Georgian government to ban selling land to foreigners. Good or bad?

Georgia is considering to secure its agricultural lands against foreigners with the strictest of constitutional entries.

The relevant law has already been approved by the third reading – a moratorium on selling land to foreign nationals has been announced. Soon, the introduction of the new constitution in Georgia (the “Georgian Dream” government is currently in the process of adopting the relevant constitutional amendments) will make the prohibition of selling agricultural land to foreigners a constitutional norm.

The initiative has both supporters and opponents. We have collected the most popular arguments.

From who or what is Georgia trying to protect itself? What are the arguments of the supporters of the ban?

It’s up to the people to decide

The Prime Minister of Georgia, Giorgi Kvirikashvili, is the initiator of this entry in the Constitution. Kvirikashvili said that the regulation was demanded by the people, “…directly expressing the requirements of the overwhelming majority of Georgians.”

The Chairman of the Parliament of Georgia, Giorgi Kobakhidze, sayd the same. According to him, Georgian citizens have a particularly emotional attitude towards their native land, which had become evident during the public discussion of the draft constitution, when many citizens expressed concern over the possibility of allowing foreigners to buy land in Georgia.

Georgian land is cheap, thus readily available for rich foreigners

Another argument by the government is that agricultural land is a limited resource in the country which is of particular significance for a small agricultural country like Georgia. Therefore, it’s necessary to impose restrictions so that wealthy foreign citizens are denied the opportunity to buy cheap Georgian land on mass, therefore not violating the country’s national interests.

Georgians will become outnumbered

One of the most common arguments is that China will buy Georgian land sweepingly, which would turn Georgians into the minority.

You won’t hear this argument directly from government officials, but it’s actively showcased by the opposition close to the government, as well as the political parties known for anti-Western rhetoric:

“The land will be completely purchased by Chinese, Arab, Turk, and Iranian citizens. They will bring their families, production engineers and workforce, so that Georgians will become the minority,” said the former deputy state minister for diaspora issues, Sandro Bregadze, at Rustavi 2.

There was neither investment nor agricultural development

The Minister of Agriculture, Levan Davitashvili, says that prohibiting the sale of agricultural land to foreign nationals will not harm the country or agriculture. According to him, the study of the previous period showed that agriculture hadn’t received any major investment even during the unimpeded sale of land. Parts of the land was alienated, but without having any positive effect on the agricultural development. “I’m sure it won’t affect the sector’s development, on the contrary, as the owner will treat the acquired resource with greater responsibility.”

It will cause economic damages to the country. What are the arguments of the opponents of the ban?

Investment reduction

The only way to develop agriculture in Georgia is through direct foreign investment. With such a prohibition, the country will lose apt investors and the development of the country and agriculture will be hampered.

“We already see the consequences of this prohibition. A member of the Israeli-Georgia Chamber of Business and owner of 170 hectares of land in Georgia wanted to introduce an American partner into the business. But as soon as the new legislative restrictions on the sale of land to foreigners became a subject of discussion, negotiations were stopped,” said Raul Agikian, chief lawyer of the Israeli-Georgian Chamber of Business, in a conversation with JAMnews.

Drop in land price

“If we deny rich buyers access to the country, that will drop the land price on the market. In this case, Georgian businessman will buy the land at the lower price, which will be damaging for the local peasants,” say experts and political forces supporting liberal economy.

Georgian will lose valuable knowledge and skill

“There’s a lack of education in Georgia. Apart from money, foreign investment also brings knowledge and modern technologies to the country.” For instance, Ferrero (an Italian manufacturer of chocolate and other confectionery that owns hazelnut plantations and processing factories in western Georgia) has introduced the knowledge of hazelnut growing in the country, and today hazelnut has become a successful export product.

“Restriction of foreign direct investments through legislative barriers hampers the proliferation of contemporary knowledge and technologies in the country, making hoe and spade the only tools Georgian peasants can rely on,” says economist Giorgi Papava.

International practice

This argument is used both by the supporters and opponents of the alienation of land to foreigners, but with different interpretations. The opponents argue that the total prohibition of the buying of agricultural land by foreign nationals doesn’t operate in any civilized country, and that it’s not a constitutional norm, but that there are, nonetheless, certain regulations and restrictions on alienation of agricultural lands in various countries.

“We could as well introduce some regulations that comply with the reality of our country, like the prohibition of selling land on frontier areas,” Papava says.

Populism and manipulation through pseudo-patriotic sentiments

There are constant talks about the unacceptability of the selling of Georgian land, suggesting that Georgians may possibly appear in the minority as a consequence, which is nothing but a manipulation with pseudo-patriotic sentiments.

“There’s no danger of the mass resettlement of Iranians and Indians in Georgia, but the government and various political parties are spreading irrational fears among the population,” says economist Giorgi Papava. According to him, the process of alienation of land to foreigners has so far only yielded positive results, which translate into investment in Georgia, as well as exportation of locally manufactured products, and that hampering those processes equates to combating progress.

One of the leaders of the opposition National Movement party, Roman Gotsiridze, says that the government is making a populist pre-election move: “This decision will not benefit the country. It’s an economically unprofitable decision that attests to the government’s attempt to score well in the pre-election period, rather than an endeavor to develop the country.” (local self-government elections scheduled for autumn in Georgia – JAMnews)

— Georgia already has experience in prohibitingthe selling of land to foreigners. In 2013, the Parliament of Georgia adopted similar ban on the “Land Use Law” through an amendment. The President of Georgia, Giorgi Margvelashvili, was against the prohibition of the selling of land to foreigners. He vetoed the amendments passed by the Parliament. However, the Constitutional Court of Georgia later recognized the prohibition of the sale of land to foreigners as contradictory to the main law of the country. The experts and the opposition forces then warned the government that it could result in a decrease in the investment in agriculture.

— Foreign investment in Georgian agriculture and fishery amounted to approximately USD 10 million in 2016, which is 0.6% of the total foreign investment volume.

— The official data suggests that foreign nationals currently own 5% of the country’s agricultural land.