Back in 1930, master Ukrainian filmmaker Oleksandr Dovzhenko made the widely acclaimed film “Zemlya” (Earth) in which he portrayed the Ukrainian peasants’ deep love for the land that they owned and farmed, against the backdrop of Stalin’s nefarious collectivization campaign. Although Dovzhenko, understandably, was forced to do so through a Bolshevik prism, he still managed to capture the almost mystical tie that Ukrainians had with their famed “Chornozem” or black earth, some of the richest and most fertile land on this planet. That struggle against collectivization cost millions of lives and untold suffering, before the whole Communist system fell apart and the collectivized agriculture experiment in Ukraine was dismantled.
When Ukraine became independent in 1991, most Ukrainians had high hopes that they would once again be able to own their own land as had their forefathers many generations back. Alas, that was not to be, and now, almost thirty years later, Ukraine is still struggling to implement land ownership as befits a country espousing a free enterprise system. This past week, during the most recent attempt to enact legislation to enable land ownership and a land market, the debate in Ukraine’s parliament, the Verkhovna Rada, grew so heated that it degenerated into a physical brawl, demonstrating once again how deep the divisions are on this issue.
Although there has been a limited market for land and property sales for some decades now, this has been restricted to small urban and residential properties. Sale of agricultural land has not been permitted. In the first decade after independence, the large state-owned collective farms were dismantled, and the land divided amongst those who had worked on that farm. Laws were passed in 2001 to create a land market, but a moratorium on agricultural land sale was put in place until a detailed and fair mechanism to do so could be created. That moratorium was to have expired in 2005, but every government since then has kept extending that moratorium. So as it stands now, those six million or so Ukrainians that received those small parcels of lands from the breakup of the collective farms, can rent or lease that land, but they can’t sell it, nor even use it as collateral for taking out a loan or mortgage.
After being elected, President Zelenskyy promised to end that moratorium by the end of 2020, and Ukraine’s parliament is now currently wrestling with how to implement that promise. Many different models have been proposed, but so far, no consensus has emerged on how to best tackle this seemingly intractable issue.
The reason for this, to put it simply, is fear. The vast majority of Ukrainians are afraid that once the agricultural land market is opened up, the same thing will happen as what transpired when state enterprises were “privatized” following independence, namely that they rapidly will come under the control of the small elite of rich and predatory oligarchs, or of large foreign buyers.
When one looks at what has transpired with the Ukrainian economy since independence, this is not an unfounded fear. Ukraine does not currently have a true broad-based “free enterprise” system, but rather a monopolistic economic system under the control of a small band of very rich and very powerful oligarchs. The economy in Ukraine is really an inverted pyramid, with a very small middle class, and a huge poor lower class.
As the proposed legislation winds it way through Parliament, the oligarchic class which holds powerful sway in parliament, is obviously doing all it can to dilute any restrictions or controls so that they can take maximum advantage when the moratorium ends. Further, most of the small private landowners who currently “own” some two thirds of the 30 to 40 million hectares of agricultural land in Ukraine, have very real fears that the legal system as it stands now is too susceptible to corruption to be able to defend their property rights in the face of oligarchic pressures.
Zelenskyy and his party are trying to come up with the right formula that will enable land sales, while putting in place sufficient controls and restrictions that will ensure that it is the small and medium sized landowners that will benefit from these land reforms, while preventing the oligarchs and large enterprises from unfairly acquiring large concentrated landholdings. As is obvious from the shenanigans that took place in Ukraine’s Parliament this week, this will definitely not be an easy task.