Kuchma abolishes collective farms (12/19/99)

Kuchma abolishes collective farms

by Roman Woronowycz
Kyiv Press Bureau

KYIV - In the first tangible evidence that Ukraine will now move quickly on economic restructuring and reforms, President Leonid Kuchma issued a decree calling for the reorganization of the country's vast system of collective farm enterprises into private enterprises and agricultural cooperatives.

As could have been expected, the announcement was greeted in Ukraine's Parliament with criticism and cynicism.

The December 3 decree marks the first step in a reinvigorated economic reform process that President Kuchma announced in his inaugural speech on November 30.

Under the presidential decree, collective farms have until April 2000 to turn over their land to the workers who formally own it and give them their ownership certificates.

Holders of certificates issued back in 1994 now may take their plot of land, which is to be doled out by individual village councils, combine it with others in a clear contractual arrangement, sell it or rent it.

Most importantly, the document orders the simplification of the process of obtaining individual plots of lands and strict oversight to ensure that the process is transparent and fair, with equal access for all those wishing to take part in it.

The decree urges that, where possible, geographical boundaries of the old collective farms remain intact.

In 1994 workers and villagers of collective farms had been allocated pieces of land in what was to have been the beginning of land reform. However, because the process of obtaining land shares was vague and costly, few peasants successfully obtained their plots.

The collective farm directors made the process still more difficult by putting up bureaucratic obstacles - at times simply refusing to turn over government-alloted plots or parceling out land that was not arable or remotely located.

Ukraine's agricultural sector has been in steep decline since independence and has produced lower and lower grain yields with each passing year. While the Soviet Union collected about 50 million tons of grain annually on average, the 1999 harvest came in at about 25 million tons.

Part of the reason lies with the Ukrainian government's failure to thus far produce an effective land reform policy.

"The point of this document is to announce that collective farms are ineffective forms of property," said Minister of Agriculture Mykhailo Hladii on December 6.

He explained that 86 percent of collective farms are expected to show losses in 1999, while most of the private enterprises will turn a profit.

Mr. Hladii was careful to point out that the decree does not give the go-ahead for the general sale of land, merely for individuals within the collective to transfer property among the collective as they formulate their private enterprises and cooperatives.

"It does not say that land is a commodity and thus subject to sale and purchase," explained Mr. Hladii. "In keeping with the Land Code, farmers working the land have the right to purchase a part of it."

The minister noted that Ukraine has a limited land market, which allows for the sale of land plots only among owners.

Oleksander Tkachenko, chairman of Ukraine's Parliament, quickly attacked the decree at a press conference on December 7. He said the abolition of collective farms would lead to famine and questioned its constitutionality. Mr. Tkachenko also accused President Kuchma of caving in to pressure from the International Monetary Fund.

Other Parliament leaders also criticized the agricultural reform decree. "The decree is issued in a totalitarian way and may cause unforeseen consequences, including starvation in Ukraine under current economic conditions," said National Deputy Vasyl Kuratsenko of the Peasant Party, a member of the Parliment's Agricultural Committee, according to UNIAN. He said the committee will appeal to Ukraine's Constitutional Court to examine the document's legality.

Another national deputy, Oleksander Riabchenko of the Green Party faction, said he agreed with the president's move, but that it must be backed up by law.

"This matter has now been politically proclaimed, but it still must be legislatively enacted," said Mr. Riabchenko.

The agricultural reform decree offers the beginning of long-awaited radical economic reforms. The process ostensibly began immediately after President Kuchma took office in 1994, but quickly bogged down as competing interests pressured the president into postponements and delays. At his November 30 inauguration President Kuchma announced that the reform effort would be reinvigorated and would take on a radical character.

The president's economic reform tsar, Vice Prime Minister Serhii Tyhypko, who has become the front man in the effort to step up the pace, said a day before the inauguration that a sea change in thinking must take place in government and society.

Mr. Tyhypko described what the Kuchma administration pursued in the first term as "the politics of small steps and compromises," which had led to "economic stagnation, the growth of internal conflicts and a twisting of market ideology."

He said the only realistic alternative is the implementation of a complex plan of radical economic reforms, in which he included: new monetary, pricing and budget policies; a change in the role of the government from an economic player to a regulator of the private sector, to include extensive administrative reforms; and the creation of favorable terms for the development of small-and medium-size businesses.

Mr. Tyhypko said the government should no longer subsidize budget deficits and should allow the hryvnia to float against world currencies to determine its real worth. Prices of certain staple goods should no longer be government-subsidized, and welfare programs for the less fortunate must be revamped and run according to clear and strict requirements.

In the budget realm, the vice prime minister called for an end to government support for bankrupt and deficit-making government enterprises, and more effective utilization of resources for government services and social support for the population; an end to tax-free status to certain industries identified as "critical"; and audit control and registration of all government contracts.

He said that municipalities must take responsibility for their own budgets, which should be allocated in blocks and then audited, while the private sector must assume responsibility for the development of the economy, with the government reduced to the role of stimulator and regulator.

Extensive administrative reform is required, according to Mr. Tyhypko, along with a reorientation of the role of bureaucrats away from that of controllers and overseers to public servants, whose responsibilities should be to make society run effectively, efficiently and safely.

He called for broad privatization, to include segments of industry that have been excluded from the process thus far, and said that factories which cannot be sold off should be declared bankrupt or reorganized. The process itself must be simplified and made completely transparent, said Mr. Tyhypko.

In his comprehensive plan, the vice prime minister also called for extensive banking reform and the development of bankruptcy laws. He admitted that housing subsidies must be removed and communal services payments on apartments increased.

Mr. Tyhypko said that, while Ukrainian society had expressed its rejection of the command-control style of the Communist system in the presidential elections, it had not yet delineated what it expects as an alternative, and called on such a public debate to begin. Before radical reforms can take place, society must give its approval, suggested the vice prime minister.

"The core of the discussion that is needed today is to choose a direction. It is happening - in informal kitchen settings, in discussions on government portfolios. But society needs a serious and intelligent public discussion," said Mr. Tyhypko.

Communists threaten impeachment over abolition of collectivization

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