Report 2002 - Czech Republic (in english)

Report 2002 - Czech Republic Petr Vancura, January 2002 Introduction. The development of the Czechlands since 1989 has been hesitant. Some attributes of democracy have been put in place, the country has a good democratic constitution, providing for a system of democratic institutions, including a freely elected bicameral Parliament. Other democratic attributes, especially the deeper ones of respect for the values of Euro-Atlantic civilization and rule of law, remain half way, and in some aspects of public life, like growth of criminality and corruption, the situation has even deteriorated. In the first years after the return to democracy, the elected leaders mostly worked with good will for the public benefit and for the reintroduction of the rule of law. With the arrival of Václav Klaus as Prime Minister in June 1992, however, this trend slowed down, and by the middle of the nineties, the country was on its way to its present level of corruption, with the parliament and the government serving more its own interests than the public. The country has become a member of NATO and is well-positioned to be accepted into the EU as well, having by now concluded the accession talks in 24 out of 30 of the required legislative chapters, including reportedly all the difficult ones. The internal political situation does not, however reflect the successful progress in the integrative processes of the West. Indeed, the internal developments can now rather be described as a “post-communist” offensive. The new political elite, the “post-communists”, comprises, beside former communists and their cronies, ambitious newcomers who are equally unprincipled, materialistic and pragmatic. The post-communists and their political parties, the Civic Democratic Party of Václav Klaus, ODS, and the Social Democrats, CSSD, attempt to monopolize power, while keeping the pretense of freedom and democracy. Although ODS poses as right-of-center, its performance, while in government between 1992 and 1997, was indistinguishable from the present conduct of the minority government of the Social Democrats, installed with the support of ODS. The Communist Party is not accepted as party to any formal arrangements, but it can be relied on to secure the post-communist offensive from the back benches of the Parliament. The initiatives of the offensive could be seen in the attempts to change election laws, limit the executive powers of the President and the independence of the central bank, gain influence over the media, especially the TV broadcasting, secure control of the law-enforcement process, and, in fact, in all walks of life, including, sadly, the neglect of the education system. Against these efforts stands the innate strength of the society, its culture, traditions, expectations, and active resistance, helped tremendously by the good luck of the country being located so close to the democratic West, by NATO membership, and the EU accession process, which not even the „euroskeptic“ Václav Klaus dares openly to question. The public reflects the broad political developments unmistakably: Whereas at the end of 1989, 33,6 percent Czechs believed everything is as it should be, the percentage declined to 10,9 percent in 1998. The feelings of fear, anxiety and insecurity prevailed for only 7,8 percent in 1989, but for 27,4 percent in 1998.[1] Under these circumstances, the coalition of the smaller democratic parties could win public support in the June 2001 elections if they could convince voters that they, indeed, mean well. These parties gathered in the “Coalition of Four” in 1998, to be able to resist the de facto grand coalition of the post-communists, but are now limited to a looser coalition of the People’s Party and the Union of Freedom, after ODA was forced to leave the Coalition for its intransparent financing in January 2002. An indication of the relatively strong voter support for the Coalition was given in the last Senate elections in November 2000, in which one third of the Senate seats was contested, and the voters rejected the post-communist candidates. These developments curiously echo the events in Poland and Slovakia, where coalitions of small democratic parties were also formed to defeat post-communists. In economy, the main market attributes have been put in place, prices and trade have mostly been freed already in 1991, and the economy has by now been mostly privatized. The necessary legal and regulatory framework has, however, been neglected. The resulting economic decline of 1997 and 1998, caused by the massive privatization frauds and the “Czech route” of economic transformation of the governments of Václav Klaus, has slowly turned, helped by the strong global growth, and the country’s economy started growing again in 2000. The Social Democratic government, under pressure from the EU, privatized the deeply bankrupt large state-owned banks, at a cost to the tax-payers of over 300 billion Kc, and attracted massive foreign investments by strong incentives. The economic growth has so far overcome the present worldwide recession, the poor performance of the remaining large state-owned companies, as well as the still intransparent business environment and rampant corruption. As a result, the GDP is estimated to have grown by over 3 percent in 2001. DEMOCRATIZATION. A. Political Process. The Czech Constitution provides for a bicameral parliamentary system, with the Chamber of Deputies holding decisive legislative power, and the Senate approval needed only for constitutional amendments, election laws, and the election of the President, elected by the Parliament. All the remaining legislation the Senate, and the President, may send back to the Chamber for another vote, the Senate with amendments, but the simple majority of 101 Deputies, out of 200, suffices for the final approval of the law, with or withoutn the Senate amendments. The Chamber is elected every four years, one third of Senators every two years, and the President is elected for a five-year term, which can only be repeated once. The main presidential executive powers are the appointment of the Justices of the Constitutional Court, the 7-member Council of the Czech National Bank, and the appointment, upon a recommendation of the Parliament, of some other high public service officials, like the members of the Commission for Securities. The President also has the power of pardoning indicted or sentenced citizens. The strongest political party in the Czechlands is now ODS, whose chairman, Václav Klaus, is also the Chairman of the lower chamber of the Parliament. With a strongly centralized structure, and mostly considered a one-man party since its founding in 1991, ODS is a pragmatic party with some 20000 members. It is usually described as liberal or conservative by its members, without a clear definition of the terms, and right-wing by others. While indeed slightly right of center in much of its performance, ODS, however, maintained the socialist welfare and pension system of the past when it held the government from 1992 till 1997, and has supported faithfully the Social Democratic minority government formed with its help in 1998. For election purposes, ODS can formulate the right-of-center principles of limited government, lowering taxes, welfare reform, or market economy, but when it was in government, it resisted most of the needed reforms, allowed, or even participated in, unprecedented growth of corruption, and eventually led the country close to economic collapse in 1996 and 97. The Social Democratic Party, CSSD, has risen in influence under the leadership of Milos Zeman, a charismatic, if somewhat coarse, former academician, reputed to enjoy a glass or two of alcohol during the day. Zeman pushed out of the party, or out of important positions, the previous leaders of the party, who tried to continue the social democratic traditions of the past, and transformed the party into a populist one, with no firm principles, following a pragmatic path together with its de facto coalition partners, ODS. It won the 1998 elections thanks to strong criticism of ODS’ corruption and embezzlement of state property, but then formed a partnership with ODS, divided power with it, and failed to fulfil most of its election promises. At the CSSD congress last April, Mr. Zeman stepped down as he had pledged after the 1998 elections, to make place for a new chairman of his own choice, Vladimír Spidla. Mr. Spidla belongs to the far left wing of his party and presented himself with a true red communist rhetoric tailored for the election role of pretended opposition to ODS. He has, however, before shown himself to be as pragmatic as his predecessor, and much of his rhetoric is likely presented just for the election appearances. For the 2002 election campaign, he promises the expansion of welfare, unemployment, and various other benefits. In the unlikely case that the Social Democratic government would again be voted in, it is practically certain that the needed reforms would again be avoided. In the de facto grand coalition ODS and CSSD formed a after the 1998 elections, sealed by what they call “Opposition Treaty”, ODS was given the top positions in the Parliament in exchange for tolerating and supporting the minority