Czechoslovakia in Search of a Third Way
SHANOR, DONALD R.
FREE MARKET VS. SOCIAL NEEDS Czechoslovakia in Search of a Third Way BY DONALD R. SHANOR Prague After rushing to political freedom last November, Czechoslovakia is proceeding...
...The contrast with East Germany is particularly sharp...
...The rest favor the radical restructuring proposed by Finance Minister Vaclav Klaus, who wants to let the free market sweep out subsidies, sheltered government industry and other Communist legacies...
...Ballad singers and tap dancers perform in front of the Civic Forum headquarters...
...The shop would have to secure its materials from State enterprises, and so far there is no way for a private entrepreneur to make such arrangements...
...Their surprising second-place finish, with 48 of the 300 seats in Parliament, compared to 169 for Civic Forum and its Slovak ally, shows how important voters consider it...
...More important, say Western diplomats here, is the fact that very few signs of joint ventures or privatization have appeared in the electronics or heavy industrial sectors that are the foundations of the economy...
...Until these personnel changes have made some progress, economists admit, it is not likely that any basic reforms will be undertaken in what they describe as an "administrative" economy...
...Since November, a new kind of attraction has been added: a daily show of democracy in the streets, cafés and squares...
...Observers here say the government is divided on the question of the best course to pursue...
...In Karlovy Vary, the elegant, faded spa, an Austrian-Yugoslav consortium is rebuilding one historic hotel, and the Pupp family has regained the landmark hostelry that used to be called the Moskva...
...The Communists campaigned on this security issue in last spring's election...
...Czechs and Slovaks look with envy at the power of the West German mark at work in the German Democratic Republic (GDR...
...Shops in this splendid old city have always been better stocked than those elsewhere in the Eastern bloc...
...A Czech academic told me he felt the task of removing unqualified and antireform elements from the vast State bureaucracy, which reaches from the universities to the factories, should have first priority...
...Donald R. Shanor, whose "Calculating the Costs of German Unity" appeared in our previous issue, is Director of the International Division of Columbia University's Journalism School...
...Poland's Draconic measures are not needed here, they argue, because the Czechoslovak Communist Party, for all of its faults, did not leave the nation with hyperinflation and a huge foreign debt...
...Along with most Czechs and Slovaks, he regards Havel as a hero, but wishes the President would get on with the reforms...
...Under the circumstances, Vesely's wife does not want him to quit his factory job and lose his steady pay, pension and other benefits, modest as they are...
...Although the go-slow policy has lots of adherents in a nation where almost everyone works for the State, citizens like Jan Vesely feel frustrated...
...The crowds of tourists who have added Prague to their itineraries this year are largely unaware of the economic debate going on in the country...
...All but a very few come back to give Havel, democracy and the economy more time to undo the damage of the last four decades...
...Consumer goods from the West have begun to fill store shelves and outmoded factories are already receiving modern equipment...
...Nevertheless, they are relieved not to have the problem that brought about the hasty economic fusion of the two German states—the sudden drain of refugees that threatened the GDR with economic and social collapse...
...Vesely and his prospective partner have managed to save enough money to start a small machine shop, yet as long as the present economic system remains in place they think it is too much of a risk...
...But inflation has become a worry, and the government is dealing with it in traditional planned-economy fashion: July's 25 per cent price rises in some consumer goods were matched by increased subsidies not tied to improved productivity...
...Part of the Cabinet agrees with Havel's go-slow approach...
...A few small business people are in evidence, too, including an engineer who operates a visa service for travelers to the West out of the back seat of his van...
...President Vaclav Havel—who had completed six months in office when he was overwhelmingly chosen July 5 to serve a further two-year term by the new Parliament, elected the previous month— wants to wait until January to begin reorganizing the economy...
...General Motors agreed this summer to carry out a feasibility study for a plant in Czechoslovakia that would produce a quarter million transmissions annually by 1992...
...Czech economists say that, given time, Czechoslovakia will develop a "third way"—a mixed economy able to compete abroad, yet also supportive of domestic social needs...
...In the U.S...
...Actually, some rural cooperatives are opening restaurants and other services in the cities...
...A chilling set of street posters educates the younger generation about the purge trials of the 1950s, when Foreign Minister Vlado Clementis, Party Secretary Rudolf Slansky and many other Communist leaders were executed for fictitious anti-State crimes...
...Restaurants are firstrate and so is entertainment, from obscure Smetana operas to cabarets where nudity is again being displayed...
...Indeed, Czechoslovakia's foreign debt, about $5 billion, is the smallest in Eastern Europe (outside of Romania, where the people literally were starved to prevent the debt from piling up...
...It's communism without the Communists," he says...
...Students protest against Romania's crackdown on demonstrators...
...Provincial Czechoslovakia, however, looks much as it did 20 years ago: Dwellings are crumbling, mills spew pollution, hitchhikers and long-distance walkers dot the roads between towns illserved by buses...
...The State system was working about the best of any in the bloc when the revolution came, and Havel, who is not an economist, doesn't see any need to rush into privatization if that would mean tough choices, unemployment, and some loss of his great popularity...
...A machinist in a State factory, he wants to start his own business...
...He had spent part of the day we met firing some of the holdovers from the time when a crash course in Marxism-Leninism and Party membership were the only prerequisites for an academic post...
...SOCIAL NEEDS Czechoslovakia in Search of a Third Way BY DONALD R. SHANOR Prague After rushing to political freedom last November, Czechoslovakia is proceeding very slowly with the economic changes needed to raise living standards, and to end the government monopoly of industry, services and trade that has survived the collapse of Communist rule...
...Television provides both documentaries on these trials and stirring scenes from the strikes and marches of last autumn that brought an end to Communist rule...
...diplomat noted...
...West Germans shuttle across the border to form partnerships, recruit sales forces, even distribute cigarette and soft drink samples...
...diplomat's view, this kind of familiar helping hand from the government ensures stability and confidence, costly as it may be in the long run in terms of Czechoslovakia's competitive position...
...Thousands of East Germans are opening their own businesses—some with Western help, others in the hope of heading off the Western invasion...
...Youthful skateboarders glide past the theater where The Garden Party, Havel's 1960s London and New York hit, is having a delayed run...
...Czech economists and Western analysts agree that Prague's planners have put concerns for domestic stability ahead of fighting for a share of the world market...
...If you're nearly 60 and have been counting on a pension, you want to be reassured that not too much will change too fast," he said...
...People are not that dissatisfied," one U.S...
...they fear labor unrest and a sellout to Western capitalists...
...The main worry, Vesely says, is getting supplies...
...Meanwhile, the young democracies in neighboring Hungary and East Germany are leaving Czechoslovakia far behind in the areas of privatization, joint ventures and market pricing...
...Vesely is studying English in night school so that he will be able to deal with customers abroad, and he makes his children learn the language after their regular school day as well...
...There, thanks to the emergence of the West German mark as the national currency, drab villages and provincial towns are getting a little brighter...
...We'd like to go private," a hotel manager in Prague told me, "butnopartners have come forward...
...Students sell the playwright-President's work on the street—where the lines to buy the raunchy new tabloid Exprès, put out by the trade union publishing house, are longer...
...Czechoslovak citizens can now make day trips to Vienna or Nuremberg...
...A Westerner who has been visiting Prague since the 1960s, though, points out that the same listless clerks make customers wait in the same State stores for the same relatively limited offerings from the nationalized enterprises...
...But GM already has 200 dealers selling its cars in East Germany, and it is gearing up for joint car assembly operations there and in Hungary...
Vol. 73 • August 1990 • No. 10
