Russian Land Code: Compromise on Ownership

Ulhas Joglekar uvj at vsnl.com
Fri Aug 31 19:32:17 PDT 2001


Economic and Political Weekly

Commentary

August 4, 2001

Russia: Land Code: Compromise on Ownership R G Gidadhubli

On June 15, 2001, the Russian Duma (parliament) approved the Land Code Bill, allowing buying and selling of not more than 10 per cent of land in the country. The importance of this law lies in the fact that it has great socio-economic and political implications for Russia in the decades to come. The president of Russia, Vladimir Putin, has thus taken a bold step on the issue of land ownership initiating the process of reversing the policy of forced collectivisation of land undertaken by Joseph Stalin in 1928 which ended private ownership of land in agriculture in the former Soviet Union. Stalin had then proudly claimed that by his policy of collectivisation of land, he had brought communist ideals to the countryside thus eliminating not only kulaks but also owners of land among middle and small farmers. The Russian peasants who were earlier guaranteed the ownership of land by Vladimir Lenin by his famous 'Decree on Land' which was promulgated soon after the Great October Socialist Revolution in 1917 were made to part with their land even without compensation. Thus, between Vladimir Lenin and Vladimir Putin, Russia has, in 80-odd years, come full circle on the issue of ownership of land. It has, however, not been easy for Russia to make this historic decision, because after the Soviet break up there have been debates and controversies in the country on the issue of land ownership with exclusive right to buy and sell land. Some sections of Russian society and political parties are in favour of it while some others are against. This was evident from the manner in which the bill was passed in the Duma. According to the press reports, members of the Duma belonging to the Communist Party and Agrarian Party tried to block the consideration of the Land Code Bill and even physically prevented German Gref, the minister-in-charge of economic affairs, to present it. After they walked out threatening the dissolution of the parliament, the bill was passed by 251 votes in favour and 22 against with two abstentions. Over the past decade, the question of the right to ownership of land has become a symbol of how far Russia will go on its declared policy of economic reform. While communists and agrarians have vehemently opposed the Land Code Bill, reformist groups and some economists have been putting pressure on the government to pass it. Presumably, to assure the latter section, German Gref stated in January 2001 that the "Land Code may be passed in 2001 although laws governing the sale of land might be postponed". In February, he further stated that all categories of land, that is, agricultural and non-agricultural, would be treated equally on the ownership issue, including sale and purchase. Vladimir Putin also lent his support on the issue of economic reforms and land code including proposals to protect all forms of property in Russia. But differences have persisted on this sensitive issue even within the Russian government. For instance, in contrast to the position of German Gref, minister of agriculture Alexei Gordeev said in February 2001 that the "new draft land code did not contain (a) provision for free buying and selling of land". However, disagreeing with the contention of the minister of agriculture, Duma deputy Viktor Pokhmelkin of the Union of Rights Forces asserted that the new land code might not prohibit the proposal of freedom to sell and buy once ownership issue was accepted by the Duma.
>From this account, the seriousness of differences on the land ownership
issue becomes evident. In fact, as per the federal law of 1993, which was adopted by Russia in the euphoria of anti-communism, Russian citizens were able to own land. But Russia has been functioning under the former Soviet legal system, and as per the old rules there were no legal provisions for sale and purchase of land. For instance, the collective farms themselves did not legally own the land which was given to them for use by the Soviet state under perpetual lease. Subsequently, by 1994-95 under former president Boris Yeltsin's leadership collective farms were reorganised into joint holding farms as 'joint stock companies' in which all members of the farms became joint owners of the land. But although state farms and collective farms were officially reorganised, in practice there was hardly any change. Moreover, what added to the complexity of the situation was that the federal law on land ownership contradicted regional laws on the issue of sale and purchase of land, because regional laws did not permit it. Hence, some Russian economists have pointed out that there was a peculiar situation prevailing in the country in which there were two laws on land issue - federal law and regional law - and both were legal. In this situation local officials and bureaucrats could, therefore, interpret the law to suit their political and economic interests, resulting in considerable arbitrariness in the Russian legal system. The debate on land issue has persisted also because the advocates of reforms have argued that private farming existed in Russia and hence farmers could own land just as they own a home or agricultural implements. Hence the right to sell and purchase land should be permitted as a matter of right. In support of their contention they further argued that most of the collective farms and state farms were not efficient and were making losses. In contrast, productivity on private farms was much higher. In view of this, it was contended that legalising land ownership and free sale and purchase would help the development of agriculture in Russia. On the other hand, the communists and agrarians have argued that private ownership of land with right to free sale of agricultural land would result in the abuse of land by the new owners. In their opinion, unscrupulous people can speculate on land property. A Russian expert has also argued in a Russian journal that in a worst-case scenario, new owners with no rights might convert workers on land into serfs. It appears that some collective-farm workers have echoed this worry and opposed privatisation of land. In fact, the privatisation policy of the Russian government during the past decade has seen insiders and those who managed such property grabbing state property. Moreover, there has been large-scale illegal appropriation of state property, which has resulted in the enrichment of a few Russians at the cost of many others. Greed and corruption have been rampant in Russia in the acquisition of property. As a result of this, a new class of Russians known as the 'Novie Russkie' (New Russians) has emerged in a historically short period of time. It is, therefore, feared that what has happened in industry and trade may also take place in agriculture. The