CSSD government, and the two parties share power more or less equally in the various committees, commissions, or boards of directors of state companies and institutions. For the benefit of the public, they keep up a rhetorical confrontation, but in the key parliament votes, they keep together. This comfortable power-sharing will provide a strong motivation to perpetuate the arrangement of the Opposition Treaty after the 2002 elections, but this time ODS is more likely to be the government party. The communists, steadfastly opposing most democratic changes, still have support of over 10 percent of the voters, mostly rank and file former communists and their family members. With over 100,000 members, the Communist Party has by far the most members of all Czech political parties, and is also the wealthiest of them. The rampant corruption of the ruling parties cemented their support, and, thanks to the proportional voting system for the Chamber of Deputies, they can be expected to retain their 12 to 15 percent participation in the Chamber. In the present political environment, their votes thus guarantee the continuation of the post-communist rule after the next parliamentary elections in June 2002. The neat arrangement of the Opposition Treaty was somewhat dented by the November 2000 Senate elections, in which the post-communist parties combined, ODS, CSSD and the Communists, lost majority in the Senate. Together, they now have only 40 seats out of 81, down from 50 seats before the elections, which was more than the constitutional majority of 60 percent. The defeat of the post-communists can be ascribed to the majority voting system that holds for the Senate. The voters, presented with a meaningful choice, rejected the post-communist candidates, and mostly preferred the candidates of the “Coalition of Four”.[2] Voter participation in these elections was low: 35 percent in the first round, which was held together with municipal elections, and only about 15 percent in the second round. This small partial success in the resistance against the post-communists gives a hope that constitutional changes and too outrageous changes to election laws will be prevented even in the coming years. It cannot, unfortunately, make much difference in the overall development of the country, because of the decisive power of the Chamber of Deputies. The most promising political subject, and the only one that could be called democratic, the Coalition of Four, has fallen apart after revelations about the intransparent financing of one of the parties, ODA, threatened to pull down the Coalition completely. The larger parties of the Coalition, the People’s Party, KDU-CSL, and the Union of Freedom, US, decided in the end to preserve a loose coalition and continue in the campaign. The People’s Party, the only Czech party with uninterrupted history since the creation of Czechoslovakia, participated in all the governments since 1918 until 1998, including the communist ones, with the exception of the WWII occupation period. It invites Christian support, but is as pragmatic as the ruling coalition parties. The Union of Freedom was formed from a split-off part of ODS at the end of 1997, and has adopted the right-of-center democratic agenda. Both parties have members of former governments in their leaderships, some of whom have discredited themselves with the public in the past, but, as of February 2002, they seem to retain a good chance to win the elections. In the resulting predicament, some analysts envisage the possibility that the highly ambitious leader of the People’s Party might join the Opposition Treaty arrangement, and trade the chair of Prime Minister post for the support of Václav Klaus to become the next President in the spring of 2003. Klaus will need the support of the Coalition in the Senate to be elected President. Apart from the above-mentioned parties, no other parties can aspire for a role in the next year’s elections. Any new political party which might wish to enter the political scene will face serious financial difficulties in the attempt to attract the attention of the public, as state support is only provided to parties which surpass three percent of the popular vote, 90 Kc for every received vote per year. Parties which surpass the Parliamentary threshold of five percent also receive 900,000 crowns a year for every seat in the Chamber and in the Senate. Independent candidates receive no state financial support. President Havel, with his limited executive powers and his failing health, continues in his role of an involved observer. In 2001 he successfully challenged, in the Constitutional Court, a number of laws produced by ODS and CSSD in the attempt to limit the influence of the President, of small parties, or the independence of the central bank, the Czech National Bank. President Havel uses the instrument of his public speeches to express his anxiety about the political developments in the country. In his latest speech, the New Year 2002 address, he appealed again, with emphasis, for common decency, and for allowing free spirit, sense of right, and civic culture to enter the social environment, and warned against „all the tunnellers, fraudsters, and people who have no scruples.“ In the Czechlands, listeners understand these words as mostly an indictment of Václav Klaus and ODS, along with the rest of the post-communists. In January 2003, the second and last term of President Havel will end. In 2000, self-governing regions, stipulated by the Constitution, were established at long last, under strong EU pressure, and, in November 2000, the eight new regional governments were elected. The elections, run under rules favoring large parties, brought a narrow victory to the Coalition of Four, over ODS and the communists, all of whom received a little over 20 percent of the vote. The Social Democrats lost with 15 percent. The regional governments were in most cases formed by the Coalition of Four and ODS. Although the regions have few powers at the moment, their influence is bound to grow. Their elected councils are full of enthusiasm, and are a promise for the decentralization of authority, and thus also for democracy. B. Civil Society. The non-government non-profit sector in the Czechlands is lively, fairly professional, but under-financed. Some 50000 such organizations are now registered, the majority of them involved in local issues, regional development, recreational activities, sports, or pursue cultural, ecological, or family interests. A few women’s organizations have been formed, or continue their activities since the days of the anti-communist dissent, but their impact barely registers on the social and political scene. Only a handful of independent NGOs are active in the public policy area. There are three types of NGOs in the country: foundations, civic associations, and publicly beneficial organizations (PBO). Although around 3500 foundations are officially registered, their activities do not perceptibly affect social life. Most of these foundations do not support their activity from seed money, but raise their funds in the same way as other NGOs. Most of the active organizations are civic associations, registered almost automatically by the Ministry of Interior. The registration of PBOs, on the other hand, is rather difficult. The relevant law, approved in 1995, is well prepared: it fulfils, for example, the American 501c)3 criteria for non-profit organizations. However, registration of PBOs is granted by the commercial departments of the appeals courts, and there is a clear, if incomprehensible, reluctance to permit such registrations. As a particularly astonishing example, the Prague Commercial Court rejected the application to register the Museum of Tomáš Garrigue Masaryk, the famous founding father of Czechoslovakia, as a publicly beneficial organization. This case is better known because it was the Office of the President of the country that applied for the registration. The Court gave no specific reason for its decision, beyond stating, in effect, that a museum is not a publicly benefitial organization. The tradition of financial support for non-government activities was interrupted by the long years of communism, and the culture of private donations for such work still has to develop. Moreover, Czech companies may only subtract two percent of their pre-tax profit from their tax-base for donations. Thus, most of the “non-government” work is supported by government money, as much as 70 percent, and most of the rest of the money for these activities comes from abroad. The income of non-profit organizations, including fees for services, publications, and the like, is not further taxed, so long as it is used for the purposes outlined in the organization‘s registration documents. While independent voluntary work enjoys full freedom, it is made light of by the post-communist government officials. A continued war about the value of voluntary civil society activities is being waged between President Václav Havel, a strong supporter and frequent donor of such activities, and Václav Klaus, the Chairman of ODS, who insists that no one but elected officials are entitled to be active in the public sphere. President Havel, worried about these tendencies of the powerful politicians, warns that the June 2002 elections may be decisive with regard to civil society. They will decide, in his opinion, whether the Czech society will indeed be open, a society in which „all citizens, at various places and in various ways, can contribute to its fate, and thus participate in political life in the broadest sense of the word,“ or will „slowly, imperceptibly, but irreversibly, become closed, until the most substantial issues will always be determined only by the same, relatively narrow brotherhood, in whose hands economic, political, and media power will be concentrated, and which will not even shrink from the very verge of criminality.