The Czech National Bank has cut interest rates by half a percentage point. The cut, which analysts had expected, leaves the main two-week repo rate at 2.25 percent. Speaking on Wednesday after the move was announced, the deputy governor of the central bank, Miroslav Singer, said it had been made because of a fall in demand in developed countries, which influences inflation in the Czech Republic. Six weeks ago the Czech National Bank cut interest rates by three-quarters of a percentage point.
The French president, Nicolas Sarkozy, has attacked the refusal of the Czech president, Václav Klaus, to fly a European Union flag over Prague Castle during the Czech Republic’s upcoming presidency of the EU. Speaking at the European Parliament, Mr Sarkozy also criticised Mr Klaus’s behaviour during a recent meeting with a delegation of senior MEPs in Prague. Those talks ended in acrimony when the MEPs tried in vain to present the euro-sceptic Mr Klaus with an EU flag. For his part, President Klaus described the French president’s comments as “really undignified”. The Czech Republic assumes the six-month rotating presidency of the EU on January 1.
A new poll suggests the opposition Social Democrats have pulled further ahead of the governing Civic Democrats in terms of public support. An opinion poll carried out this month by the CVVM agency indicates that 44.5 percent would vote for the Social Democrats, compared to 27 percent support for the Civic Democrats. In November the gap was 1 percent narrower. The Communist Party ranked third in the December survey with 14 percent backing. The Social Democrats made significant gains on the Civic Democrats in regional and Senate elections in October.
The leader of the Social Democrats says he believes a deal with the government aimed at ensuring the Czech Republic’s EU presidency runs smoothly will be agreed before Christmas. After discussions on Tuesday, Jiří Paroubek said it was possible he and Prime Minister Mirek Topolánek would hold further talks on the matter in the near future. Mr Paroubek has previously said any agreement would only concern some aspects of EU policy – not domestic politics.
Czech betting firms are to be allowed to operate internet gambling for the first time. Following lobbying from the country’s biggest betting companies, the Finance Ministry decided to allow five firms to introduce on-line gambling. Currently Czech firms are losing out as punters in this country bet on websites based in other states. Gamblers who wish to bet on-line will first have to register in person at bricks and mortar betting shops, a Finance Ministry spokesperson said.
The Social Democrats Irena Kočí has been sworn in as a member of the Chamber of Deputies, following the resignation of his seat in the lower house by her former party colleague Michal Pohanka. Mr Pohanka had previously abandoned the opposition benches to vote with the government; his departure has further weakened the shaky coalition, which is unsure of a majority in the lower house.
The Czech government has taken the advice of the Finance Ministry and the governor of the central bank and decided not to set a date for adopting the common European currency, Finance Minister Miroslav Kalousek said on Wednesday. That means the Czech Republic will not sign up next year to ERM-II, the exchange rate mechanism which is a major step towards full euro adoption. Several Czech business leaders have called for the introduction of the euro, as the strong Czech crown has had a negative impact on exports. Neighbouring Slovakia joins the eurozone on January 1.
Prime Minster Mirek Topolánek said on Tuesday that he plans to announce changes in the centre-right coalition government before the end of the week. A reshuffle has been on the cards ever since the coalition’s crushing defeat in regional and Senate elections in October but the prime minister had postponed the move until his own party confirmed his mandate as party leader and head of government two weeks ago. The three party ruling coalition has been racked by infighting and defections which have weakened its position in the lower house, making it difficult to push through further reforms and undermining its position ahead of the EU presidency.
The Christian Democrats of the ruling coalition want the government to set a timetable for euro adoption by the end of May at the latest. Czech exporters have long been pushing for the move but so far the government has been reluctant to make a commitment. Prime Minister Topolánek says the time is not yet ripe for such a commitment in view of the global financial crisis, the need to complete economic reforms and stabilize the country’s public finances. Last year Finance Minister Miroslav Kalousek of the Christian Democrats proposed that the euro be adopted in 2012, but the government later backpedaled on the proposed date. The opposition Social Democrats say 2012 seems like a realistic target. Slovakia, the Czech Republic’s eastern neighbour, will adopt the euro as of January 1, 2009.
The Czech Foreign Minister Karel Schwarzenberg has said that the Czech
Republic could organize not only an EU-Israeli summit during its EU
presidency but also a summit between the EU and Palestine. He made the
statement after talks on Monday with visiting Egyptian Foreign Minister
Ahmed Aboul Gheit. The two ministers discussed the Israeli-Palestinian
conflict, the situation in the Mediterranean and the priorities of the
Czech Republic's upcoming EU presidency. Israel has said that Prague can
assist the peace process during its presidency by intensifying the EU role
as mediator in the dialogue between Israel and Palestine. At the same time,
Israel has made it clear that it is mainly the countries in the region that
bear the responsibility for peace.
The Czech Prime Minister Mirek Topolánek said during a visit to Israel earlier this year that he would welcome a more active role by the EU in the Middle East peace process. The Czech Republic takes up the EU presidency on January 1.