CCCCC AA RRRRR OOOO LL II NN N AA CC AA A RR R OO O LL II NNN N AA A CC AA A RRRRR OO O LL II NN N N AA A CC AAAAAA RR R OO O LL II NN NN AAAAAA CCCCC AA A RR R OOOO LLLLLL II NN N AA A STUDENTS' E-MAIL NEWS FROM CZECH REPUBLIC Faculty of Social Science of Charles University Smetanovo nabr. 6 110 01 Prague 1 Czech Republic e-mail: CAROLINA@cuni.cz tel: (+4202) 24810804, ext. 252, fax: (+4202) 24810987 *-*-*-*-*-*-*-*-*-*-*-*-*-*-*-* C A R O L I N A No 249, Friday, May 30, 1997. FROM THE EVENTS OF THE PAST WEEK (May 21-28) Central Bank Deregulates Czech Crown The battle to maintain the 6-year stability of the Czech crown ended on the evening of May 26, when the Czech National Bank (CNB) stepped away from the controls. CNB Governor Josef Tosovsky and Prime Minister Vaclav Klaus announced at a special press conference that evening that the bank would stop controlling fluctuation of the crown within a 7.5-per-cent margin, tied to the American dollar and the German mark. The crown's value is now tied only to the mark. Its exchange rate fell by 10 per cent May 27, leaving the mark selling at 19.4 crowns and the dollar for a little more than 33 crowns. The crown began to drop two weeks ago, as foreign investors turned away from the drooping domestic economy and political instability. The Central Bank intervened in the interbank market, probably spending billions of dollars from their hard currency reserves to purchase crowns. Although the CNB raised the Lombard rate, it didn't stop financiers from speculating on the crown's fall. Following the lead of domestic companies, many Czechs started exchanging the local currency for dollars and marks. Experts say that putting a brake on the plumetting crown will depend on how quickly the government is restructured and on regaining the people's trust in its solvency. The government should take further steps in decreasing the foreign trade and balance of payment deficits. There is talk of increasing import tariffs and of watching the stock market more closely, as well as of budget cuts and of wage stays, against which union leaders are expected to take a stand. Although Chairman of the Czech-Moravian Chamber of Unions Richard Falbr said unions have little interest in becoming a catalyst for the current political situation, railroad union leader Jaromir Dusek says that he plans to defend union members' standard of living tooth and nail. Usually one of the loudest critics, opposition leader and Parliament Chairman Milos Zeman said it is in the best interests of both the coalition and opposition to maintain Czech currency stability. Jiri Fremuth/Andrea Snyder Government Admits Serious Errors in Economic Reform and Proposes Program "Instead of economic growth we must expect economic decline accompanied by a visible rise in unemployment. The changed course of the crown will also cause a temporary rise in inflation. All of these phenomena will mean a decline in real wages and other income," is written in a document agreed to May 28 in Prague by the three coalition party chairmen: Vaclav Klaus (Civic Democratic Party), Josef Lux (Christian Democrats) and Michael Zantovsky (Civic Democratic Alliance). The government thus for the first time openly admitted that the Czech Republic finds itself in a grave economic situation, and that measures leading to its repair will be painful. Among the i mediate measures are further reductions in 1997 budget spending in state administration, investment and social support, as well as support for Czech National Bank monetary restrictions, strengthening the crown, an uncompromising limitation on subsidized imports and a freeze of public wages. The government also proposed collective bargaining in state-related enterprises to prevent the creation of a wage and price spiral. If the measures do not bring the expected effect in the coming half year, the coalition does not rule out even more radical steps, including import duties and tariffs. The stabilization and recuperative program of the government coalition also deals with the main causes of the current economic situation: the low effectivity of the banking system deepened by state intervention, maintenance of ineffective activities with budget spending, payment problems caused by legal insufficiencies, lack of transparency in ownership relations and the absence of a legal and administrative atmosphere in which it would pay owners to act responsibly. It focuses on wages growing faster than productivity, the declining competitiveness of the Czech economy, the payment-balance deficit and troubles maintaining a balanced budget. Lida Truneckova/Michaal Bluhm Ministers Leave Posts Interior Minister Jan Ruml, Finance Minister Ivan Kocarnik and Trade Minister Vladimir Dlouhy, in the Cabinet's response to evaporating public confidence, are leaving their government posts. Ruml and Kocarnik are members of the ruling Civic Democratic Party (ODS) and Dlouhy is a vice chairman of the Civic Democratic Alliance (ODA). Chairman of the parliamentary Committee for Defense and Security Petr Necas should replace Ruml. ODA has not yet announced a new candidate for the Ministry of Industry and Trade. There should also be changes at the Health Ministry. ODS says it will replace current minister Jan Strasky if the coalition makes it possible for ODA Chairman Michael Zantovsky to be a part of the restructured government. Both ODA and ODS would like to see the