The Transformation of Property Regimes and Transitional Justice in Central Eastern Europe

The transformation of communist property into private property was undoubtedly one of the most important changes to take place after the implosion of the communist regimes in Central and Eastern Europe in 1989. In many ways, this remarkable transformation was a reversal of the ‘transfer’ of private property into the hands of the state that occurred in all the countries of the region both prior to and after the Second World War. However this transformation is poorly theorised in transitional justice studies and in legal scholarship. This study attempts to address the gap in the legal scholarship outlined above, by offering a new framework for analysing the post-communist transformations of property.

This chapter offers an overview of the difficulties of conceptualising measures transforming property adopted by the post-communist Central East European governments, accordingly to a transitional justice framework. The study of the brutal terror accompanying the communist takeover and the Stalinist period in the region indicates that relatively strong retributive measures would be in order, post 1989, to obtain reckoning with the communist past and some sort of closure with this past. Yet, as I argue in this chapter, the Central and Eastern European post-communist ‘transitional’ responses to the wrongs of the communist era mostly appear as unrelated to the historical record of communism in the region. This particularity could be understood in the wider historical context of the communist era in Central Eastern Europe, where great human rights abuses characterised an earlier (Stalinist) phase of communist regimes in CEE, and the brutality characteristic of this early phase was greatly relaxed afterwards. The historical background shows that during its existence, the Real Existing Socialism in Eastern Europe allowed for great social advancement, most evident for citizens from previously marginalised or under-privileged social backgrounds, on a scale not encountered in the recent histories of the CEE countries. This mixed historical record allows us to arrive at an understanding of why the transitional post-communist CEE political agenda was not centered on retributive justice. It also allows us to see why the post-communist CEE political parties preferred the adoption of distributive justice measures, such as those transforming the communist property into private property. However, if closure is an important goal for transitional justice the analysis provided in this chapter shows that little ‘closure’ was obtained in post-communist CEE after the application of measures aiming to change property regimes. Thus, even if the dominance of such measures in post-communist CEE ‘transitions’ could be understood in the light of the historical record, the measures applied in CEE defy an easy explanation under the transitional justice framework and do not accomplish one of the important goals of transitional justice. Therefore, the theorisation of such measures could not be sought in the transitional justice framework usually provided in the scholarship.

This chapter extends the discussion of the theoretical underpinnings of the dominant ‘transitional’ measures deployed in post-communist Central Eastern Europe, which aimed to transform property regime(s). As shown in the previous chapter measures transforming state property into private property in post-communist CEE were distributive in character and not easily justifiable accordingly to a transitional justice framework. However, as they could still be justifiable in accordance with the major theories of justice, an overview of the main justifications for private property offered by classical liberal theory is provided, since these justifications were imported directly into post-communist CEE political discourses to rationalise the transformation of state property. On examination of these justifications it results, nevertheless, that none of them offer compelling arguments and responses to the question why the regime of property should be changed. That means that there is no theory of justice which could support changes in property regimes of the scale and type done in Central Eastern Europe during the transitional period. Nevertheless, this is not the only problem plaguing the theorisation of the CEE post-communist transformation of property, since there are further difficulties with the Anglo-American concept of property as a ‘bundle of rights’ when this concept is applied to explain post-communist transformations of property. As this concept obscures more than it illuminates how the changes in property regimes occurred during the post-communist transitional period (and what these changes have achieved), this chapter shows why is not appropriate to use the ‘bundle of rights’ idea to describe communist and post-communist property. Similarly, as the neoliberal ideology inspiring the CEE post-communist measures transforming property presents a number of inconsistencies, this chapter provides an analysis of this ideology and of its impact on CEE transformation of property. Finally, the capacity of the transitional post-communist law and of judicial institutions to correct administrative abuses during the transitional period is critically examined, and it is shown that contrary to the neoliberal assumptions, the judicial institutions lacked any propensity to deliver a just distribution of property.