“[3] The present social democratic government, all but three of whose ministers are former communists, does not speak up against the non-government organizations, but it cut drastically even the meagre support some of them had been receiving from the previous governments, insisting that it is the government that is primarily responsible for publicly beneficial activities. The government support for the various Christian charities was mostly stopped, protests and petitions notwithstanding. So, for example, the support for the Christian Community of the Emmaus Homes, a branch of an international organization with the same name, which cares for homeless people, and is the only organization in the country which provides residential post-penitentiary care, was cut so low as to allow only bare survival. The grants for gradual improvements of their run-down premises, mostly acquired for free from municipalities, have been stopped. This is an organization which provides an important social service, runs a farm to secure most of its food, and makes its inmates to work to resocialize them. More troublesome independent groups, like the ecological „Rainbow“, or the very few public policy groups, receive no government support whatever. The media and the public are sympathetic to the NGOs, and, in this struggle, generally tend to support them. Churches and their activity revived after 1989 significantly. Yet, results of the 2001 census, published in July 2001, show a significant decline in the number of people who believe in God, as compared to the 1991 census. In 1991, 39,9% Czechs characterized themselves as atheists, but in 2001 this number rose to 58%. The largest church is the Roman Catholic Church: 2,7 million people consider themselves to be Roman catholics. This is the legacy of the Habsburg counter-reformation of the 17th and 18th centuries when the Catholic Church was the only permitted church in the country. The Evangelical Church of the Czech Brethren, formed in 1918 out of the remnants of several protestants churches, has 137 thousand followers, and the Hussite Church, originally created as the „Czechoslovak Church“, a new „state“ church of the Czechoslovak Republic after 1918, has 95 thousand followers (down from over 1,5 million before WWII). Some twenty other small churches are registered in the Czechlands, all existing in a benevolent environment, and participating in the ecumenical cooperation. The churches remain state paid, which is likely to provide continued motivation for discussions about the separation of state and church. Independent public policy research institutes practically do not exist, as there is almost no funding available for this kind of work. Some such institutes are run by the government, to fill in the void, and to present at least some partners for international cooperation. These institutes serve more to propagate government policies than to generate independent debate or provide critical assessments. In some areas political decision-making is influenced by interest groups, mostly intransparently, however, and sometimes in support of corrupt initiatives. The education system of the country is free, but it still waits for a meaningful and effective reform, as the governments either do not care, or prefer to retain centralized control over education. Teachers are underpaid at all levels of the system. Elementary and secondary school teachers receive the initial salary of 8 to 9 thousand Kc ($220-270), and the average salary of these teachers is, as of December 2001, 13500 Kc ($365). The overall average salary in the country is 14700 Kc ($400), and the average salary of a bank clerk is 28400 Kc ($770). The minimum salary in the country is 5000 Kc ($135), and if the young teacher had a spouse and a child, and remained unemployed, the family would receive 12000 Kc ($325) in welfare benefits. The salaries of university educated workers in state-run cultural institutions like museums start at 5000 crowns ($135), and rarely surpass 10000 Kc ($270). University teachers have been leaving the universities from the first years after 1989 to claim more lucrative jobs, but now the situation is coming to the point when the universities must cancel some courses for lack of teachers. The Philosophical Faculty of the Charles University in Prague, for example, will not teach Czech literature in the coming year for this reason, according to media reports. The starting salary of university teachers is 7150 Kc ($190), and, at the end of the academic career, the basic salary of a university professor is 16030 Kc ($450).[4] Teachers at all levels of the system have been considering symbolic strikes to attract attention to their plight for several years now. Only very few private schools with better conditions for teachers exist, at the elementary and secondary levels, usually in the larger cities, some of them relatively very good. The government keeps control over these schools through the registration process, and also financially, because in most cases more than half the funding for these schools also comes from the government. At the time of the government of Václav Klaus education funding was drastically slashed from its already low levels in the budget negotiations of 1995, and the shortfall has never since been corrected, not to speak of preparing and implementing a serious reform of the education system. (DNES, 7/19/2001) Trade unions organize some 40 percent of the workforce, almost exclusively in large industrial companies. Most of the unions are members of the Czech-Moravian Association of Trade Unions, which is a direct descendant of the former communist Revolutionary Trade Union Movement. The Association has the same chairman from its founding in 1990, a charismatic and very capable former employee of communist secret police, Richard Falbr, elected also for a six-year term to the Senate in 1998, on the Social Democratic ticket. (Mr. Falbr taught languages in one of the StB, communist secret police, training facilities, located at the site where one of terrorist training camps run by the communist regime under Russian supervision in Czechoslovakia, in Zastávka u Brna, was also located) The unions mostly perform quite well on behalf of its members. Occasionally, however, they fail to defend their members’ interests. Just recently, for example, the unions leadership, having accepted the government explanation, provided support to the government decision not to raise public sector salaries in year 2002 (later reversed under the pressure of the employees themselves). A few religious charitable organizations are active in Czechlands, mostly running shelters for homeless people, such as the Catholic Charity, Salvation Army, the already mentioned Christian Association of Emmaus Homes, and a few others. The conditions of these organizations are difficult, because their main source of funding is the government, rather grudging in its support. A recently approved new law on the churches will seriously complicate their charitable work, putting all these organizations under the obligation to register with the state as publicly benefitial organizations. Church officials have cried out against the law, pointing to the Constitutional provision of the Czech „Charter of Fundamental Rights and Basic Freedoms“, which stipulates, in Article 16, that „churches and religious communities establish their organs, appoint their clerics, and set up their devotional and other church institutions independently of the state administration.