Civil Rights

Rolling back the outdated ban on the sale of farmland in Ukraine

Ukrainian farmer

About 7 million landowners are legally prohibited from selling their land in Ukraine, the only democratic state where people are prohibited from freely disposing of their property. This 15 percent of the population owns 70 percent of the land, much of which is underutilized. The moratorium on the sale of agricultural land in the country has been a hot-button issue for many years until very recently, when Kyiv-based EasyBusiness backed a successful lawsuit on the ban to the European Court of Human Rights (ECHR).

When the communist system fell in Ukraine, the new government wanted to protect its people by awarding farmland to citizens who had suffered under the previous regime while also prohibiting the sale of that land so no one could be pressured into selling. However, this has had the unintended consequence of keeping aging Ukrainians on land that is too large for them to maintain despite their desire to downsize as they retire. They also have been unable to use their capital as collateral in commercial ventures.

“The implementation of the farmland reform in Ukraine is a long-playing game that requires tremendous effort and dedication,” said Dmytro Lyvch, project manager and head of analytics at EasyBusiness. “And our team is happy to see that our work actually pays off and gains global recognition.”

Several Atlas Network partners have engaged in this issue in Ukraine, and EasyBusiness has been a leading voice in providing credible paths toward land reform and in popularizing the idea of a free market for farmland. Over 4 years it developed a comprehensive policy research program, a roadmap for land market reform, and facilitated a broad communications strategy to reach both experts and everyday Ukrainians who had not been familiar with the issue.

A principal part of EasyBusiness’ campaign was the launch of its own online platform to support landowners in filing applications to the ECHR to challenge the legality of the ban and to build bottom-up pressure for reform. EasyBusiness’ platform provided templates to file appeals with local deputies and with the ECHR, even responding to all requests of landowners and providing free legal consultation. Over 500 applications were submitted through the platform, two of which were actually considered by the ECHR, where EasyBusiness then became a third party to provide expert economic and legislative background as an independent think tank.

In May 2018, the two Ukrainian landowners unprecedentedly won their case at the ECHR against the Ukrainian government. The Court’s reasoning rested on Article 1 of Protocol 1 to the European Convention on Human Rights: that the moratorium on the sale of agricultural land is a direct violation of property rights and that Ukraine must pass appropriate reforms, including paying monetary compensation to each of the 7 million landowners (to the degree of about $50 billion USD total).

Shortly following the Court’s decision, 69 Members of the Ukrainian Parliament submitted a case the Constitutional Court of Ukraine to admit that the moratorium violates the Ukrainian Constitution. Meanwhile, EasyBusiness leveraged the story of one of the landowners involved in the lawsuit into a broader media campaign and in regional meetings with landowners. Now that EasyBusiness had helped deliver the Overton Window on reform, it was building national momentum in executing actual reform.

Later in September 2018, the Drohobych District Court acknowledged that the moratorium is illegal, followed by an appeals court in Donetsk allowing a farmland transaction between the landowner and a legal entity. The ruling of ECHR is providing credible precedent for the 7 million affected landowners to assert their rights, and this is possible thanks in large part to EasyBusiness. The think tank estimates the liberalization of this market may bring as much as $100 billion USD to the economy in the long-term. It also estimates the moratorium prevents anywhere from $500 million to $600 million USD of foreign direct investment and roughly $10 billion USD of potential GDP growth per year.

Also after the ECHR decision came the establishment of a working group convened by the Ministry of Justice of Ukraine—and which included EasyBusiness—with the charge to develop an effective mechanism of launching a formal farmland market in Ukraine. This is not the only entity that recognizes EasyBusiness’ thought leadership; representatives from international organizations such as the International Monetary Fund, the World Bank, the Council of Europe and embassies of countries including Canada, Denmark, France, Estonia, the Netherlands, Norway, and the United States regularly seek out EasyBusiness’ expertise vis-à-vis ongoing land reform matters.