JANUARY 8, 1999

C O M M E N T A R Y

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Ceskoslovenska Obchodni Banka initiated bankruptcy proceedings against the Chemapol Group on December 22, much to the surprise of the company's other creditors . Chemapol Group claims that the bank's move is illogical, as Chemapol's bankruptcy would bring only losses to both Chemapol's creditors and its trade partners. Spokesman for Obchodni Banka, Milan Tomanek, hinted that the main reason behind the decision was Chemapol's insolvency, nevertheless, he declined to be more specific.

"I cannot tell you exactly what our reasons were," Mr. Tomanek told Czech Radio. He added though that anyone who initiates bankruptcy proceedings against another subject, always expects to aquire property in order to compensate for existing debts.

Major Chemapol shareholdres have been trying to negotiate with Obchodni Banka to stop the bankruptcy proceedings. They offered to compensate for the bank's claims, arguing that in this way the bank would get much more than it would if Chemapol was declared bankrupt.

The Chemapol Group's losses at the end of November exceeded 50 percent of the company's base capital and it underwent a major restructuralisation. A new company Aliachem was established and the most lucrative companies from the Chemapol Group including for example the explosives producer Synthesia, were transferred there.

The letter concentrates mainly on the criticism of the President's New Year speech, in which he spoke of the need to break down the walls put up in Czech society and on its political scene, walls like racial prejudices, for example. 37 well known Czech writers, including Ivan Klima, Ludvik Kundera, and Milan Uhde signed the letter. I asked one of them, Jiri Stransky, the president of the Czech PEN Club, why they had thought it necessary to publish such a letter at this time.

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Did the fact that president Havel is a well known writer and member of the PEN Club make you feel you had to speak up on the issue?

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So much, then, from the President of the Czech PEN Club Jiri Stransky, who also stressed that the authors of the letter did not consider the head of state above any criticism, but they objected to the mud slinging organised by some.

Minister Kavan said that Germany had made it clear the fifteen-nation European Union would have to reform its finances before taking-in new East European members. This view was understood and backed by Prague, Kavan said. EU leaders are currently involved in tough talks over setting annual national contributions for the block's budget from 2000 to 2006. Germany, which currently holds the EU's presidency says it wants negotiations wrapped up by March. Bonn will throw its full weight behind a rapid eastern EU expansion, Fisher said after talks with Foreign minister Kavan and premier Milos Zeman.

"If expansion is delayed, Europe could plunge into a deep political crisis," Fisher said. He also assured the Czech government that planned reforms of the European Union would not delay new members from joining, and that he himself would do all he could to ensure the Czechs could join the EU as soon as possible. However, Mr.Fisher declined to name any timetable for possible membership of the former Eastern block states, saying he no longer takes part in visionary setting of goals.

Germany took over the presidency of the EU on January 1st and has said internal reform would top its agenda although it firmly supported enlargement. Fisher has said the entry date for the Eastern European applicants would depend on several factors which could not be predicted. The Czech Republic is one of five eastern European states which, along with Cyprus, began talks last year on rapid accession to the EU.

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