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aims to more effectively protect rights of creditors The reform of natural monopolies progressed. In and owners; however, it shall be noted that at the March of 2002, the revised package of draft laws moment its provisions rise more questions than give on the reform of power engineering was presented answers. At present there are elaborated to the government of the Russian Federation. The amendments, which should remove a considerable package includes the following laws: УOn number of flaws contained in the law. These introducing amendments to Section Two of the amendments will be introduced in the course of the Civil Code of the Russian Federation,Ф УOn power second reading. engineering,Ф УOn introducing amendments to Recently approved federal law УOn introduction federal law СOn natural monopolies,ТФ УOn of amendments to the Penal Code of the Russian introducing amendments to federal law СOn Federation in order to toughen criminal liability for competition and restraints on monopolistic offences on the security marketФ will certainly activities on commodity markets,ТФ УOn facilitate the development of the stock market. The introducing amendments to federal law СOn law stipulates tougher responsibility for the economy of energy.ТФ presentation of intentionally misleading In the first quarter of 2002, the consistent effort information with regard to issuance of securities was continued in the sphere of external economic and malicious evasion of providing the information activities in order to reach a compromise on amendments to the Basic list of the Common exchange of information among tax and customs customs tariff. There was fixed the agreed list of agencies of CommunityТs member countries.

goods to which are applicable prohibitions and Elaboration of draft federal laws УOn specific restrictions related to import and export of goods as protective, anti-dumping, and compensation concerns foreign trade with third countries and the measures relating to export of goods,Ф УOn list of goods not included in the agreed list. licensing export and import of goods in the Russian There were signed agreements on customs and Federation,Ф УOn amending federal law СOn state tax control over production and turnover of ethyl regulation of external economic activitiesТФ is alcohol, alcohol, alcohol-containing and tobacco underway.

O. Fomichev products within territories of member countries of Eurasian Economic Community (EvrAzES), and on Agricultural Land Transferability Law: Development Progress The processes currently underway in the Russian There are no such requirements in the agrarian sector require clear legal definition of rules government version of the Law and, to our mind, of agricultural land transfer since over 5-6% of this is its positive distinction.

eligible land areas are already involved in it. This is 2. Ban on land ownership by non-residents quite a large share as compared to 0.5-2% in The right of foreign individuals and legal entities developed countries and approximately the same to own agricultural land is restricted in almost all percentage in major transition countries. An the introduced bills: either only tenancy is allowed adequate legal basis is needed to support this or the buy-out after several years of renting is transfer. forbidden except for some locations. To our mind, Following the new Land CodeТs adoption, the given the permitted land ownership by legal Agricultural Land Transferability Law is being entities, any restrictions of personal non-residentsТ worked out in the country. At present 6 draft bills rights become a fiction since they are easily evaded.

are introduced to the State Duma: those of the Right Thus, the choice between respective permission or Forces Alliance, of the Agrarian group, of deputy ban is actually the choice between social and Bakiev R.S. et al., of deputies Chetverikov A.V. psychological appeasement of population (that is and Puzanovsky A.G. and, finally, that of the known to be generally against foreignersТ land government. ownership) and the international rating of the Given the current political situation the country4.

government version is of particular interest since The government version restricts non-residential it's likely to become the basic document discussed land ownership only in special zones (e.g. near the in the Legislative Assembly.

state border).

The discussion on Agricultural Land 3. Restriction on land transfer to the mortgagee Transferability Law revealed several key issues of in case of credit default divergence between the introduced bills. They are When specifying rules of agricultural land as follows:

mortgage, all the bills on agricultural land 1. Skill requirements to potential land owners transferability (as well as special bills on As a result of rather demagogic talks on especial agricultural mortgage) presume that the mortgagee value of farmland as a natural resource and the need bank should have no right to get title to the to protect it from occasional people, almost all bills mortgaged land in case of mortgager's failure to try to specify some skill requirements to potential pay.

owners. However, life shows that such After the State Duma adopted the second reading requirements pose financial rather than of the bill that abrogates provisions of the Federal qualification barriers and are an additional feeder Mortgage Law banning agricultural land mortgage, for corruption. Besides, the evolving of private the respective norms need not be included in the farming in Russia in the 1990's evidenced that land transferability bill being discussed.

newcomers from cities having no special 4. Upper limits on land ownership by one person agricultural training often turned out to be much more efficient agricultural producers as compared For example, the diminishing of residential to local residents.

qualification for foreigners to acquire farmland is currently one of the stumbling stones for PolandТs acceptance to EU.

