Law in transition Spring 2003 [antikvár]

Arthur Mitchell, General Counsel, Asian Development Bank Fostering legal reform in Central Asia Although lying at the trading crossroads of Europe and south-east Asia, being endowed with valuable physical and human resources and having a rich, common cultural and political heritage, Central Asia has yet to attract its share of private and foreign investments. Nor has it been able to foster economic alliances and unleash its comparative advantage or exploit effectively the gains of international trade. Nonetheless, the Asian Development Bank (ADB) and the European Bank for Reconstruction and Development (EBRD) have been development partners in Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan for the past decade. Together they have helped improve the lives of the region's people by strengthening governance, economic management and transformation and introducing market orientation and competition. The ADB's primary goal is to reduce poverty through socially and economically sustainable development strategies and high standards of corporate governance. The ADB has provided loans and technical assistance for a broad range of development activities and instigated policy, legal and regulatory reform to create a favourable investment climate for the private sector. Among other things, the ADB has launched a comprehensive regional economic cooperation programme aimed at (i) developing effective transport corridors, (ii) encouraging rational use of vital resources, particularly energy, and (iii) promoting market integration both within the region and with the outside world. The EBRD, which facilitates transition to open market-oriented economies and promotes private and entrepreneurial initiatives, has employed similar methods of operations, although its focus has primarily been on the private sector. For both the ADB and the EBRD, promoting legal reform and ensuring its effective enforcement is an important element of their activities. Over the past decade, Central Asia has emerged as a natural zone of collaboration for these two international financial institutions. Cooperation between the ADB and the EBRD has taken many different forms, from financing joint investment projects, such as the Almaty-Bishkek road, to participating in complementary technical assistance efforts, such as the proposed reform of the telecommunications sector in Uzbekistan. In a number of other areas, such as microfinance and small and medium-sized enterprise development, both institutions are working side by side. The two have been proactive in financial and enterprise restructuring and have paved the way for equity investments from foreign investors and the private sector. However, the countries themselves need to make greater strides in attracting private sector investment from abroad and stimulating entrepreneurial activity within. Key to this will be a demonstrated and sustained commitment to open markets and governmental accountability. In addition, high standards of state conduct will be imperative to instil confidence in current and potential investors and ensure the contracts that they enter into are upheld and enforced by independent courts, particularly against publicly owned parties. The countries of Central Asia must strive to build on their best legal traditions and discard what is no longer useful for a modern economy and progressive society, thereby entrenching respect for the rule of law. As legal reform is pursued in the countries of Central Asia, it is important to learn from past experiences. Law reform must be part of larger sector policies and complement other sector reforms. The ADB's experience in east Asia has shown that market-oriented laws can lay dormant for years until economic reforms create incentive for their use and produce further demand for improvements.1 Institutional capacity must also go hand-in-hand with law reform and take account of the broader governance setting in which new laws and policies must operate. If the process of law making is not inclusive and new laws are implemented by the executive without citizens' recourse to independent judicial institutions, the very objectives of law reform will fail. Linkage of law reforms to broader governance reforms, such as the law making process and judicial reform, cannot be ignored. This issue of Law in transition highlights the economic progress in Central Asia, identifies challenges as well as opportunities, and seeks to encourage further reform, particularly in the legal sphere. It should be of particular interest to all those who make or influence sound legal reform policy, which is key to sustainable and equitable economic growth and a core component of viable democratic institutions.