Revolution Reversal: Public Lands to Private Hands
MARX ON THE
PRAGUE, SEVASTOPOL, UKRAINE, HAVANA, WARSAW, HANOI, AND HANOI
VOLODYA BURAKOV recalls the day he offered a fellow Ukrainian $100 a month to help him grow roses on a private plot. Compared with the $4 that the man earned on a collective farm, it was a fortune. But the offer was rejected.
''There's still a certain mentality here,'' says the rose farmer, who works near Sevastopol in the former Soviet republic. ''He thinks, 'Nyet, I'm not going to leave the collective and be your slave.' ''
Communism may have been ousted or on its last legs around the world, but nearly 2 billion people from Moscow to Beijing still struggle daily with a Marxist legacy that demonized private ownership of land and has left much property in state hands.
Private ownership is becoming a benchmark for progress in more than two dozen former and present Communist nations. In the coming decade, it will help show how much these nations accept market reform and may also indicate their prospects for political stability. Karl Marx, the 19th-century philosopher who laid out the principles of communism, saw private property as a tool controlled by the rich to keep the working class poor. Whenever communists gained power, they seized private property from individuals - in theory to distribute it more equitably among the people.
People like Mr. Burakov, in the four short years since communism's collapse in the former Soviet Union, have come to adopt a new theory: Most things - from apartment buildings to TV sets - are better off in individual hands.
But he is still in the minority. For many others like the collective farmer, the concept of actually owning land is fuzzy, bogged down by decades of communist ideology.
The longer the communist and ex-communist governments cling to their possessions, keeping industry and agriculture out of the open market, the more difficult it will be to establish a prosperous economy. That could lead to large-scale migration.
Nowhere is this more evident than in Cuba, where tidal waves of refugees have fled to America. The government of Fidel Castro Ruz has loosened ownership rules somewhat to prevent the total collapse of the island nation's economy.
After Castro's 1959 revolution, some Cubans were allowed to own homes. But the state still holds about 90 percent of all property.
Now the government is offering enticements to farmers, hoping to boost production. About 100,000 private farmers till about 7 percent of the country's farmland.
But the question of land ownership still serves as a valuable propaganda weapon. Cuban leaders use it to play on popular concern about US legislation, now under consideration, that would entitle Americans who owned property in Cuba before the revolution to regain their confiscated land and other possessions.
Cuban leaders argue that if President Castro's communist regime collapsed, and the US proposals were enforced, the number of property holders would actually shrink as rich, prerevolutionary landowners now in the United States moved back to reassert their authority over vast tracts of land.
The formerly communist nations of Eastern Europe are also struggling with how to dole out possessions confiscated by the communists after World War II, deepening the debate over who has a right to own land.
The capitalist scoundrel
''For 50 years it was explained to people in Poland that he who has property is a scoundrel, a thief, someone who takes advantage of others. That's been ingrained in a lot of people's mentalities,'' says Krzyszytof Laszkiewicz, a Warsaw lawyer specializing in restitution.
Poland and other countries in Central Europe had experience with free markets between the world wars. Now those capitalists, or their descendants, want to recover their property that was confiscated by communist governments after World War II.
The country that has made the most progress in this vein is the former East Germany, where all property has been already privatized under the West German legal framework by the Treuhand privatization agency. But even here, the restitution debate hampered progress.
In Poland, the issue is still divisive, as the case of Hanna Waberska shows. Before World War II, her family owned an apartment building in Warsaw and had other holdings, including a sugar mill, outside the city. All the property was nationalized by the postwar communist government.
Ms. Waberska emigrated to the United States but returned after the communists were ousted in 1989. She asked for her property back, filing restitution claims. But her effort is still far from complete.
Opposing Waberska are tenants of her Warsaw apartment building, people like Kazimierz Bac, a retired radio technician who moved in after the property was nationalized. Three years ago, Mr. Bac was notified of Waberska's ownership claim, but he doesn't recognize it.
''Why should people profit from something they don't have a right to do?'' he says.
The restitution issue has divided thousands of Poles like Waberska and Bac. About 100,000 restitution claims have been filed in the post-communist era, 75 percent of which come from people from eastern regions of prewar Poland. These people were promised parcels of land, but never received them after Poland's borders were shifted westward following the end of World War II.
