I. Snapshot of the Czech Republic
This landlocked country, nestled in between
Poland, Slovakia, Austria and Germany, has long played a
pivotal role in the history of Central Europe. Its location
and history have formed the national character and culture,
which have both Germanic and Slavic elements.
Prague, the capital, has through the centuries acquired
an unrivalled richness of architectural treasures which
have earned a place on UNESCO's world culture heritage list.
The romanesque, gothic, renaissance, baroque and art nouveau
styles form a unique aesthetic blend. In this way the city
represents well the successive phases of Czech history;
as a capital of the Holy Roman Empire, as an important cultural
centre of the Habsburg Empire and, in the first half of
the twentieth century, as the capital of an independent
and democratic republic between the two world wars.
Yet the country has much more to offer than the beauties
of its capital. The Czech Republic consists of three historic
regions - Bohemia, Moravia and the Czech part of Silesia.
The varied landscape of hills and plains boasts an impressive
array of castles and chateaux as well as picturesque villages
where folklore traditions still live on. Towns like Cesky
Krumlov, Tábor and Karlovy Vary for example, all
offer a rich cultural and historical heritage attracting
millions of visitors every year. The "Czech lands"
are well known for their long-established tradition of making
high quality beer and in the cities of Plzen (Pilsen) and
Ceské Budejovice one can find some of the country's
most famous breweries. There is also a rich culinary tradition
with influences from other countries in the Central European
region, such as the German, Hungarian and Polish cuisine.
Sport is taken seriously and the country has produced many
successful sportsmen and women, among them Martina Návratilová,
Ivan Lendl and Emil Zátopek. Ice hockey is the most
popular team sport and the national team has had great success
in recent years, winning the World Championships in 1999,
2000 and 2001, along with Olympic gold in 1998.
The Czech Republic has made a significant contribution to
European culture. In the sphere of music, the works of Antonin
Dvorák, Bedrich Smetana and Leos Janácek are
often played around the world. Wolfgang Amadeus Mozart lived
and worked in Prague for some time, holding the world premier
of the opera Don Giovanni there in 1787. In literature,
Franz Kafka, Jaroslav Haek and Milan Kundera provide
examples of a rich Czech literary tradition. Well-known
Czech artists include the early eighteenth century painter
Petr Brandl and the Art Nouveau painter and poster artist
Alfons Mucha, while Czech cinema has produced names like
Milo Forman, Jan Sverák and Jirí Menzel.
Unfortunately, in 1997 and 2002 major floods caused extensive
damage to cities, including to Prague in 2002, and to widespread
rural areas across the country.
CZECH Data sheet
About two thirds live in town, and a third in the
country. 94% are Czech, 3% Slovak, and the rest are
mainly Polish, German, Roma, and Hungarian.
||79,000 square km - about
the same size as Austria.
||Germany, Austria, Slovakia,
||Prague, Brno, Pilsen,
||Christianity (but nearly
as many self-proclaimed atheists)
||Czech crown (ceská
koruna): 1 koruna (Kc) = 100 halire = 0.032 Euro
||The latest surveys show
that 45% think EU membership is a good thing, 50%
would vote "yes" in a referendum, 48% believe
the EU would bring net benefits to the country, 36%
believe it to be of benefit personally, and 51% tend
to trust the EU. PLEASE USE EUROBAROMETER HORIZ.
II. A BRIEF HISTORY
The history of the territory that now makes
up the Czech Republic goes back almost two millennia to
the time when Slavonic tribes settled in the area. Bohemia
first began to develop as an independent state in the 9th
century and Prague came to be the seat of the Premyslid
dynasty. In the 13th century, German immigration and colonisation
of the borderlands took place, initiating a period of intense
growth in trade and culture.
The power and influence of the kingdom of Bohemia reached
its peak during the reign of King Charles IV (1346-1378)
of the Luxembourg dynasty, who also became Holy Roman Emperor
in 1355. Prague held a very prominent position as the seat
of the Holy Roman Empire, and grew into one of the greatest
cities of medieval Europe. Charles IV gave Prague some of
the most important landmarks that now characterise the city,
such as the Charles Bridge over the river Vltava, the St.
Vitus cathedral and the New Town (Nové Mesto). He
also founded central Europe's oldest university, the Charles
University, situated in Prague.
Jan Hus, a preacher and rector of Charles University, is
a central figure in Czech history. In the late 1300s, a
century before Martin Luther, he formed a reform movement
with the aim of fighting corruption in the Catholic church.
The Hussite movement as it came to be called, was a national,
as well as a religious phenomenon; in particular, the translation
of the Bible led to the establishment of the Czech language
in written form. The ideas of the Hussites threatened the
power of the Catholic Church and Jan Hus was ultimately
burnt at the stake in Constance in 1414. This event initiated
the Hussite Wars in which followers of Hus successfully
fought off for many years the crusades ordered by the Pope
before finally being defeated.
In 1526, the Czech kingdom came under the control of the
Catholic Habsburg Empire. In 1618, the Bohemian Estates,
who were disappointed with the Habsburgs' failure to live
up to promises of religious tolerance and who were disgruntled
about the loss of privileges, threw two Habsburg councillors
from a high window in Prague Castle. This famous "defenestration"
sparked off the Thirty Years' war in which the Czechs initially
fought on the Protestant side. At the decisive Battle of
the White Mountain in 1620, however, the Czech forces suffered
a comprehensive defeat. A severe repression followed and
the Habsburgs intensified the process to Catholicise and
Germanise the country.