former ambassador to the USA holding a position in the government, but the ODS does not plan on giving him their man Josef Zieleniec's job as Foreign Minister, nor do the Christian Democrats want to give up the Defense Ministry post held by Miroslav Vyborny. Zantovsky has said that as the head of a coalition party, he cannot accept a less important position, and that he does not feel qualified to become trade minister. He says he is not forcing his way into the government, and that it is possible to construct the Cabinet without his presence. Karolina Cebrovska/Andrea Snyder After deadline President Vaclav Havel approved the coalition's proposal, and will name new ministers June 2. Social Democrat Chairman r Milos Zeman said that repositioning current Education Minister Ivan Pilip to head the Finance Ministry is a bad joke and an offense to Czech citizens. ODS Rejects Government Resignation Proposal In conjunction with the swift decline of the crown, much has been written in the papers lately speculating on the possibility of the resignation of Prime Minister Vaclav Klaus' Cabinet. They say that the new government would be made up of independent experts. Klaus' party is not considering the resignation of the current government. President Vaclav Havel said he supports the current government and the changes being made, but also said they should finish the changes as soon as possible. Karolina Cebrovska/Andrea Snyder Zeman Presents Economic Proposal Social Democrat Chairman Milos Zeman presented in Parliament May 21 his so-called anti-package (labelled thus in contrast to the governing coalition's package of economic measures) proposal for improving the Czech economy. His opponents were not enthused. The Czech Social Democratic Party (CSSD) proposed the increase of import tariffs on foodstuffs, chemicals, machines and other goods by 10 per cent to 20 per cent. The authors say that imports would decrease by 40 billion crowns to 75 billion crowns, and profits for the state coffers of 25 billion crowns to 40 billion crowns. CSSD proposed tax breaks for exporters, higher government subsidies for farmers and increasing consumer taxes by 10 billion crowns. Uniting health insurance companies and regulating medicine prices would save 5 billion crowns to 10 billion crowns. The party counts on a deficit budget. Prime Minister Vaclav Klaus called Zeman's anti-package a return to socialism. Lucie Podesvova/Andrea Snyder FROM SLOVAKIA Slovak Referendum Ends in Scandal The referendum, in which Slovaks were supposed to answer questions regarding Slovak membership in NATO and direct presidential elections (for the exact questions see Carolina 248), ended in total failure. The Central Election Commission (UVK) declared the referendum, which took place May 23-24, illegal. Interior Minister Gustav Krajci (of the ruling Movement for a Democratic Slovakia) refused to distribute ballots including the question on direct presidential election, and as a result less than 10 percent of Slovak citizens came to the ballot boxes. UVK Vice Chairman Jozef Krumpolec confirmed May 25 that the referendum was not valid, partly because of the ballots' flaw, but also because of the low voter turnout. The referendum's validity is conditional on 50-per-cent voter participation. The commission also filed criminal charges against Krajci, who knowingly distributed ballots not bearing the UVK stamp. For his part, Krajci filed criminal charges against those mayors and local executives who refused to receive the invalid ballots. Most of the Slovaks who voted rejected both NATO membership and placing nuclear weapons and NATO bases on Slovak territory. Some government coalition representatives admitted mistakes were made, and opened the possibility of dialogue with the opposition. However, the opposition considers dialogue impossible, and is planning to prepare a proposal by the end of May for a constitutional amendment on direct presidential elections. However, it does not plan on cooperation with coalition parties. In the wake of the unsuccessful referendum, Foreign Minister Pavol Hamzik resigned his office May 26. President Michal Kovac also appealed to Premier Vladimir Meciar for his resignation: "If you want to help this country and its citizens at least once, give up your mandate as premier." On the contrary, Meciar called on Kovac to step down. European statesmen and observers strongly criticized the referendum procedure, and admit the possibility of Slovakia's international isolation. "The referendum was a test of democracy, which was not successful," wrote the Reuters press agency. It is not out of the question that Slovaks will have to invite foreign observers for the next Parliament elections. Lucie Podesvova/Denisa Vitkova ECONOMY Foreign Trade Slightly Improves in April According to the Czech Statistical Agency, foreign trade indicators were considerably better in April than in the same month last year. For the first time since September 1995, imports and exports rose at the same rate. Exports rose by 23 per cent, 0.1 per cent ahead of import growth. However, the continuing preponderance of imports drove the trade deficit up by more than 15 billion crowns, climbing to a total of 53.7 billion crowns for the first quarter of the year. Experts are far from eliciting anything from the April's improvement, pointing out that change in such a macroeconomic indicator can only be confirmed