The European Union suffers from imperial ambitions

26.05.2014 — Analysis

In Ekaterinburg, lawyers from Russia and other countries had a two-day session, discussing whether events in Ukraine resulted in the collapse of international law. Many lawyers verbalized their concerns about the confusion in the heads, which may send people spinning to the range of irrationality, wars and revolutions.

In the meantime, no one overstated the situation: There is no alternative to law-supported interaction between nations and countries. As the RusBusinessNews columnist has found it out, the economic growth becomes more beneficial when it is governed by clear-cut rules and regulations rather than by political appropriateness. It prompts hope that the conflict in Europe will be resolved without severe consequences.

With the crisis in Ukraine still in progress, the idea of autarky is steadily moving to the fore: Each country should produce its food products and manufacture the equipment they need; use national payment systems for billing and payment operations; design their own software, etc. Although it may sound logical, the eighth session of the European-Asian Law Congress that took place in Ekaterinburg on May 22-23 showed that the economic seclusion from the rest of the world is not possible, no matter how hard the country may try.

Vladimir Yarkov, a professor of the Ural Law University, pointed out a large project, which is under construction in the Sverdlovsk Region. The construction site is regularly visited by top public officials; it is of paramount importance for the economy of the country; however, it is governed by… the Swiss laws, as it is registered in the Alpine Confederation. So, Russia imports not only machine tools and watches, but also the law from Switzerland.

Not long ago, Russian bankers encountered even a more illustrative fact. A certain oligarch took out loans from different banks for the total amount of one billion dollars and took off to London where he filed a bankruptcy petition to the court. British Themis turned out to be cooperative, and now he, holding the verdict in his hand, asserts that he has been released from all the obligations.

The experts draw a simple conclusion from the above examples: Encountering jurisdictions of other countries and the legal systems of the world, Russia is not able to disregard them. The lawyers think that the idea of isolation should be replaced with active involvement in the process of working out international conventions and regulations that have a direct impact on national economies.

Yarkov states that in Russia the economic component of the civil rule-making is not given proper attention. Most countries of the world realized its importance long ago; therefore, they aim to export both their law and their style of life.

For example, since 2003 the experts of the World Bank have been publishing Doing Business reports that are based on a simple assumption: The U.S. system is the best economic and legal system and, consequently, all the rest should look up to the USA.

When in 2006 the French saw that their country ranked between Rwanda and Burundi, they were outraged and conducted a root cause analysis. They found out that the rating was built on ambiguous criteria and fudged numbers. The civil lawyers who carried out the analysis were dispirited; they published an extensive report, warning the global community that the legal traditions had been challenged.

Russian lawyers had the research translated into Russian and reckoned that the reliability of the Doing Business rating needed no comment. However, they were really surprised when in 2012 the RF top-tier officials decided to promote a new national idea and to move the country from the 120^th to the 20^th place. Apparently, someone wanted Russia to be armed with the legal frameworks designed in the United States and serving as the guidance for investors.

In the meantime, Veniamin Yakovlev, an adviser to the RF President, thinks that the continental or, in other words, European system of law is much more familiar and more beneficial to Russia than the Anglo-Saxon system so favored by the United States. Although both systems are steadily moving closer to each other, the legislation of continental countries is more future-oriented, from the perspective of society.

For example, Article 14 of the Constitution of Germany reminds that property is binding: "Use of property should serve the public weal." Russians and, by the way, Americans talk only about the rights of owners. The German main law has also a chapter about federal law enforcement. In Russia, this route is still underexplored; thus, the legal system lags behind.

In Veniamin Yakovlev’s opinion, the law will start working only when the interaction between the federal and regional authorities is tuned up to seamless performance. However, the uniform government body in Russia is a far-away goal. German entrepreneurs say that the Russian court system is efficient in protecting the rights guaranteed by the laws; however, these advantages are stifled by the executive power, which creates problems right at the entry to business.

The experience of the countries having continental law offers tangible economic benefits. Vladimir Yarkov says that with the Anglo-Saxon system the average cost of the legal infrastructure (i.e. costs of jurisprudence) accounts for 2-3% of GDP. In the continental countries that established more clearly defined regulations it accounts for 0.5 -1%. It is another proof of the higher efficiency of the continental system.

On the other hand, in the recent years in Europe politics has been dominating the law, and even economic interests have been moved aside. Anatoly Kapustin, a professor of the Institute of Legislation and Comparative Law under the Government of the Russian Federation, does not see Ukraine as the factor that caused the crisis of international law. The European Union decided to resume the policy that used to be known as imperialism, to the policy that attempts to restrict the scope of international law.

As a result, the European Union lost its face. Having promulgated the integration of European countries as the highest achievement of the legal thought and practice ("The law will solve all political, economic and social problems"), today the European Union sacrificed it for the sake of politics, ignoring the degradation of some countries and its own economic losses. The integration through the law turned into the integration through the conflict. Is it very frightening?

Anatoly Kapustin is sure that there is nothing to fear. The international law has always gained strength due to conflicts. 30 years ago, when the insoluble contradictions of the 21^st century were brought to the fore, the top-agenda issue was adoption of conduct-governing rules and regulations, which would be incorporated in laws. Nothing has been done so far. On the other hand, numerous collisions helped to avoid disaster.

The expert thinks that there are certain advantages in the decentralized system. The European countries are gradually becoming aware of them. During the May elections to the European Parliament, residents of many countries demonstrated that every miller draws water to his own mill.

Vladimir Terletsky