Trouble in post-communist paradise: Things get bumpy for Czechs
MARK J. PORUBCANSKY
Jun. 02, 1997
PRAGUE, Czech Republic (AP) _ It all seemed so easy.
While neighboring countries struggled after 1989 to find their way in the post-communist world, Czechs appeared to have discovered an elegant way to avoid economic chaos and political bickering.
They had a moral compass, playwright-turned-president Vaclav Havel.
And no-nonsense Premier Vaclav Klaus provided everyone a stake in state enterprises along with a sense of optimism and certainty. Even though wages averaged $290 a month _ a fraction of West European standards _ he balanced the budget, stabilized the currency and kept unemployment low.
After Havel's ``Velvet Revolution'' and the subsequent smooth breakup of Czechoslovakia into the Czech Republic and Slovakia, the 10 million Czechs appeared to be heading for a velvet economic landing, too.
It wasn't to be. Czechs have found themselves this year faced with political squabbles, financial scandals, cuts in government services, decreases in imports and a drop in the currency. They have awakened to inequities and insecurity.
No one is starving, and few people even seem really angry. But, in Havel's words, the mood is ``lousy.'' After seven years of mostly good news, Czechs are calculating who got how much of the post-communist pie and are worrying about prices, education, health care and jobs.
Klaus was widely praised during two years as Czechoslovakia's finance minister and five as the Czech Republic's premier, but now he is taking his lumps. His party receives positive ratings from only about 20 percent of people surveyed in opinion polls, and his days may be numbered.
In Klaus' crash privatization program, Czechs were given shares in state-owned companies to give them a stake in economic changes. But the government also took the calculated risk of throwing the cash-starved economy wide open.
Major investors came in, such as Volkswagen, which turned around the Skoda car company. However, reforms also drew fast-buck artists, and Czechs now are experiencing the downside of laissez faire capitalism.
Nine small private banks have collapsed. The Finance Ministry has taken over a pair of investment funds because of scams that cost investors millions. Eleven people were charged with embezzlement in a scandal involving the largest private bank. Two top managers of another leading bank are charged with embezzling more than $3 million.
Pollster Eliska Rendlova said Czechs learned that economic transformation ``is not so simple, and it's not only good things.''
``Nobody expected there would be such cheating,'' said Vladimir Gebhard, a retiree in the northern town of Litvinov. ``After the revolution, people thought that they would be rid of such evil.''
Economic numbers still are decent: The economy is growing 2.5 percent a year. Inflation is down around 6.8 percent. Unemployment is 3.9 percent.
Many Czechs give Klaus credit, but wonder if he isn't running out of steam. They point to the May 1 election in Britain that turned out the Conservative Party after 18 years in power.
The Social Democrats, led by Milos Zeman, are battering Klaus over the scandals in the financial system. And they promise more government spending to help those who have not fared well in the economic transformation.
Klaus has acknowledged mistakes. Wages have far outstripped increases in productivity, possibly setting the stage for higher inflation. Banks and investment funds that took large stakes in inefficient state enterprises have not pushed serious restructuring that would cause job cuts.
Medical care and education are being squeezed. Plans call for a cut of 20,000 hospital beds by 2000. Low government-controlled rents will increase by up to 100 percent this summer.
Borivoj Sila, who supervises 140 people in a northern coal mine, said government plans to sell the mines make him worry about his job. It is difficult to plan ahead, and cuts in the medical system mean adequate care might not be available when he needs it, he said.
In Lom, a village near Litvinov, Eva Mikova is losing money on her store stocked with video rentals, cigarettes, clothes and toys. ``You can see that people don't have much money, and they are concerned about the future, so they buy basics and nothing else,'' she said.
The silver lining for Klaus is the doubt that the Social Democrats would do any better. Sila asked whether the party ``would try to get too much because it would be their turn.''