Central Europe Review: politics,
society and culture in Central and Eastern Europe
Vol 2, No 11
20 March 2000

Czech NewsC E N T R A L   E U R O P E A N   N E W S:
News Review for the Czech Republic
All the important news from the Czech Republic
since 11 March 2000

Markus Bonorianto and Maria Dissenova

According to preliminary estimates from the Ministry of Environment, the flood that affected regions of Central, Northern and Eastern Bohemia last week caused damages of around CZK 1.5 to 2 billion (USD 42.85 to 57.14 million). Vital transportation routes - roads, railways and bridges - as well as industrial estates suffered the most damage. However, Deputy Premier Vladimír Špidla stated on Sunday (12 March) that there is enough money in the state budget to cover the damages. Three people were reported to have been killed by the catastrophe. Meanwhile, Catholic Bishops from the Litoměřice and Hradec Králové dioceses had begun collecting material contributions. In the very near future, the Catholic Church is to introduce a bank account to which financial assistance will be able to be directed. Heavy torrential rains and the melting of snow had caused the flood that culminated last Friday and Saturday. Hundreds of people had to be evacuated from their homes. Meanwhile, Česká Pojišťovna, the country's largest insurance company, estimated that it would have to cover some CZK 300 million in claims. The company's spokesman, Michal Urban, assured that people would receive compensation as soon as possible.

Prime Minister Miloš Zeman asked President Václav Havel on Tuesday to dismiss Minister without Portfolio Jaroslav Bašta and replace him with Karel Březina, currently the Head of the Government Office. Jaroslav Bašta was in charge of the "Clean Hands" anti-corruption campaign, the progress of which was criticised by Zeman. The replacement of Jaroslav Bašta is the first in a series of cabinet dismissals announced by Zeman. The profound cabinet change was a demand put forward by the majority opposition party - the Civic Democratic Party (ODS) - in exchange for the approval of the government budget for the year 2000. The dismissal of Jaroslav Bašta and his replacement by Karel Brežina will take place next week. However, Karel Brežina, who at 28 will be the youngest member of the cabinet, will not take over the responsibility for the intelligence service or the "Clean Hands" anti-corruption campaign, which will pass over to the State Attorney. Brežina, who is seen as Prime Minister Zeman's right-hand man and was a main organiser of the Social Democrats' 1998 election campaign, was the focus of controversy last June when he was named to the supervisory board of the partly state-owned telecommunications giant SPT Telecom - a post he was said not to be qualified or experienced enough to hold.

President Václav Havel was hospitalised on Tuesday when a stomach virus worsened his chronic bronchitis and was expected to remain in hospital at least until Sunday. As a result he put off planned state visits to Poland, Romania and Turkey. In spite of the hospitalisation, Havel was able to meet with Minister without Portfolio Jaroslav Bašta and Karel Březina, who will replace Bašta in the post. The 63-year-old President has been hospitalised more than ten times over the last five years

The government approved draft amendments to the law on parliamentary and local elections, which are designed to help the winning party to form a majority government with a smaller parliamentary party by cancelling the allotment of deputy mandates in elections to the Chamber of Deputies in two vote counts. The amendments are part of the opposition agreement between the ruling Social Democratic Party (ČSSD) and the senior opposition Civic Democratic Party (ODS). The amendment could also finally give the right to vote to Czech citizens living abroad, although these votes will only be cast in the Prague 1 voting district, meaning they will influence the election of six out of a total 200 MPs.

In a TV debate on Sunday, 12 March, Foreign Minister Jan Kavan insisted that the law passed by the Czech Parliament prohibiting the export of ventilation components to Iran by the ZVVZ Milevsko company will not have any influence on the state of bilateral trade between the two countries. He also added that the United States and Israel had previously promised to grant compensation for the losses incurred by the ban. The government itself had prepared CZK 230 million (USD 6.57 million) in compensation, far below the actual value of the export. On the other hand, Chairman of the Freedom Union (US) party and former Minister of Trade and Industry Karel Kuhnl was convinced that the prohibition of the USD 300 million export would harm both Czech industry and trade relations with Iran. The export deal was halted for fear that the equipment would be used to develop nuclear arsenals.

The management of ZVVZ Milevsko rejected the compensation plan offered by the Czech government. Co-owner of the company Ivan Zach said on Monday (13 March) that the sum is too low and that the company is only asking for what it rightly deserves. The firm claimed a loss of CZK 1.2 billion (USD 34.3 million) through the ban on the export of its products to Iran. The Czech government, though, refused to change its position. The Minister of Trade and Industry Miroslav Grégr said that it is up to ZVVZ Milevsko whether or not it chooses legal means to solve this problem. Moreover, the company could find itself in financial difficulties while waiting for the court to come to a decision, because there is no other solution than the one the government has been offering, Grégr added.

