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Czech prime minister going; plenty of problems remain for successor

December 4, 1997

PRAGUE, Czech Republic (AP) _ For decades under communism, ``they,″ the gray faces of an authoritarian regime, were blamed for the everyday frustrations of Czech life.

``They″ disappeared in 1989, and Czechs embarked on what was for years a smooth transition to democracy and a market economy. The government became popular, politics and economics stable.

Now, the grumbling is back. Only this time, it’s about the politicians like Prime Minister Vaclav Klaus, the brains of the Czech economic transformation, who was forced to resign last weekend after a campaign finance scandal.

With Klaus’ resignation, the country appears headed for early elections.

``Finally, he goes,″ said a 75-year-old pensioner, Rudolf Fiser. ``Let’s hope that the mess will end now.″

While Czechs haven’t soured on democracy, their mood is an indication of economic problems and fragmented politics that defy quick solutions.

Social Democrat Milos Zeman, the strongest opposition leader, is the likely choice for voters in an election. But whoever runs the Czech Republic faces a protracted period of the instability that has characterized its post-Communist neighbors.

Nobody is starving, and Czechs have all the liberties they longed for under communism. Polls indicate that as many as 60 percent are satisfied with their standard of living.

However, allegations of corruption in the privatization process have made them conscious of who used the transition to get rich. Average people are worried about prices, education, health care and jobs.

Adding to the bad mood, President Vaclav Havel, the moral force of the revolution and the transition, is in poor health. Even so, he likely will be re-elected in January.

Zeman has capitalized on the worries and discrepancies in wealth. He charges the government is riddled with criminals. He repeatedly has promised to halt tax evasion and send swindlers to jail.

He also promises more public spending, to make health care free once more and build low-cost housing. He has not said how he plans to pay for it. But politically, it has worked.

While support for Klaus’ Civic Democratic Party _ the largest in the outgoing coalition _ dropped about 10 percent in the past few months, Zeman’s Social Democrats have moved up.

Klaus now faces a fight just to keep his job as party chairman. Hanging on as a caretaker prime minister, he acknowledges he is in a no-win situation.

It also may turn out to be a no-win situation for Zeman, and for the country as a whole.

The Czech Republic already has gone through one round of belt-tightening this year. State-run banks have kept a large chunk of privatized enterprises, delaying restructuring and layoffs. Pay raises far exceeded productivity, leading to a glut of imports and throwing the balance of payments out of whack. The currency weakened dramatically.

Klaus was forced to cut budgets, decreasing the room a new leader would have to increase spending.

NATO, which already has invited the Czechs to join; the European Union, which plans to open talks with the Czechs; and potential international investors will be watching carefully.

But any new leader could be called upon to complete Klaus’ economic revolution by cutting jobs and facing down the unions. Other leftists like Hungary’s Socialist Premier Gyula Horn, a former Communist, have managed it.

The Social Democrats’ ``rhetoric of fiscal deficits would likely be re-evaluated if they have to face the responsibility of the governing,″ said Petr Zahradnik, a economist at Prague International Securities brokerage.

He added, though, that the Social Democrats might slow down or temporarily halt privatization.

So far, Zeman has rejected the idea of massive layoffs in the inefficient state-run railway system, which has a union that is among the most restive. Preventing tax evasion may not bring in as much money as promised for housing and health care.

Foreign investors, who already seem to be leaving, may bolt more quickly if he halts the planned sale of the state’s three biggest banks to foreign partners or abandons plans to privatize utilities or deregulate prices of gas and electricity.

Then, there are the political problems. Zeman controls 59 of 200 seats in parliament. Even with his surge in the polls, he is unlikely to gain a majority in new elections. He has no certain allies, and the government may be no more stable that Klaus’ minority government that lasted about a year and a half.

``Klaus has to go, that’s already clear,″ says Jarmila Kratka, a 31-year-old homemaker and mother of two who was shopping in downtown Prague. ``But people are crazy if they think that life will be better with Zeman.″

Alexandr Mitrofanov, a prominent commentator from the Pravo daily, predicted that unless new leaders made rapid improvements, they would quickly become ″they.″

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