issue of ownership of agricultural land has raised controversies and has been strongly resisted also due to social and historical reasons. During the Soviet era, even as collective farms were given land by the state under perpetual lease, members of the collective farms felt they were all equal so far as land ownership was concerned. In this sense, the tradition and feeling of collective ownership of land goes back to the tsarist period, when the institution of 'mir' (village commune) had been widely prevalent in Russia for centuries. While most agricultural land belonged either to the tsar, or to the Church or to kulaks, in practice, mir looked after the cultivation of the land and agriculture as a whole. Although serfdom (a form of slavery) was practised in many parts of Russia, in villages peasants would address kulaks with, "We are yours, but the land is ours". This shows how peasants were attached to their land with a collective spirit. Private farming with the right to use land independently got a boost under Mikhail Gorbachev's perestroika or, policy of restructuring. There was enthusiasm for this policy in some parts of the USSR, particularly with regard to cattle farming. After the Soviet break up, this form of private farming in agriculture was expected to gain greater momentum and popularity. But from available reports it appears that many farmers who had left collective farms and state farms and who had started private farming taking their share of a few hectares of land for cultivation, surrendered the land and joined back in their collective farms. There are many reasons for such a development. It appears that there are several problems such as getting supply of agricultural inputs like seeds and fertilisers. There were instances where collective farms or state farms, which had monopoly over agricultural inputs, did not cooperate with private farmers either due to general shortage of supply of inputs or to discourage private farming. Several economists opined that the lack of a market for agricultural inputs was partly affecting private farming in the country. Notwithstanding this, officially some form of private farming has been going on in Russia. In fact, as per the federal land registry reports, as of January 2001 130 million hectares of land had been privately owned over the past decade. Further, there are 43 million landowners in Russia who own 130 million hectares of land, which accounts for about 8 per cent of the total land area of the country. In this connection, it is important to note that even before the Soviet break up about 5 per cent of land was under private farming which included family farming, also known as subsidiary farming on personal plots of land. The land for this form of agriculture was given by collective farms to their members who worked on their personal plots of land along with their family members after their main work in collective or state farms. It is possible that this category of land is also included in the statistics on private land maintained by the federal land registry of the Russian government. If so, there is only a marginal increase in the share of land under private farming in Russia. Private Farms To achieve the objective of establishing a market economy in the country, the Russian leadership has to promote private ownership of land as part of restructuring the agricultural sector. Moreover, another strong reason for permitting private ownership with the right to sale and purchase of land seems to be the issue of investment. At present, there is a lack of investment in agriculture. After reorganising state farms and collective farms, investment by the Russian state has gone down drastically, as has subsidy on agricultural inputs on items such as oil and lubricants and fertiliser. In fact, according to Russian publications, during the year 2000 Russia lost 15 million tonnes of grain due to inadequate supply of agricultural machinery and due to outdated machinery and equipment. It is hoped that private ownership of land might attract investment both for the improvement of land and for modernising agricultural machinery. Apart from the economic aspect, landownership may also involve a sociological question. Over the past 4-5 decades, one major problem in Russian villages has been the steady migration of youth from rural to urban areas. Hence there is a demographic imbalance, with the dominance of older men and women engaged in the agricultural sector. The pace of migration seems to have slowed down after the Soviet break up but the problem persists. In view of this situation, it is possible that this section of the old-age farming population may be exploited by vested groups and individuals to part with their land once sale and purchase is permitted. In that case, this may eventually result in social tension and economic disparities creating a class of landlords and landless agricultural workers. Hence the fears of communists and agrarians may be quite legitimate. It is also quite likely that Russia's 'new rich' class may buy up thousands of 'dacha' (summer house) plots and land on which Russians are known to produce fruits and vegetables. There are reports in the Russian press that foreigners may also exploit the land code provisions to buy up land in the country. Some Russian analysts opine that there is a possibility, for instance, in the far eastern regions of Russia, where millions of Chinese have settled down during the past decade both legally and illegally in Russia's border regions with China. Agrarian Party leader Mikhail Lapshin said last month that Putin was against foreigners owning land in Russia, while foreign corporations would be allowed to buy and sell land. It is reported that Putin is also in favour of creating a buffer zone along the borders of the country in which no land could be sold to any foreigner. In this regard, the cooperation of the regional administration has to be sought by the Russian authorities to prevent illegal transfer of the ownership of land. If Russia has to achieve its economic objectives - establishing a market economy in the countryside, removing the Soviet-era inefficiencies of state and collective farming, attracting investment in agriculture - private ownership right of land might be an inevitable requirement. At the same time, efforts have to be made by the authorities to prevent the misuse of privatisation of land, which may benefit a few at the cost of the larger interests of the country. The outcome of the implementation of the land code will be evident in the years to come. But as of now, the land code appears to be a compromise formula. By setting a limit of 10 per cent, the protest by the communist and agrarian parties might have been partly lost its sting. But at the same time, reformist groups could also claim that they have succeeded in their effort to push the Land Code Bill into practice.

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