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The Czech Republic Today

The Czechoslovak government, after recovering its breath after the heady days and months which followed the Velvet Revolution (or "November"), set about dismantling old frameworks. The totally new situation after the fall of Communism led to an almost immediate about-face in international relations for Czechoslovakia. The Warsaw Pact and Comecon were out, and NATO and the European Union are currently in - the Czech Republic is set to join both, and already participates in NATO's "Partnership for Peace" program and is associate member of the European Union and a member of the Organization for Economic Cooperation and Development (OECD).

As early as 1990, the country military cooperated closely with the US military while participating in the UN-sanctioned Gulf War. Since then, the country's army has played a continuous role in UN peace- keeping missions in the former Yugoslavia.

In the early 1990's many countries in the Central and Eastern European region fell apart: Yugoslavia, the Soviet Union, and Czechoslovakia have all ceased to exist. For Czechoslovakia, the transition to separate Czech and Slovak Republics was entirely peaceful.

That Czechoslovakia would become defunct was basically decided at the polls with the nationwide general elections of 1992, when the Czechs voted overwhelmingly for the Civic Democratic Party (ODS) led by then-Federal Finance Minister, Vaclav Klaus - a strict Monetarist of the Milton Friedman school, a fan of Margaret Thatcher, and one of the fathers (along with Tomas Jezek and Dusan Triska) of the Czech economic reform and privitization processes. Meanwhile, the Slovaks voted in the Movement for a Democratic Slovakia (HZDS) led by the staunch nationalist Vladimir Meciar, whose platform basically consisted of two planks: more autonomy for the eastern half of the former Czechoslovakia and the slowing down of the privitization process and economic reforms.

Voter preference in the two halves of Czechoslovakia reflected such divergent public opinion on how the future of the country should progress - with the Czechs choosing fast-paced reforms and the Slovaks choosing a time-out in the reform process - that the election winners in the two halves of Czechoslovakia soon decided that a shared future for the two nations was essentially impossible.

The next six months were spent dividing the common property that the two partners in the Czechoslovak Federation shared. Like all "divorces," the breakup of Czechoslovakia was painful and a little bit messy. But it was as amicable as it could be under the circumstances. Czechoslovakia peacefully ceased to exist on December 31, 1992.

In the Czech Republic, coupon privitization, restitution, and the selling off of formerly state-owned companies (in two stages - known as the "Small Privitization" and the "Large Privitization") continued apace. Huge state monopolies like those in the Telecommunications and Tobacco industries were privatized - but banks were not. A complex debt structure that the largest formerly state companies retained from communist times (when it was impossible for a factory to stop manufacturing goods for ie a "business partner" in the Soviet Union even if he did not pay) led to an even more complex system of mutual insolvency (in which company A owed money to company B which owed money to company C which owed money to company X which owed money to our original company A). This situation was, unfortunately, never resolved. The state-run banks were unwilling to foreclose on companies A-C and X, fearing a rise in unemployment. Banks tended to loan very little money at very high interest rates, and when mismanagement and embezzlement caused a number of Czech banks to fold in the first half of the 1990s, the government bailed them out instead of allowing them to fail - essentially making the same mistake the banks had done in not letting any large enterprises fail on account of their unmanageable debts.

Medium and small businesses did not receive government support - nor did Czech-made goods - even though the private sector desperately needed a shot in the arm after 40 years of communism. Taxes for both individuals and business were - as is usual in Europe - rather high. In 1996, restrictions on trading of the Czech crown were lifted, making it the first convertible currency in the former Soviet Bloc.

In mid 1997, foreign market speculation with the newly convertible Czech currency caused a monetary crisis which brought all the deficiencies in the Czech privitazation process and economic transformation glaringly into the forefront of political life in this country. As this text was being prepared for Radio Prague's "History Online" exhibit, it seemed possible (even likely) that the government would soon face a no-confidence vote in the parliament, and President Vaclav Havel (who remarried in early 1997) may well call early elections in the not-too-distant future. (If he does not, the next regular elections are scheduled to take place in 2000.)

This is not as bad as it sounds, as early elections have been expected ever since the parliamentary elections of mid-1996 (the first for the independent Czech Republic) returned an unclear mandate to the government. On the one hand, voters returned the same parties which have ruled in coalition since the 1996 elections to power - confirming their agreement with economic reforms and the post-Velvet Revolution leadership (rather than returning to socialist or reform- communist parties, as voters have done in Poland, Hungary, and other post communist countries). But they returned them with much lower overall voter support - so that they initially had a minority in the Parliament (99 seats out of a total of 200).

While all of the nation's problems have not been solved in the eight years since the communists were swept from power, much has been done. In the fall of 1996, the Czech Republic's first Senate as upper house of parliament was elected; while in the spring of that year - in their last session before the 1996 elections, the Czech parliament passed a law enabling the public to access their old Communist Secret Police files (at least those portions of them that don't compromise national security).

The fall of the Iron Curtained re-opened formerly closed borders, and the Czech Republic has become one of the premier tourist destinations in all the world. Unspoilt medieval city centres in Prague, Telc, Cesky Krumlov and Kutna Hora are on the UNESCO World Heritage list, as is the Pilgrimage Church of St John of Nepomuk in Zdar nad Sazavou.

Many foreigners have also moved to the Czech Republic, especially to Prague. This has returned the kind of lively, cosmopolitan feel the capital city has traditionally enjoyed through the ages, situated as it always has been on the "crossroads of Europe."

Accomplishments like the Oscar for Best Foreign Film of 1996 going to the Czech film, Kolya and the Czech victory at the 1996 World Hockey championships in Vienna (and their second-place win in the European Cup soccer finals the same year) as well as the 9 medals they brought back from the 1996 Olympics have done a lot to help to build up Czech national pride, which was rather at an ebb after 40 years of communist rule made most Czechs feel disconcerted, and as if they were "second-class Euro citizens."

After the fall of communism, people in the arts had feared that the loss of state subsidies would lead to a sharp decline in the standard of Czech culture. This has not, apparently, been the case - and Czech film, theater and music have flourished in the absence of censorship and other state interference.

Architectural activity has mostly focused on the reconstruction of important buildings that suffered from 40 years of criminal neglect under the communists. As for new buildings, the "Dancing House," (also nicknamed "Fred and Ginger") on Rasinovo nabrezi (next to President Havel's former flat) has - like the Cubist, Rondo, and other new architectural styles which came before it - caused many disputes and much controversy. But new building activity is low, and the housing crisis which has plagued this country since at least the 1920s is as bad as ever it was. The lifting of rent controls on July 1, 1997 should help to remedy the situation at least a little. As with the current economic and political crises, we will have to wait and see.

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