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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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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: 102 - (27/10/05)

President Klaus most trustworthy Czech politician - poll 
There is a general mistrust of their rulers by the Czechs, a rather more astringent view than the usual mistrust of politicians that is general. Former President Vaclav Havel was an exception, a dissident and playwright in communist times. He was indeed, an exceptional man, who had proved his integrity by his long-standing opposition to communist rule.
President Vaclav Klaus, his successor, is also esteemed. He is the most trustworthy Czech politician, as almost three-quarters of Czechs trust him, according to an October poll by the private polling agency STEM. However, the STEM long-term surveys show that Klaus's credibility has been falling since March. 
By contrast, the popularity of Prime Minister Jiri Paroubek (senior government Social Democrats, CSSD) has been stable since June. He is considered the most trustworthy politician by slightly less than one half of the population. 
Only two in five Czechs trust the chairmen of the Chamber of Deputies and the Senate, Lubomir Zaoralek (CSSD) and Premysl Sobotka (senior opposition Civic Democrats, ODS) respectively. 
While the approval rating of Sobotka in October was 41 per cent, only one percent fewer than in March, Zaoralek was trusted by 36 per cent of people at the beginning of October, which is seven percent less than in the spring.
There is a general conception that Czech politicians apply the principles of Self-Help, which animated the small business sector in nineteenth-century Britain and the US, in an original way, as "Help Yourself".

CSSD is interlinked with organised crime - Nemcova 
Indeed, the senior ruling Social Democrats (CSSD) are interconnected with organised crime, senior opposition Civic Democrat (ODS) deputy head Miroslava Nemcova indicated during the question time in the Chamber of Deputies recently. 
Prime Minister Jiri Paroubek (CSSD deputy chairman) dismissed the accusations. 
Nemcova expressed this opinion in a parliamentary question concerning links between organised crime and the state and the recent statements by prosecuted fugitive billionaire Radovan Krejcir and David Berdych, alleged boss of a criminal gang where policemen figured, in the media. Krejcir told the daily Mlada fronta Dnes (MfD) that he had lent 60 million crowns to the CSSD for the promise that the party would help him gain the state-run company Cepro. Cepro is involved in the transport and storage of oil products, operates some 190 filling stations and protects the state material reserves. 
CSSD leaders, including Paroubek, repeatedly declined Krejcir's accusations as absurd. In connection with Berdych's words, Paroubek asked in parliament how trustworthy testimonies of criminals or people prosecuted as fugitive are. 
Nemcova said she took "the words of a criminal" with immense reservations. "However, for me they have the same value as the words of a representative of a political party whose members are interconnected with organised crime, a party which participates in the rising corruption in the Czech Republic," she said. 
The CSSD deputies present then started to interrupt her speech by loud pounding on the benches. 
Paroubek said that similar statements are exactly the reason why citizens consider Czech politics disgusting. This has been one of several battles of words between the CSSD and the ODS in the lower house. 
On October 18th, the Social and Civic Democrats accused one another of attempts to damage the country and of dirty tricks and lies. They were also in dispute about an amendment to the tax law. 
Another ODS deputy chairman and shadow interior minister Ivan Langer also asked about the alleged corruption today, in particular about the Czech Republic's unflattering position in the corruption ladder of the Transparency International (TI) agency. 
Paroubek said that these figures are hard to compare. The TI statistics ensued from the stances of Czech inhabitants and are "no exact measurement," he added. 
Transparency International, monitoring the corruption environment in the world, placed the Czech Republic among the most corrupted EU member states. In 10 years, the Czech Republic has dropped from 25th to 47th-50th place, and this year it received 4.3 points on the corruption scale from 1 to 10 where 10 is the best rating. 
Paroubek also reiterated that the fight against corruption is the government's priority. Langer, however, objected that "the CSSD is fighting with corruption by words, but it actually supports its development and spread." 
Paroubek recalled that the ODS politicians too, faced suspicions of corruption. This 'tit for tat' style of defence is not exactly re-assuring. It rather bears out the view that the Czech Republic has a decidedly sleazy public life.

