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czech republic

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CZECH REPUBLIC


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 69,590 56,800 51,400 43
         
GNI per capita
 US $ 5,560 5,250 5,310 68
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km) 
78,866

Population 
10,249,216 

Density 
(per sq.km) 
132.2

Capital 
Prague 

Currency 
Koruna 

President 
Vaclav Klaus

Private sector 
% of GDP 
80%

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Background:
After World War II, Czechoslovakia fell within the Soviet sphere of influence. In 1968, an invasion by Warsaw Pact troops ended the efforts of the country's leaders to liberalize party rule and create "socialism with a human face." Anti-Soviet demonstrations the following year ushered in a period of harsh repression. With the collapse of Soviet authority in 1989, Czechoslovakia regained its freedom through a peaceful "Velvet Revolution." On 1 January 1993, the country underwent a "velvet divorce" into its two national components, the Czech Republic and Slovakia. Now a member of NATO, the Czech Republic has moved toward integration in world markets, a development that poses both opportunities and risks. 

Update No: 084 - (29/04/04)

Spidla survives
The Abbe Perigord was asked what he did in the French Revolution. He replied simply: "Je suis vecu" (I survived). So might Premier Spidla opine of his career so far in government. Everyone thought that his predecessor, Milos Zeman, left him a poisoned chalice. He did.
Zeman resigned, leaving Spidla to lead the Social Democrats after an indecisive electoral victory in 2002. He has barely a majority in parliament. He is kept in office because no-one else wants the job right now. 

The Bohemian legacy
It is curious how central Bohemia, the old referent of the name for the lands inhabited by the Czechs, has been in European history. The "defenestration of Prague" in 1618 set off the Thirty Years' War, which divided Europe and decimated Germany. An Imperial emissary was chucked out of the window by the chief minister of the King of Bohemia, a challenge that soon pitted Protestant and Catholic forces against each other for a generation. 
The issue was resolved in 1648 at the Treaty of Westphalia, where was established the principle that governs international law to this day, that one should not interfere in the internal affairs of a sovereign state, cujus regio, ejus religio. It is a principle, needless to say, honoured far more often in the breach than in the observance. People have been meddling in each other's affairs ever since, but at least in some cases with a guilty conscience.
Not so Hitler. He regarded the Treaty of Westphalia as the real bugbear of Germany, far worse than the victors' Peace of Versailles. The Czechs were to be the occasion of his anger and desire to mend matters to Germany's benefit.

Czech crucible of modernity
Twice within ten years Czechoslovakia played a vital role in world history, each time investing the current development with a peculiar significance.
The first was the grave crisis of Munich in 1938, which was resolved by the British and the French selling the Czechs down the river to Hitler, who was given one part of the country by the conference and grabbed the rest in March the following year, an event which shattered the illusions of Chamberlain, the UK premier, and provoked the guarantee to Poland and hence the second World War.
Chamberlain at Munich was abiding by two precepts which are still highly recommended today, He was thinking positively ("I was told as a boy that if you fail the first time, try and try again, "he said on his return, waving in his hand his document, co-signed with Hitler, that brought 'peace with honour'). Churchill, who denounced the pact, was the one thinking negatively and could be assumed to be wrong. The second precept, following on the first, was that one should never go to war except at the last resort. This is Chamberlainism to a tee. For it was Chamberlain who did eventually declare war on Germany when Hitler invaded Poland. Churchill's policy would have been to go to war not as the last resort, but when necessary, which with Hitler was as soon as possible, the very first resort, exactly what was the case with Saddam.
The second key event was when a communist coup toppled the democratic government in Prague in 1948. This intensified the Cold War, commenced by Churchill in 1946 in his Fulton speech: "From Stettin in the Baltic to Trieste in the Adriatic an iron curtain is descending upon Europe." Czechoslovakia now lay on the wrong side of this divide. For to the west of it lay the West; to the east of it lay the east.
The terms West and East in their modern sense came about in 1946 due to a complex of events. Czechoslovakia had been allowed by the West to be absorbed by first fascism in 1938-9 and then communism in 1948. The Velvet Revolution of 1989 brought it back westwards again. But the real meaning of the entry into NATO and the EU today is to give this a definitive institutional shape. The Czech Republic and Slovakia, which split in 1993, are now decisively in the West.

