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Moratorium on sale of Ukrainian land: Decision of ECHR

Author : Mykhailo Pozhyvanov

European Court of Human Rights acknowledged that the existing moratorium on the sale of agricultural land in Ukraine violates human rights
22:37, 6 June 2018

Read original article at 112.ua

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Unresolved problems can return to you at the most unexpected moment and beat in the most sensitive places. Recently, the European Court of Human Rights acknowledged that the existing moratorium on the sale of agricultural land in Ukraine violates human rights. The problem was actualized by two pensioners: 71-year-old Sofia Zelenchuk from Ivano-Frankivsk and 79-year-old Viktor Tsytsyura from Ternopil. Both plaintiffs are owners of land shares, which they rented, and then they wanted to sell. In 2015, Zelenchuk and Tsytsyura appealed to the ECHR with a request to explain whether the existing moratorium violates their civil rights.

The court's decision says that there is no total ban on the sale of land in member countries of the Council of Europe. There is no such restriction for countries with transitional economies. And consequently, from the point of view of European law, the plaintiffs can be recognized as victims of the policy pursued by Ukraine in this sphere. For this policy, we generally got a lot. The ECHR noted the "inconsistency of the Ukrainian authorities," which had long declared its intention to create a land market, but each time only prolonged the moratorium.
 
Ukraine should adopt a set of legislative measures that would ensure an equitable balance in the interests of the society and individuals with farmland, the ECHR noted. At the same time, of course, the human rights court did not (and could not) insist that the moratorium is lifted, and the land market - immediately created. It was only about the responsibility of the state, which should balance between the needs of citizens and the nation as a whole. And the ECHR decided to pay compensation of 3,000 euros to the victims.

Minister of Finance Olexander Daylyuk, who is now in acute opposition to the authorities, immediately commented on this decision. That is, this decision opens our eyes to the obvious thing: no state policy, in his opinion, will be effective if it is built on the violation of human rights. But is it really about human rights violations in this case? The Ukrainian specificity of managing everything has its own unique imprint, and that is why land issues are among those that often do not have an unambiguous answer.

For example, in Denmark, agricultural land is sold solely on the condition of maintaining the status quo of this land. The buyer must prove that he plans to engage in farming and nothing else - in particular, the last eight years before buying, he must live in rural areas. There are other fuses: purchase of shares and bringing the land to a size of more than 150 hectares is prohibited by law when the acquired property reaches 30 hectares, the owner must confirm his professional qualifications and demonstrate the results of his work on this land. For legal entities in Denmark, agricultural land is not sold at all - only private owners have the right to purchase.

And what about Ukraine? And in Ukraine, 71% of the territory (42.7 million hectares) belongs to agricultural land (of which a quarter belongs to the state), and at the same time, however, we have completely unregulated land legislation. 25 years ago the Verkhovna Rada adopted a resolution "On Land Reform", in which there were a number of gaps. It is thanks to them that the market of agricultural land has not yet been formed; a significant part of the rental market is in the shadow; several categories of lands do not have a clearly defined legal status.

Since the de facto reform did not work, 11 years after its adoption, that is, in 2002, a moratorium on the sale of agricultural land was introduced. It was assumed that the moratorium will be in effect until 2005 and will end with the adoption of laws on the land market and on the state land cadastre. The first law does not exist today. The second was still adopted in 2011 with a deferral until January 1, 2013. But it did not come into force because of the extension of the moratorium until January 1, 2016, and subsequently - until the current year, 2018.

If we talk about the pros and cons of lifting the moratorium, then all the advantages of selling land have been discussed for a long time. The lack of a free land market hampers healthy competition and the growth of the agricultural sector; inefficient land management deprives the motivation of farms; Ukraine as an agrarian state loses its attractiveness in the world market and the like. All that has been said is entirely just and fair, but the desire to establish order in this area should correlate with the assessments of all the risks that the lifting of the moratorium brings. We do not need Pyrrhic victories, and, if you think about it, the chance to enter the free market without significant losses at the moment is zero.

Consequently, we consider all the disadvantages of introducing free land sales. Ukrainian peasants are not rich people, so they will almost certainly see the possibility of stabilizing their financial position in the right to sell their plots. The same applies to land that is in communal ownership - due to its sale, local budgets (still dependent on Kyiv, despite promises of decentralization) will gladly be replenished and expanded. So, the land will move from one source to another. But where? Here there are only two options: either the investor will be domestic or foreign. Our farmers (even large farms) will not buy much land - again, because of the limited financial resources. Therefore, most likely, shares will be owned by foreigners (or speculators, who will then resell the land abroad).

What's wrong with foreigners? It's all right if they work for the Ukrainian economy. The legislative algorithm, which would limit the presence of foreign capital on the land market, is not available today. Someone predicts the arrival on this market of large transnational corporations that will buy out all that was left unsold by Ukrainian investors. This will largely change the profile of the domestic agribusiness, which will lead to a drop in the production and export of agricultural products during the redistribution of the market (and in the long term, to a reduction in jobs in this area).

However, let us imagine that with the changes to the current legislation, the activity of foreign capital will be minimized or eliminated altogether. Is it possible to consider the problem solved in this case? No, because a lot of urgently needed first steps have been made for today. The cost of land (which varies depending on the quality of the "goods") and the cost of its lease is professionally not determined (this second value, in my deep conviction, should be at least 5 percent of the estimated land value per year).

And this is in the first place. Secondly, the mechanism of control and responsibility for misuse or inadequate use of land is not legally established. A penalty (from administrative to criminal) for intentional damage of soils (when, for example, three consecutive years in the same area are planted crops that deplete the ground) must be established.

The third point is that an institution (land exchange) should be created - it will control the flow of land from one property to another. Naturally, this institution should be completely independent both from the executive power and from private individuals. However, after the obvious failure of the mission of various "anti-corruption" structures, it is difficult to believe in the integrity of the land exchange.

In addition, even before the launch of such a stock exchange, a complete cadastre of agricultural land has to be developed, a model of the land market to be imitated by Ukraine must be defined, and clarity with the use of mineral resources and water resources should also come about. All these nuances should be very clearly spelled out in the Ukrainian legislation. Without an appropriate code on hand (and it does not yet exist) to accept a waiver of a moratorium on the sale of land would be a real crime.

In conclusion, I note the obvious: to exit from the crisis, such decisions (on the abolition of the moratorium) do not work. The way out of the crisis is changing the structure of capital, that is, the creation of new enterprises, the development of new markets or spheres of management, or the modernization of old ones. With the offering of land in the "free market" neither the first, nor the second, nor the third factor will not work. Because the sale of land is not a modernization of the market, it is only a change of its owner; moreover, it is extremely unprofitable and (given the absence of an appropriate legislative basis) is extremely untimely. One should think on this well before returning to this topic again.

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