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Friday, 21 June, 2002, 16:15 GMT 17:15 UK
Russia bans foreign farm buyouts
Demonstration outside the Duma against the sale of land, 2001
The sale of land is a sensitive issue in Russia
The Russian parliament has passed an amendment to the country's land code, banning foreigners from buying farmland.


I share... the concerns voiced by those who do not want to hurry over giving foreigners the right to purchase land

President Putin
They will only be allowed to lease farms for 49 years.

In a rare show of unity, the lower house of Russia's parliament, the Duma, approved the amendment with only six deputies voting against it.

The move is seen as a compromise between the government's intention to liberalise Russia's land market and the widespread opposition to foreign ownership of the country's land assets.

The sale of farmland to foreigners was the most sensitive issue in the new land code that is aimed at shaking up the ailing agricultural sector in Russia.

Fears

Most of Russia's land currently belongs to the government, just as it did in communist times.

Farm in Russia
Most of Russia's land remains state-owned
The BBC's Nikolai Gorshkov in Moscow says the left-wing opposition is against the very principle of private farm ownership, and it made a last-ditch attempt to postpone the reading until the autumn session.

But President Vladimir Putin was determined to push through the land code which is seen as crucial to his programme of reforms.

However, he had to accommodate the widespread fears among the Russians that their most valuable farmland could be bought up by foreigners.

"I share and understand the concerns voiced by those who do not want to hurry over giving foreigners the right to purchase land," said Mr Putin. "There is no direct economic reason to do that."

Disappointment

There was heated debate in the Duma last year, when the opposition tried to prevent the adoption of the law allowing private ownership of non-agricultural land.

This time the vast pro-presidential majority ensured a much smoother vote.

Western investors in Russia have been disappointed by the Duma's decision.

Alexei Moiseyev of the Renaissance Capital investment bank said that Russia's agriculture sector is starved of investment and that only the legal sale of land to Westerners could revitalize it.

In addition, the ban will prove easy to circumvent, according to Mr Moiseyev.

"All a foreigner who wishes to buy land needs to do," he says, "is to register a Russian subsidiary, which is a very straightforward task."

See also:

23 Apr 02 | Business
14 Jul 01 | Europe
08 Mar 02 | Country profiles
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