“ The problem again is the corrupt and manipulative nature of the Czech registration system, indicating a possible post-communist desire to have all public activity under control. Ethnic minorities in the Czechlands are small. They have their own civic organizations, mostly involved with cultural issues, and they appear to be sufficiently effective. Of these groups, only the Romas have problems in cohabitation with the majority population. Under both domestic and international spotlight, the Romas have formed quite a few voluntary organizations, but, unfortunately, these organizations are not very good in setting their goals, and do not cooperate well with each other. The responsibility here seems to rest mostly with the government. One more phenomenon must also be mentioned, namely, the growth of the skinhead movement. According to the police report on extremism, the number of skinheads grew by one fourth in 2000, and reached around 6200. The number of criminal acts by the skinheads, mostly of racist nature, also grew, to 364 in the year 2000. The minister of interior pledged to wage a war against the skinhead extremism, mistakenly called „ultra-rightist“. (DNES, 7/16/2001) A noteworthy circumstance is the 1998 Parliamentary report of the then-newly appointed Slovak Minister of Interior, Ladislav Pittner, in the Slovak National Council, revealing that under Meciar the Slovak intelligence agency, SIS, had worked on a contract from the Russian FSB to destabilize the Czech Republic by, among several other projects, inciting the growth of the skinhead movement and anti-Roma sentiments to prevent the acceptance of the Czechlands into NATO. C. Independent media. With the exception of three public media - Czech TV with two channels, Czech Radio broadcasting four programs, and the Czech Press Agency - all other media in the Czech Republic are private. Two private TV stations cover the whole country and another one aspires to do so. About 60 radio stations broadcast, and a vast number of print publications exist, all privately owned and financially viable. A significant number of both the radios and the printed publications are financed by foreigners. The country’s daily papers are Lidove noviny (The People’s Newspaper), Mlada fronta DNES (Young Front Today), Pravo (Law; the former Communist Rude pravo - Red Law), Zemske noviny (Lands Newspaper), and Slovo (Word). Of the many weeklies, Respekt and Euro are most respected. The private TV NOVA, which has until now attracted most viewers, is currently undergoing an ownership dispute. Radios Frekvence 1 and Evropa 2 are among the most popular private radio stations. Czech Radio Free Europe, no longer supported by the Congress of the United States, but mostly by Czech Radio, retains the highest standards and is the only Czech radio station providing solely spoken programs seven days a week. With non-government organizations in the public policy area so weak, the independent media provide the only relevant watch-dog service for the society. They are helped by a 1997 law on the freedom of information which, however, is not very respected by the government. The law stipulates no sanctions, and allows the government to charge arbitrary fees for providing information. Experience shows that, despite the law, there is no way of extracting from the Government information which it is not willing to disclose. Legally, there is full freedom of press and the media. Article 17 of the Charter of Basic Rights and Freedoms, a part of the Czech constitution, states that ”everybody has the right to express their views by word, script, print, image or other means, as well as freely search for, receive, and distribute ideas and information without regard to state borders.” Censorship, according to the Charter, is unacceptable. Freedom House’s annual survey of press freedom has rated the Czech Republic (until 1992 Czechoslovakia) ”Free” from 1990 through 1999. Formally then, the media in the Czechlands have all the democratic freedoms. Yet, they cannot be considered completely free. The public Czech TV (CT) has repeatedly been subjected to attempts at political control. In December 2000, the ODS-influenced parliamentary Council for Czech TV appointed an ODS-linked new director who had previously failed in a much lower position at the TV. The employees decided to strike against the appointment and occupied the TV premises in a sit-in that lasted several weeks. Massive demonstrations in the Wenceslas square in support of the TV employees in the end persuaded the post-communist rulers to back down. As a result of the public pressure, the Council itself was dismissed, a new law passed, and a new Council appointed, with some efforts made to make it appear that it comprises respected independent personalities. Immediately after this new Council elected the new director of the TV, one of the members of the Council, the protestant pastor Svatopluk Karásek, resigned from the Council, complaining that political influence had swayed the decision-making of the majority of the Council members. A year after the conflict, public CT is settling down under the new director. A large number of its reporters have left in protest against the new management which they consider unqualified. The overall impression is that, in the end, CT has been deprived of yet more of its independence. The media noticed another worrisome development: the financing for the public media is being squeezed. CT, for example, lacks 50 million crowns for wages in its 2002 budget, which, the management says, will not be needed because in the planned restructuralization the number of employees will be cut. The worries are appearing again that the situation is being prepared for one of the two channels of CT to be privatized. The situation of the public Czech Radio is even worse, despite the optimism displayed by its director: several programs of the radio are being abolished, among them the regular prime-time evening commentary program „Mikroforum“. The programs of the cultural station „Vltava“ are being slashed even more severely. Thus, Czech public media and their freedom are being paralyzed. (Respekt, 12/27/2001) The private TV NOVA openly propagates ODS and Václav Klaus. NOVA was originally financed by an American company CME Enterprises, but when the owners finally decided to sack the director of the TV, Vladimír Zelezný, he broke his agreements with them, and created another, “new” NOVA, with obscure financing and equally obscure ownership, mostly suspected to be Russian. The deal is being contested in international courts, with the result so far of Mr.Zelezný having been sentenced to paying about one billion Kc to CME in damages, and the Czech Republic also sentenced to pay damages to CME for failing to protect its investment. The amount of these damages is yet to be decided, but CME demands some 23 billion Kc. The complicity of the Czech government in the TV takeover is obvious from the decisions of the Council for Radio and TV Broadcasting which were tailored to serve Mr.Zelezny’s interests. Messrs. Klaus and Zeman even appeared in the first talk-show of the new NOVA in 1998, and celebrated the event at a lunch with Mr.Zelezný afterwards. Mr.Zelezný’s star may, however, be declining, as he has been under police investigation for many months now, and his lawyer is even in custody, both indicted for an attempt to fraudulently harm their creditors. Despite all these warning signs, Mr.Zelezny just won another TV licence for TV NOVA in Slovakia. The other private TV, „Prima“, was spirited out of the collapsing IPB Bank last summer into equally obscure ownership of a firm called GES Real Investment, and is reportedly also suspected to have fallen under Russian control, linked to the owners of NOVA. The Council for Radio and TV Broadcasting, ODS-controlled, also decided in June 2001 that it needs to control whether the Czech Radio Free Europe broadcasts „in a balanced manner.“ When a group of visiting U.S. congressmen, led by Speaker Dennis Hastert, expressed concern about such interference in a meeting with Václav Klaus, Chairman of ODS, it led to an outraged attack by Klaus against the U.S. Embassy for allegedly providing false information to the American lawmakers.[5] The media group to which TV NOVA is believed to be linked has recently begun printing a new tabloid, Super, a particularly nasty one, bent on defaming well-known personalities, and not hesitating to present unconfirmed or even invented reports, with a political agenda openly supportive of ODS and Václav Klaus. Klaus returns the compliment, saying, for example, that it is not the tabloids that are harmful to society, but the intellectuals and their readers (Lidové noviny, 9/10/01). One of the DNES commentators, Viliam Buchert, recently observed that whatever TV channel one opens, whatever newspaper, one encounters the face of Václav Klaus. (DNES, 1/7/2002) Political influence and the direct links of some media and journalists to politicians, amounting to manipulation of public opinion, are the most damaging transgressions against media freedom in the Czechlands. Another of the detrimental circumstances is the fact that most printed media in the country belong to two or three large companies, German, as the case be. These companies appear to have no political agenda, but, in their efforts to achieve profit, keep the papers seriously understaffed. As a result, investigative journalism in the Czechlands is limited to a very few individuals, mostly working for the two independent weeklies, Respekt and Euro. The analytical and opinion pages of most of the papers thus do not have very high quality. Another factor limiting the freedom of the media is the reluctance, and often refusal, of the authorities to provide information. The single existing journalists’ association is silent with regard to these shortcomings. In 2000, a couple of journalists were indicted by the government for refusing to disclose the source of a report about a defamation campaign organized by an employee of the Office of the Government against the Vice Chairwoman of the Social Democratic Party, very likely upon orders from the Chief Adviser to Prime Minister Zeman, a former District Secretary of the Communist Party, Miroslav Slouf. The courts upheld the right of the journalists to protect their source of information. In the process, the report about the scandalous