Environmental Law & Economics: How to "clean up" the Slovak Land Fund

Radovan Kazda
Environmental Policy Analyst
Conservative Institute of M. R. Stefanik

Wednesday, April 30, 2008

How to "clean up" the Slovak Land Fund

By Radovan Kazda, Hospodarske noviny (Economic Journal) (link)

Slovak Land Fund, along with Slovakian Woods and the Slovak water company to trinity of huge state organizations that manage state-owned natural resources. Their common attribute is very low accountability mechanisms decision, which limits media interest in them particularly in cases where the next corruption scandal appears.
In the case of the Slovak Land Fund of the organisation which decides on the management of nearly a quarter agricultural land in Slovakia. A smaller part of their scope represents the state-owned land (approximately 6% agricultural land in the Slovak Republic), which the Fund rented, sold or cast new owners as a replacement for the application of land restitution claims. The majority of (approximately 18%) constitute the land of unknown owners, who rented the fund agricultural use.

Status Quo on the Slovak Land Fund

During the sixteen years that have passed since the establishment of the fund, no government was able to amend the two relevant circumstances the performance of the Fund, which identified him to be an ideal tool for "drawing" state assets in favour of people who took power over the Fund. The first factor relates to control decision-making fund.

Personnel of the Fund, namely the Director-General, Management and Controll Board, is in political power of minister of agriculture and government, it means under the control of political parties, which are appointed by authorities at the time the fund in power. In terms of public control there is very important availability of treaties content. Fund since 2005, although he began to publish the names of tenants of land, but without the provision of the most important information about parcels and contract price.

Suspicion of corruption had broke "political tie" to Minister Jureňa. New Minister Zdenka Kramplová therefore put forward recently a proposal to amend the law on land fund. The proposal is responsive to strengthen public and political control over the Fund. Disclosure of the contents of all contracts of the fund about the lease and transfer of the fund's assets can contribute significantly to the strengthening of public control.

What to do with the Fund's Board

The problem remains with the creation of a new mechanism, eleven-membered Board of the Fund. By the amendment, six members will appoint a government and five National Council on the basis of proportional representation of political parties and political movements, for which they were members elected to the Slovak Republic. It follows that the authority to control the fund "will remain" paramount position for two nominanty opposition. But: Amendment of the Act does not address any particular second, more fundamental factor, which creates room for corruption in the fund. It lies in the current rules for valuation of land on which to conclude all of the lease land, the sale of state land and the transfer of spare land for restitution. The current land valuation rules are based in particular on the assessment of production characteristics of the soil, thus their potential for agricultural use.

The basic material for such a valuation of land are soil maps "site class ecological units", which arose in 70th in the last century and became the basis for the determination of solid, non-market price of land in the socialist economy. This system is now the basis for determining the price of land.

Price as a problem

High risk of corruption in the activities of the Fund resulting from the nature of governmental (official) prices. This is very far from flexible market prices, that are negotiated between private parties. When we compare data on the average market price of land disclosed in "Green Reports" and the price of the fund, the difference between market and the governmental (official) price of land is an average from two to three times higher. The difference between sales of private land and governmental land we can determine very difficulty, because the state contracts are not yet known. The current mechanism for determining the price, however, doesn't give good conditions for approaching the market prices. In the case of restitution, now we know content of some contracts, in which the difference between the government-determined and market price of land is estimated at several hundred times.

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