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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

A Country of Nominal Owners

The agrarian reform in Ukraine is one-third complete
12 July, 2005 - 00:00
BY EARLY 2005 A TOTAL OF 1.6 MILLION INDIVIDUALS — ONE-FOURTH OF UKRAINIAN PEASANTS WHO HAVE OBTAINED LAND-SHARE CERTIFICATES — ARE STILL WITHOUT OWNERSHIP DEEDS AND LAND

No one doubts the need to integrate Ukrainian agriculture into world agrarian production, as evidenced by an international agrarian integration conference recently held in Kyiv. However, attendees had to concentrate mostly on how to implement this integration with the least possible losses to domestic producers.

No matter what is said about the advantages of Ukraine’s membership in the WTO and EU, there are still big risks involved in the transition period. Ukrainian farmers must brace themselves for the WTO regulations that are seldom favorable for new members. This is especially true of the domestic agrarian market, which is less protected under the circumstances. Today 95% of its current produce originates from Ukraine, but if and when this country is admitted to the WTO, this share will inevitably go down considerably. Other countries that have succeeded in finding WTO market niches cannot serve as examples worthy of complete emulation. Ukraine has different starting possibilities. “No other country has shown such glaring deviations from economic laws as Ukraine,” says Petro Sabluk, director of the Institute of Agrarian Economics. And the negative consequences have yet to be overcome.

A constant refrain at the conference was the idea that a full- scale integration of the Ukrainian agrarian sector into Europe is impossible without regulating the land issue. Speakers emphasized that Ukraine, with all that precious chornozem black topsoil, should become a dynamic world market operator, but this requires solid and legally protected landowners. “The land-sharing project hasn’t been completed, so farmers are merely nominal owners of their plots. Neither domestic nor foreign investors will want to do business with such bogus landowners,” says Yuriy Shemshuchenko, director of the National Academy’s Koretsky Institute of State and Law. According to Mr. Sabluk, many farmers are abandoning their plots of land, never having taken full possession of them; they leave Ukraine looking for better paid jobs abroad. Ivan Tomych, chairman of the Verkhovna Rada’s Committee on the Agroindustrial Complex and Land Relations, is more optimistic; he is placing big hopes on the passage of the land market bill in parliament, although he predicts this won’t be easy.

After all, the Ukrainian agrarian sector isn’t used to having good laws enacted; the trouble is that good intentions often remain unrealized. Regrettably, most such bills are prepared and enacted without the input of experts, meaning that they aren’t good enough a priori, and it’s easy to predict that they won’t be adequately implemented, says Vitaliy Semchyk, chief research fellow of the Koretsky Institute. He adds: “Later we’ll be hearing that there is no mechanism for implementing such laws. Yet every law must envisage this mechanism. Otherwise this law is only a declaration and it requires a number of other laws to help implement it. This is true of most laws relating to the countryside. This is what happened to the land code, which requires 30 additional bills. This explains why it will take so long to push it through. Because such “agrarian” laws are failing to reach all of the 29,600 populated rural areas, nothing has been done to create economic rules of the game in the countryside.”

Experts voiced a number of complaints about the implementation of a major law concerning “priority socioeconomic development” in the countryside. Mr. Semchyk says that “there are many good clauses supporting the countryside,” but legally envisaged privileges are absent from the tax legislation, meaning, of course, that they won’t be reflected in the central budget program. Mr. Sabluk pointed out that the law in question introduces the notions of “nominal price” and “maximum price” with regard to farm products, yet the stated price-setting pattern is practically never applied. Such legal nihilism is intertwined with the low efficiency of implementing domestic agrarian scientific developments. Mr. Sabluk’s statistics show that only 30% of the solid agrarian reform, developed and submitted by domestic experts in 1994, has been carried out.

Mr. Tomych believes that the budgetary policy in the agrarian sector today is marked by the good old approaches that fail to meet EU standards. The sophisticated budget appropriation procedures run counter to the WTO doctrine, which envisages a differentiation of state subsidies to villages according to so- called boxes. Also, government support at this level is obviously inadequate. According to research conducted under the Program to Improve the Cost of Living in the Ukrainian Countryside, the proportion of support to farmers from the main “green box” in the structure of the state budgets in past years has not exceeded 25%. Designed to help develop rural areas, these measures totaled less than 4% of the central budget appropriations. No appropriations are being disbursed for the development of rural infrastructures. Likewise, privately owned farmsteads are left without state protection, contrary to the legally established principle of equal conditions for all business entities in the field.

Mr. Tomych says that an important component in the formation of infrastructures is farmers’ access to information about the fundamentals of market economy: “Large producers are kept fully up to date; medium-sized businesses are partially informed, and small businesses know next to nothing.” At the same time, such reforms can be effective, largely owing to the right decisions being made by such business entities, depending on how well they are informed. These gaps should be bridged by special information services in the countryside, especially since such services are envisaged by Ukrainian legislation. However, setting up a nationwide network of such information services has been postponed for two years, simply because the central budget cannot afford it.

Mr. Tomych calls the current situation in parliament related to passing the bills necessary to joining the WTO “complex” and “overly politicized,” and it is connected to next year’s parliamentary elections. However, MPs aren’t the only ones responsible for these legislative hardships. “The government cannot adequately provide for the passage of bills in parliament related to the WTO,” says Vira Nanivska, director of the International Center for Future Studies, adding that this government lacks a clear stand on the “worth of the question”; they don’t know what Ukraine stands to gain and lose, depending on various WTO membership options. But this is not at all surprising, since, as agricultural specialists have noted, this country, with one-third of the population engaged in the agrarian sector, still lacks a strategy for agrarian development. Without it the current government will remain dependent on the coming elections or the WTO membership deadline.

Petro IZHYK, The Day
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