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AUTOMOBILES

Asmo to invest 400m Czech crowns


Asmo, a Japanese motor manufacturer, will invest 400m Czech crowns and employ more than 240 people in the Czech Republic by 2010, Jana Viskova of CzechInvest said, Interfax News Agency reported recently. 
Asmo, which wants to build a production plant in Zruc nad Sazavou, Central Bohemia, has chosen the Czech Republic on the recommendations of other Japanese investors, Viskova said. The decisive criteria for placing the investment in the Czech Republic included investment incentives for the creation of new jobs and training. The key staff of the new Czech plant will be trained in Japan, said the head of the CzechInvest advanced technologies section, Bohuslav Frelich. Asmo is 63% controlled by Japan's Denso, which launched production of automotive air-conditioning units in Liberec, North Bohemia last year. Japan is now the largest foreign investor in the Czech Republic, with 119 production plants registered in autumn 2003. The Denso Group, which employs 9,400 worldwide, also has plants in North America and Asia.

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BANKING

Zivnostenska Banka sees 2003 net rise to 260m crowns

New Europe reported recently that Zivnostenska Banka (ZB) netted 262m Czech crowns by Czech accounting standards (CSA) in 2003, up from 100m crowns in 2002, the bank announced recently. ZB attributes the higher net profit to tighter cost control. The bank's costs rose only slightly last year - to 1.17bn crowns. It also credits higher income from fees and commissions and financial operations. Total assets dipped by 3.2bn crowns to 49.3bn crowns. The bank granted loans worth 22.8bn crowns in 2003, a 500m crowns year-on-year increase. Deposits fell by 250m crowns year-on-year to 38.9bn crowns due to a shift of money from time deposits to funds. ZB had 90,100 clients as of the end of 2003, a 3.7% year-on-year increase. The bank has 26 branches, a number it aims to double. ZB hopes to focus more on retail banking, introducing leasing and insurance services. Italy's Unicredito banking group has owned ZB since last February.

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ENERGY

Karbon Invest to shell out 2.25bn crowns for OKD

Karbon Invest (KI), the majority owner of the Czech Republic's largest black coal mining firm OKD, is offering 2.25bn Czech crowns for the state's 46% stake in OKD, Industry Ministry spokesman, Ivo Mravinac, told Interfax News Agency recently. KI has been in exclusive talks with state on the purchase of OKD since last November. The latest offer represents an increase from its original offer of 1.2bn crowns.
"The price offered by KI is higher than an expert valuation prepared for the government," said Mravinac. The firm VOX Consults puts the value of the 46% stake in OKD at 2.08bn crowns.
The Czech-Slovak financial group Penta earlier announced it would offer at least 1.8bn crowns for the stake. "No tender for the sale of the stake in OKD was declared. Penta's offer is therefore irrelevant," said Mravinac.
The state lost its majority in OKD in 1997, when the National Property Fund (FNM) did not take part in a share capital hike. In 2002 the state wanted to sell its stake to the Dutch company LNM Holdings, but the privatisation talks failed after obstruction on the part of KI, which owns 50.02% of OKD, Interfax News Agency reported.

Long-term energy policy approved

The Czech government has approved the country's long-term energy policy, Prime Minister, Vladimir Spidla, said at the recently held Zofin Economic Forum in Prague, New Europe reported. 
The industry ministry drew up the plan approved by the government, while a draft plan by the Environment Ministry was largely ignored.
The approved plan calls for greater dependence on domestic energy sources, mainly brown coal. The plan gives a green light to the lifting of limits on brown-coal mining, but leaves the final decision up to municipalities where the mines are located. The country's biggest power producer CEZ is expected to replace most of its brown-coal fuelled power plants around 2015.
The policy also calls for two new 600MW nuclear power reactors to be built by 2030. The Czech Republic is currently home to two nuclear plants - Temelin and Dukovany - both operated by CEZ.
The two plants account for over 40% of the country's overall electricity output. Under the approved plan, renewable resources should account for 16% of total electricity output by 2030, up from the current 3%. A more ambitious proposal by the Environment Ministry would have set the level at 18.5%.
The energy sector is expected to shed roughly half of its current workforce of 80,000 by 2030. As a result, energy consumption in relation to GDP should drop by 3.0% to 3.5% annually, as outlined in the energy policy.
It is recalled that the decision on the country's long-term energy policy was postponed several times. The Czech Republic's energy policy has to be changed as part of its entry into the more liberalised energy market of the Union. Its electricity market will be fully liberalised in January 2006. The natural gas market is to be opened in 2007.

