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Carolina (English) No 249
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STUDENTS' E-MAIL NEWS FROM CZECH REPUBLIC
Faculty of Social Science of Charles University
Smetanovo nabr. 6
110 01 Prague 1
Czech Republic
e-mail: CAROLINA@cuni.cz
tel: (+4202) 24810804, ext. 252, fax: (+4202) 24810987
*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*
C A R O L I N A No 249, Friday, May 30, 1997.
FROM THE EVENTS OF THE PAST WEEK (May 21-28)
Central Bank Deregulates Czech Crown
The battle to maintain the 6-year stability of the Czech crown ended
on the evening of May 26, when the Czech National Bank (CNB) stepped
away from the controls. CNB Governor Josef Tosovsky and Prime Minister
Vaclav Klaus announced at a special press conference that evening that
the bank would stop controlling fluctuation of the crown within
a 7.5-per-cent margin, tied to the American dollar and the German mark.
The crown's value is now tied only to the mark. Its exchange rate fell
by 10 per cent May 27, leaving the mark selling at 19.4 crowns and the
dollar for a little more than 33 crowns. The crown began to drop two
weeks ago, as foreign investors turned away from the drooping domestic
economy and political instability. The Central Bank intervened in the
interbank market, probably spending billions of dollars from their hard
currency reserves to purchase crowns. Although the CNB raised the
Lombard rate, it didn't stop financiers from speculating on the crown's
fall. Following the lead of domestic companies, many Czechs started
exchanging the local currency for dollars and marks.
Experts say that putting a brake on the plumetting crown will depend
on how quickly the government is restructured and on regaining the
people's trust in its solvency. The government should take further steps
in decreasing the foreign trade and balance of payment deficits. There
is talk of increasing import tariffs and of watching the stock market
more closely, as well as of budget cuts and of wage stays, against which
union leaders are expected to take a stand. Although Chairman of the
Czech-Moravian Chamber of Unions Richard Falbr said unions have little
interest in becoming a catalyst for the current political situation,
railroad union leader Jaromir Dusek says that he plans to defend union
members' standard of living tooth and nail. Usually one of the loudest
critics, opposition leader and Parliament Chairman Milos Zeman said it
is in the best interests of both the coalition and opposition to
maintain Czech currency stability.
Jiri Fremuth/Andrea Snyder
Government Admits Serious Errors in Economic Reform and Proposes Program
"Instead of economic growth we must expect economic decline
accompanied by a visible rise in unemployment. The changed course of the
crown will also cause a temporary rise in inflation. All of these
phenomena will mean a decline in real wages and other income," is
written in a document agreed to May 28 in Prague by the three coalition
party chairmen: Vaclav Klaus (Civic Democratic Party), Josef Lux
(Christian Democrats) and Michael Zantovsky (Civic Democratic Alliance).
The government thus for the first time openly admitted that the Czech
Republic finds itself in a grave economic situation, and that measures
leading to its repair will be painful.
Among the i mediate measures are further reductions in 1997 budget
spending in state administration, investment and social support, as well
as support for Czech National Bank monetary restrictions, strengthening
the crown, an uncompromising limitation on subsidized imports and
a freeze of public wages. The government also proposed collective
bargaining in state-related enterprises to prevent the creation of
a wage and price spiral.
If the measures do not bring the expected effect in the coming half
year, the coalition does not rule out even more radical steps, including
import duties and tariffs.
The stabilization and recuperative program of the government
coalition also deals with the main causes of the current economic
situation: the low effectivity of the banking system deepened by state
intervention, maintenance of ineffective activities with budget
spending, payment problems caused by legal insufficiencies, lack of
transparency in ownership relations and the absence of a legal and
administrative atmosphere in which it would pay owners to act
responsibly. It focuses on wages growing faster than productivity, the
declining competitiveness of the Czech economy, the payment-balance
deficit and troubles maintaining a balanced budget.
Lida Truneckova/Michaal Bluhm
Ministers Leave Posts
Interior Minister Jan Ruml, Finance Minister Ivan Kocarnik and Trade
Minister Vladimir Dlouhy, in the Cabinet's response to evaporating
public confidence, are leaving their government posts. Ruml and Kocarnik
are members of the ruling Civic Democratic Party (ODS) and Dlouhy is
a vice chairman of the Civic Democratic Alliance (ODA). Chairman of the
parliamentary Committee for Defense and Security Petr Necas should
replace Ruml. ODA has not yet announced a new candidate for the Ministry
of Industry and Trade.
There should also be changes at the Health Ministry. ODS says it
will replace current minister Jan Strasky if the coalition makes it
possible for ODA Chairman Michael Zantovsky to be a part of the
restructured government. Both ODA and ODS would like to see the former
ambassador to the USA holding a position in the government, but the ODS
does not plan on giving him their man Josef Zieleniec's job as Foreign
Minister, nor do the Christian Democrats want to give up the Defense
Ministry post held by Miroslav Vyborny. Zantovsky has said that as the
head of a coalition party, he cannot accept a less important position,
and that he does not feel qualified to become trade minister. He says he
is not forcing his way into the government, and that it is possible to
construct the Cabinet without his presence.