A consortium of JP Morgan and Komerční Banka has been chosen to become the advisor and global co-ordinator in the privatisation of the 51 per cent government stake in Český Telecom. According to Finance Minister Pavel Mertlík, the state shares in the company would be sold by the end of this year. He expected that the consortium would propose the best method of privatisation including a timetable specifying when the tender would begin.

Deputy Premier Vladimír Špidla is prepared to run for the chairmanship of the ruling Social Democratic Party (ČSSD) next year, as the current chairman, Miloš Zeman, is not going to seek re-election. Miloš Zeman has recommended Vladimír Špidla as the best candidate for his replacement.

The controversy over the different evaluations of two special police squads, responsible for investigating corruption and organised crime respectively, made by Prime Minister Miloš Zeman and Minister Interior Václav Grulich has led President Václav Havel to entrust the matter to the director of the Counter Intelligence Service (BIS), Jiří Růžek. The Prime Minister's recent criticism of the work of the two squads ran contrary to both Minister Grulich's and President Havel's evaluations and has led the President to believe that someone is trying to undermine the squads.

Czech industrial output increased by 3.9 per cent in January 2000 compared to the same period in 1999. Average nominal wages were up by 4.6 per cent to CZK 12,081 (USD 345). Real wages, meanwhile, increased by 1.2 per cent and labour productivity by 10.3 per cent.

The Czech Police investigated an anonymous letter from an organisation calling itself the Moravian Territorial Army, which it received on Monday, 13 March. The organisation threatened to launch an attack against the leaders of the country, including President Václav Havel, Prime Minister Miloš Zeman and the Opposition Leader Václav Klaus. The reason given was the "undignified position of the historical Moravian lands." Czech statesmen and politicians emphasised Bohemian national interests only and neglected Moravia, the letter claimed. Moravia, the region in the east of the Czech Republic includes regions with the highest unemployment rate in the country. Both police and the Ministry of Internal Affairs have expressed their concern over these developments.

Czech carmaker Škoda Auto has sold a total of 57,766 cars throughout the world since the beginning of the year, an increase of 16.8 per cent from January 1999. On the domestic market, the company sold 10,844 units in the same period, which was again a boost of 30.5 per cent. Škoda Auto now controls 49.2 per cent of the Czech car market, according to its spokesman Milan Smutný.

The Czech Republic signed a "Memorandum of Understanding" with the consortium BAE Systems and SAAB AB on the purchase of 36 supersonic Grippen jets worth CZK 50 billion (USD 140 million) on Tuesday. This action caused a certain amount of confusion among other companies competing for the same contract although the State Security Council stated that despite signing the memorandum it had not yet definitively decided to purchase the jets. The Council is expected to make its final decision on 15 April. Other interested companies include Boeing with its F/A-18, Lockheed Martin with F-16, French company Dassault with Mirage 2000 and Dasa with its Eurofighter.

The Czech Ministry of Foreign Affairs on Wednesday made a statement condemning the attempts to assassinate an advisor to the Iranian President Mohammad Khatami and an attack by the Mojahedeen warriors earlier in the week. Anti-democratic forces in the country were trying to de-stabilise the situation and slow down the democratisation process, said the Ministry in its statement. The Deputy Foreign Minister is to visit the country in April and is no doubt hoping to smooth current troubles with Iran, namely concerning the cancellation of the export of Czech ventilation components to an Iranian nuclear plant. The Czech government welcomed the outcome of the recent elections in Iran, which were won by reform-minded leaders.

The dispute between a leading American businessman, Ronald Lauder, and the Czech government involving the successful private television station TV Nova was to be heard Friday by the International Arbitrary Tribunal in London. Lauder demanded the creation of conditions that would return the value of his investments in the company. He launched the arbitration proceedings last August, basing his complaint on an agreement from September 1991 between the US and the Czech Republic about the mutual support and protection of investment, claiming the Czech government had not fulfilled its side of the agreement by not protecting his investments into TV Nova. The contract had been cancelled following disputes between TV Nova and its majority shareholder, ČNTS. A representative from the Czech Finance Ministry, Václav Lombald, also took part in the hearing.

Markus Bonorianto and Maria Dissenova, 17 March 2000

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