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Published: 6/29/2002

Rebirth of rural Russia plods along

The last sacred cow of Communism - a taboo on private ownership of farmland - arrived at the slaughterhouse in Russia last week when the Duma passed a bill legalizing buying and selling agricultural land. But the cow is alive and kicking.

The bill still must pass ratification by the upper house of Parliament.

As it is written now, the law is seriously flawed.

But first, a little history:

Farmland in Russia has been off limits to individuals since the late 1920s and early 30s, depending on the locale, when Joseph Stalin's Bolsheviks robbed farmers of land and cattle and established huge collective farms. Millions of hardworking people died of cold and starvation, some on their stolen ancestral land, others in Siberian exile.

Survivors for decades quietly complained, whispering "Nyet khozyaina u zemly." Translation: “The land has no master.”

For decades since, collective farm workers, unable to leave their villages without an official release by the authorities, had no reason or incentive to perform well. After dictator Stalin died in 1953, a horde of rural dwellers flooded into the cities, seeking lucrative work. The countryside was left scarcely populated.

Many of the remaining collective or state “farm workers” spent their meager pay on alcohol. They drowned their misery as their crops rotted and cattle died of neglect. Yours truly was a witness to the waste in the late 1970s, when his family camped in a cabin on a collective farm about 100 miles east of Moscow.

All farmland in Russia officially belongs to the state. About 60 percent of land is still given over to collective and state-run farms. Since the late 1980s, private farmers have, in some places, leased the remaining farmland from local authorities.

It's common knowledge in Russia that the old collective and state farms remain in disarray. And the daring new-wave private farmers are complaining en masse of extortion by local officials. These “guardians of the public good” typically base their land-lease decisions on the absence or presence of a bribe. Clearly, the authorities have much to lose from the legislation that might loosen their grip on the farmland.

Will the new laws revive rural Russia? Not as soon as one might hope.

Private ownership of farmland is still heavily restricted.

First, regional authorities would have the right to restrict the amount of land belonging to a single proprietor if it exceeds 10 percent of total farmland area in a given jurisdiction.

The acreage restriction makes farmland less attractive to big investors. Without big investment, however, Russian agriculture simply cannot survive foreign competition, experts say.

Second, the law bans sale of agricultural land to foreigners.

No serious international agribusiness concern would conceive of investing in Russia, not with its poor transportation system, risky climate, and abundant red tape. The ban sends a chill through the broader investment climate in Russia. To the potential business partner, it's just one more example of Russian authorities' xenophobic outlook.

The rationale of the regional bureaucrats, who are clearly behind these restrictions, is simple. They claim to protect local investors, while they in fact are simply securing their powerful stake in redistribution of farmland. Out in the countryside, the smaller investors - given Russian realities - will continue to bribe regional authorities to secure a nice piece of real estate. Larger investors, especially the foreign ones, are more likely to press their advantages from the top, in Moscow.

Little wonder the Kremlin, namely President Vladimir Putin, initially was against restricting private farm ownership, according to Russian media reports. The big boys in Moscow hear the music of a power vacuum, and the Kremlin wants to play the first fiddle in redistribution of farmland.

The Kremlin likely will prevail over the regional bosses in the end, given the trends of the past two years. The restrictions will ease eventually. The question is how soon.

But until the sacred cow is reduced to steaks and burgers, Russia can forget about large Western investments into its economy. And Russia's alliance with the United States will remain hamstrung.

Mike Sigov, a Russian-born journalist, is a staff-writer for The Blade.



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