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Ukraine farmers fear land sales

Endemic graft and memories of the wheeler-dealing privatizations of the 1990s have many landowners worried about scrapping ban on land sales.

By Volodymyr Verbyany

Tamara Tarasenko’s life began against the backdrop of the violent struggles for land in Ukraine, known as “the breadbasket of Europe.” Now she’s 80, and she’s afraid there’s another fight coming for its fertile black soil.

Born between the Josef Stalin-imposed famine that killed millions of people in the 1930s and the invasion of Nazis who murdered millions more to exploit the land for Germany, she spent most of her life on a kolgosp, a collective farm created from land seized by the communists.

After Ukraine broke with the Soviet Union in 1991, she and her husband got six hectares that helped keep them afloat during the country’s tumultuous effort to transform itself into a market economy. And like all owners of farmland in Ukraine, she wasn’t able to sell it.

Until now. President Volodymyr Zelenskiy, a former comic who swept to power on a pledge to crack down on corruption and revive Ukraine’s sputtering economy, is about to scrap a 2001 rule that banned sales to prevent people from being strong-armed or swindled out of their property.

His government says it can boost the economy by as much as 2% annually for the next five years by attracting badly needed investment and know-how and improve living standards. But most Ukrainians -- almost three quarters, according to opinion polls -- think it’s a terrible idea.

“I’m very much against it,” said Tarasenko, who lives off of a pension of less than $100 a month and fears she’ll be cheated out of her holdings in the village of Blystavytsya, 25 miles northwest of Kyiv. “Who would take care of me?”

In a country with a potential arable-land market of 40 million hectares, an area almost the size of California, the concern is real. Endemic graft and memories of the wheeler-dealing privatizations of the 1990s -- in which the nation’s all-powerful oligarchs snatched control of large swathes of the economy -- have left many landowners worried.

Zelenskiy’s opponents have also stoked concern that cash-flush foreigners will eventually be able to snap up one of Ukraine’s most-valuable resources, leaving many of the country’s 41 million people forced to work for others on the soil they once owned. That has led to public protests and at least one brawl in parliament.

The plan poses what is potentially the biggest risk yet for Zelenskiy, whose pledges to curb corruption and end the Kremlin-backed war in eastern Ukraine boosted his popularity to above 60% this fall. But his doubling down on lifting the ban has hit his popularity.

Spurred on by demands from western donors, including the International Monetary Fund, his government is pushing to cancel the moratorium from next October. While his party has a large majority, only 24O of parliament’s 450 lawmakers backed an initial reading of a bill allowing the sale of farmland to Ukrainians, with limits on how much one person or company can own.

They’ll discuss it again and may vote on a final version as early as this week. The land-reform debates have already prompted demonstrations. Protesters and police clashed on Tuesday near parliament, according to Hromadske TV.

The idea is that opening the market can prompt a tectonic shift in banking and agriculture and propel an industry that makes up over 10% of Ukraine’s economic output. It’s also aimed at providing collateral and easier access to loans for landowners, many of whom still use livestock, hand tools and dilapidated tractors to work the fields.

“It’s a litmus test that shows Zelenskiy’s readiness for unpopular decisions,” said Volodymyr Fesenko, the head of the Penta research institute in Kyiv.

Olena Perevoznyk, a 44-year-old icon painter who inherited several small plots from her grandmother, is looking forward to change. The ban stopped her from selling the plots to repay a mortgage a decade ago, and she now rents them out for about $70 a year. As the opening of the market looms, she’s increasingly thinking about starting a goat farm.

“It’s my long-time dream,” said Perevoznyk, who lives in the town of Brovary near Kyiv. “I’ll probably need to sell my separate plots and buy one parcel.”

If the government doesn’t manage to create a market, its goal of boosting the economy by 40% in the next five years would be hard to achieve, said Oleg Nivievskyi, an assistant professor at the Kyiv School of Economy.

Foreigner Question

The biggest question is whether the reform will eventually allow sales to foreigners. That may be a tough sell in a country once considered by the Nazis as a target for “Lebensraum,” a place for Germans to take for their own.

“The Nazi Lebensraum was, above all, Ukraine. Its fertile soil was to be cleared of Soviet power and exploited for Germany,” Timothy Snyder, a history professor at Yale University who has extensively studied eastern Europe, wrote in the New Republic in 2014. “German planners expected that some 30 million inhabitants of the Soviet Union would starve to death.”

The Soviets, whose imposition of collective farms and confiscation of food caused a 1932-1933 famine that killed millions of Ukrainians -- the exact number is unknown -- spent decades after World War II warning that the “chornozem” black soil was at risk of being exploited by the West.

While the government bill approved in the first reading banned sales to foreigners until 2024 -- with Russians permanently excluded -- Oleksiy Mushak, an adviser to the prime minister, said Monday that parliament may agree to prohibit sales to foreigners until Ukraine holds a referendum. Zelenskiy is pushing for a vote to solve the question for good.

In other former communist countries that are now in the European Union, concerns that foreigners would buy up land proved baseless. But that doesn’t convince people like Fedir Bohdan, a 63-year-old landowner from the village of Mykhaylivka.

“Investors from the Middle East and Asia have crazy amounts of money, and farmland resources are limited there,” he said during a protest in Kyiv against the law. “Will businessmen from countries like China hire locals? No, they’ll hire their countrymen. And we will lose our work and money.”

To contact the reporter on this story:
Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net
To contact the editors responsible for this story:
Michael Winfrey at mwinfrey@bloomberg.net;
Balazs Penz at bpenz@bloomberg.net;
Andrea Dudik at adudik@bloomberg.net
Andrew Langley
© 2019 Bloomberg L.P.
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