Books on Czech Republic
% of GDP
Update No: 093 - (28/01/05)
Havel bows out
An era ended exactly one year ago in February 2003, when Vaclav Havel's term as
president came to an end. The dissident playwright in communist times had
spearheaded the velvet revolution in 1989 and was the first president of
post-Communist Czechoslovakia. His presidency was interrupted for only a few
months at the time of the separation of the Czech Republic and Slovakia, which
borders the Czech Republic to the south, in 1993, engineered by the Slovak
strongman, Vladimir Meciar, a notorious thug.
Mr Havel saw the ghost of former Soviet military influence exorcized in 1999,
when the republic was granted full membership of NATO. He left office having led
it to the threshold of the EU. His old rival and successor as president, Vaclav
Klaus, oversaw the country's accession to the union. The formal invitation to
join the EU came despite criticism of policies towards the Roma, or Gypsies, who
number up to about 300,000 and who suffer disproportionately high levels of
poverty, illiteracy, and unemployment.
The Czech Republic has not steered clear of controversy in international
relations since independence. The firing up of the Temelin nuclear power plant
sparked a major row with Austria in 2000, while the republic's refusal to revoke
the post-war Benes decrees which sanctioned the expulsion of over two and a half
million ethnic Germans and Hungarians has strained relations with neighbours.
The Senate has voted to extend the country's mission in Iraq until February
2005. Around 100 Czech military police officers are currently deployed in the
The governing CSSD has trailed the Civic Democratic Party (ODS) and the
Communist Party of Bohemia and Moravia (KSCM) in recent voting intention polls.
The next election to the Chamber of Representatives is tentatively scheduled for
Two oldsters of Czech politics
There is now no love lost between the former president and his successor, Vaclav
Klaus. In the early days of his presidency, Havel fostered Klaus's rise in
parliament, but the two men developed very divergent views on entry into the EEC
and, since Klaus gaining the Presidency, the animosity between them has only
sharpened. Klaus, unlike Havel, is no staunch advocate of consensual democracy.
In 2001, he was thrust into the headlines when reporters at the state-run Czech
Television went on strike to protest the appointment of close Klaus associates
into key positions at the station. Renegade reporters took over the newsroom and
lambasted the flagrant cronyism and over 250,000 people protested in Wenesclas
To many, Klaus is a worrisome figure in contemporary Czech life; a numbers-man,
a wheeler-dealer and an un-reformable egotist. One of his first acts as the
newly elected President was to publish a self-serving autobiography before any
recognizable presidential style could be ascertained. Klaus, an admirer of
Thatcher, is a Eurosceptic, whose Atlanticism did not prevent him from being
critical of the war in Iraq.
Havel's place in all the cultural and political changes now reshaping the Czech
Republic is somewhat problematic. At 68, he is too young simply to fade into the
woodwork, but too ill (having had lung cancer) and powerless to be an active
political force. He is gradually making that subtle transition from politician
to statesman. (A presidential library, in the tradition of American presidents
Kennedy, Nixon and Reagan, is actively being organized for him.) Among artists
and intellectuals, after acknowledging his enormous contribution to the
country's liberation from the Soviets, his standing as a playwright tends to be
disparaged. But one conveniently forgets that it is the length and breadth of
his personal sacrifice which made it possible for new generations of writers to
emerge. Although young and innovative artists are always crowding through the
open door, somebody had to be there to open that door in the first place.
The new young figure in Czech politics, Stanislav Gross
Premier Vladimir Spidla's decision to step down in the wake of his party's poor
performance in the European elections in June last year led to a collapse of his
government, after alienating many traditional left-wing voters with a series of
unpopular public finance reforms. On Jul. 1, Spidla resigned from his post
following a poor showing from his party in the Jun. 13 elections to the European
Skipping a generation, Stanislav Gross formed a government, with the centrist
Christian Democrats (CSSD) and the rightist Freedom Union. In the June 2002
ballot, the CSSD elected 70 lawmakers to the 200-member Chamber of
President Klaus appointed the CSSD interim leader Stanislav Gross as prime
minister on Jul. 26. Gross, who had acted as the country's interior minister,
now leads a coalition government, which also includes the KDU-CSL and the
Freedom Union - Democratic Union (US-DEU). At the age of 34, Gross has become
the youngest prime minister in the history of the Czech Republic. The coalition
has a narrow majority of 101 seats in the 200-seat lower house and faces many
challenges. "I feel a great responsibility, and take this very personally.
I will try not to disappoint," Gross said at the time of his nomination.