working of the Office of the Government was found to be correct by the court, but the guilty employee has kept his job. On the positive side, most journalists in the country are independent-minded, some of the printed media and radio stations impose no restrictions on their journalists, Internet access, used by some five percent of the population, is completely free, and most free information does reach the public, alongside with the skewed information from the politically influenced media. Radio Free Europe provides a safe informational and analytical anchor to those, unfortunately few, who desire it. To form a truthful and reliable picture from the mixture is many Czechs’ pastime. D. Governance and Public Administration. The Czech constitution, approved in December 1992, establishes a relatively good framework for checks and balances among the legislative, executive, and judicial branches of the government. Most laws are prepared by the government, and submitted to the Parliament for consideration, although members of the Chamber of Deputies, Senators, the President, and the regional parliaments also have the right to submit legislative proposals. Despite the law on access to public information, the proposals become available for the public only at the time of being submitted to the Parliament. Few of these proposals become subject of public debate, because the institutions and customs of civil society and press are not sufficiently developed. Even in these cases, however, the Parliament rarely pays much attention, as there is little public pressure for accountability. The Constitution provides for the independence of the central bank, an independent Supreme Control Office, and the Constitutional Court. These constitutional safeguards have played a very benefitial role in the past years, and especially the Constitutional Court has defeated several attempts by the ruling coalition to skew the political system to their benefit. In the most important of these decisions, on January 25, 2001, the Constitutional Court cancelled all the key paragraphs of the election law for the decisive Chamber of Deputies of the Czech Parliament, pushed through by the combined effort of ODS and CSSD. The law would give significant advantage to stronger parties, and would practically eliminate smaller political parties. In an extreme case, just thirty percent of the cast votes would suffice for a majority in the Chamber of Deputies. But the Constitutional Court was also needed to thwart the attempts by ODS and CSSD to impair the independence of the Czech National Bank, and to limit the executive powers of the President. The Constitutional Court also struck a law providing for unfair government financing of political parties, but in this case the Parliament responded immediately by approving a slightly changed law which provides for similarly unfair financing conditions. The ruling of the Court that rent regulation in the present form is unconstitutional has been completely disregarded by the Government. Rent regulation continues, keeping residential rents of people who have not moved from their apartments after 1989 up to ten times lower than currently negotiated rents. The populist decision negatively affects the housing market, as well as employment mobility. The secretive ways of Czech politics have an important corrective in the need to meet the accession criteria of the European Union. While the politicians pursue their narrower interest goals, they still have to meet the accession requirements, an important blessing for Czech citizens, even if perhaps not as appreciated as it would deserve. Some politicians, foremost among them Václav Klaus and his party, ODS, speak up against European integration, harmful, they say, to Czech national interests. Observers believe that this is a populist move designed to attract the xenophobic, nationalist and extremist voters, estimated to comprise some eight percent of the electorate. The instrument of parliamentary investigative committees has been introduced in the Czech Parliament, but has not been very effective yet. In one recent case, the committee set up to investigate the collapse of the largest Czech bank, IPB, was apparently set up with the goal to indict the then-Minister of Finance, Pavel Mertlík, of wrongdoing in the way the bank was sold. Who caused the failures of the bank, and the resulting loss to the taxpayer of over 100 bn Czech crowns ($2,8 bn), never became the subject of the committee investigation. Regional governments will only start functioning in 2002, and their responsibilities and relative autonomy will yet be contested and adjusted in the coming years. The communal governments are in place since 1990, apparently from the beginning with sufficient authority to serve their communities. Some 70 percent representatives in the town and village councils have been elected as independents. Since they are much better known to their voters than at the national level, they are also much more likely to serve them properly. This situation apparently irritated ODS, so it proposed a new communal election law, which would exclude independent candidates, but the proposed law, approved in the Chamber of Deputies, was rejected in the Senate by the margin of one vote in November 2000. ODS, however, did succeed in preventing independent candidates to run in the regional elections, after having fought unsuccessfully against the establishment of the Constitution-guaranteed regions until the last minute. For the regional elections, ODS also succeeded in pushing through the skewed arithmetic of apportioning mandates which the Constitutional Court struck for the country Parliament. In this case, with each of the regions forming one large election district, the impact of this arithmetic will not be too big, although it did prevent most of the local regional groups from winning a seat in the elections of 2000. At the moment, the regional governments, which have received responsibility for elementary and secondary education, health care and regional transportation, are in a healthy battle with the central government for power and funds. According to the present law, the regions have no independent revenues - all their funding comes from the state budget. The government ministries are reluctant to part with their power over the funds to be spent in the regions, but, in this case, their efforts may be doomed to failure. Civil service as a whole is in dire need of reform. After 1989, it has mostly been taken over from the previous communist establishment, and then allowed to expand to more than twice the previous size, retaining the rigidly centralized communist form. The regional self-government will hopefully relieve the grip of the central government, depending on the extent of its authority. Czech civil servants, on the whole, have responsible attitudes to their work, the two main problems in the service are the uninspired administrative system and the corruption of their superiors. RULE OF LAW. A. Constitutional, Legislative, and Judicial Framework. In the Czechlands, the so called ‚parliamentary system‘, in which the government is appointed by the party or coalition which can muster a majority in the Parliament, eliminates one of the three main pillars of democratic checks and balances, the mutual independence and control between the legislative and executive powers. When this happens in a corrupt environment, the whole political system can get out of balance, and facilitate overwhelming influence of the ruling powers. This has actually happened in the Czechlands under the rule of ODS and CSSD. The judiciary, comprising district, regional, „higher“, „Supreme“, and the Constitutional courts, is more independent, with some 70 percent judges appointed after 1989, but even so, the judicial system of the country is still in need of much improvement. Last year, it came under strong criticism by the European Commission for being ineffective. This year, after two important reforms had been approved, amendments of both the Civil and the Criminal Codes, the EC expressed its pleasure with the achievement. The Commission, however, appears to be praising mostly the fact that some progress could be reported, without analyzing in more detail what the effect of the changes may be. One of the matters that still await a needed reform is the surviving communist system of selection of new judges. In the Czechlands, applicants for judgeship are selected from freshly graduated law students, who then serve for three years as „Court Apprentices“, and are afterwards appointed as judges, without any further requirements. The Civil Code amendment has been in power since the beginning of 2001, and the effect that is most felt is unpleasant: under the new provisions, the defense of the indicted person can prolong the litigation indefinitely, by presenting evidence one piece at a time. The effect of the new Criminal Code, which, in principle, is bringing a positive move away from the communist system, and will come into power in January 2002, is, unfortunately, expected to be similar: the whole burden of investigation will now fall on the judges, and, underfinanced, understaffed, and underequipped as they are, the judges will likely have little chance to keep up with the