Black Horse, Black Earth, and BlackRock

Jude Russo

Global market liberalization and the war machine are happy bedfellows, as usual.

Foreign entanglements, both political and economic, invite deeper and more extensive entanglements. That is not a very original insight, to be sure, but one to be borne in mind as the think tanks and the public flirt with the idea of more direct military involvement in the Ukraine–Russia war or the South Pacific on the one hand and agitate for expanded foreign trade relations on the other. When a nation depends on another for an economic good — semiconductors, say — it takes on its partner’s problems. Less obviously, when a nation’s citizens and business interests invest abroad, it takes on the target countries’ problems.

A spate of perfervid headlines in May 2021 warned of a dire near future — “World has just 10 weeks’ worth of wheat left after Ukraine war” was a typical instance. The concern: The war would interfere with the harvest and shipping of Ukraine’s cereal crops, which compose double-digit shares of world produce and 40 percent of the wheat supply for the World Food Program. Ten weeks passed and the black horse and its scale-bearing rider failed to appear; in fact, Ukraine had a healthy harvest, and grain shipments from the Black Sea have continued uninterrupted since July’s agreement between the belligerents to protect shipping.

The phony food crisis — quickly forgotten after the phony nuclear crisis and the phony missile crisis — did, however, invite scrutiny of the particulars of Ukraine’s agricultural sector. “Chernozem,” or “black earth,” a soil that is so fertile that there is a black market for it, covers 34 million hectares of Ukraine, making it one of the most agriculturally productive countries on earth. In 2001, the Ukrainian government passed a moratorium on land sales, expanding the restrictions of the original post-Soviet 1993 land regulatory regime. This moratorium forbade most transfers of land ownership, forcing agribusinesses to work through long-term leases with the government and private land holders.

Land Matrix, a non-partisan database tracking the transfer of land ownership and use rights, reported in 2020 that an estimated 15 percent of arable Ukrainian land is owned or leased by foreign — that is, non-Ukrainian — entities. Four out of five of the largest landholders in Ukraine are holding companies registered in Western Europe or Cyprus, while the fifth, NCH Capital, is a large American private equity investor. A number of these holding companies are ultimately controlled by Ukrainian nationals, but the very device of using non-Ukrainian tax shelters emphasizes the enterprises’ indifference to Ukraine’s national interests.[...]

“It is exceptional by the fact that this privatization of land, the creation of a land market, at this scale — I’ve never seen that anywhere,” commented Frederic Mousseau, an agricultural economist and the policy director of the left-leaning Oakland Institute, which is releasing a report on Ukrainian land ownership next month. Mousseau points to the fact that Ukraine is already in possession of robust agricultural infrastructure in addition to exceptionally productive land as the impetus behind Western profit-making interests’ push for land reform.