Rath appointed first deputy health minister 
A particular instance of divided loyalties, or conflict of interests, a lesser offence than outright corruption but serious all the same, came up in late October, with Klaus taking a different view of the matter than his ministers.
David Rath, president of the Czech Doctors' Chamber (CLK), became the first deputy health minister with the task of heading the office, Deputy Premier Zdenek Skromach, who has been temporarily in charge of the office after the dismissal of Milada Emmerova, said. 
Skromach appointed Rath to the post. Rath will thus head the office despite President Vaclav Klaus's disagreement. 
Prime Minister Paroubek originally wanted to appoint Rath as Emmerova's successor, but President Klaus refused to do so on October 20th. Klaus said that if Rath were a cabinet member and the chairman of the CLK, it would be at variance with the constitution. 
Rath has declared in a written form that he executes some posts cited in the law on the conflict of interests, but did not elaborate on them. Klaus said that he wanted to be informed about the activities performed by Rath that are inconsistent with his new post. 
Rath runs a small private out-patient surgery and is the executive of the 4R s.r.o and Paracelsum, s.r.o. companies. He is also engaged in expert, consultancy and training activities. Rath told that he is ready to suspend his position as CLK head if he became minister, and would give up his business activities. 
Paroubek said that he did not want the office to be without a head for a long time. Under the constitution, Klaus is not bound by any deadline to appoint a minister. Paroubek said that later he could propose to Klaus again that he appoint Rath. 
If Klaus refuses this again, Paroubek will ask him to assign himself with the leadership of the Health Ministry instead of Deputy Prime Minister Zdenek Skromach. 
Paroubek considers Klaus's steps unconstitutional. He is considering turning to the Constitutional Court. 

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AUTOMOBILES

Czech environment agency picks Prius 

An electric hybrid Toyota Prius is the new around-town car for the Czech Ministry of Environment, New Europe reported.
The ministry's office chief, Miroslav Jandura, said the fuel-stingy, low-emission Prius will be used for running general errands in Prague. It's the first electric car in the government's fleet, which is dominated by Czech-made Skodas with petrol or diesel engines. "Hybrids are advantageous for operating in a congested city," Jandura said. In September, the ministry paid Toyota 500,000 Czech crowns (US$20,800) for a used, test-model Prius with 30,000 kilometres. Jandura hinted the government may buy more hybrids in the future, noting Skoda's owner Volkswagen may bring a hybrid car to market by 2008.

Peugeot, Toyota to boost output 

Peugeot SA and Toyota introduced a third shift at their TPCA plant in the Czech Republic on October 2nd as the joint venture steps up output, a plant spokesman said, Prague Monitor reported. 
"This is the last big step on the road to achieving full production capacity, which will be fulfilled at the start of 2006," said TPCA spokesman, Matej Matolin, in a statement. The TCPA plant, built for an investment of 1.3 billion Euro, manufactures Toyota Aygo, Peugeot 107 and Citroen C1 models for the European market. Matolin said the TPCA plant, which launched production on February 28, will manufacture 100,000 units this year.

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FOOD & DRINK

McDonald's sees stronger sales 

Fast-food chain McDonald's expects sales in the Czech Republic to grow five per cent to 2.25 billion Czech crowns this year, spokeswoman, Drahomira Jirakova, said, Prague Monitor reported on September 26th. 
The company runs 71 restaurants in the country and plans to open one more in Prague this year. In the years to come, the year-on-year growth of the company should hover around five per cent, a slowdown from previous years when it was opening more new restaurants. The firm plans to launch two to three new restaurants a year in the following years. In the first half, McDonald's sales in the Czech Republic amounted to 1.084 billion crowns, a year-on-year increase of 4.7 per cent, with one restaurant opened in Prague.