Gross entered parliament in 1992 at the age of 22, two years after becoming
leader of the Young Social Democrats. He served as interior minister since 2000.
Mr Gross, who has also taken over as head of the ruling Social Democrat Party,
is a popular politician. But he is facing an extremely difficult, not to say
daunting, task. Mr Gross has only one extra vote to count on in securing a
majority in parliament and presenting a viable government alliance. Mr Gross
wants to sustain his government until the 2006 elections, while avoiding any
compromising reliance on communist support.
Czech Civic Democrats Remain Well Ahead
The Civic Democratic Party (ODS) in opposition, nevertheless, remains the
most popular political organization in the Czech Republic. According to a poll
by STEM, 34.1 per cent of respondents would vote for the ODS in the next
The Communist Party of Bohemia and Moravia (KSCM) is second with 16.1 per cent,
followed by the governing Czech Social Democratic Party (CSSD) with 15.6 per
cent, and the Christian and Democratic Union - Czech People's Party (KDU-CSL)-
with 8.1 per cent.
The Czech Republic will hold a nationwide referendum on the European
Constitution by June 2006, possibly along with parliamentary elections. Prime
minister Gross supports the ratification of the proposed body of law. On Dec. 2,
Klaus said the document would "endanger freedom, democracy and
Consumer surge in spending
Czech retail sales surged 8 per cent year-on-year in November 2004, the
statistical office said on January 17th. The November figures were well above
expectations for a rise in retail sales of around 6 per cent. In October, sales
were up just 1.3 per cent.
Analysts said the figures pointed to robust consumer demand in the run up to
Christmas but did not necessarily herald a strong pick up in the wider economy.
The Czech gross domestic product is rising strongly by European Union standards
but lags the other seven former communist countries which joined the European
Union in May last year. Economic growth in the third quarter, the latest period
for which data is available, was 3.6 per cent year-on-year.
Neighbouring Poland posted year-on-year GDP growth of 4.7 per cent in the same
period. Slovakia posted year-on-year GDP growth of 5.3 per cent.
Tatra truckmaker stays cool on higher sales result
Tatra Koprivince, the Czecg truckmaker, posted 47m Czech crowns profit on sales
of 2.7bn crowns in January-September, Interfax News Agency reported.
In third quarter of 2003 Tatra lost 631m crowns. The company said that while the
number represents an important turnaround, it does not want to overestimate the
results. Tatra sold 1,119 lorries in the third quarter of 2004, up by 129
year-on-year. In may Tatra officials predicted the company would produce 2,200
trucks in 2004. Sales were up 39% year-on-year, exports accounted for 80% of
Tatra said it has managed, in part, to avoid the effects of the strengthening
crown against the US dollar by raising Euro sales. The company also attributes
the profit to savings after a restructuring following the entry of the US
company Terex, which cut overhead by 3%. The truckmaker intends to consolidate
production and sign contracts on the supply of components from external
suppliers. It also plans to lease out some facilities to subcontractors.
More passengers flying with Czech Airlines
Czech Airlines (CSA) transported over four million passengers last year, 11%
more than in 2003, CSA spokeswoman, Jitka Novotna, said recently, Interfax News
Agency reported. Novotna attributes the growth to CSA's 10 new destinations in
Europe and Asia. CSA has also increased its number of flights and now offers two
or more flights per day to most common destinations. CSA flies to nine German
cities, offering up to three flights a day between Prague and Frankfurt. CSA
flies seven a day to London's three main airports, she said. This year CSA
expanded its fleet, adding a record 10 new planes. In January-October CSA
transported 3.74m passengers, up 22% year-on-year. The number of take-offs and
landings grew 19% to 27,000. Originally, CSA expected this Year's profit to
reach 600m crowns, compared to 70m crowns in 2003.
Prague to issue bonds in 2005
The Czech state will issue bonds worth 17bn Czech crowns in the first quarter of
2005, the Finance Ministry said recently, Interfax News Agency reported.
The bonds will be used to finance the state budget deficit. The state will also
issue short-term treasury bills (T-bills) worth 64bn crowns, of which paper
worth 46bn crowns will be put up for auction, the ministry said.
The maturity of the crown-denominated bonds will range between three and 15
years so that the instalments do not pose a major burden in any one period. In
mid-October, the Czech parliament approved the 2005 state budget draft with a
deficit of 83.6bn crowns. This year, the state plans to issue bonds worth 118bn
crowns to cover the state budget deficit. Including Eurobonds, the total will be
near 165bn crowns.
