VZCZCXRO9418
RR RUEHIK
DE RUEHKV #0068 0151347
ZNR UUUUU ZZH
R 151347Z JAN 10
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC 9120
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS KYIV 000068 
 
SIPDIS 
 
STATE FOR EUR/UMB, EEB/TPP/MTAA/ABT, COMMERCE FOR CLUCYK 
 
E.O. 12958: N/A 
TAGS: ECON EAGR UP
SUBJECT: UKRAINIAN LAND SALE MORATORIUM ENDS, BUT 
TRANSACTIONS REMAIN BLOCKED 
 
REF: KYIV 2172 
 
¶1. (U) Summary.  President Yuschenko vetoed a bill that would 
have extended the moratorium on the sale of agricultural land 
through the end of 2011, allowing the ban to expire on 
January 1, 2010.  As in past years, parliament is expected to 
make a strong push to overturn the veto.  However, even 
should the moratorium end, free-market trading of 
agricultural land will still have to wait until a land 
registry (cadastre) law and a land market regulation law are 
passed.  The lack of reform in the sector will continue to 
severely restrict what should be one of Ukraine's leading 
sectors, as reported in reftel.  End summary. 
 
¶2. (U) On December 29, 2009, President Yuschenko vetoed a 
measure, approved by the Verkhovna Rada (Ukraine's 
parliament) on December 22, 2009, that would have extended 
the moratorium on the sale of agricultural land another two 
years past its pre-set expiration date of January 1, 2010. 
He justified the veto by arguing that the extension would 
create further opportunities for corruption and abuse in the 
land market, and further slow Ukraine's agricultural 
development. 
 
¶3. (U) This marks the third time Yuschenko has vetoed 
extensions of the moratorium.  On December 31, 2006, he 
vetoed a measure extending the moratorium to January 1, 2008, 
but parliament overturned the veto on January 12, 2007.  A 
later measure extended the moratorium to January 1, 2010. 
Yuschenko vetoed this legislation as well, but parliament 
overturned it on March 4, 2009.  Parliament has 30 days in 
which to vote to overturn Yuschenko's latest veto.  On 
January 5, 2010, Speaker of Parliament Volodymyr Lytvyn 
announced his intention to secure the votes to push the 
extension of the moratorium through. 
 
¶4. (U) Staunchly opposed to the free trade of agricultural 
land, Speaker Lytvyn echeos the fears of Ukrainians who 
believe that unrestricted sale of land would benefit only 
those who have purchased land on the black market and want to 
legalize their holdings, and that the free market for 
agricultural land would be dominated by ultra-wealthy 
speculators seeking to buy land as an investment, pricing 
Ukrainian family farmers out of the market. 
 
¶5. (SBU) Comment.  Given Yuschenko's dismal level of 
political and popular support, it is highly likely that 
parliament will once again overturn his veto and extend the 
moratorium to January 1, 2012.  Even should Lytvyn's override 
attempt fail, the required cadastre and market regulation 
laws do not have significant support in Parliament and are 
unlikely to be enacted in the foreseeable future. 
Unfortunately, the inability to legitimately sell 
agricultural land not only limits investment in the land, but 
holds back the development of Ukraine's agricultural sector, 
which curently makes up less than 7% of Ukraine's GDP. 
TEFFT