Continued reform

Vaclav Klaus
An interview with the Prime Minister of the Czech Republic

How do you explain the strong showing of Milos Zeman's Social Democrats in 1996's elections?

The characteristic feature of the last elections in the Czech Republic was not a weakening of popular support for the ruling conservative coalition, but rather a shift on the opposite side, ie the concentration of the majority of opposition votes with the Social Democrats.

There are many reasons why this concentration of opposition votes took place. Definitely, the first reason was the aggressive and populist election campaign of the Social Democratic Party, which promised 'everything to everybody'. Anotherfactor was the tendency of the media (in accordance with the election patterns of the US or UK) to portray the elections as a two-man contest - Klaus versus Zeman. This helped the Social Democrats and damaged other parties. It gave the Social Democrats less than one third of the seats in parliament, making them the strongest party of the opposition which, however, remains fragmented.

To what extent will the government's legislative programme be hampered by the outcome of the polls? Should foreign investors expect the privatisation programme to be watered down?

The one-vote opposition minority in parliament is a very delicate one, when one bears in mind the fragmentation of the opposition. Open coalition between the Social Democrats, the Communists and the extreme right Republicans discredits all of them in the eyes of the electorate and is hardly sustainable. Therefore, I am optimistic about our ability to implement the government's programme. I see no important reasons why foreign investors should fear for the future of the privatisation programme.

Turning to the economy: the Czech Republic has consistently registered strong growth since 1993. To what do you attribute this success?

Resumed economic growth is a natural outcome of the implementation of our radical economic transformation programme. After radical liberalisation of our economy at the beginning of the decade, after the implementation of the mass privatisation programme which took place in a stable macroeconomic climate, the economy started to grow. This growth is driven by very strong domestic demand, especially in the investment sector, which reflects strong enterprise and production restructuring. To summarise all of that, I think that the strong growth of our economy can be attributed to our correct and radical transformation strategy and its pragmatic implementation.

Foreign investment is obviously part of the reason for the Czech Republic's economic success. What are the key sectors?

Foreign investment is flowing into practically all sectors of the Czech economy. Because of the traditionally strong manufacturing base, fields like the automobile industry, food processing, machinery and telecommunications are the main beneficiaries of these investments.

Just to pinpoint one sector - car manufacturing. What are the major foreign companies involved in this sector, and how do you see it developing in coming years?

The car manufacturing industry has a long history in our country and was, from the beginning, of interest to many international producers. The largest foreign investor in this sector is the Volkswagen Group, but many other west European, American and Asian companies are investing in car (VW), truck (Daewoo) and bus (Renault) manufacturing, as well as in car component manufacture. Because of the strong competitive edge our producers enjoy internationally, I am optimistic about the future of the industry.

Tourism is an important foreign exchange earner. What is the government doing to attract tourists?

Tourism has been a booming sector in our economy for several years, and both the number of visitors, and our revenues from them, have multiplied substantially in recent years. For the time being, the natural beauty of our country and the boom in the service sector have been enough to achieve this without significant government intervention. I think that in this sector, as well as in other fields of business, the key element of success has been private initiative and not government activity.

How realistic are Czech plans to join the European Union? What benefits would eventual membership bring?

Together with our partners in the EU, we consider our plans for EU membership as realistic, and hope that they will materialise soon after the crucial open questions of the EU are resolved at the IGC and elsewhere. The benefits of membership for us are obvious - participation in European integration brings both economic and political benefits stemming from the Union's large economic space, common legislation and procedures and harmonised policies. The political aspect of EU membership is also very important for our country.

Finally, are you optimistic for the future of the Czech Republic and of Central Europe in general?

Because of all I have said, and there are other important issues which I have not mentioned, I am optimistic about the future of my country and of the region. I believe that history has taught us all that democracy, freedom, the market economy and private enterprise, as well as international co-operation, are the preconditions for long-term prosperity and stability. I think that we have no other option, and that we will succeed.

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