Ukraine moves toward historical land market reform as bill opening sales adopted in first reading

Agricultural land makes up 70% of Ukraine's territory, giving the country the nickname of the "breadbasket of Europe." This photo was taken near Kryviy Rih by Olena Makarenko
 

Reforms

On 13 November, Ukraine’s parliament adopted at the first reading a bill on opening the land market, ending a moratorium that had been in place since 2001. It was adopted with 240 votes, 227 of which were from President Zelenskyy’s Servant of the People party and 13 – from non-factional MPs. The rest of Ukraine’s political parties – ex-president Poroshenko’s European Solidarity party, rock-star Sviatoslav Vakarchuk’s Voice, Yuliya Tymoshenko’s Fatherland, and the pro-Russian Opposition Platform – For Life – did not give any votes for the bill. After the vote, Yuliya Tymoshenko even announced her party was entering the opposition, in protest of the “politics of destruction of Ukraine” and “continuation of the era of poverty.”

The bill allows the following categories of users to buy and sell agricultural land of the country termed the “breadbasket of Europe”: Ukrainian citizens, Ukrainian legal entities, territorial communities, and the state.

However, there are restrictions: no more than 35% of agricultural land can be owned by one individual within a united territorial community, no more than 8% of the oblast, and not more than 0.5% (200,000 hectares) within the country.

The most contentious question of the land reform concerned whether the sale would be extended to foreigners. Announcing the intention to launch the land reform, President Zelenskyy promised that “the Chinese, Arabs, and aliens” would not become owners of Ukrainian land. Prior to the vote, he announced that the bill would be amended before the second reading so that only “Ukrainian citizens and companies founded by exclusively Ukrainian citizens” would have the right to sell and buy land, and foreign citizens and companies would receive that right only if it is approved on an all-Ukrainian referendum.

Representatives of other factions that didn’t vote for the bill today insisted a referendum is held before the vote on the issue.

So far, the text of the bill adopted in the first reading mentions only that foreigners have the right to inherit land and then are obliged to sell it within a year. But it also includes a paragraph of changes to the transitional provisions of the Land Code dedicated to foreign citizens and companies. It outlines that they won’t be able to buy agricultural land in Ukraine until 1 January 2024, but provides exceptions for agricultural companies owned by foreigners who have been working in Ukraine and leasing land for over 3 years. They will be able to buy land and like other tenants will have the right of first purchase.

Today, a large proportion of agricultural land is owned by large companies with foreign capital which have been working on it for over three years. Therefore, the restrictions mentioned in the bill, will not apply to the majority of companies, according to the Chief Scientific and Expert Directorate of the Verkhovna Rada, the BBC reported.

Many MPs who criticized the adopted law agreed: they claimed that its authors met the interests of large agricultural producers first of all.

Ukraine’s Land Code which includes guarantees of land ownership entered into force in 2001. Simultaneously, a temporary moratorium on the sale of agricultural land was introduced, which was explained by the need to prepare necessary laws for the introduction of the land market. The moratorium was regularly extended.

Ukraine’s international financial partners and the government believe that the moratorium has led to the creation of a shadow land market enabling corruption, and the absence of competition has led to a drop in rents. The European Court of Human Rights had confirmed that the owners of Ukrainian land de-facto are not allowed to dispose of it by ruling in 2018 that the moratorium violated the rights of two Ukrainian citizens as landowners.

The opening of the land market was greeted by the EU but is highly unpopular within Ukrainian society, being supported by only 20% of Ukrainians, according to a poll by the Razumkov Center.

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