cases. The backlog of cases, already formidable in the civil and commercial sectors, will start growing in the criminal sector of the courts, too. After long delays, the criminal cases may then become impossible to investigate and prosecute properly. The Czech courts thus face the likelihood of being increasingly paralyzed. The government also prepared, and the Parliament approved in December 2001, a new Law on the Courts and the Judges, which came under strong criticism for instituting government oversight over the judges. The new law stipulates further education and screening for the judges, organized centrally by the Ministry of Justice, leaving it in the hands of the ministry clerks whether a judge is, or is not, fit to continue serving as a judge. Astonishingly, the law gives the minister of justice the authority to single out a judge for a „review“ when the minister deems appropriate. The judges are also outraged at the thought of the bureaucrats deciding how they should educate themselves. They say that not even the communists dared to impose such restrictions on the independence of judges. The Czech Constitution and its safeguard, the Constitutional Court, have amply proved their worth in the last three years. Perhaps the main explicit reason for Václav Klaus to support the Social Democratic minority government was his wish to change the Constitution in several points, and to change the election law for the Chamber of Deputies in such a way as to eliminate or limit the influence of smaller parties, and in an extreme case, even allow the winning party to achieve majority in the Chamber with as little as 30 percent of the cast vote. The constitutional changes proposed by Klaus would take away most executive powers of the President, including his power to appoint the judges of the Constitutional Court and the top management of the Czech National Bank, the Czech central bank, and would limit the independence of the Bank. The post-communist alliance managed to push all these changes through the Parliament, while they still had constitutional majority in both its chambers, but President Václav Havel appealed against the decisions to the Constitutional Court, and the Court cancelled both these constitutional amendments, and the new election law. Václav Klaus then complained that the President “tramples on democracy”. Hopefully, the vigilance of the European Commission will continue, and such excesses will, eventually, be corrected. But these judicial reforms show that utmost vigilance is indispensable in dealing with the post-communists. The situation is much worse in the area of state prosecution. Some 90 percent state prosecutors served as prosecutors already before 1989, and it is no exception that both the state prosecutor and the defense lawyer are former communists, and former colleagues in one way or another. It is then no wonder that, according to the Supreme State Prosecutor, Ms. Marie Benesová, 70 percent cases submitted by investigators for prosecution are laid aside by the prosecutors. Especially cases involving criminal activities of the post-communists often fail to appear before a court, not to speak of the crimes of communism. In addition to this, many criminal activities are not even investigated. The situation may now be streamlined by the changes to the Criminal Code, with the judges becoming henceforth primarily responsible for the investigation. The most outrageous act of the present Social Democratic government with regard to law-enforcement is the dismantling of the police department fighting Russian-speaking organized crime, despite protests by President Havel. The director of the department has been prosecuted since November 1998 on totally trumped up charges, most probably to send the message to all policemen not to even think of investigating Russian criminals. In December 2001, he was finally cleared by a court, but the desired damage had been achieved. The Social Democratic ministers of interior have fired practically all police and security employees who entered the service after 1989. Instead, they have called back former communist security „experts“. Among them, for example, are former guards in prisons for political prisoners Petr Ibl, now Deputy Minister of Interior, or Václav Jakubík, now Deputy Director of Czech Police, who, for two long years, could not obtain the obligatory security clearance. When the National Security Office finally did give him the clearance, the Chairman of the Senate Committee for international affairs and Security, Michael Zantovský, commented that by clearing Mr.Jakubík the Social Democrats ensured that none of the clearances issued by the National Security Office, will henceforth be trusted by our allies. Mr. Jakubík was reportedly, before his appointment to his Police position, involved in a commercial enterprise with a former State Security officer, who had, for years, worked in Brussels against NATO, and an Italian suspected of links to organized crime. The security situation of the country worries also President Václav Havel. Last year he personally protested against the pressure to which the police units fighting organized crime, corruption, and serious economic criminality were subjected. He said that he suspects that “someone is successfully attempting to destabilize successful police units”, (LN 3/2/2000), and then, a week later, added: “I am beginning to be very disquieted by some developments in our country. There are the strangely lost tens and hundreds of billions [of crowns], the embarrassing inability of the state to resolve those cases and uncover the culprit, all of which has the detrimental impact on the apparent waning of citizens’ confidence in the democratic state, in the democratic system and its institutions.” (LN 3/10/2000) The Czech situation indicates that the proportional election system, used to elect members of the Chamber of Deputies, may not be ideal for post-communist societies. This system allows, as illustrated by the example of the post-communist parties, ODS and CSSD, a development of centralized political parties with powerful secretariats and party chairmen, who have a decisive say in the constructing the election candidates lists, reminiscent of the structure of the Communist Party of old. Skillful and plentifully funded election campaigns then allow these parties to convince voters to give them their votes. Election promises, however, and not honored, as seen in the example of the „Opposition Treaty“ between ODS and CSSD, seeming mortal enemies before the elections. Such dishonest strategies would be more difficult to apply in a majority voting system, in which individual candidates would have to attract the support of voters. The one area where respect for human rights is being seriously harmed in the Czechlands is the relationship to the Romas, and other colored people. While the majority of people are mostly tolerant and helpful, some groups, racist, chauvinistic, and some with unclear motivations, target the Romas with hateful attacks. The police, shamefully, are often found to side with the attackers, mostly various groups of skinheads. The investigations of these crimes usually lead nowhere, and many Romas live in the situation of permanent insecurity. (Some of this behavior may have been artificially inflamed. When the present Slovak government came to power, the new Slovak Minister of Interior published the information that, under the Meciar government, the Russian FSB had several contracts for subversive activities against the Czech Republic with the Slovak secret police, SIS, among them to incite the growth of the skinhead movement and to inflame ethnic conflicts with the Romas.) B. Corruption. The poor state of law-enforcement in the Czechlands is accompanied by massive corruption. According to international assessments, the Czechlands is now one of the most corrupt countries in Europe. In the Transparency International corruption index it has been ranked in the 47th place together with Bulgaria and Croatia, with the score of 3,9. Apart from Russia and Ukraine, only Slovakia, Latvia, and Romania have scored worse in Europe. In the otherwise rather benevolent evaluating report of the European Commission of November 2001, the high level of corruption belonged to the most criticized points, with special emphasis on intransparent procurement. Corruption, building to a large extent on behavior patterns of the communist past, permeates the life of the society. Sociologists speak politely about “temporary separation of the market from law, and procrastination of the state in forming the institutions of market society.”[6] Government procurement is intransparent, and to get a government contract is considered impossible without a bribe, the standard rate reported to be 10% of the value of the contract, or without participation in the influence networks of political power. Instead of “human capital, education and experience,” it is the “social capital which decides, friends and connections.”