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September 2004

New publication

Land Reform in Eastern Europe - Western CIS, Transcaucuses, Balkans, and EU Accession Countries

by Renee Giovarelli and
David Bledsoe
Rural Development Institute (RDI)
Seattle, Washington, USA

The former socialist countries of Eastern Europe (that is, Europe east of Germany and west of the Urals, but including all of Russia) began a transition to a market economy in the late 1980ís and early 1990ís. This paper looks at one aspect of that transition: the transition from state ownership to private ownership of agricultural land and the accompanying transition to a land market for agricultural land.

The countries included in this study have been divided into four groups:

  • The Western CIS countries: Belarus, Moldova, Ukraine, and Russia;
  • The CIS Transcaucasus: Armenia, Azerbaijan, and Georgia;
  • The Balkans: Albania, Macedonia, Bosnia and Herzegovina, Croatia, Federal Republic of Yugoslavia (Serbia and Montenegro), and the administrative protectorate of Kosovo; and
  • The EU accession countries: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia.

The Western CIS countries, with the exception of Moldova, are still struggling over meaningful private ownership of agricultural land and the right to sell land, to mortgage land, and to employ land to its best use without interference from the State. All of the Western CIS countries are still primarily farming through large collective-style farms with little benefit afforded to individual landowners. Few land transactions are taking place, and the majority of those land transactions that do occur involve leasing back to the collective farms from which the land was allocated or divided. The Western CIS countries, with the exception of Moldova, have lacked the political will to move forward on land reform efforts.

The Transcaucasus countries are leading the CIS in terms of privatization and farm reorganization and are ahead of some of the EU accession states in these areas as well. Each of these countries has the political will to privatize land and move toward a market economy. The Transcaucasus countries plus Moldova devolved some land management responsibility to the local level. In addition, they passed legislation clearly allowing for land transactions.

In the Balkan countries, the rural land markets are not only influenced by economic transition issues, but also by ethnic strife, political instability, and war. The Balkan countries have diverted a great deal of their energy and resources that might have otherwise been directed (at least in part) toward land market development goals to land issues related to the instability and strife.

The EU accession countries have struggled less with the ideology of a market economy than many of the CIS countries, so privatization of land was not disputed. However, in some cases, EU accession countries have chosen to continue support for large collective-style farms, and much less farm break-up has occurred than in Armenia, Azerbaijan, and Georgia. While there are many contributing factors, it does appear that in countries where there is a lack of independent private farmers, the land market is functioning at a lower level than in countries with a larger number of private farms.

The paper addresses various issues related to land reform and land market efforts in the Eastern European countries, including: land privatization; state-owned land reserves; farm restructuring; land transactions; mortgage; registration; land consolidation; and the role of the public and private sector.

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