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. Last Updated: 07/27/2016

Farmland Reversal Puzzles the Experts

The State Duma is expected to pass in a crucial second reading Friday the long-awaited bill allowing the sale of farmland. But a last-minute about-face by the government to bar foreigners from buying land has observers scratching their heads.

Some said President Vladimir Putin wanted to avoid enraging the population. Others speculated that the government had folded under pressure from Russian businessmen eager to capitalize on the sale of farmland.

Giving equal access of farmland to Russians and foreigners alike was the cornerstone of the government's version of the bill on farmland sales that passed the Duma in the first reading this spring.

But just four days before the second reading, the four centrist Duma factions - Unity, Fatherland-All Russia, Russia's Regions and People's Deputy - declared they would amend the bill to ban foreigners from participating in the sales. The four factions have a majority in the Duma. The government then chimed in with its support.

The announcement left observers baffled, particularly because the centrists, who are known for toeing the Kremlin line, had apparently not received any instructions from the government or the Kremlin to adopt a tougher stance.

Putin, who before the Land Code was passed never went on record as to whether he backed the sales, has also never publicly said whether he supports the sale of farmland to foreigners.

On Wednesday, he told the Russian Chamber of Commerce that he shares and understands "concerns voiced by those who propose not to rush to give foreigners the right to purchase land."

"The discussions have shown that we must take a well-balanced, accurate and extremely careful approach to solving the issue," he said cautiously, adding that the government might change its mind later.

Andrei Ryabov, an analyst with the Moscow Carnegie Center, said the Duma factions probably abruptly changed their tactics due to fierce lobbying by big agricultural producers.

"Of late, land has unexpectedly become a very profitable business, and big business in Russia is used to starting up in favorable conditions," he said. "They just asked for a head start."

Ryabov said despite People's Deputy claims, he believes that it prepared the amendment on its own initiative, and it was probably pushed through by a chain of people that included Vladislav Surkov, the powerful deputy Kremlin chief of staff who "has good connections in the People's Deputy faction."

"I don't think that Putin created this initiative, but apparently he approved it," Ryabov said.

Vladimir Pribylovsky, director of the Panorama think-tank, said the initiative most probably came from Putin.

"Putin must have felt that he went too over the top with his closeness to the West and understood that people might not be very understanding about this and that it could be used against him at some stage," he said.

"I am pro-West but also against such sales," he said. "What about the nationalists? They comprise between half and two-thirds of Putin's electorate, and he must have thought about that."

Pribylovsky said Putin is in a difficult spot where he has to please both the West and the Russian electorate at the same time.

"He wants to look like Gorbachev to the West and Stalin to Russia," he said. "So he could not announce such a decision, but he could have urged Surkov, our unofficial deputy prime minister for parliament, to give the order to the factions.

"If such a decision was made by all the four factions, it could only mean that they got the order from the president."

People's Deputy head Gennady Raikov said in a recent television interview that he had talked with Putin at a banquet and persuaded him to support the amendment.

Alexander Chetverikov, a Duma deputy with the Russia's Regions faction, said: "I think what happened was an apparent political plot between the Kremlin and the Duma to combine both internal interests and the effort to follow a civilized foreign policy."

He said that despite the heated debates over whether foreigners should have the right to buy farmland, the right "does not mean practically anything because there are no realistic opportunities for foreigners or even Russians to invest in agriculture."

"Many years will pass before Russian land will be divided into plots and measured properly, before laws will be passed on mortgages and land pricing," he said. "But what is clear now is that Russian land is too cheap to be let onto the free market.

Chetverikov said all Russian farmland could be purchased for about $1.5 billion, if prices were in line with the amounts plots are currently being sold for in some regions.

"Some foreign financial consortiums could find this kind of money and buy it all just for the sake of diversification of their assets," he said.

But Yury Korgunyuk of the Indem think tank said the theory that foreigners might buy all of Russia's land was "a fairy tale for idiots."

"Our land is a risky investment," he said. "And don't forget our bureaucracy. Perhaps it would cost $1.5 billion altogether, but then they would have to spend another half a trillion dollars buying our officials."