Almost all the introduced bills set upper limits on 5. Transfer of land shares land area to be owned by one person, either by One of the most complicated problems of the specifying it directly or by making references to Agricultural Land Transferability Law is the legal corresponding legislation of Federation's regulation of issues pertaining to land shares - an constituent members. The alleged reason for that is institute that emerged in the process of collective the need to exercise antimonopoly control on the and state farms' restructuring in early 1990's and agricultural markets. But, first, ownership of land nowadays became the basic mechanism of farmland doesnТt presume market monopoly: the land may transfer.

not be cultivated at all or its productivity may be Land shares can be transferred through both low. The opposite situation is possible and even purchase and rent, the latter being spread much more likely: product market monopoly is not tied wider. But in both cases the existing practice of with monopoly possession of land resources. conditional shares has advantages. It presumes that Second, in case an agricultural product market is an owner of such a share has the absolute right to monopolized, antimonopoly regulations are parcel out a physical land plot, but until he does enforced and the monopoly is fought with various that the location of his plot is not specified. A land means up to dividing the violating enterprise. There share is a sort of option to be sold, purchased, is no need to control land ownership for this rented, inherited, etc. This mechanism enables an purpose. Third, limits on land ownership will have entity wishing to acquire a large land area for no antimonopoly effect given the lack of limits on agricultural production to accumulate the needed land tenancy: rented and used land areas may be number of shares and only then to apply for much larger than the owned ones. Fourth, limits on parcelling out a land plot (or several plots). As a land ownership will be hard to control and will result the problem of land plotsТ consolidation (that become one more source for corruption.

is inevitable in case of acquiring physical plots6) is Still, there is an aspect necessitating certain evaded. Consolidation requires time and money and limits on concentration of land in the hands of one thus can avert potential investors from the agrarian entity. As well as other natural resources land is a sector.

limited production input. Monopoly control over it The second advantage of renting a share over may impede other entities' access to the market thus renting a physical plot is its preferability for the constraining competition. The RF Law "On share owner making him more willing to rent out.

competition and prevention of monopoly on In case a share is rented, the tenant can get the commodity markets" doesn't envisage such a case, corresponding land plot that is most suitably and therefore it's important to incorporate certain located (consolidated with other rented or upper limits on land ownership at one local market purchased plots). After the term of the rent is over, into the agricultural land transferability law, e.g.

the share owner may wish to parcel out a plot for through limiting farmland area to be owned by one his own needs. If the location of formerly rented entity in a rayon5 (this provision is included both in out plot doesnТt suit him, he can return it to the government and the agrarian group's draft bills). collective land use and parcel out another plot. In It should be noted that at present the size of the case the location of a rented plot is specified once largest land holdings does not exceed 300 thousand and forever, its owner may not wish to rent it out or hectares (just the size of an average rayon in major its location may not suit the potential tenant and he agricultural regions) and they are always located will refrain from renting. In other words, the not only in several rayons, but even more so - in opportunity to rent a land share (instead of a several constituent members of the Federation. This physical plot) extends the market demand: there are enables operators to use agricultural machinery more potential tenants wishing to rent a conditional more efficiently. Therefore, there are no grounds to land share rather than a physical plot and thus the fear the emergence of land monopoly in the price of such a rent is more economically justified.

foreseeable future. It also goes without saying that Besides, tenancy (or life-long rent that is spread the restoration of landlordism (i.e. the specific type even wider) is a specific social compensatory of farming based on corvee and metayage) today is mechanism in rural areas. After renting out their absolutely inconceivable. shares under life-long rent contract, elderly rural This statement is supported by the experience of all East and Central European countries where land was An administrative unit - component part of an oblast physically distributed (irrespective of the form of such (region). - Ed. distribution - restitution or compensation).

residents get certain benefits from the tenant (not the rent charged by a collective owner will exceed being large, they are still rather guaranteed). Given the one charged by individual shareholders. As a the persisting social instability and poor result funds will be side-tracked from production development of other social welfare mechanisms in investments and thus the total amount of the countryside, the renting out of land shares investments in agriculture (that has just started to provides a real social guarantee to certain rather grow) will be curtailed by the land legislation numerous groups of rural population. Neither their regulations.

sale nor investment in the authorized capital Finally, the abolition of land share renting will ensures anything of the kind. destroy the above mentioned social compensatory Today it's obvious that in the nearest future the mechanism in rural areas in the situation when the basic agricultural producers in Russia will be large state is not yet able to provide any substitute for it.

commodity farms cultivating extensive areas of In this respect the best legal mechanism for rented or purchased land and employing many regulating land share transfer is proposed in labourers. The mechanism of renting conditional ChetverikovТs draft bill.

land shares is quite adequate to the large-scale The government version goes farther than simply commodity production. abolishing the rent of conditional shares: it Still, in the introduced draft bills this mechanism envisages the substitution of trustee management is attacked both from the right and from the left. contracts for the existing land share tenancy The proponents of left ideas advocate the ban on agreements (though there are currently millions of selling or renting out land shares to outsiders (i.e. them in the country). This is an unprecedented outside the mother farm). This provision ensures to decision since the proposed law replaces contracts former collective and state farms guaranteed land signed on certain terms with the ones that are use irrespective of its efficiency and thus hampers radically different. ItТs inadmissible from the point real land transfer in the country. of view of legal procedure. There are also many The proponents of right ideas (in particular, the imperfections in the billТs contents, in particular:

government) try to adjust this special mechanism to 1. The trustee manager Уis to manage the the norms of civil legislation that does not property to the benefit of this management incorporate the definition of land share or authorizer or the person named by him transactions with it. Therefore, it's proposed to (beneficiary)Ф (Clause 1012 of the Civil Code).

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