Karolina Cebrovska/Andrea Snyder
After deadline
President Vaclav Havel approved the coalition's proposal, and will name
new ministers June 2.
Social Democrat Chairman r Milos Zeman said that repositioning
current Education Minister Ivan Pilip to head the Finance Ministry is
a bad joke and an offense to Czech citizens.
ODS Rejects Government Resignation Proposal
In conjunction with the swift decline of the crown, much has been
written in the papers lately speculating on the possibility of the
resignation of Prime Minister Vaclav Klaus' Cabinet. They say that the
new government would be made up of independent experts. Klaus' party is
not considering the resignation of the current government. President
Vaclav Havel said he supports the current government and the changes
being made, but also said they should finish the changes as soon as
possible.
Karolina Cebrovska/Andrea Snyder
Zeman Presents Economic Proposal
Social Democrat Chairman Milos Zeman presented in Parliament May 21
his so-called anti-package (labelled thus in contrast to the governing
coalition's package of economic measures) proposal for improving the
Czech economy. His opponents were not enthused.
The Czech Social Democratic Party (CSSD) proposed the increase of
import tariffs on foodstuffs, chemicals, machines and other goods by 10
per cent to 20 per cent. The authors say that imports would decrease by
40 billion crowns to 75 billion crowns, and profits for the state
coffers of 25 billion crowns to 40 billion crowns. CSSD proposed tax
breaks for exporters, higher government subsidies for farmers and
increasing consumer taxes by 10 billion crowns. Uniting health insurance
companies and regulating medicine prices would save 5 billion crowns to
10 billion crowns. The party counts on a deficit budget. Prime Minister
Vaclav Klaus called Zeman's anti-package a return to socialism.
Lucie Podesvova/Andrea Snyder
FROM SLOVAKIA
Slovak Referendum Ends in Scandal
The referendum, in which Slovaks were supposed to answer questions
regarding Slovak membership in NATO and direct presidential elections
(for the exact questions see Carolina 248), ended in total failure. The
Central Election Commission (UVK) declared the referendum, which took
place May 23-24, illegal.
Interior Minister Gustav Krajci (of the ruling Movement for
a Democratic Slovakia) refused to distribute ballots including the
question on direct presidential election, and as a result less than 10
percent of Slovak citizens came to the ballot boxes. UVK Vice Chairman
Jozef Krumpolec confirmed May 25 that the referendum was not valid,
partly because of the ballots' flaw, but also because of the low voter
turnout. The referendum's validity is conditional on 50-per-cent voter
participation. The commission also filed criminal charges against
Krajci, who knowingly distributed ballots not bearing the UVK stamp. For
his part, Krajci filed criminal charges against those mayors and local
executives who refused to receive the invalid ballots. Most of the
Slovaks who voted rejected both NATO membership and placing nuclear
weapons and NATO bases on Slovak territory.
Some government coalition representatives admitted mistakes were
made, and opened the possibility of dialogue with the opposition.
However, the opposition considers dialogue impossible, and is planning
to prepare a proposal by the end of May for a constitutional amendment
on direct presidential elections. However, it does not plan on
cooperation with coalition parties.
In the wake of the unsuccessful referendum, Foreign Minister Pavol
Hamzik resigned his office May 26. President Michal Kovac also appealed
to Premier Vladimir Meciar for his resignation: "If you want to help
this country and its citizens at least once, give up your mandate as
premier." On the contrary, Meciar called on Kovac to step down.
European statesmen and observers strongly criticized the referendum
procedure, and admit the possibility of Slovakia's international
isolation. "The referendum was a test of democracy, which was not
successful," wrote the Reuters press agency. It is not out of the
question that Slovaks will have to invite foreign observers for the next
Parliament elections.
Lucie Podesvova/Denisa Vitkova
ECONOMY
Foreign Trade Slightly Improves in April
According to the Czech Statistical Agency, foreign trade indicators
were considerably better in April than in the same month last year. For
the first time since September 1995, imports and exports rose at the
same rate. Exports rose by 23 per cent, 0.1 per cent ahead of import
growth. However, the continuing preponderance of imports drove the trade
deficit up by more than 15 billion crowns, climbing to a total of 53.7
billion crowns for the first quarter of the year.
Experts are far from eliciting anything from the April's
improvement, pointing out that change in such a macroeconomic indicator
can only be confirmed by longer-term results. Although import deposits,
one item in the government's package of economic measures, were
introduced at the end of the month, they could have had some effect on
the upturn. On the other hand, the debate on such protectionist
restrictions may have provoked some importers to stock up in advance.
