Russia Ranks between Nigeria and Pakistan on Property Rights

According to a report in the Moscow Times, the Washington-based Property Rights Alliance has just released a poll which ranks Russia 63rd among 70 countries in terms of property rights, positioning them between Nigeria and Pakistan.

This embarrassing reminder of Russia’s regime of impunity and lawlessness underscores not only the damaging impact of events such as the theft of Yukos, the harrassment of Motorola and Peter Hambro, and the hustling of Shell at Sakhalin, poor enforcement of property rights is also extremely damaging to Russia’s economic prospects. How can Russia possibly drum up enthusiasm for foreign investors when there is so little guarantee that contracts will be honored? When there is inadequate access to fair courts for business diputes with local companies? When the government itself cancels and adjusts agreements and contracts on a whim? Property rights are integral part to Russia’s transition to a market economy, and the failure to take action to improve the situation presents an key obstacle to deepening trade, joining the WTO, and securing economic development. From the Moscow Times:

Widespread corruption and a lack of judicial independence, among other factors, put Russia toward the bottom of a new global property-rights index released Tuesday. According to the Washington-based Property Rights Alliance, Russia ranks 63 out of 70 countries — a notch above Pakistan and one below Nigeria — when it comes to protecting intellectual and property rights. Norway topped the list, while Bangladesh came in last. It was the group’s first such compilation. Russia “made a lot of solid steps over the past year,” said Scott LaGanga, Property Rights Alliance’s executive director. But the study was critical of Russia’s “legal and political environment.” … The study establishes a clear link between property rights and gross domestic product: The more property rights are protected, the higher the GDP. “There are some who incorrectly claim that strict property protections prevent developing countries and their citizens from unlocking their potential,” LaGanga said in the study. “Such assertions are the opposite of the reality on the ground.” On average, countries in the index’s top quarter were more than seven times wealthier than countries in the bottom quarter — with a per capita GDP of nearly $33,000 compared to roughly $4,300. MDM Bank’s chief economist, Peter Westin, said the property rights-GDP connection posited in the Property Alliance report “sounds reasonable.” Westin pointed to the Baltic countries as support for the thesis.