Former Soviet and Yugoslavian states slammed for slow reform

Former Soviet and Yugoslavian republics have come under fire from the European Bank for Reconstruction and Development (EBRD) for being slow to reform their legal and law enforcement systems.

In its Transition Report 1998, covering central and eastern Europe, countries such as Bosnia and Herzegovina, Ukraine, Kazakhstan and Russia have been slammed for failing to modernise.

The report cited the inability to enforce civil and foreign judgments, dragged-out court proceedings, corruption and economic crime as serious, ongoing problems.

But the report praised the Czech Republic, Estonia, Hungary and Poland, which have made great strides in enacting clear and extensive laws.

The claims were re-enforced by lawyers working in eastern Europe, but with caveats. Slava Johnson, partner at US-firm Altheimer & Gray in Ukraine, said: “Clearly the pace [of reform] could be picked up, but it has not. The bureaucrats' kickback structures are still in place.”

But she added that this was failing to deter investors.

In Azerbaijan, Brian Cassidy, resident director of Scottish firm Ledingham Chalmers, said slow progress was being made despite limited resources and expertise.

A new labour code and a streamlined tax regime are planned for next year.

“There's a move to more substantive, solid law, and away from one-off contracts and dispensations,” he said.

The report says “the effectiveness of company law is quite weak in most countries.

“It is often difficult to hold incumbent management or majority shareholders legally accountable for their actions.”

The Russian financial crisis will mean a drop in output for the region as a whole, but growth will remain positive in many individual countries.