[7] In the initial transition period, privatisation was conducted equally intransparently, and the government allowed some 500 billion Kc, about one half of GDP, to be lost from state-owned banks. Government officials have developed a “legal” method of bribing: the bribes are concealed as fees of mediating companies. Thus, government procurement passes, artificially and unnecessarily, through mediating companies related to the government officials involved, which collect the agreed fees. The present social democratic government won the 1998 election partly on promises to bring justice into these matters, and to “put the tunnellers and fraudsters into jail”, as the now-Prime Minister Zeman put it. While the relevant multilateral anti-corruption conventions have been signed by the Czech Republic, in reality, their provisions are not implemented, and the election promises remain unfulfilled. The government started an initiative called “Clean Hands” in 1998, but it brought practically no results, as mentioned in the Global Report of Transparency International. Regular police investigations have led to a few convictions in 2001, but most criminal cases never make it to the court. The huge bank losses have been swept under the carpet by the present government, to be paid by the tax-payer. The government bought the state-owned banks’ debts of several hundreds of billions of dollars, and then sold the banks to foreign investors for low prices to prevent their total collapse. The malaise of corruption affects even foreign companies active in the Czechlands. In a notorious case, the Vice Chairman of ODS, Miroslav Macek, was discovered to have received 10 million Kc as a fee by Erste Bank for consulting services related to the Erste’s purchase, in the spring of 2000, of Ceská sporitelna, one of the then-bankrupt large Czech state-owned banks. Mr.Macek, however, apparently performed no real consulting work for Erste. The case shows how intertwined the two post-communist parties are: the CSSD government was selling the bank, but a high ODS official had to be bribed. Presumably, this was not the only bribe in the case, as indicated by the continued position of Livie Klausová on the Board of Directors of Ceská sporitelna. According to a research conducted in May 2001 by the GfK agency, 39 percent of the Czech population believe that the government most responsible for the spread of corruption and bribery in the Czechlands is the present government of Milos Zeman, 29 percent believe that the governments of Václav Klaus are most responsible, 19 percent believe that it is the guilt of the previous communist governments, and only five percent stated that governments are not responsible for corruption and bribery. The large majority of Czechs, almost three quarters, believe themselves to be victims of the corruption of the powerful new rich. On June 8, 2001, the Supreme Control Office announced that, according to its findings, the government breaks the existing law in every other case of government procurement. Despite such findings, there are practically no anti-corruption measures being put in place. No codes of conduct exist for public administration. Many honest public officials exist, but their motivation is their own. When the weekly Respekt recently observed that the government failed to keep its election promise of combatting corruption, and that its ministers are even involved in corruption-supporting activities themselves, Prime Minister Zeman was offended, called the paper the “garbage can of Czech journalism”, and, at a press conference on October 22, 2001, he threatened to “ask for such financial compensation that Respekt will finally be smashed.” The conflict led to a thorough recapitulation of proven or suspected acts of corruption by the government ministers in the media.[8] The threat by the Prime Minister against Respekt elicited international indignation. For example, Charles Gati wrote in the Washington Post, on November 8, 2001: “Supporters of NATO enlargement, like myself, should be the first to say that the heavy-handed attack of Prague against the press is an offense against Western values …” Transparency International has a chapter in the Czechlands, financed mostly by EU money, but it is under government influence, and spending its energy mostly in formal activities. According to its young director, the goal of Transparency International is to work with the government on anti-corruption initiatives. No wonder then that these initiatives have no impact and the public is unaware of TI presence in the country. Among these activities, TI organized a large International Anti-Corruption Conference in October 2001, which passed largely unnoticed. Nor are there any other meaningful public initiatives combatting corruption. Although the public is outraged at the levels of corruption, people have largely given up the hope that they could influence the situation for the better. Corruption has to be combatted by the government, people are convinced. Even the willingness to report corrupt behavior is declining, and, according to the GfK research, only four percent of the population would be willing to testify in a corruption case. People are again afraid to speak up, similarly as they were in the days of the communist regime.[9] ECONOMIC AND SOCIAL TRENDS. The Czech economy has climbed out of recession under the Social Democratic government, partly following global trends, and partly, possibly, thanks to the privatization of the large state-owned banks, and the large inflow of foreign investment since 1999, averaging 5 billion U.S. dollars a year. The investments were encouraged by the incentives adopted by the government, 5-year income tax waiver, and generous requalification subsidies. The GDP is now estimated to have grown by over three percent in 2001, a respectable result at a time of a worldwide recession. Inflation remains low, at 4,1 percent in 2001, but unemployment has returned to historic highs, 9,4 percent at the end of 2001, despite the huge investment growth, a result, most likely, of the demotivating welfare policies. However, the privatization of the banks, which was unavoidable, and the investment incentives which attracted foreign investments, appear to be the only positive acts of this government with respect to the economy. None of the other neglected main shortcomings of the economic life were addressed by the Social Democrats. The imperfect legal environment remained largely untouched, bankruptcy laws have been slightly improved but remain ineffective, and allow the large insolvent companies to maintain the environment of general distrust in Czech business by failing to pay their invoices, a register of debtors has been prepared by the banks but prevented from publication by the government, regulation of capital markets remains unsatisfactory and the markets fail to provide investment capital. Justice has remained practically unenforceable due partly to corruption, and partly to the huge backlog of about five years of cases in the commercial courts, the high taxation level has been increased rather than lowered, support for the development of small and medium enterprise is still missing, welfare continues to motivate people to stay out of work, pension reform has again been avoided, and public budget deficits have grown sky-high (11,5 percent of GDP in 2001), as much as the government debt. While passive in all these respects, the government has devoted itself to a number of activities whose purpose invites scrutiny. Among the main efforts of the government are the plans to sell practically all remaining state property, jealously protected from privatization by the previous governments of Václav Klaus. Two different kinds of worries arise with regard to these otherwise praiseworthy privatization plans: the potentially corrupt nature of the sales, and the danger of selling significant segments of Czech economy to the Russians, or to companies under Russian influence. While the former might lead to the strengthening of the influence networks supportive of the present post-communist rulers, the latter is a much more serious threat. According to the latest public report of the Czech intelligence service, Russian secret services have stepped up their activities in the Czechlands, and are trying to penetrate public administration at both the state and the local government levels. All over Central Europe, Russian companies are reported to be buying up businesses, mostly in the energy, finance and media sectors. The January 2002 selling of the strategic petrochemical company Unipetrol to Agrofert of Andrej Babis appears rather unfortunate in this regard. Babis is reportedly a former StB agent, the sources of his financing are intransparent, and some of his previous acquisitions were contested in courts for alleged fraud. On the other hand, the selling of the gas monopoly, Transgas, to the German RWE, also in January 2002, is widely considered to be a good choice. There are other serious indications of Russian influence. In November 2000, for example, the sixth session of a ”Permanent Russian-Czech Committee on Economic and Scientific Cooperation” took place in Prague, at the Ministry of Industry and Trade. No reports about the session penetrated to the public at the time, so the session must be considered to have been a secret one, between the Czech and the Russian governments. Equally secret meetings reportedly took place between the leader of the Russian delegation, Minister without Portfolio and Director of the Office of the Government of