Governments in Central Europe have been wary of tackling such restitution matters head-on because of the political implications. The person turned out on the street today could turn out the government in the next election.
The Polish government, which comprises parties that have their roots in communism, is pushing a plan to restrict the number of those entitled to the return of physical property. But President Lech Walesa, who is facing an uphill battle to win reelection this winter, has indicated he would veto the government's restitution proposal in its present form.
Many experts say the lack of clarity in restitution law helps block foreign investment, which is vitally needed to revive regional economies. A backsliding economy could spark social unrest, given that Central Europe's economic transformation has dislocated millions of workers.
''Every foreign investor ... has to be sure that no one is going to take his land away from him in a year or two,'' said Miroslaw Szypowski, head of the Polish Union of Real Estate Owners.
Restitution aside, most Central European countries permit the sale of land on a limited scale. The ability to purchase land is usually restricted to citizens of the particular country.
For foreigners, buying land in formerly communist countries is another question. Even in the states that have made significant reform progress, there is still great reluctance to let foreigners buy and sell land.
In the Czech Republic, foreign ownership isn't officially permitted, largely because of the fear that Sudeten Germans - ethnic Germans expelled from the former Czechoslovakia after World War II - will return, buy up everything, and thus drive up prices.
''The only reason for the law against foreign ownership is the Sudeten German problem,'' says Ondrej Turek, secretary-general of the Christian Democratic Party, a junior member in the Czech republic's governing coalition. ''In any event, [foreign ownership] is practically possible if you buy through a Czech citizen.''
Catching up in the East
It appears that the farther East one goes, the greater the opposition to the free sale of land. In Bulgaria, a recent attempt by the neo-communist government to reimpose a virtual state monopoly on land sales was overturned by the Bulgarian Constitutional Court.
In former republics of the Soviet Union, the appearance of landowner societies is still a long way off. In countries such as Russia, Ukraine, and Kazakhstan, the concept of private property remains limited to the condominium model, and not co-op: In general, people can own the buildings, but not the land.
''You'll never have a situation where 100 percent of the land is in private hands,'' said Nila Martyniuk, who coordinates US-sponsored agricultural initiatives in Ukraine. ''They've never had democracy.''
Only 10 percent of the country's arable land can be used for private farming, and less than half that has actually been allocated.
Meanwhile, in countries where communist dinosaurs are still hoping to stave off extinction - such as Vietnam and China - changing official attitudes on ownership may mean the difference between peaceful adaptation to the 21st century and economic collapse.
Vietnam has taken some steps to encourage foreign investment and boost the economy. While the government officially owns all land, in 1988 it allocated land for the first time to individual families. In 1993 another land law allowed for land-use certificates to be exchanged, transferred, leased, and inherited.
This January, the government amended the 1993 law with a decree specifying that land users could mortgage the value of their property, opening the way for new construction projects financed by foreigners.
In February, however, another decree set the clock back, requiring most Vietnamese land users to pay rent to the government. In a tribute to Marx, the decree aims to help Vietnamese by squeezing rent from the privileged few who have land certificates for businesses.
But the decree hurts Vietnamese joint venture partners who now have to pay rent based on the value of land they contribute in the ventures. And some Vietnamese companies have to pay for land twice: Once by buying a land-use certificate and again by paying rent. The decree has chilled the property market.
In China, there is officially no private property either. Many Chinese still live in state-run housing for less than $5 a month. Some international companies have negotiated for land-use contracts to develop property, but even these may not be worth much.
That is what global burger marketeer McDonald's found last year, temporarily becoming a victim to the supply-short, overheated property market. To make way for a mulitbillion-dollar commercial plaza in the heart of Beijing, developed by Hong Kong magnate Li Ka-shing, McDonald's faced eviction from its lucrative street corner despite holding a 20-year lease.
The burger giant's battle came to epitomize the Chinese notion that contract terms can be altered at will and American investors' disenchantment with the highly unpredictable Chinese market. Eventually, McDonald's came out smelling like a rose, with a handsome compensation package and a new guaranteed prime site.
''It's outrageous what is going on in real estate here,'' says a commercial property lawyer in Beijing But ''it's not surprising, given the pent-up demand.''