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Vol 2, No 43
11 December 2000
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The Czech Republic in 2000Two Steps Forward...
2000: The year in review for
the Czech Republic

Tiffany G Petros

The year 2000 was one of both successes and setbacks for the Czech Republic in its ongoing transition. While the country experienced a stable government and growing economy, it found itself falling behind Poland, Hungary and Estonia in its bid for European Union membership. Relations with neighboring Austria were also strained as a result of Temelín, a newly operating nuclear plant located close to the Czech-Austrian border.

The year 2000 also offered the Czech Republic the opportunity to attract world headlines. In September, the country hosted the annual International Monetary Fund/World Bank meetings for the first time. Shortly thereafter Czech athletes brought home eight medals from the Sydney summer Olympic games. This article provides a year-end overview of these and other significant political and economic events which shaped the Czech Republic in the year 2000.

The race for the Senate

Throughout much of 2000, it was politics as usual in the Czech Republic. Prime Minister Miloš Zeman of the Czech Social Democratic Party (ČSSD) continued to rule a minority government with the support of former Prime Minister Václav Klaus' ODS party. After coming to power in June 1998 the Social Democrats signed an "opposition agreement" with the center-right Civic Democratic Party (ODS). This ongoing agreement is considered "undemocratic" by many who argue that not only does it prevent true opposition in government but it also prevents political participation by smaller political parties.

In the first significant challenge to both the Social Democrats and ODS, voters handed control of the Senate to a four-party opposition coalition in the November 2000 elections. Although voter turnout was low, less than 30 percent, and the upper house has significantly fewer powers than the Chamber of Deputies, the results of the election brought a clear message.

According to Patrick Nacher, spokesman for the Freedom Union, a leading party within the four-party coalition, "The result is simple: voters clearly showed their desire for a change and that they do not agree with the 'opposition agreement' of the CSSD and ODS." Jiří Leschtina of Mladá fronta Dnes also said that the vote showed support for a broadening of opinions in government, as opposed to the continuation of "parties based on the dominant role of one person."

The results of the election make the center-right four-party coalition the largest party in the Senate, with 39 out of 81 seats. Loss of Senate seats by both the Social Democratic party and ODS will make it more difficult for these parties to push through their own agendas, including limiting the powers of the President. Since the government's next general election is scheduled for 2002, it remains to be seen if the four-party coalition can gain support to challenge ČSSD and ODS for seats in the lower house.

Money matters

In the year 2000, the Czech Republic experienced its most significant economic growth since 1996. This growth was in part fueled by increased domestic consumption. While increased consumption bolstered the economy, imports quickly outpaced exports leading to an increase in the country's foreign trade deficit. According to Czech National Bank statistics, by December 2000 the trade deficit in the Czech Republic reached CZK 76.8 billion (USD 2 billion).

At the same time that the trade deficit continued to grow, the Czech Republic also experienced an increase in foreign direct investment. This investment is expected to reach CZK 246 billion (USD 6 billion) by the end of the year.

Changes in inflation and unemployment levels also added to the economic boom in the Czech Republic throughout 2000. Inflation rose only 3.9 percent, and although unemployment remained at 9 percent, the number of available job openings were up from 1999 levels. According to one bank analyst, "Based on all available figures, the current growth looks balanced and sustainable for a while."

Bank man causes controversy

A driving force behind the Czech Republic's post-Communist economy has been Josef Tošovský, who served as the long-time Governor of the Czech National Bank, as well as the interim Prime Minister from 1997 to 1998. On 31 October 2000, Mr Tošovský submitted his resignation as Governor of the Czech National Bank and stepped down from the position as of 31 November. By resigning before his term in office officially expired, he gave President Havel the opportunity to independently appoint the next governor. Havel appointed the former Vice-Governor, Zdeněk Tůma as Tošovský's successor effective as of 1 December. The six-year appointment will last until the end of 2005.

Although the President currently has the power to make this political appointment, the swearing in of Tůma as the National Bank Governor was contested by ruling Prime Minister Zeman, former prime minister and current leader of the Civic Democratic Party Václav Klaus, as well as outgoing governor Josef Tosovský himself.

Opponents of Tůma argue that he has financial ties which may compromise his independence and object to his proposal to increase interest rates in an effort to keep inflation low. Although Tůma will hold the position of Governor for the current term, future appointments by the President will be made from a list of candidates proposed by the government.

EU disappointment

The European Commission issued its Regular Report on the Czech Republic's Progress towards Accession on 8 November 2000. The more than hundred-page report outlined both the Czech Republic's progress as well as obstacles in meeting the EU's political and economic criteria for membership. Czech media attention, however, focused primarily on the Czech Republic falling behind Poland, Hungary and Estonia in an EU ranking of the applicant countries' economic readiness to join the Union.

Given that the overall report indicated that the Czech Republic had made substantial progress in 2000, the EU Enlargement Commissioner Günter Verheugen said that the Czech Republic overreacted to the ranking of its economy, which provided only one indicator of preparedness for EU membership. In response to the Czech reaction, Verheugen said, "Prague got a slightly worse mark than Poland or Hungary because of the delay in restructuring companies and banks." Responsibility for the lack of reform in these areas, Verheugen attributed to former Prime Minister Klaus' government.