the Russian Federation, I.I.Shuvalov, and three top Czech politicians, Václav Klaus, Milos Zeman, and Jan Kavan, the Foreign Minister. The Czech government has no such permanent committees with any other country. The Ministry of Industry and Trade refuses to provide any information about the previous five sessions of the Committee. The conclusions of this sixth session were leaked to the press, and appeared in January 2001 in the weekly magazine Euro. Among many other pledges, the Czech government apparently promised to provide the Russian government with preferential information about the privatization of the energy sector, to regard Russian companies as equal to Czech companies in this process, and to cooperate with the Russians on nuclear industry projects with respect to third countries. The government has other strange deals with Russia, the most odious being the agreement to forgive two and a half billion U.S. dollars of the Russian government’s debt to the Czech Republic, for the dubious benefit of receiving the payment of some 15 percent of the debt. To add insult to injury, the Russian government insisted that the payment be provided to the Czech Republic via a Russian company Falcon Capital, which has been investigated by the Czech police for criminal activities ever since it was registered in the Czechlands in 1995. The media speculate that the reason why the Russian government should insist on making the payment through Falcon Capital is to facilitate money-laundering. The Czech government refused to comment on this possibility, and refused to publicize the agreement on the debt with the Russians, invoking a curious provision in the law on foreign debt repayments enabling it to keep such information secret. The reasons why the Czech government should agree to the deal are truly incomprehensible. To all appearances, several billion dollars are being made available for possible criminal purposes upon a request from the Russian government, in an act very likely flouting Czech international obligations with respect to money-laundering. In another huge and indefensible transaction, the government is at the point of purchasing 36 Swedish Gripen supersonic fighter airplanes for the price of 75 to 100 billion Kc ($2-3 bn). The purchase, if executed, will only add to the present paralysis of the Czech military budget. At the moment, the Czech Republic is sorely lagging in the fulfilment of its NATO obligation for lack of finances caused by a number of previous irresponsible purchases and other financial commitments of the Ministry of Defense. If the supersonic fighters are purchased, this lamentable situation of the military budget will likely be prolonged until 2030! The transaction is all the more questionable since Sweden is not a member of NATO, and the Gripens have never been tested in Alliance action. The tender has reportedly been skewed in favor of the Gripens from the beginning, and all the other competitors withdrew their proposals. Closer to home, the Social Democratic government has run increasing budget deficits. With the good excuse of having to deal with the huge debts incurred by the state-owned banks under the Klaus governments, the deficits have risen to the level of around ten percent of GDP, far above the EU upper limit of three percent. Although the overall government indebtedness is still below the European limit of 60 percent of GDP, the growing government debt is made more ominous by the continued absence of reform of any of the ever-growing mandatory government expenses, which now swallow some 86 percent of the government budget. In Czechlands, most prices were liberated already in January 1991, but regulation of energy prices and of rents has been maintained, although it makes no economic sense. Prices of electricity paid by Czech consumers are now substantially higher than the price the Czech electric power monopoly, CEZ, receives for its surplus electricity on the European markets. The gas prices are also higher than they would be in a free market, providing extra income for the state budget. For the rent regulation, keeping residential rents of people who have not moved from their apartments after 1989 up to ten times lower than currently negotiated rents, there is no sensible excuse. According to the results of the census of 2001, half a million apartments in the country are empty. The experience from East Germany showed clearly that rent deregulation is beneficial, opens the housing market, frees up unused housing, and allows housing investment to develop. The Czech post-communist governments may fear social disturbances, as they say, but they may also wish to keep private house owners’ hands tied by low income and the inability to expel non-paying tenants. In the social sector, the Social Democratic government naturally follows in the footsteps of the previous ”right-wing” governments of Václav Klaus, and avoids any attempts at pension or welfare reform. The pay-as-you-go pension system has remained without any attempts at reform. The Minister of Social Affairs, and new Chairman of CSSD, Vladimír Spidla, is obsessed with the conviction that the government is obliged to provide care for everyone’s needs, and would most likely prefer to relieve the citizens of all the trouble with having to dispose of their income by channelling it through the state budget. The new Minister of Finance, and former Deputy to Minister Spidla, Jirí Rusnok, appointed in March 2001, seconded this approach by expressing his opinion that taxes will need to be raised. With some 86 percent of the state budget consumed by mandatory expenses, the state finances head for a crash landing in near future. One of the saddest stories of Czech transition to democracy is the fate of the education system. Neglected from the beginning by all the governments, education is in sore need of wise reform. In elementary and secondary education the centralized socialist management of education is perpetuated, with the emphasis in education being put on learning huge amounts of information, to the detriment of learning skills, creativity, and independent thinking. Higher education institutions have used their newly gained academic independence to cement their communist lecturers into their positions. Thus, better teachers have by now left the universities, to avoid the fate of having to conform to the prevailing atmosphere, in addition to earning a higher income. As mentioned above, the universities have now come to the point of having to close some courses for lack of teachers. The post-communist governments seem not to care about the fate of education, the single most important element for the success of the transition to democracy. Health care is also in a need of reform, even though the sector has been relatively quiet throughout 2001. Salaries are low, compared to European standards, the system encourages abuse by patients, state-imposed saving regulations are often counter-productive, and the health care insurance companies are suspected of wasting a large proportion of the health insurance money. [1] Information from researches of the Sociological Institute of the Czech Academy of Sciences, as quoted in Lidové noviny, 11/16/2001. [2] One third of the Senators is elected every three years for a six-year term. [3] President Havel now sends this message in every major opublic speech he makes in this country. The quotation used is taken from his New Year speech 2002. [4] Lidové noviny, November 21, 2001. [5] Respekt, June 4, 2001. [6] See Jirí Vecerník: Economy, Politics, and Society, in Respekt, December 10, 2001. [7] Ibid. [8] See, for example, the special supplement of Respekt, November 11, 2001, devoted to government corruption. [9] For the reviewers: There are literally hundreds of newspaper articles and analyses concerning corruption, and substantiating the statements made in this section. The Czech rulers arrogantly ignore all such information and revelations. With the limits to the length of the report, already far exceeded, this information simply cannot be included in the text. Let me note a few important articles here: Lidové noviny, June 4, 2001: An analysis of the ways in which the government by-passes the required procurement procedures. Respekt, June 11, 2001: Special supplement devoted to „The Golden Age of Corruption“. Recounting of the losses in the state-owned banks, the „tunnelling“ of state-owned companies, of some privatization cases. Lidové noviny, August 25, 2001: Miroslav Antl, just appointed as the Director of the Czech Office of Investigation, confirms in an interview his previously published statement that „there is corruption, unfortunately, in the ranks of state prosecutors, police, and courts.“ Lidové noviny, November 15, 2001: Just one day after the EC report was published, the government approved a new procurement law which, if approved by the parliament, will expand its authority in procurement without public competition. Respekt, December 17, 2001 - on the direct information links between Prime Minister Zeman and Nomura, concerning the investigation of the IPB bank frauds. Much ink has also been spent on the Russian links of our governments. One example: Respekt, May 25, 2001: The Moscow connections of our governments: Barak Alon, Falcon Capital.