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Few Guarantees in Czechoslovakia’s New Capitalism

November 18, 1990

PRAGUE, Czechoslovakia (AP) _ As a child, Josef Dundr would stroll with his father past the snug Three Ostriches Inn, a buff-colored 17th-century building that had belonged to the family until the communists came.

″My father would say, ‘This used to be ours; maybe it will be again some day’,″ said Dundr, who was born there 44 years ago. ″I didn’t see that day coming, I was so downtrodden by that time.″

The communists no longer run Czechoslovakia and the day may come after all.

On Dec. 1, the government will start selling or giving back to private owners 100,000 restaurants, small shops and other businesses. The return of many factories and other large enterprises will begin next year.

In the new, no-frills capitalism of Czechoslovkia, however, individuals may lose out to economic expedience. They risk losing their jobs, as well as the chance of ownership, but the winners can get rich.

Officials cite the Soviet Union’s many false starts in their argument against moving slowly. All East European countries have lost time since their communist regimes fell last year, but Czechoslovakia now may be poised to outpace the others.

For people with money, the switch to private enterprise ″is a golden opportunity not to be repeated in this century,″ said Miroslav Zamecnik, spokesman for Finance Minister Vaclav Klaus.

There are few guarantees in the new system.

Dundr may not get the Three Ostriches back. Alena Kubistova is not sure she will have a job when a private owner takes over the meat market she manages just off Wenceslas Square.

Down the street, Ctirad Fuchs, 30, looks for a compromise between his wish to own the music and book store he manages and the interests of the building’s new owner.

President Vaclav Havel has warned that failure to protect such people as Fuchs and the others could lead to unrest, but appears to have yielded to Klaus’s desire for quick reform.

When Parliament approved the privatization law Oct. 25, the finance minister acknowledged it would not ″satisfy all completely.″

Dundr, now assistant manager of the joint-venture Palace Hotel, considers the Three Ostriches a sure moneymaker. It nestles at the foot of the Charles Bridge on the royal route to Prague Castle, and enjoyed a good reputation even under state ownership.

He estimated its worth at 25 million to 70 million crowns, or from $1 million to nearly $3 million.

Emotion is deeply involved in the desire to get the inn back. Dundr said his father, now 81, ″wants to feel that he can pass this on to his children and grandchildren.″

His likely rival for the Three Ostriches is the man who runs the restaurant and the 18-room hotel the state made from the family apartments above it. Dundr fears the manager’s connections in the bureaucracy give him an edge.

″In a case like this, millions are involved,″ he said. ″Stamps can be issued, documents can be signed.″

If he gets the inn back, Dundr said, he will fire the manager and staff of about 20 for inefficiency and rudeness.

Zamecnik, the Finance Ministry spokesman, sees nothing wrong with such action. ″The sooner they kick these people out, the better,″ he said.

Under the privatization law, property must be returned to former owners or their heirs, or be auctioned. Local governments will set bid prices, and any small business can be bought for a minimum of half the asking price.

Even before the law was approved, managers of state-run stores held brief strikes to express concern that Czechoslovaks who got rich on the black market or through past Communist Party connections would have an advantage.

According to Zamecnik, the government will not examine buyers too closely because a quick change to private enterprise offers a way to put ill-gotten wealth back into legal circulation.

Dundr’s position is that the Three Ostriches should be returned to the family rather than auctioned. It falls into a gray area, however.

The family acquired the restaurant in about 1930 and was nationalized after communists took power in 1948. The Dundrs kept the building until 1962, then turned it over as a cultural monument they could not afford to preserve.

To protect consumers, the law requires that any shop going private must continue selling the same goods for one year, but privatization is much farther along than efforts to cushion its effects.

There are no requirements for private owners to retain current employees or even to pay a minimum wage.

Ms. Kubistova, like most working Czechoslovaks, has no experience of market economics. She was 3 years old when the communists took over.

After her first talk with the new owner of the meat market, she said, she is about 80 percent sure he will keep her on as manager, at least for now.

Her current salary of about $110 a month is above the national average, but she said more important than pay is ″whether you will have a job.″

Fuchs would like to reach an agreement to own his music and book store, and perhaps others of the approximately 100 in Prague.

The store manager said he should have the chance not by right, but because Prague needs such stores managed by competent people.

″Culture as a commodity will not be very attractive when the price of paper and food go up,″ he said wryly.

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