JUNE 26, 1998

F R O M  T H E  W E E K L I E S

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By Alena Skodova

In its article titled "A very hazardous amendment" the political weekly TYDEN writes about a controversial amendment to a bill on lotteries. By approving the amendment, the lower house has worsened the relationship between the Czech republic and the European Union, claims TYDEN. The amendment, which had been rejected by both the Senate and the president, and which forbids companies with foreign capital to organize lotteries in the Czech republic, was endorsed - in one of the last debates in the former lower house - by ultra-right Republicans, Social democrats and Communists, but also by several right-wing deputies. The main argument was that foreign companies, usually unsuccessful at home, should not compete with domestic firms in such a sensitive sphere. According to many deputies, lotteries are much too often closely linked with the criminal behaviour of their organizers. On the other hand, some lottery industry specialists would welcome the participation of renowned foreign companies, because these could cleanse the lottery market of opaque domestic and foreign lottery businesses. But now, following the approval of the amendment, warns TYDEN, non-credible foreign companies can continue their activities in this country through Czech puppet companies. The Foreign ministry also considers the amendment unhappy: "We might expect that the deputies' decision will lead to protracted international disputes," said ministry spokesman Rudolf Hykl, adding that his ministry had been contacted several times by the European Union, which said that by adopting the amendment on lotteries, the Czech Republic was gravely discriminating against foreign entrepreneurs. "At a time when the Czech Republic has been negotiating for admission to the European Union, it would be exceptionally unhappy to limit in one way or another activities of lottery firms just because they come from abroad," TYDEN quotes chairman of the European Commission delegation Joannes ter Haar as saying.

"Sell them before it's too late!" is the title of an article in this week's RESPEKT, with the subtitle "Why politicians fear the privatization of banks". One of the most important news items of the past few days was doubtlessly the entry of the European Bank for Reconstruction and Development into the Czech Savings Bank, reports RESPEKT. The Tosovsky cabinet remained silent about the matter, but we can feel its tacit support for the deal: the cabinet intended to do at least something so that the long discussed privatization of one of the key Czech banking houses could not be reversed. The EBRD has said quite resolutely that it is entering the Savings Bank for just two years, and will stay longer only if the privatization is quickly completed. But, the shadow Finance minister, Social democrat Ivo Svoboda, does not agree with this. Alhtough he had said some time ago that "The European bank is the anchor and certainty of the privatization process," he at the same time warned that the Social democrats rejected speedy privatization. According to Svoboda, it is impossible for someone - including the EBRD - to simply come and make decisions. As far as the speed of the privatization is concerned, Social democrats allegedly envision that within two years "irreversible processes for finding the right owners will be started". It is hard to imagine less concrete statements uttered by a representative of the strongest party in the Czech republic, notes RESPEKT.

"Investors hoping for a stable government to form soon," reads the title of an article on the front page of the PRAGUE POST. Now, that the extremist troublemakers have been given the electoral boot, foreign investors may start feeling a bit safer in the country, writes the weekly. The government can still go either right or left, and business people are hoping talks will soon result in a stable government they can count on. Cautiousness ruled the equity and currency markets on the Monday after the elections. Investor optimism pushed-up stocks that morning, but lack of foreign interest braked the initial rise. "Even with a Social democrat-led coalition, we won't be swinging too much to the left," Zivnostenska bank chief analyst Pavel Sobisek told the Prague Post. And HEX Capital Partner's Bruce Bybee adds that the regulations that the Czech republic must follow to join the European Union and NATO will also prevent the government from taking drastic measures, concludes this week's Prague Post.

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