BorsodChem-MCHZ sees sales rising 42% in 2004
Czech chemicals maker BorsodChem MCHZ, a subsidiary of Hungary's BorsodChem,
expected its sales to rise 42% to 3.7bn Czech crowns last year, CEO Alexander
Palffy, New Europe reported recently.
Operating profit should grow by nearly 8% to 185.8m crowns, while net profit
will drop to 143.7m crowns, representing an annual decline of 21% versus 2003
when the firm had extraordinary revenues from the sale of its adhesives and
formaldehyde production unit and some intangibles, Palffy explained.
The firm expected its sales to rise mainly thanks to growth in aniline
production to a record 112,500 tonnes last year, as well as growth in sales to
the Hungarian parent company, Palffy was quoted as saying. The volume of exports
to Hungary increased 53% to nearly 1.5bn crowns, accounting for 36.3% of the
firm's total exports. The rest headed for Slovakia, Switzerland and Germany,
with sales in the Czech Republic accounting for only 2.8% of the firm's
BorsodChem MCHZ cut staff by 60 to 599 during the year. Most of those who lost
their jobs were transferred to the OKD-Doprava company after the first quarter,
where the firm moved some of its activities, Palffy noted.
CEZ eyes foreign acquisitions
Czech power utility CEZ expects to create financial resources worth three
billion Euro over the next five years to be used for possible foreign
acquisitions, the company said in a recent report provided to the Prague Stock
Exchange (BCPP). CEZ's overall indebtedness should not exceed 30 per cent, CEZ
spokesman, Ladislav Kriz, said. He said the actual use of these financial
resources will depend on eventual opportunities. At the same time, CEZ must
retain its ability to finance extensive investments in the renewal of Czech coal
resources after 2010. This investment programme, CEZ would also consider the
construction of new power plants outside the Czech Republic, or participation in
CEZ wants 3 Bulgarian power plants
Czech power utility CEZ has joined 13 companies expressing preliminary interest
in three Bulgarian coal-fire power plants, CEZ spokesman Ladislav Kriz told
Interfax recently. Kriz said eligible investors will be asked to submit their
offers in March 2005. Other interested parties reportedly include Germany's E.ON
Energie and Stadtwerke Leipzig GMgH, Austrian EVN AG, Greek Public Power
Corporation AE, Italy's ENEL, Britain's International Power, France's Dalkia,
Japan's J Power, Belgium's Unit International SA, and India's National Thermal
Power Corp. The three tenders can be won by one investor or by different
companies, according to the privatisation agency.
Skodaexport wins Argentina tender
Czech engineering firm Skodaexport has won an order to supply two thermal power
plant units to Argentina, Hospodarske noviny reported. The construction of the
first of two units of the Rio Turbio thermal power plant in southern Argentina,
worth 800m Czech crowns, should be completed in 2007. Two Skoda steam turbines
have been operating in the Rio Turbio coal mine since 1962. The second unit
should follow with the modernisation of the Rio Turbio mines and railway
reconstruction. The Czech Export Bank (CEB) will finance the deal, according to
Skodaexport's Zdeneck Sima. Skodaexport plans to cooperate with Czech firms on
supplies for the project.
Czech foreign trade results best in 10 years
In November 2004, for the first time in10 years, the Czech Republic exported
more from the country than imported into it. This is good and surprising news
for the Czech Republic, Czech Radio 1 reported.
Foreign trade was faring well and it ended at a surplus of over 5bn korunas. In
view of the nature of the economy the good result is very important for the
healthy development of the economy as a whole. Reporter, Jitka Hanzlova, was
trying to find the reasons for the success: The year-on-year increase in export
grew in standard prices by 33 per cent, while import by only 20 per cent.
"This is the best result in the last 10 years and it surprised both
analysts and statisticians," she said. Kamil Kudlak, the head of the
analysis section at the Statistical Office, said the favourable foreign trade
result was mainly due to record exports of computers, TV sets and cars.
"Electro-technical and car companies confirmed to us exceptional
results," Kudlak said. "These firms are mainly firms owned by foreign
However, Industry Deputy Minister, Martin Tlapa, believes that small and
medium-size businesses also played an important role. "They coped well with
our EU entry. I believe that this continues to indicate a good balance between
the quality of what we can offer and the production cost in the Czech
Republic," Tlapa said.
Patrik Rozmbersky, an analyst with Zivnobanka, pointed out that exporters were
successful in spite of the fact that west European economies stagnated and
prices of Czech goods, resulting from the ever-stronger koruna, kept growing.
The effect of the country's EU entry thus kept playing an important role.