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STOCK MARKET

Prague, Bratislava bourses "plotting 2005 merger"

The struggling Prague stock market and its growing counterpart in Bratislava intend to merge next year, bourse officials said recently, New Europe reported. 
Negotiations for combining the Prague Stock Exchange and the Bratislava bourse are under way, PSE Secretary, Pavel Hollmann, and BSSE Director, Maria Hurajova, told Lidove noviny. The proposed merger follows a failed attempt to combine five central European exchanges in Prague, Bratislava, Warsaw, Ljubljana and Budapest. That idea, floated in 1999, proved too complicated. The Prague and Bratislava exchanges share a common past. Both grew out of the post-communist coupon privatisation programme of the former Czechoslovakia, which split into the Czech Republic and Slovakia in 1993. The Prague bourse saw its stock and bond trading value fall to US$50bn last year, down 23% from 2002, owing to lower bond market liquidity.

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TELECOMMUNICATIONS

T-Mobile net profit climbs 60% in 2003

T-Mobile, the Czech mobile operator, saw its net profit rise 63% year-on-year to 4.4bn Czech crowns in 2003, the company announced recently. The company attributes the higher profit to cost-cutting, made possible by membership in the multi-national T-Mobile group. T-Mobile attracted 438,000 new clients in 2003, bringing its total base to 3.95m. T-Mobile's revenues climbed almost 13% to 24.4bn crowns last year. Revenues from services alone grew at the same pace, reaching 23.5bn crowns. T-Mobile clients spent 3.57bn minutes on their phones last year, up 15% year-on-year. Germany's T-Mobile (an arm of Deutsche Telekom) owns 60.8% of T-Mobile, while the Czech telecom Ceske radiokomunikace (Cra) owns the remainder. Cra is owned by Deutsche Bank/TDC. T-Mobile's Czech rivals Eurotel and Cesky Mobil (CM) also saw their bottom lines improve in 2003, New Europe reported.

Aliatel cuts 2003 loss to 385m crowns

New Europe reported recently that alternative telecoms firms Aliatel cut its net loss to 385m Czech crowns in 2003 compared to a loss of 718m crowns the previous year, according to figures released by the firm. Aliatel's revenues increased by 38% year-on-year to 2.55bn crowns in 2003. The firm showed a gross profit (EBITDA) of 250m crowns last year compared with a loss of 78m crowns in 2002. Aliatel invested 220m crowns in 2003, an increase of 75% over 2002. The bulk of that went to new client services, as the firm's network was already complete. "Aliatel saw its revenues and profit rise last year despite stagnation on the fixed-line telecommunication market," said Aliatel CEO, Bernhard Fanger, adding the firm expects to remain in black in the years to come. 
Aliatel, established in 1996, provides data, telephone and internet services. The firm has share capital of 3.27bn crowns and employs 353 people. Six regional Czech power distributors hold a 60% stake in the company, while Germany's RWE controls the remaining shares.

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TRANSPORT

Skoda DT wins 2bn crown Ceske drahy tender

Czech engineering firm, Skoda Dopravni technicka (Skoda DT), has won a tender to supply the national rail operator, Ceske drahy (CD), with 20 high-speed electric locomotives, CD spokesman Petr Stahlavsky announced recently. Skoda DT was competing against Germany's Siemens for the order, worth some 2bn Czech crowns. Skoda DT was the only one to meet all tender requirements while also offering the lowest price, according to Stahlavsky. The price per locomotive runs in excess of 100m crowns, he added. The deal will be financed via a loan from Eurofima, the European rail operators' association, which offers funding to members for renovation projects. Under the terms of the tender, Skoda DT must supply the first locomotive within 36 months of signing the contract and must complete the order within 60 months. The locomotives will be used in the Czech Republic, Austria, Germany, Slovakia, Poland and Hungary and will have a top speed of 200km per hour. Skoda DT, a unit of Skoda Holding, produces electric locomotives, electric trains and also specialises in modernising metro trains. 
The firm, which employs over 650 people, expects to net over 100m crowns this year on sales of 2bn crowns, New Europe reported recently.

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