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CZECH REPUBLIC


 



In-depth Business Intelligence 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 85,438 69,590 56,800 39
         
GNI per capita
 US $ 6,740 5,560 5,250 66
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km) 
78,866

Population 
10,246,178 

Density 
(per sq.km) 
132.2

Capital 
Prague 

Currency 
Koruna 

President 
Vaclav Klaus

Private sector 
% of GDP 
80%



Update No: 096 - (26/04/05)

Czech coalition agrees cabinet
Leaders of the Czech coalition government have agreed to form a new Cabinet after Prime Minister Stanislav Gross said he would quit over a property scandal. After an almost eight-hour meeting, Gross said his Social Democrats reached agreement on the government with the Christian Democrats and the Freedom Union parties, resolving a political crisis triggered by the scandal over the financing of his luxury apartment.
"We prepared the basic points of an agreement about co-operation of three parties in forming a majority, democratic, pro-European Cabinet," Gross said after the meeting. He said he would inform President Vaclav Klaus about the agreement.
Christian Democrat chairman Miroslav Kalousek said the agreement guarantees the country will have an "effectively functioning" government until the next general election, scheduled for spring 2006.
The leaders gave no details on the new Cabinet, saying they first have to inform their parties, but Gross said earlier that the Czech ambassador to the European Union, Jan Kohout, was his party's candidate to replace him.

End of a crisis
The agreement seems to bring an end to weeks of political crisis triggered by a scandal surrounding the prime minister's financing of his luxury apartment.
Five ministers resigned from his Cabinet in early April, while the other two coalition parties demanded Gross leave his post to restore confidence in the government.
The scandal arose over how Gross paid for his luxury apartment. He first said he paid for it with his own money and a mortgage, but then he said he borrowed money from his uncle. Czech media later reported that his uncle borrowed the cash from a journalist he barely knew. After weeks of struggling to hold his government together, Gross said that he would resign and make way for a new coalition government.

The communists make a comeback
One intriguing aspect of the whole affair was the role of the communists, who alone in Central Europe still count on the Czech scene and increasingly so. 
At one moment in the crisis Gross survived a no-confidence vote in parliament, but only because the communists, who have one fifth of the seats in the lower house, abstained. The Communist Party of Bohemia and Moravia, as they style themselves, are unreconstructed hardliners, unlike the Communist Party of Moldova, which is actually in power.
Elsewhere in Central Europe the communist parties changed their names after 1989. In Czechoslovakia after 1968 the CP was purged of liberal, reformist elements, such as nudged other countries in the region towards the West in the 1970s and 1980s. Dubcek was pensioned off and there was to be no more Prague Spring.
It was more a question of 'Prague Winter,' as Jiri Pehe, an adviser to former President Havel, entitled a most perceptive piece in the Wall Street Journal Europe of April 7th. "Lacking reformers in their ranks, the Czechoslovak Communists stuck to their ideology. Their strategy was to become a far-left alternative to the Social Democrats who had been eliminated after the Communist putsch in 1948, but successfully re-emerged after the Velvet Revolution (in 1989)."
Most people expected the communists to fade away, appealing only to older people. They were not banned, despite the Czech parliament passing a law in 1993 (In January of that year Czechoslovakia ceased to exist) denouncing the Communist regime and its ideology as criminal. It did not seem a very appropriate thing to ban a party when founding a democracy. 
The result could not have been more favourable to the communists. Shunned by the other parties, they have been kept right out of power and have not been tainted by the corruption scandals of the others, at one time or another in a coalition government. " They did not have to carry the burden of necessary but unpopular economic reforms," as Pehe says, "and, lacking opportunity, they have not been involved in any of the various privatisation scandals. As a result, we have arrived at the absurd situation where an increasing number of young people, who were still children when the regime collapsed, believe the Communists are the only 'clean' party around."
In an extraordinary development, the communists have come to fill the gap left behind by the demise of the far-right Republican Party. "Catering to both ends of the political spectrum, the Communists manage to represent not only those voters for whom the Social Democrats are not sufficiently leftist, but also voters who are nationalists, xenophobic and anti-European." The party has cynically opposed any reconciliation with the Sudeten Germans expelled in 1945.
Pehe is generous enough to say, however: "It would be unjust, though, to call all supporters of the Communist Party extremists. There are social groups in the Czech Republic that have been left behind in the rapid process of economic transformation - and the Communists give these people a vote."

An explosive mixture?
All this makes for startling reading. Is a communist return to power at all feasible?
Most probably not. As hardliners, they have a terrible record to defend, even if a long time ago. The old people are dying off and not enough of the credulous youngsters will replace them.
The fact is that the communists have never topped 25% of the vote, their score in 1948. They have not, indeed, topped 20% since 1989. There are enough sensible people in the country to keep them out.

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ENERGY

CEZ to rebuild Tusimice plant


There is a need for one more thermal power station in the country, the Czech state run power producer, CEZ, said in a statement, CTK News Agency reported.
CEZ said it would rebuild the Tusimice II thermal power station and the cost will be about 15bn Czech crowns. According to CEZ's Jiri Borovec, construction should start in 2007 and the project should be complete in all respects and launched with full capacity by the end of 2010. CEZ plans to announce a plan for their renewal or the construction of new facilities after May 15th. This has to be decided early because the life span of most coal fired plants presently run by CEZ will expire by 2015. "The reconstruction of a specific power station depends on the supplies of coal throughout its life and Tusimice would have enough coal from local mines for its entire life span of 25 years," said Borovec. The Tusimice plant with installed output of 800 megawatts in four units now employs 240 staff. After the reconstruction, it will have to sack 40 people owing to cutting-edge technologies.

