The British Helsinki Human Rights Group monitors human rights and democracy in the 57 OSCE member states from the United States to Central Asia.
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Parliamentary elections in Czech in 2002: Economic Climate
HITS: 1956 | 14-04-2005, 04:41 | Commentaire(s): (0) |
 (Votes #: 0)

Over the previous 4 years foreign investment in the Czech economy grew as large firms including breweries and utilities such as gas distribution companies were sold abroad. Large hypermarkets were appearing, although they have not yet proliferated to the same level as in Poland. But, as foreign supermarket chains are offered tax breaks (similar to those in Poland) to enter the Czech market their presence can only increase. By the end of 2001 there was no major bank in the Czech Republic not controlled by a large Western banking group. The former Czech representative at the EBRD noted that: “This has led to a change in strategy de-emphasizing corporate lending to locally owned companies ... local small and medium-sized enterprises may lack working capital for growth”

The ČSSD government’s success in the 2002 election was probably due to a sense of relative economic well-being resulting from the revenues received from large-scale privatizations. However, many analysts see problems ahead when the last major industries are sold - which boils down to the Czech state-owned telecom and electricity companies. This is confirmed by Martin Jahn, chief executive of Czechinvest: “the end of the post-Communist privatization process will likely mean a decrease in foreign direct investment”.3 Using the langue de bois of the transition economist, Jahn talks about “investment” when what he really means is “buyout”. In reality, there is little ‘foreign investment’ and once the sell-off is complete, the economic crunch will come. Perhaps, some bad news was postponed deliberately until the election was over: the Singapore-based Flextronics International announced the closure of its plant in Brno on 11th July. 1000 workers will be made redundant on 1st December.

At the same time, there will be pressure from the most enthusiastic proponents of EU entry in the ČSSD and US for strict adherence to the Maastricht criteria which will inevitably lead to cuts in social spending, something not necessarily anticipated by the average ČSSD supporter. Many people have not fully appreciated that the Czech Republic will be a net contributor to the EU budget after accession. On present calculations (and according to Czech sources) that would mean c. Kc 27 bn. Euros annually. Although the country should receive more from the EU budget than it puts in: “the volume of money to be drawn by the Czech Republic from the EU budget will depend on its ability to come up with quality projects that the EU will be willing to co-finance”.

The other major area of economic activity is defence spending. Large-scale, behind-the-scenes lobbying for defence contracts has inevitably grown since the Czech Republic became a member of NATO in 1999. Such lobbyists will have made their preferences clear as to which group of politicians is more likely to favour this or that piece of defence procurement. The last ČSSD government prepared legislation for the purchase of 24 Gripen fighter aircraft from a joint Swedish and British consortium. But the decision to buy was put on hold after defeat in the Senate. Behind the scenes lobbying by US contractors could very well lead to a change of heart by the new government. For example, Michael Žantovský a senator for the small Civic Democratic Alliance (ODA) and former Czech ambassador to the US claims that the US deputy defence secretary, Paul Wolfowitz, disapproves of the Gripen deal. Cynics say that, in order to keep everyone happy, the Czech Republic could end up buying both Gripens and US F 16 fighter aircraft!



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