Way clearing for outsiders to buy land

VILNIUS - A constitutional amendment allowing foreign companies and non-Lithuanian citizens to purchase agricultural land was initiated on Oct. 30.

The government looks set to win the two-thirds majority necessary to pass the amendment, thus bringing Lithuania into line with the European Union in the agricultural sphere.

But the opposition believes a transitional period delaying implementation until after accession to the EU is necessary.

During drafting of the Lithuanian constitution in 1992 one of the more sensitive issues concerned the right of foreigners to buy and own agricultural land. Fears abounded that once independence had been achieved large foreign corporations and investors would buy up land and run local farmers out of business. This led to the designation of some land as being held in common by the state and the people.

A year ago the voices of those opposing the amendment seemed to drown out the supporters, but today the stage looks set for implementation. The questions now are when and how.

A majority of MPs seem to believe implementation should occur upon accession to the EU or before. Christian Democrat MP Kazys Bobelis said, "I'm very strongly in favor, and we're voting for the amendment. It should be implemented immediately."

Liberal MP Alvydas Medalinskas believes the Liberal party is also in favor of the amendment. The measures should be implemented as soon as possible, he says. "The constitution needs to be changed because of the EU but also because this is much better for a free market," he said. Medalinskas believes the amendment will benefit land owners. "As it stands the constitution puts a burden on landowners' necks because it distorts the land market."

But not all MPs are so enthusiastic about the change. Peasant Party MP Ramunas Karbauskis believes that after accession to the EU there should be a seven-year transition period in which farmers would have a chance to make a profit and then buy their land. Politicians gripped by EU mania are forgetting the real needs of the people, says Karbauskas, who despite being one of Lithuania's biggest farmers owns just 35 percent of his land.

Most Lithuanian farmers rent their land from city dwellers, he says. "Lithuanian agricultural land costs only 1,000 litas ($250) per hectare - a joke for EU farmers," he said. "We need a seven-year transition period to give farmers a chance to buy this rented land before prices rocket."

According to Karbauskis, Lithuanian farmers are currently no match for their competitors inside the EU. "Lithuanian farmers have been losing money over the last five years and have no help from the government, whereas EU farmers profit from government subsidies."

But according to Ramunas Vilpisauskas, analyst at the non-governmental Free Market Institute in Vilnius, there are no guarantees that in the course of a seven-year transition period Lithuanian farmers will start to turn a profit. "In a market economy you find new ways to profitability - this argument for delaying transition doesn't make any sense."

As things stand, the same EU agricultural subsides under the Common Agricultural Policy may be challenged at the next round of World Trade Organization talks, Vilpisauskas pointed out. "The U.S.A. as well as other countries are pushing hard to get rid of these subsidies. They aren't related to the sale of land and it's the taxpayers in EU countries that are paying for this. You don't impose wrong policies to counteract other wrong polices. It would only hurt the Lithuanian economy."

Poland wants an 18-year agricultural transition period after EU membership, due, according to Vilpisauskas, to the dominance of agrarian political parties in the country. "This notion that foreigners are going to buy up all the land has little basis economically. They are nationalist fears."

Vilpisauskas believes that the benefits of EU membership to the Lithuanian economy will be many. The free movement of capital and the lifting of restrictions on the restructuring of agriculture would cause the price of land to increase, making landowners richer and making possible the re-mortgaging of land for larger amounts.

To limit negative consequences of the constitutional amendment some safeguards may be introduced, including restrictions on buyers and constraints on how land is used and the size of plots being purchased. With the amendment winning support overall, these special requirements may provoke the fiercest debate.