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NEWS ANALYSIS Land and the landed


The Dutch - and some Arab Gulf states - may disagree, but throughout history conventional wisdom has supported Mark Twain’s contention, “Buy land, they’re not making it any more.” And Ukraine’s rich agricultural land


is an increasingly important commercial and strategic asset for the future, as the global rise in food prices that followed Russia’s grain export ban earlier this year demonstrates. Agricultural yields in Ukraine are


Svitlana Barnes


low by western standards, and could be greatly boosted to the benefit of the


country and food production on an international level, but this would require significant investment. Hence the global interest in Ukraine’s plans to sell state land to private investors from this year. Sale of such a vital state asset is a contentious issue – especially in a


country where the line “All property is theft” was government policy for most of the last century – with the Communist Party still opposing the sale of agricultural land. If the land already belongs to everyone, who benefits when it is sold?


And who should benefit? Should it stay in Ukrainian hands, or would allowing foreigners to buy land increase the price obtained and avoid a ‘sale to friends’? Does it make much difference if it’s a Ukrainian or Russian Oligarch, a Western Corporation or Middle Eastern government fund that owns Ukraine’s farmland? Perhaps the most significant issue for Ukraine is whether those investing


in the country’s agriculture sector are doing so for the long term, or short- term speculators whose interests are served by rapidly increased food prices. Ukraine’s wealthiest nationals divide opinion even more. The fact that


some individuals have billions while the country languishes with per capita incomes among the lowest in Europe will be anathema to many. Others concern themselves with question such as, how was this wealth accumulated and what they are doing with their wealth? Or more importantly, to what extent are they investing in Ukraine’s future? This issue of UBI runs through the famous, not so famous and


sometimes infamous in our Rich List, and it is notable that the country’s leading industrialists have indeed staked a considerable portion of their wealth on the future success of Ukraine. If there is any justification for keeping foreigners out of Ukraine’s land sale, it is this, that nationals with a vested interest in the country are less likely to ditch their assets when times get hard, and are more likely to take a long term view, which in turn, better serves the interests of the country as a whole. On the other hand, international investors will bring greater transparency,


are thought more likely to oppose corruption and croneyism, have access to greater investment funds, cutting edge technology, international management skills, and greater expertise at exploiting international markets. For good or ill, decisions made by Ukraine’s government over the next


few months are likely to shape the country for decades to come – so lets hope they get the balance right – whatever the correct balance may be. UBi


Svitlana Barnes Joint Publisher


4 UkraineBusiness insight October/November 2010 Yanukovych:


”We will bring you order - after all this Orange mess.” This was the essence of the election promise of Viktor Yanukovych, the President of Ukraine. Special correspondent, Lisa Ukrainka, reports six months on


Not only Ukrainians, but even Brussels and Washington seemed to have had enough of the anarchy of the previous government. And so Viktor Yanukovych narrowly beat Yulia Tymoshenko and, on the 7th February 2010, was elected the 4th President of Ukraine.


Flying into the country half a


year later, it is hard not to notice manifestations of ‘new order’. The notoriously overcrowded and overpriced Boryspil airport has opened a gleaming new terminal F, part of preparations for Euro-2012. At the main train station, the previous crowds of drunks and vagrants are now dispersed; nobody smokes on the trains, the gangs of youths with beer bottles are largely gone from Khreschatyk. In every corner of the country, the face of President Yanukovych smiles at the citizens from numerous billboards. The restaurants of Kyiv, Lviv and Donetsk have begun filling up again - a far cry from the eerie emptiness of two years ago. Construction sites, frozen by the crisis until recently, are coming back to life.


Yanukovych also gets a highly


favourable press in Russia, the IMF has renewed granting of loans to the country, which in turn brought about more more favourable credit ratings, Fitch raised Ukraine’s rating to B


from B- days after the loan had been granted - still well below investment grade but a marked improvement from the near- default ratings in times of crisis. There is a lot of talk of stability in the country’s governing apparatus (or usurpation of power, according to the opponents).


But Ukrainians are used to


measuring their government’s success by rather more mundane things: the price of gas and of basic foods. Both soared, in some cases doubled in recent months. The ruling Party of Regions tries to downplay the falling popularity ratings and insists that the government has had to make some unpopular but necessary decisions.


So how has the government


fared in its first six months? It’s interesting to note the response of foreign experts that we contacted. Some did not get back, some delayed responding. And the spokesman for a well-known US think- tank dealing with geopolitics in Eastern Europe, emailed about a previously promised interview: “Unfortunately, it looks like we won’t be able to do this interview for you due to security concerns over some of our employees working in the region.”


It might - or might not - have been the result of


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