On a positive note, Verheugen expressed his belief that the Czech Republic could catch up with the other countries prior to the first round of enlargement. While no specific timetable for EU enlargement has been officially set, 2002 has been suggested as the earliest possible date.

Roma progress

One area in which the Czech Republic made progress in 2000 was that of dealing with the country's Roma minority. The EC's Progress Report stated that, "Increased and, in some areas, significant efforts have been made since last year regarding the situation of the Roma community, notably with regard to the education system."

The Czech Republic had been previously criticized for its "special schools" which were set up for mentally handicapped children. Statistics showed that Roma children made up 75 percent of the students at these schools, leading many to question the selection methods for attendance. In June, the Czech government announced its "Concept of the Government Policy Towards Members of the Roma Community." This policy actively addresses the issue of Roma education at all levels. Other issues facing the Roma which are being considered as part of the government's long term plan of action include unemployment, housing and health care to name a few.

The Czech Chornobyl in waiting?

Throughout 2000, the Czech Republic took active measures to deal not only with domestic concerns, but also to promote positive relations with neighboring countries. Despite Czech efforts, however, an ongoing dispute remains with Austria concerning the issue of nuclear safety.

At the heart of the conflict is the Czech nuclear power plant at Temelín which was activated on 10 October in the face of protests from the Austrian government. The activation of the plant is cause for concern to many Austrian citizens given that Temelín lies only 60 kilometers (37 miles) from Austria's border.

Non-nuclear Austria is concerned about the activation of Temelín's reactors, not only because of its close location, but also because the construction of the plant began in 1981 under Communism. The Chornobyl nuclear disaster of 1986 is still fresh in the minds of the Austrian people—all the more so since Temelín's is a modified version of the Chornobyl reactor. Radiation from that accident affected much of Europe, not only the territory of today's Ukraine where the incident occurred.

In an effort to first prevent the activation of Temelín, and subsequently to shut the plant down, Austrians protested day and night at the Czech-Austrian border. Signs held by the protesters have made their message clear, "We are against Temelín, not against the Czech people," and "Stop Temelín- radioactivity does not have borders." As the protests continued official relations between the two countries became increasingly tense. Prime Minister Zeman repeatedly stressed that Temelín is a domestic issue which has the support of the Czech people. Austria's Chancellor Wolfgang Schüssel, however, argues that environmental issues are not confined to particular sovereign states.

Temelín may continue to cause problems for the Czech Republic in that Austria has warned that the issue may obstruct the country's entrance into the European Union. Thus far, however, Czech policy has not changed.

The battle of Prague

International attention turned to the Czech Republic from 26 to 28 September, as Prague hosted the Annual Session of the Council of Governors of the International Monetary Fund/World Bank for the first time. While these meetings presented an opportunity for the 182-member state representatives to discuss the future of the organization, world headlines instead focused on the violent behavior on the part of a small group of protesters and widespread allegations of indiscriminate police brutality. In the domestic media, issues of human rights abuses by the police were largely ignored or played down.

The IMF, which was created at the end of World War II in an effort to promote international cooperation and economic stability through free market initiatives, has been increasingly criticized for creating conditions that make it impossible for poor countries to advance economically. Anti-IMF protesters argue that globalization has increased the suffering of the world's poor and therefore the IMF should be reorganized, if not abolished altogether.

Although much criticism was levied at the IMF itself, hosting the event allowed the Czech Republic to make a symbolic statement about its own transition from Communism to democracy, although this was marred by the police actions. In addition, it is argued that the international exposure will bring added investment and other forms of cooperation to the country in the future.

Olympics success

The Czech Republic also received international attention through its participation in the 2000 Summer Olympic games held in Sydney, Australia.
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Czechs had reason to be proud of their accomplishments when Czech athletes brought home a total of two gold, three silver and three bronze medals. Štěpánka Hilgertová won her second gold medal in women's whitewater kayaking.

Furthermore, Jan Železný became the first man ever in Olympic history to take home a gold medal in the javelin competition three Olympics in a row. As a result of his win, he also became the first Czech to win any competition in three consecutive Olympic games.

Throughout 2000, the Czech Republic continued to deal with a number of important issues, not all of which were discussed here. It is worth mentioning, for example, that judicial reform, crime and privatization to name a few, remain issues of concern for the country.

Overall, however, the Czech Republic continued down a path toward the consolidation of democracy in the year 2000. One can expect this trend to continue in 2001, as the Czech Republic keeps European Union membership among its top foreign policy goals.

Tiffany G Petros, 11 December 2000

Moving on:


Bouc, František. August 30-September 5, 2000. "Statistics Point to Continued Recovery." Prague Post. 10(35). p B2.

Bouc, František. October 4-10, 2000. "Stumbling Over a Growing Economy." Prague Post. 10(40). p B1-B3.

"Commentary on the Balance of Payments for 2000 Q1-Q3." December 4, 2000. Czech National Bank.

EC Progress Report 2000.

"EU Report on Prague is Mixed." November 15-21, 2000. Prague Post. 10(46): p A3.

Hannon, Brian. October 18-24, 2000. "Under the Volcano." Prague Post. 10(42): p A1.

Kaspar, Petr. November 22-28, 2000. "ČSSD on Political Ropes." Prague Post. 10(47): p A1.


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