaucratic capitalism" than with the Russian people's alleged traditional attachment to collectivism.