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Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

#6
Date: Thu, 13 Dec 2001
Subject: agriculture land law
From: "Steve Wegren" <swegren@mail.smu.edu>

A few quick observations by way of follow-on to the news piece you ran in JRL 5596 regarding a new agricultural land law:

1. The primary intent of a new law on agricultural sales will be to replace a previous decree, dating from 27 October 1993, with a federal law. Decrees were intended to be temporary legal acts until federal law could be passed. The recently adopted Land Code (October 2001) was able to be passed primarily because the most contentious issue, agricultural land sales, was set aside after more than 7 years of argument.

2. The new agricultural land law, once it is passed, will add legal clarity to rural land transactions, just as the new Land Code adds legal clarity and codified urban land transactions. It is important to note that rural land transactions have been occurring since 1994. In 2000, for example, there were about 5.2 million land transactions recorded in Russia, of which 44 percent, or 2.28 million, occurred in rural areas. (Most land transactions, both urban and rural, are lease transactions. Approximately one half million rural transactions in 2000 were land purchases.)

3. The new agricultural land law is unlikely to have much of an immediate impact. The problem with the rural land market is not political or legal, but economic. This is not to say that legal clarity is bad, especially in the long run, but legal clarity is unlikely to solve the present problems of the rural land market. Those problems are twofold: (a) low purchasing power by rural dwellers, which depresses demand for land; and (b) the unattractiveness of rural land due to a decade of neglect, during which rural infrastructure and services (which already were of low quality) were significantly degraded. Until and unless the infrastructure and service problem is addressed, rural land will not be attractive to domestic urban or foreign investors, no matter what the legal environment.

4. The new agricultural land law will be skeletal, in which broad federal principles and policy orientations will be indicated. While avoiding detail, the law is likely to allow great latitude to regions to decide how much, if at all, they want to regulate their rural land markets. This has been the position of Putin since early 2000. Thus, there will be a federal law, but there will continue to be a great deal of regional variation.

5. Finally, the battle of the communist leftists to fight land sales is already lost. Land sales are a reality and have been ongoing since 1994. Their posturing attests to the antiquated nature of their policy platform.

Steve Wegren
Southern Methodist University

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