April's numbers also show more heavy-industry products and consumer
goods were exported, while the import of agriculture products decreased.
Statistics for May should tell us more, because they will be affected by
the government's package of economic measures and the devaluation of the
crown.
Jiri Fremuth/Matej Cerny
Exchange Rates at the Czech National Bank
(valid from May 30)
country currency
------------------------------------------
Australia 1 AUD 25.050
Belgium 100 BEF 92.915
Great Britain 1 GBP 53.473
Denmark 1 DKK 5.037
Finland 1 FIM 6.360
France 1 FRF 5.678
Ireland 1 IEP 49.250
Italy 1000 ITL 19.366
Japan 100 JPY 28.095
Canada 1 CAD 23.680
Luxemburg 100 LUF 92.915
Hungary 100 HUF 17.917
Netherlands 1 NLG 17.048
Norway 1 NOK 4.617
New Zealand 1 NZD 22.565
Poland 1 PLN 10.232
Portugal 100 PTE 18.945
Austria 1 ATS 2.726
Greece 100 GRD 11.957
Slovakia 100 SKK 96.587
Germany 1 DEM 19.180
Spain 100 ESP 22.619
Sweden 1 SEK 4.248
Switzerland 1 CHF 23.020
USA 1 USD 32.691
ECU 1 XEU 37.332
IMF 1 XDR 45.495
CULTURE
Between the Fences Theater Festival Successful
The 6th year of the theater festival Between the Fences (Mezi
ploty), held May 24-25, was one of the biggest domestic cultural
gatherings of the year. More than 80 theater ensembles and soloists
performed in Prague's Psychiatric Hospital. The event was organized by
the NedomYsleno Association for Barrier-Free Culture. The biggest
benefit of the festival is that beside top professionals perform amateur
theater ensembles and ensembles of handicapped people. For many of them,
Between the Fences is one of few opportunities to show their work in
public. All performers give up their fees for the event, and the profits
of the festival, attended by thousands, will be given to the hospital,
as they are every year.
Lucie Podesvova/Magdalena Vanova
SPORTS
Soccer League: Bohemians Fall, Fight for Title Heats up
The Czech premier soccer league's 28th round determined the first
team to fall from the league and brought an unexpected complication to
the fight for the league title. First-place Sparta Praha only managed
a 2-2 tie with lowly Karvina on its own field and its lead on
second-place Slavia (which defeated Olomouc 1-0) shrank to one point. In
a match between the two teams fighting for saving their spots in the top
league, Bohemians lost to Hradec Kralove 1-2 and became the first team
assured of falling from the league, with two games remaining. Five teams
could still finish second-to-last, which also means a drop to the second
league.
Results: Sparta Praha - Karvina 2-2, Olomouc - Slavia Praha 0-1,
Bohemians Praha - Hradec Kralove 1-2, Ostrava - Jablonec 0-1, Brno
- Ceske Budejovice 2-1, Drnovice - Viktoria Zizkov 4-0, Plzen - Opava
5-1, Liberec - Teplice 0-0.
Honza Mazak/Mirek Langer
Czech Team Shut Out of Handball World Championships
The Czech Republic national team lost to Hungary 19-20 in its match
in the round of the final 16 teams in the men's handball world
championships in Japan May 27, and thus exited the tournament. It will
not defend its eighth-place standing from the last championships.
The Czechs advanced to the quarterfinals from third place in their
qualification group after these results: they lost to Egypt 22-24,
defeated Brazil 24-10 and Portugal 28-24, then they defeated Tunisia
19-18 with some great luck after trailing the entire game. In their last
qualification match, they lost to Spain 26-29.
In the match with Hungary, the Czechs started badly but managed to
come back, only to lose a 19-18 lead in the last minute, with one man
out.
"It is very unlucky loss, the players are seriously stunned, they
realize they missed a great opportunity," said coach Michal Barda to the
daily Pravo.
Honza Mazak/Mirek Langer
New Records in Prague Marathon's Third Year
The third year of the Prague International Marathon, held May 25,
was the most remarkable event on the Czech sport scene last week.
Winners in both men's and women's categories broke the event's records.
Kagve from Kenya, with a time of 2:09:07, beat last year's record by
more than three minutes. Jelena Vinicka of Belarus, in 2:32:58, was five
minutes faster than last year, when she won as well. Karel David, the
top Czech marathon runner, placed eighth, and Hajna finished 12th.
Honza Mazak/Matej Cerny
WEATHER
The hot summer days of last week are gone, and the weather has been
shedding tears with us over the local political and economic scene.
There's light snow in the mountains, and temperatures together with the
mood approach the freezing point. People have resumed wrapping
themselves in coats and man's most faithful friend for a walk is an
umbrella. Occasional thunderstorms and lightning do not provide much
optimism, but we can hope that it's just shedding some light on brighter
times ahead.
Karolina Cebrovska/Magdalena Vanova
English version edited by Michael Bluhm
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