by longer-term results. Although import deposits, one item in the government's package of economic measures, were introduced at the end of the month, they could have had some effect on the upturn. On the other hand, the debate on such protectionist restrictions may have provoked some importers to stock up in advance. April's numbers also show more heavy-industry products and consumer goods were exported, while the import of agriculture products decreased. Statistics for May should tell us more, because they will be affected by the government's package of economic measures and the devaluation of the crown. Jiri Fremuth/Matej Cerny Exchange Rates at the Czech National Bank (valid from May 30) country currency ------------------------------------------ Australia 1 AUD 25.050 Belgium 100 BEF 92.915 Great Britain 1 GBP 53.473 Denmark 1 DKK 5.037 Finland 1 FIM 6.360 France 1 FRF 5.678 Ireland 1 IEP 49.250 Italy 1000 ITL 19.366 Japan 100 JPY 28.095 Canada 1 CAD 23.680 Luxemburg 100 LUF 92.915 Hungary 100 HUF 17.917 Netherlands 1 NLG 17.048 Norway 1 NOK 4.617 New Zealand 1 NZD 22.565 Poland 1 PLN 10.232 Portugal 100 PTE 18.945 Austria 1 ATS 2.726 Greece 100 GRD 11.957 Slovakia 100 SKK 96.587 Germany 1 DEM 19.180 Spain 100 ESP 22.619 Sweden 1 SEK 4.248 Switzerland 1 CHF 23.020 USA 1 USD 32.691 ECU 1 XEU 37.332 IMF 1 XDR 45.495 CULTURE Between the Fences Theater Festival Successful The 6th year of the theater festival Between the Fences (Mezi ploty), held May 24-25, was one of the biggest domestic cultural gatherings of the year. More than 80 theater ensembles and soloists performed in Prague's Psychiatric Hospital. The event was organized by the NedomYsleno Association for Barrier-Free Culture. The biggest benefit of the festival is that beside top professionals perform amateur theater ensembles and ensembles of handicapped people. For many of them, Between the Fences is one of few opportunities to show their work in public. All performers give up their fees for the event, and the profits of the festival, attended by thousands, will be given to the hospital, as they are every year. Lucie Podesvova/Magdalena Vanova SPORTS Soccer League: Bohemians Fall, Fight for Title Heats up The Czech premier soccer league's 28th round determined the first team to fall from the league and brought an unexpected complication to the fight for the league title. First-place Sparta Praha only managed a 2-2 tie with lowly Karvina on its own field and its lead on second-place Slavia (which defeated Olomouc 1-0) shrank to one point. In a match between the two teams fighting for saving their spots in the top league, Bohemians lost to Hradec Kralove 1-2 and became the first team assured of falling from the league, with two games remaining. Five teams could still finish second-to-last, which also means a drop to the second league. Results: Sparta Praha - Karvina 2-2, Olomouc - Slavia Praha 0-1, Bohemians Praha - Hradec Kralove 1-2, Ostrava - Jablonec 0-1, Brno - Ceske Budejovice 2-1, Drnovice - Viktoria Zizkov 4-0, Plzen - Opava 5-1, Liberec - Teplice 0-0. Honza Mazak/Mirek Langer Czech Team Shut Out of Handball World Championships The Czech Republic national team lost to Hungary 19-20 in its match in the round of the final 16 teams in the men's handball world championships in Japan May 27, and thus exited the tournament. It will not defend its eighth-place standing from the last championships. The Czechs advanced to the quarterfinals from third place in their qualification group after these results: they lost to Egypt 22-24, defeated Brazil 24-10 and Portugal 28-24, then they defeated Tunisia 19-18 with some great luck after trailing the entire game. In their last qualification match, they lost to Spain 26-29. In the match with Hungary, the Czechs started badly but managed to come back, only to lose a 19-18 lead in the last minute, with one man out. "It is very unlucky loss, the players are seriously stunned, they realize they missed a great opportunity," said coach Michal Barda to the daily Pravo. Honza Mazak/Mirek Langer New Records in Prague Marathon's Third Year The third year of the Prague International Marathon, held May 25, was the most remarkable event on the Czech sport scene last week. Winners in both men's and women's categories broke the event's records. Kagve from Kenya, with a time of 2:09:07, beat last year's record by more than three minutes. Jelena Vinicka of Belarus, in 2:32:58, was five minutes faster than last year, when she won as well. Karel David, the top Czech marathon runner, placed eighth, and Hajna finished 12th. Honza Mazak/Matej Cerny WEATHER The hot summer days of last week are gone, and the weather has been shedding tears with us over the local political and economic scene. There's light snow in the mountains, and temperatures together with the mood approach the freezing point. People have resumed wrapping themselves in coats and man's most faithful friend for a walk is an umbrella. Occasional thunderstorms and lightning do not provide much optimism, but we can hope that it's just shedding some light on brighter times ahead. Karolina Cebrovska/Magdalena Vanova English version edited by Michael Bluhm ----------------------------------------------------------------------- This news may be published only with "CAROLINA" designation. The subscription is free. Comments and remarks are appreciated. 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