As one of the most salient goals of ‘transitions’ in post-communist Europe was the transformation of regimes of property, I analyse in this chapter the most important claim of the neoliberal policy prescriptions for Central and East European states in the early 1990s, that property should be privatised. My argument is that this policy prescription was based on a number of false assumption about what property was under socialism and about communist law. The reality of property arrangements during ‘Actually Existing Socialism’ in Central Eastern Europe was totally different from that assumed by neoliberal agents and policies. Contrary to their assumptions, the distinctiveness of the communist era property arrangements resided not in the absence of private property, which was tolerated under ‘Actually Existing Socialism’, but in the organisation of property as an administrative matter, based on unwritten ‘operational’ rules. This distinctiveness was even more manifest for socialist corporations, where communist formal law was more or less similar to western corporate law, yet unwritten operational rules determined how all the exchanges and transfers of property took place among these socialist corporations. Nevertheless, the neoliberal policies totally ignored the operational unwritten rules, which should have been changed if a ‘transformation’ was desired, and proposed instead a change of formal law, which was not necessarily needed. As a result, the post-communist process of privatisation was plagued by many unforeseen and negative effects. The consequence was the great enrichment of the former communist managers who were able to manipulate the formal law and operational rules to benefit from ‘privatisation’ at the expense of the public, in a process which was not ‘rights based’ or ‘democratic.’

In this chapter I argue that transitional justice scholarship fails to provide a satisfactory answer to the question of what is ‘post-communist restitution’, even though it primarily analyses this mechanism of transforming state property into private property, and not privatisation. Using the definitions provided for restitution in the Continental Law tradition (to which the former CEE countries belong), I show that ‘restitution’ has a very distinctive meaning in the CEE countries, which cannot be confused with any of the meanings of ‘privatisation.’ However, confusing privatisation with restitution was exactly what the lawmakers of the region have done. When the transitional justice scholarship followed this confusion, the result was that it offered an incorrect normative prescription for transforming state property into private property, preferring privatisation, considered as a normatively superior tool for transformation of regime of property during ‘transitions’, to ‘restitution’. I claim that (1) restitution is superior to privatisation from a transitional justice perspective, and (2) because of the transitional goals it could accomplish, restitution should be considered as preferable to privatisation, by transitional societies facing similar dilemmas to those faced by post-communist CEE.

In the previous chapter I analysed the transitional justice literature on post-communist restitution and privatisation and I have shown that contrary to this literature’s assertions, restitution is ‘normatively’ superior to privatisation. A post-communist transformation of regimes of property based on restitution would have, therefore, experienced fewer justification problems and be more ‘just’ than a transformation of such regimes relying foremost on privatisation, as it was dominantly the case in Central Eastern Europe in the early 1990s. However, taken individually, restitution does not come without a string of normative problems, mainly addressed in the historical justice scholarship. I argue in this chapter that the normative problems of restitution, as well as the arguments against restitution in this literature, mainly concern restitution for the descendants of slaves or the descendants of colonial subjects, therefore, these arguments cannot be forcefully applied against having restitution in post-communist nations. Consequently, even when analysed individually, restitution remains the ‘better’ normative legal instrument for transforming state property into private property in post-communist transitional settings.

In this chapter I argue that strategic privatisation policies were preferred to restitution by post-communist CEE governments. These policies were independent of the political colour of the respective governments, since executives dominated by former communists, as in the case of Romania, could enact wide privatisation legislation at the beginning of transitional period, in a similar fashion as governments dominated by a more ‘liberal’ outlook, somewhere else in the region. Using the examples of Romanian and Poland, two countries which followed the other ends of the restitution spectrum in Central Eastern Europe, I also argue that restitution, a legal institution that it was already in the Civil Codes of the CEE countries, did not need any particular legislation in order to be implemented by the courts. However, when local or national politicians refuse to implement court decisions’ to restitute property to the former owners, as in the case of Romania, there is not much that international judicial bodies or (even) the European Court of Human Rights could do. Finally, I argue that what is termed as ‘post-communist restitution’ should be analysed from the perspective of the policies distributive or transformational of the regimes of property followed by CEE governments at the onset of transition in the region, and not as a standalone legal institution. Seen this way, the failures of restitution in the region point towards the failure of transitional measures aiming at privatising state property in CEE, rather than toward a breakdown of restitution as transitional justice mechanism.

This book commenced with an examination of the distinctiveness of the post-communist transformation of property within the general framework of transitional justice. It analysed the particularities of such transformation in post-communist societies, where the bulk of property had been owned or controlled by the state. It ends with several conclusions and suggestions for further research.