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FOOD & DRINK

Czech meat output drops 19%

Czech meat output, excluding poultry, dropped 18.9% to 33,446 tonnes in February, the Czech Statistical Office (CSU) said recently, CTK News Agency reported.
Slaughtered bulls meat increased 8.3%; price and demand for this meat rose in the period. There was an increase in the price for slaughtered pigs because its output was down 35.5% year-on-year. Farmers supplied 18% less pork and 22.8% less beef and veal in February than a year ago. The head of the Czech Meat Processors Association, Ladislav Steinhauser, said recently that there is a shortage of beef all over Europe and Czech farmers are exporting live cattle which pushes up prices on the domestic market. The number of slaughtered cattle decreased 22.3% year-on-year and average slaughter weight dropped 0.5% to 526.2kg. The number of slaughtered pigs was 13% lower and their average slaughter weight fell 4.5% to 111.9kg. Milk purchases were also lower by 3.5% in February compared to a year ago.

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INFORMATION TECHNOLOGY

Telecom ups broadband coverage

Cesky Telecom, the leading operator in the Czech Republic, is increasing the range and coverage of its broadband service by a further seven per cent, telecomweb.com reported recently.
The number of subscribers has risen substantially over the past year. As part of an aggressive broadband plan, it has expanded its range. The expansion opens up the market to another 210,000 potential customers. Cesky has been particularly aggressive in terms of widening its broadband coverage in 2005. With this increase, its coverage has grown to a potential customer base of close to three million lines that is nearly 90 per cent of Cesky potential customer base. The operator has seen explosive growth in broadband. It shows that the use of internet services is the requirement of every citizen today. In its recent full year results, Cesky said that it had 101,000 ADSL customers at the end of 2004, a year-on-year increase of well over 500 per cent. To communicate with each other through broadband does not take much time, also there video linking in addition to data. So its expansion for more broadband services has become very important for Czech Telecom.

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MINERALS & METALS

Nine firms bid for Czech steel manufacturer Vitkovice

Czech steel manufacturer, Vitkovice Steel, is off-loading the state's majority stake in the company, New Europe reported recently.
A spokeswoman for its parent company indicated that nine companies have submitted bids for the state's 99 per cent stake. Nineteen companies had initially expressed an interest in Vitkovice Steel. The company has a 1,600-strong workforce and made a pre-tax profit of 1.6bn Czech crowns in 2004.
Eva Kijonkova, spokeswoman for Osinek, the company through which the government holds the stake, said that the bids ranged from four billion crowns (134m Euro) to seven billion crowns. As per the estimates of the analysts, the government could get 4.0 to 4.5bn crowns for its stake. Kijonkova did not reveal the names of companies that submitted bids but said Mittal Steel, which had been fighting to be allowed to take part, had not placed a bid. Mittal has been in dispute with the government over pig iron prices and says it will now try to stop the sale after a privatisation committee excluded it from participating. Mittal has lodged a complaint about its elimination from the tender to the European Union Commission. It is demanding 350m crowns in compensation for iron supplies from its unit VPO to Vitkovice Steel. The state blames Mittal for an inadequate increase in prices and is asking for more than one billion crowns in compensation. The anti-trust office ruled earlier in March that the prices were market prices. Meanwhile, the Ukraine-based group System Capital Management has confirmed that it had submitted a bid for Vitkovice. "We are ready to provide sufficient investment for the further development of Vitkovice Steel," manager, Igor Syry said.

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TELECOMMUNICATIONS

Czech minister says Telefonica best bidder for Telecom

The privatisation of the Cesky Telecom is about to be completed - the Czech government has decided to sell the state share in Cesky Telecom to the Spanish company Telefonica, Czech Radio 1 reported. 
The telecommunications giant is to pay almost 83bn Czech korunas for 51 per cent of shares in Cesky Telecom.
"The prices reflect the company's value and therefore with a clear conscience I recommended to the government the same thing as the privatisation commission - that was, to sell to the highest bidder," Czech Finance Minister, Bohuslav Sobotka, said.
The Transport Infrastructure Fund was waiting for the sale to proceed - as it is to receive more than 26bn korunas from the overall sum. 

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TOURSIM

Czech Republic attracts Britons

New budget airline links to Britain helped the Czech Republic attract a record number of foreign visitors last year, the government's Czech Tourism agency said recently, New Europe reported.
The total number of tourists rose to more than 7.9m, the agency said, up 19% from the previous record set in 2003. Nearly 800,000 British visitors visited the country - a 58% increase from the year before - mainly because budget airlines launched flights between Prague and cities such as Manchester and Birmingham, said Czech Tourism Director, Rostislav Vondruska. Czech destinations also drew nearly two million German tourists last year, up 9% from 2003. The ranks of Italian, Dutch and Russian tourists also grew last year, but fewer visitors came to the Czech Republic from Israel and Poland.

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