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Zelensky’s Land Reform: Another Step Towards Disintegration Of Ukraine

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Zelensky's Land Reform: Another Step Towards Disintegration Of Ukraine

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On November 11th, the Ukrainian land reform bill passed with a majority in parliament. It was presented by Ukrainian President Volodymyr Zelensky.

Out of 450 MPs, 240 deputies voted for Ukrainian President Volodymyr Zelensky’s bill that allows the sale of land to foreigners. 227 votes were cast by the “Servant of the people” and 13 were given by independent deputies.

The bill includes the following, as set out previously:

  • The land sale begins on October 1st, 2020;
  • acquisition of land will be possible for: citizens of Ukraine, legal entities of Ukraine created under the legislation of Ukraine, territorial communities and by the state;
  • no more than 15% of the land in one region and 0.5% of the all-Ukrainian land bank, that is, in fact one farm can receive no more than 200 thousand hectares;
  • introduce a transitional period until January 1st, 2024, during which legal entities, beneficial owners of which are foreigners, stateless persons, legal entities created under the law other than the legislation of Ukraine, foreign states, will not be able to acquire land from the designation of state, communal property, as well as unitary lands, except for those lands which at the time of entry into force of the law are already leased, to such legal entities, and provided that such legal entities are created not less than 3 years before the effective date of the law;
  • foreigners will be allowed to redeem priority land, which their companies currently rent already. About three million hectares out of 42 million are affected by this;
  • There are no restrictions on buying up companies with existing land banks, there are already companies with 300-500 thousand hectares, a company can own pretty much half the land in Ukraine if it’s done as purchasing entities that already own land.

Opponents of the land reform claimed that this is a very large share, and it opens the way for large land owners to buy all of the land (the change means that 200 people can put all of the land in Ukraine under their control).

Additionally, there comes the issue of price of the said land:

  • It is proposed to establish the “minimum price” for land at the level of a normative monetary assessment (on average in Ukraine it is 28-30 thousand hryvnias per hectare, that is, about a 1,000 euro);
  • Villagers would be allowed to buy the land at such a price, with an installment plan for five years. These individuals at one time have worked the land and prepared it for permanent use under a household or a farm (before the adoption of the new Land Code in 2002);
  • Calculations show that farmers will have to pay about $ 200 per hectare annually (at the same time earnings per grain per hectare is $300, that is, after the bill enters into force, the villagers will have to give most of their income to the state);
  • There are no mechanisms for lending to medium-sized farmers so that they can buy land and create a middle class of owners in the countryside. And no such propositions for establishing a mechanism were made;

The situation is quite simple: small and medium-sized farms at a massive disadvantage compared to large Ukrainian companies, and even more so when it comes to foreign investors who can have much more purchasing power and capabilities.

Zelensky’s predecessors shied away from the land reform bill because they could lose the support of rural residents and the agricultural business, which in turn could allow for the possibility for protests led by the opposition.

And immediately, Yuliya Tymoshenko’s “Fatherland” party moved into opposition:

“Our party decided not to go into opposition from the first day the new president assumed power… But today Volodymyr Zelensky crossed all the “red lines.” On his behalf, the bill on the sale of land was voted.”

In addition, Tymoshenko called the Parliament’s decision “a sale of strategic facilities, including land,” and stated that the “Fatherland” party had already sent a submission to the Constitutional Court demanding clarification of article 13 of the Constitution, which says that Ukrainian land belongs to the people. She added that she would appeal in court the adoption of the law in the first reading because of violations of the regulations.

The “Opposition Bloc – For Life!” party also opposed the bill, but Zelensky appears to be the bigger winner of the situation. He proved that he is now the central figure of Ukrainian politics and he makes all of the decisions and sets out the political agenda.

This decision was predominantly made to be given expanded financing by the International Monetary Fund.

On November 15th, just four days after voting on the land, the Prime Minister of Ukraine Oleksiy Honcharuk and Minister of Finance Oksana Markarova discussed the conditions for starting a new three-year program for expanded financing with the mission of the International Monetary Fund, which began work in Ukraine on November 14th.

Prime Minister Honcharuk outlined the situation and plans, while openly expressing hopes for financial assistance:

“Ukraine has demonstrated and continues to demonstrate the rapid and successful implementation of the reforms declared by the president, our government and parliament. In recent weeks, the Ukrainian parliament adopted as a basis the draft bill on the sale of agricultural land, and also adopted as a whole the law on “unbundling”. The latter has already been signed by the president. Therefore, we hope to agree on a new long-term expanded financing program that will support our efforts to accelerate economic growth.”

The IMF mission already operated in Kiev between September 12th and 26th, at the time the Ukrainian Ministry of Finance announced that negotiations with the fund were actively on-going. Thus, this was not a secret, which allows us to conclude that Zelensky’s opposition already knew that he was the pushing force behind the political agenda in the country, they’ve most likely probably conceded to the fact and their current opposition is simply a formality.

Furthermore, it would appear that the IMF, similarly to the US, is concerned with how much influence oligarch Igor Kolomoisky has over Zelensky.

The head of the office of the President of Ukraine Andriy Bogdan said in a private meeting with reporters that: “Now the IMF wants to know how close the oligarch Igor Kolomoisky is to power. It’s difficult for the president’s team to convince foreign partners that he is playing his own game.”

Since it is rather worrisome that Kolomoisky in an interview with the NYT said that relations with Russia should be normalized and the West should be “sent home.”

“The Americans dragged us into a conflict with Russia, but did not give us anything in return. The Americans need us to fight with the Russians. But we don’t need it. We need to abandon IMF loans and switch to financing from Russia.”

According to Kolomoisky, Russia is ready to give Ukraine $100 billion.

Furthermore, Zelensky, at a meeting of the “Servant of the people” party, reportedly said that Kolomoisky was behind any protests against the land reform bill. Which, if true, would mean that Zelensky may be attempting to distance himself from the oligarch, but how likely that is remains questionable.

But it is true that the narrative of “Russian aggression” appears to be leading to a less significant response than it used to, and the economic profit it brought appears to be diminishing.

Under these conditions, Zelensky faced the need to seek political and economic resources for the successful continuation of his presidency. This resource, currently, appears to be the Ukrainian land.

Negotiations are ongoing with the IMF, Zelensky has a majority in parliament. The final vote on the land reform bill still hasn’t passed.

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