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The Moscow Times, June 24, 2002

Deputies Quietly Approve Farm Bill

By Yevgenia Borisova

After six hours of half-hearted debate, the State Duma approved a bill in the crucial second reading allowing Russians to buy and sell farmland and restricting foreigners to 49-year leases. Liberals slammed the limitation on foreigners. The only protest from the Communists, who oppose the sale of farmland altogether, came from a crowd of about 200 people rallying outside the Duma building. Most lawmakers appeared to be more interested in following two World Cup soccer games that were being played, and the Duma hall was all but empty during the debate.

The bill, which had the support of the four centrist factions that make up the majority of the parliament, was quietly passed 245-150 with three abstentions.

"We have prepared a bill that creates a civilized turnover of agricultural land," said Vyacheslav Volodin, head of the pro-Kremlin Unity faction after the vote.

"We have protected our agriculture producer, the peasant. Now we must wait and see how it will work."

Russia has 221 million hectares of farmland, 137 million hectares of which has been privatized and is owned by 12 million citizens, according to government statistics.

The 29-page bill approved Friday states that farmland must be sold or leased at "market prices" or at prices determined by an auction. The land must be used solely for farming.

A single person or company cannot have more than 10 percent of the land in one region.

Plots can be confiscated by a court if they are used for purposes other than farming or left abandoned.

If a plot is sold by an individual, the first right of purchase belongs to the region or municipality, which effectively means its renationalization. The state also has the right to buy a share of commonly held land if other shareholders are not willing to buy it.

Regions are left to decide the timing and procedures of sales and minimal size of a plot.

Foreigners, people without citizenship and entities with more than 50 percent foreign ownership can only take out leases on farmland for up to 49 years.

If a Russian company buys land and later increases its foreign ownership to more than 50 percent, it will be obliged to start leasing the land.

Volodin hinted that foreigners may not always be limited to leasing land. "We may come back to this issue in five or six years, depending on how this law will be implemented, and foreigners may get the right to own land," he said.

"But they must first prove that they have come as genuine investors." Foreigners have insisted that the private ownership of farmland is essential for investment. However, at least one foreign company said Friday that it is satisfied with the bill that allows only leases. "We at Heartland Farms believe the correct way forward is to lease the land for a 49-year period with the option to purchase the land after a designated period, say five to seven years, and our project is structured around this principal," said Colin Hinchley, director of the British-based Heartland Farms, which plans to establish up to 80 British-run farms in the Penza region in the next five years. "This allows serious investors the security to develop the land and return it to full production," he said, adding that it creates employment and sales for support industries such as fuel, seeds, fertilizers, agrichemicals, machine repairs and transport.

Volodin said the Duma could pass the farmland bill in a third and final reading as early as this week. The Federation Council must then pass the bill before President Vladimir Putin can sign it into law. It would come into force six months after then being published in the official Rossiiskaya Gazeta.

Aside from members of the four centrist factions Unity, Fatherland-All Russia, Russia's Regions and People's Deputy, which lobbied hard for farmland sales but insisted on limiting foreigners' rights, no one seemed to be pleased with what was approved and the way it was done.

"What is taking place now is not only the rudest violation of law but also the preparation for battles over the division of land in every region, especially in the southern regions," Communist leader Gennady Zyuganov said, breaking his silence after the six-hour debate. The liberal Yabloko and Union of Right Forces factions spoke against the amendment to the bill that puts limits on foreigners, pointing out that the curbs were not included in the government-backed version that passed in the first reading.

"Such an amendment shows investors that the authorities in this country are dashing from back and forth and don't know what they want," said Yabloko's deputy head Sergei Ivanenko.

The amendment was supported 366-6 with two abstentions. The Communists tried several times to push through an amendment of their own that banned companies with any foreign ownership from buying land.

The head of the Duma's agriculture committee, Gennady Kulik, who chaired the debate, retorted every time that approval of the amendment would mean that a Russian farmer could not even be allowed to include a U.S.-built John Deere combine in its charter capital. The amendment was rejected after getting only 134 votes.

A dozen Kuban Cossacks wearing colorful black and red uniforms and medals were sent to a hall where reporters were watching the Duma session on television monitors. They napped during part of the land debate but sprang to their feet when Kulik and the heads of the centrist factions walked into the hall to give interviews to the media at midday. One of them, who called himself Mitrich, shouted at Kulik: "Were you born in Russia? Who decided to sell Russian land? I came here to say it is unacceptable! You democrats have already ruined collective farms!"

Viktor Protsko, a lawmaker in the Krasnodar regional legislative assembly, complained that the Duma had not conducted a referendum on farmland sales.

Kulik replied, "Please be quiet. No one is going to sell community Cossack land. They will be held in common forever by this law." Turning to Protsko, he said, "Look, you are the one who allowed the sale of your own land. Half of the land in your region has been sold off. Our [Duma Deputy Vladimir] Bryntsalov has purchased two vineyards -- where have you been looking?"

The Communists promised to organize protests in the regions in the near future.

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The Moscow Times, June 24, 2002

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