Czechs press ahead in race for accession

Date: 16/05/1996

IF EU politicians were asked secretly to pick their favourite amongst the Union's ten enlargement candidates in Central and Eastern Europe, their choice would almost certainly be the Czech Republic.

Unlike Poland, the republic is small enough not to challenge the dominance of EU 'giants' such as Germany, France, the UK, Italy and Spain. But with ten million inhabitants, nor will it confront the 15 with the difficult exercise of integrating another midget state into the Union's institutions.

Geographically, incorporating the Czechs will neither distort the Union's existing borders nor challenge its present identity. Prague, the country's thriving and beautiful capital, is closer to Brussels than Vienna and entirely lacks the whiff of exoticism one might encounter in Bucharest or even in Budapest.

The Czechs' historical proximity to the West is even more obvious in the cultural field, with authors such as Milan Kundera, directors such as Milos Forman and playwrights such as Vaclav Havel - the widely-respected head of state - who were international stars even in the segregated days of Communism.

Agriculture, the next enlargement round's biggest headache, is a subject which will hardly need to be raised when the Czech accession negotiations begin.

The Czech Republic, a country with an old industrial tradition, is one of the few in Central Europe to have an almost negligible agrarian sector. Following a policy of massive collectivisation, the republic employs only between 6&percent; and 8&percent; of its labour force in farming, which contributes only 3.5&percent; to the GDP.

Politically, the country which fostered the famous Prague Spring in 1968, forced the Soviet Union to roll out the tanks and thus unwittingly delivered the final blow to Reform Communist hopes, has grown into a paragon of conservative stability, with its Thatcherite Prime Minister Vaclav Klaus widely expected to be returned for another term of office in the parliamentary election to be held at the end of this month.

The country's astonishing political stability also became apparent in its mature and largely friction-free handling of its separation from Slovakia, which opted to become a separate republic in 1992.

While the Slovak half of former Czechoslovakia has since developed a political culture riddled with agitated nationalism, banana republic practices and a distinctively authoritarian style of government, the Czech Republic has seen the emergence of a political landscape which is remarkably free of the maverick demagogues characteristic of many post-Communist societies.

In social and economic terms, meanwhile, the Czech Republic has a track record that is the envy of its neighbours.

With a comfortable GDP growth rate of 4.8&percent; in 1995, which is expected to increase to around 5.5&percent; this year, the republic's results are not as spectacular as those of neighbouring Poland. But the absence of a foreign or domestic debt problem, an unemployment rate barely exceeding 3&percent; and a government budget regularly showing up a surplus have created a macroeconomic framework of which most EU governments can only dream.

Inflation, meanwhile, has been brought down from 20.8&percent; in 1993 to 9&percent; last year. The government is confident of sustaining the downward trend, provided it can hold off inflationary pressures expected from the growing confidence of a Czech labour force which so far has been spared the scourge of unemployment.

Josef Kreuter, the Czech Republic's ambassador to the Union, strongly disputes the suggestion put forward by some foreign economists that the country's outstanding employment performance is mainly due to a delay in the restructuring of the former state industry, with thousands of jobs yet to be shed.

Arguing that the economy is already largely exposed to the winds of foreign competition, Kreuter, a fellow-economist on friendly terms with Premier Klaus, points out that the Czech Republic - in contrast to Poland and Hungary - has refrained from enacting any anti-dumping provisions and has erected far fewer hurdles to imports than most of its Eastern competitors.

The country's remarkably low unemployment rate, Kreuter explains, is due largely to the politically motivated systematic suppression of the service sector under the Communist regime, which was much harsher in Czechoslovakia than in other former Eastern bloc countries.

Hence, according to the ambassador, the huge demand for even basic service activities such as retail allowed a large number of job-seekers to find work in this sector once the artificial clamp-down on its expansion had been lifted.

Critics of the Czech model point to the many transition problems besetting the republic in common with most of the other former Eastern bloc economies.

Spectacular cases of corruption and organised economic crime regularly make the headlines, and the once-popular voucher privatisation scheme has left many small-time investors disgruntled as the hoped-for equitable share-out of national wealth has failed to materialise.

Foreign investors, meanwhile, have complained about ongoing discrimination, as the Czech authorities - with notable exceptions such as Skoda, now part of the German Volkswagen conglomerate - have sometimes been loath to sell off prestigious symbols of Czech industry to eager foreign buyers.

And while the political landscape's remarkable stability is generally acknowledged, some point to the lack of prestige enjoyed by the country's parliament and judiciary as symptoms of its remaining democratic weaknesses.

Set against the problems that many of the other candidates for Union membership continue to confront, however, the tasks facing the new Czech government - likely to be the one which will launch accession negotiations with the EU towards the end of the decade - seem comparatively easy.

Combined with a love of provocation and a considerable confidence in his own judgement, the Czech record has encouraged Prime Minister Klaus to lecture fellow leaders in both the East and the West about the best way to administer their countries, a tendency which has infuriated other heads of government such as German Chancellor Helmut Kohl.

This irritation has been reinforced by Klaus' glowing admiration for former UK Prime Minister Margaret (now Baroness) Thatcher, whose strident comments are still ringing in the ears of many European leaders.

Echoing Thatcher, Klaus regularly warns about the dangers of excessive and over-hasty Euro-federalism, and attacks such Euro-fervour as dangerous and naïve.

But as Ambassador Kreuter is keen to point out, the Czech government and most of the political establishment are firmly committed to the goal of further European integration.

“We are interested in stability and security. Our historical experience has made us convinced that they can best be preserved through common and balanced structures,” stresses Kreuter.

“In our view, the goal of European Union is political, and not primarily economic.”

According to the ambassador, the long experience of enforced integration in the former Eastern bloc, combined with substantial transfers of cash to poorer neighbours, has made the Czechs especially wary of the benefits of hand-outs and regional subsidies.

“For us, this will not dominate the negotiations,” stresses Kreuter.

Provided the Intergovernmental Conference on EU reform does not run into a major crisis, the ambassador expects the enlargement negotiations to begin sometime in 1998, with all the ratification procedures completed and accession actually taking place between four and six years later.

“We used to be amongst the founders of institutions and conventions such as the League of Nations and the Bretton-Woods-Agreement,” says Kreuter.

“This reflects our deep conviction that the stability of the continent is something for which you have to work. We are a small country, but we have a contribution to make.”