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Deal of the century?

  • 2002-07-25
  • Eugen Tomiuc
Several of the 12 European Union candidate states are showing increasing dissatisfaction over the deals they negotiated on the sale of farmland to foreigners after EU accession.

From the Baltic countries to Hungary, more voices are calling for better terms. Some are asking for transitional periods, others for the extension of such periods.

Out of 12 candidates, all but one, Rumania, have closed negotiations on the chapter regarding the free movement of capital, which includes the issue of land sales to foreigners. Most of them closed the chapter by December last year.

Lithuania, Estonia, Latvia and Slovenia have concluded negotiations without any transitional agreement, giving the green light to foreigners to purchase land immediately after admission.

Poland, the largest of the candidates, was the last to close the chapter in March, and obtained the longest transitional period, 12 years.

In many of the candidate countries, constitutional amendments are still required to bring legislation in line with EU regulations permitting land sales to foreigners.

Now some of the countries that were among the first to close negotiations on the issue, like Estonia, Lithuania and Hungary, say they were given raw deals.

The Lithuanian government decided on July 10 to ask the EU to reopen talks and grant it a seven-year transition period.

In Estonia, which allowed farmland sales to foreigners as early as 1996, the main opposition party, the People's Union, has begun gathering signatures for a ban on such sales until 2012.

Those who support renegotiating the transition periods argue that low farmland prices will allow foreigners to buy up the majority of a country's arable land.

But analyst Ramunas Vilpisauskas of Lithuania's Free Market Institute said that foreign interest in buying farmland in Lithuania and other Baltic countries was relatively limited and did not justify the sudden calls for transitional periods.

Vilpisauskas said such calls could have been triggered by a combination of factors. Among them may be disappointment over the EU's decision to have new members wait 10 years for parity on farm subsidies, the interests of local land speculators, and traditional historical sensitivities. "Part of those protesting against (the absence of a) transition period are farmers who are simply reacting to potentially lower support from the EU (agricultural subsidy) funds, and they think they wouldn't be able to compete," Vilpisauskas said.

Foreign land purchases remain a sensitive issue throughout Central and Eastern Europe, where memories of foreign domination and shifting boundaries are still fresh.

In Poland, which has the strongest farming sector of all the candidates and has so far been granted the longest transitional period, there is also growing support among farmers for anti-EU parties, such as the populist Samoobrona (Self-Defense), led by maverick politician Andrzej Lepper.

Enlargement analyst Heather Grabbe, of the London-based Center for European Reform, said foreign land purchasing was stirring controversy now chiefly because there is more public awareness about EU membership among the candidate countries as the enlargement date draws closer.

In the Baltic countries and Hungary, which were among the first to close negotiations on the issue, critics have accused governments of being too lenient on the farmland issue in order to close negotiations faster.

Vilpisauskas warned that if Lithuania's bid to obtain a transition period is successful, it could trigger a chain effect in neighboring Baltic states. "I know that if Lithuania gets the agreement from the EU on the transition period, it could be likely that Latvian farmers and interest groups would use this as an example and an argument to follow the same path as well," Vilpisauskas said.

However, Grabbe said it was unlikely that the EU would be ready to go back and make any substantial concessions, since the deadline for closing the negotiations is drawing closer. "I think they could have some symbolic concessions, but I think it's unlikely they (the EU) will give anything substantive," Grabbe said.

Grabbe said the advantages of joining the EU even under the current terms were far greater than the drawbacks. However, she warned that some media and politicians in these countries highlighted only the difficulties, creating a wave of artificial Euroskepticism. "In the long run, they're going to get a lot more money than if they stay outside. In the long (run), and even in the short run, the benefits of joining will be absolutely huge," Grabbe said.

But Grabbe said that once the initial wave of disillusionment wore off, the candidate states would realize that joining the EU was going to be what she called "an incredibly good deal."