[PEN-L:4258] Re: Slovakia and the Czech Republic

[ts99u-1.cc.umanitoba.ca [130.179.154.224]]

"Prague, 17December 1998 (RFE/RL) by Jolyon Naegele

CZECH REPUBLIC: ECONOMY WORSENS AS GDP 
CONTINUES TO DROP

The Czech Republic's economic difficulties, which began some 20 
months ago, are worsening.  The Czeck Statistical Office reported 
this week that during the third quarter of this year gross domestic 
product shrank by 2.9 percent and that for the fist nine months of 
the year, GDP dropped by 2.1 percent compared with the same 
periods last year.

In the words of Prime Minister Milos Zeman, "we are falling into an 
abyss."  He blames the policies of the two previous govers of 
Vaclav Klaus and Josef Tosovsky.  Zeman dismisses Klaus' much 
touted privatization as "fiction" and say virtually no real privatization 
has occurred.  He told the progovernment daily Pravo yesterday his 
cabinet needs nine months of calm without criticsim to enable it to 
start turning the economy around.

(full article at 
http://www.rferl.org/nca/features/1998/12/F.RU.981217142836.html 
)

Paul Phillips,
Economics, 
University of Manitoba

Date sent:              Sun, 07 Mar 1999 22:30:32 -0800
From:                   Peter Dorman <[EMAIL PROTECTED]>
To:                     Pen-L <[EMAIL PROTECTED]>
Subject:                [PEN-L:4208] Slovakia and the Czech Republic
Send reply to:          [EMAIL PROTECTED]

> I just finished reading the piece by Timothy Garton Ash on Central
> Europe in the most recent New York Review.  Most of it is a rumination
> on the meaning of "Central Europe" (and a mild critique of Samuel
> Huntington), but along the way he tells a story about Slovakia, its fall
> and redemption.  I have no love, of course, for the ethnic chauvinism
> and authoritarianism of Meciar, but it seems to me that Garton Ash
> seriously misrepresents the economic realities of Slovakia and the Czech
> Republic.  He lists "genuine free market economics" as one of his
> criteria of virtue, so perhaps this should come as no surprise.
> 
> My understanding is that Garton Ash is wrong about both countries. 
> Slovakia, according to most accounts, is muddling through economically. 
> It is undergoing a slow, uneven transition toward a market economy, with
> enterprises gradually becoming more professionally managed.  It has
> respectable economic growth, and seems to be proceeding at approximately
> the same rate as Hungary (especially if one excludes Budapest).  I'm not
> endorsing this approach to transition, of course, simply placing
> Slovakia within the spectrum of CEE transitioners.
> 
> The Czech Republic, on the other hand, is a disaster zone. 
> Pseudo-privatization has given the cronyklatura a corrupt grip on
> enterprises, few of which have even begun to transform themselves.  The
> combination of abrupt openness in trade and finance, along with the
> failure of transformation, has created a gaping hole in the current
> account.  The crisis has been delayed due to the absence of initial
> external debt in 1989 (perhaps the only positive bequest from the
> Stalinist era) and large tourism receipts in Prague, but as foreign
> exchange disappears the moment of reckoning draws imminent.  (The Czech
> economy is already in a recession, alone in central Europe, that marks
> just the first stage in a painful process of current account
> adjustment.)  This is terrible news for the people of the Czech
> Republic, of course, but it also casts a shadow over conventional views
> of that country and its figurehead, Vaclav Havel.  If this description
> is accurate, the Czech miracle is a sham, and the philosopher-king
> presides over a Potemkin economy of charlatans and kleptocrats.
> 
> So: is this in fact a fair description of where Slovakia and the Czech
> Republic stand today?  And if so, how to explain the acquiescence of not
> only Garton Ash, but nearly all journalists, academics, and officials of
> international agencies, in a fraudulent story that will be smashed
> sometime within the next year or so?
> 
> Peter
>