Law professor leads group guiding former Soviet Union's laws

By Mark Reutter

A professor from the UI College of Law is helping to guide
the former Soviet Union into a market-based economy by
working with other experts on a model commercial code.

A noted specialist in Soviet law, Peter B. Maggs spent last
year as a director of the Rule of Law Consortium, an
alliance of 70 U.S. and European organizations committed to
strengthening the legal institutions and laws that support a
democratic, free-enterprise society.

Maggs, who is fluent in Russian and has reading knowledge of
most Slavic languages, helped legal authorities in the
former Communist nation complete the first part of a model
commercial code for the Commonwealth of Independent States.
The 214-page document, which spells out procedures for
business contracts, mortgages, intellectual property, land
titling and other matters, will be used as the basis for
recommendations to the 13 parliaments of the commonwealth
states.

"It is a huge technical task to draw up such a code for a
country that has not had experience with a private market
economy in 70 years, since Lenin's short-lived New Economic
Policy," he said. Today's legal code is based on the
assumption of government ownership of the land and a command-
and-control economy directed by state planners.

In late January, Maggs returned from a visit to Kyrgyzstan
where he met with President Askar Akayev, who pledged his
support for the project and promised to push the model code
through parliament. Maggs also consulted with officials from
Kazakhstan and Uzbekistan, who are negotiating a free-trade
zone with Kyrgyzstan.

The model code is one of three areas that the Rule of Law
Consortium is concentrating its efforts. Maggs also is
involved in a pilot project in Russia and Ukraine to help
law schools and courts stay abreast of legal decisions and
the publication of new laws.

"Russian law schools couldn't get material reproduced fast
enough and some schools and provincial courts did not
physically have the documents they needed to function
properly," he said. An e-mail system was established last
year to provide weekly information about new statutes and
court decisions.

Despite the Russian army's brutal assault on Chechnya, Maggs
remains upbeat about the prospects of the commonwealth
states developing into a market-oriented, law-abiding
society. "We should remember that in the 19th century, we
were developing a legal and economic system while the
cavalry was out massacring Indians. The Russian Federation
would be more likely to crumble if troops had not gone into
Chechnya, which had been taken over by rebels connected with
organized crime."

The Russian economy is doing better than generally reported,
the UI professor explained, because of two factors:
Traditional Communist statistics of economic performance
underreport activity in the service sector ("services meant
nothing to Communist state planners") and many citizens hide
part of their income to avoid high income taxes. "Bribery
and organized crime are obviously problems because they take
money away from business," he said, "but again using the
U.S. as an analogy, the rise of organized crime did not keep
Chicago from growing rapidly."

The most serious problem threatening economic stability is
the declining living standard of citizens living in the
provinces where state-run industries have collapsed. "In the
cities, people are moving fairly well from jobs in declining
goods production to jobs in the booming service economy," he
said. "This is generally not true in rural districts where
the job base was totally dominated by a single state-run
industry."

Maggs will fly March 20 to the University of Leiden, in
Holland, where the Rule of Law Consortium will meet with a
committee appointed by the interparliamentary assembly of
the commonwealth states to go over a draft of the second
part of the model code. Maggs will attend another meeting in
St. Petersburg in April where the completed draft is
expected to be presented to the interparliamentary assembly.

"We hope that the completion and subsequent adoption of
these codes will promote market-based reform and, in turn,
increase the effectiveness of non-state actors in promoting
legal reform and the use of the law to develop a democratic
society," Maggs said.

To expedite work, the UI professor has been engaged in
translating sections of the draft from Russian to English,
for distribution to other specialists. The consortium's
activities are funded through a contract with the U.S.
Agency for International Development.