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FOREIGN ECONOMIC COOPERATION

Bulgaria seeks Czech help for railway restructuring 

Czech firms are most welcome to help reconstruct and revamp the railroad network in Bulgaria, damaged by floods earlier this year, Bulgarian President, Georgi Parvanov, said after a meeting with his Czech counterpart, Vaclav Klaus, CTK said in a report.
Bulgaria was hit by four waves of severe floods which destroyed a large part of its vital infrastructure, the report said. 
Parvanov and Klaus were quoted as saying that they both believed that the volume of trade between the Czech Republic and Bulgaria would continue to grow. 
Czech-Bulgarian political relations and economic activities became less intense after a change in the then-Czechoslovakia's political regime in 1989, according to CTK. 
The Czech Republic traded mainly with Western European countries and the US in the years following the changeover, the report added. Foreign trade and economic cooperation between the two countries have seen a boost in recent months. Last year Czech power producer CEZ and the Bulgarian government signed an agreement on a takeover of three Bulgarian power distributors. The acquisition worth around 8.9 billion Czech crowns was the largest investment in the history of the Czech Republic and a major event in Czech-Bulgarian economic relations, according to the report. 
Parvanov was quoted as saying he hoped Czech companies would take part in tenders to sell Bulgaria's state-run thermal and hydroelectric power plants. 

Talabani calls on Czech firms to invest in Iraq 

Iraqi President, Jalal Talabani, on an official three-day visit to the Czech Republic, recently called on Czech firms to become active in Iraq, CTK reported. 
Following a meeting with his Czech counterpart, Vaclav Claus, at Prague Castle, Talabani said the economic conditions would be good. According to Talabani, Czech companies could take part, for example, in the reconstruction of oil refineries and power plants destroyed in the war. Klaus was quoted as saying the Czech Republic was ready for close political, economic, military and cultural cooperation with Iraq. Klaus noted that the fact that the Czech Republic was the first European country visited by Talabani after his election was evidence to the close relations between the two countries. 
One of the Czech companies ready to sign contracts in Iraq is Inekon Group which may build a cement factory in Iraq for four billion Czech crowns. A preliminary contract has already been signed. Inekon is also interested in the reconstruction of a hydroelectric power plant, and talks are currently under way on the technical and commercial aspects of the project, Zdenek Moravek of Inekon Group said, cited by CTK. Czech companies are well-known in Iraq and were praised for the quality of their work in the country's industrialisation in the 1970s and 1980s, according to the report. Czech trademarks Skoda, Jawa and Sigma are very popular in Iraq. 

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TELECOMMUNICATIONS

Telefonica may get 80% of Telecom 

Spain's Telefonica could control up to 80 per cent of Czech fixed-line operator Cesky Telecom after a buyout of minority shares, ING analyst, Barbara Seidlova, said, Prague Monitor reported recently. 
Other analysts polled said they expected Telefonica to raise its share several percentage points. Telefonica offered a buyout at 456 Czech crowns per share in July after it bought 51 per cent of Telecom from the Czech government. Seidlova said her estimate was based on the activity of hedge funds, which were very active after the result of the Telecom privatisation was announced.

Vodafone plans Czech investment 

Mobile giant Vodafone plans to invest in mobile TV and high-speed internet through its Czech acquisition Oskar, Czech IT Minister, Dana Berova, said, Prague Monitor reported on October 3. 
Vodafone chief executive, Arun Sarin, met Czech Prime Minister, Jiri Paroubek, in Prague on September 30th. He sought to assure Paroubek that Vodafone was a long-term investor that cared about the development of the Czech telecommunication market. "We have agreed it is necessary to make sure that mobile number portability works because it boosts competition, which leads to lower prices," Berova said. The development of high-speed wireless internet is important for the Czech Republic in the long run, because it has turned out that a developed mobile market supports economic growth, she added. 

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