In the 19th century there was a revival of national awareness
culminating in the 1848 revolutions, when Prague was the
first city in the Hapsburg Empire to demand reform. The
Czech dream of forming an independent state however, was
not realised until after the First World War. With the support
of the Allied powers the Czechs and the Slovaks - who despite
having very similar languages had long lived politically
quite separately as Slovakia was part of the Hungarian Kingdom
- agreed to create the democratic federal state of Czechoslovakia
In the inter-war period Czechoslovakia prospered, led by
the charismatic President Tomá Garrigue Masaryk.
The industrial and economic development that took place
allowed the country to became one of the world's ten most
industrially advanced. Czechoslovakia developed into a liberal
democracy and the ideals and philosophy of Masaryk came
to play an important role in the development of the Czech
humanistic and democratic legacy. Although Czechoslovakia
flourished economically, political problems persisted. The
dominance of the Czechs in the new federal state, for example,
led to calls for Slovak autonomy, while ethnic Germans pushed
in the Sudeten areas, where they were a majority, for links
with Germany and Austria. The Munich agreement of 1938 between
Germany, the United Kingdom, France and Italy led to the
secession of the Sudetenland, and in March 1939, Nazi Germany
invaded Bohemia and Moravia, putting an end to the independent
Czechoslovak state. During the Nazi occupation virtually
the whole Jewish population perished in concentration camps
or were driven into exile and several terrible reprisals
for partisan actions were taken against civilians.
In 1945 the Red Army liberated most of the Czechoslovak
territories from Nazi occupation and the power and ideology
of the Soviet Union came to play a decisive role in the
political development of Czechoslovakia. After the war,
President Bene and his government-in-exile returned
to the Czechoslovak state for a brief interval before the
Communist Party seized power in the coup d'etat of 1948.
In the years 1945 to 1946, approximately 2.5 million former
Czech citizens of German origin were expelled.
The Communist coup ushered in a long period of political
repression and a harsh process of collectivisation and nationalisation
of agriculture, industry and trade took place. In the late
1960s a reform movement known as the "Prague Spring"
emerged in Czechoslovakia under the leadership of Alexander
Dubcek, a reform-minded general secretary of the Czechoslovak
Communist Party who aimed to create "socialism with
a human face". The Soviet Union and other Warsaw Pact
countries, however, feared that these ideas threatened the
existence of the communist system, and they invaded Czechoslovakia
in 1968. A hard-line regime was consequently installed under
Gustáv Husák, which erased all traces of reform
in a process known as "Normalisation". However,
some dissident thinking continued, as expressed by Vaclav
Havel and other adherents of "Charter 77". During
this period of political stagnation the communist system
further eroded and finally collapsed in the "Velvet
Revolution" of 1989. After more than forty years of
communist dictatorship former playwright and dissident Václav
Havel was elected President of Czechoslovakia, symbolising
the re-emergence of democracy in the Czech lands.
III. POLITICAL CONTEXT
In November 1989, under pressure from massive
demonstrations, the Communist regime agreed to a peaceful
and gradual democratisation of the political system which
led to the downfall of the Communist regime. Through this
process, known as the Velvet Revolution, the country took
up the task of resuming its pre-Communist traditions and
building a genuinely democratic political system.
The Czech Constitution establishes a Parliamentary Republic.
The President is Head of State with largely symbolic powers
and is elected by the Parliament. The Parliament is composed
of the Chamber of Deputies and the Senate. Deputies are
elected for four year terms by proportional representation
whilst Senators are elected for six year terms on the basis
of a majority system. The Chamber of Deputies is the supreme
legislative authority and has the final say on budgetary
and legislative matters.
These new institutions have successfully provided the framework
for a stable and vigorous democracy. For much of the 1990s
Czech political life was dominated by the Havel-Klaus-Zeman
triangle. President Havel, the main leader of the dissident
movement and internationally recognised as a symbol of the
end of the Cold War, represented the Czech Republic very
effectively. Nonetheless, the orientation of government
policy was set by the Prime Minister, first Mr Klaus and
subsequently Mr Zeman.
Václav Havel, was elected President of Czechoslovakia
in December 1989 and the first general election was held
in June 1990. The Civic Forum, a broad democratic grouping,
won and formed a government but later split up, leading
in particular to the formation of the Civic Democrats led
by Finance Minister Václav Klaus as well as the Civic
By the next elections in June 1992 a wide diversity of parties
existed. Klaus, who remained Prime Minister until 1997,
and the Civic democrats won the elections on a platform
of accelerated economic reform and a pro-Western orientation
in foreign policy. On this basis he formed a coalition government
with the Christian Democrats. One of this government's most
important decisions was, in agreement with the Slovak Prime
Minister Meciar, to dissolve the Czechoslovak Federation
from 1 January 1993 and to replace it with the separate
Czech and Slovak Republics.
Mr Havel had resigned his post rather then preside over
the break up of Czechoslovakia, but he was re-elected as
the first President of the Czech Republic. Mr Klaus launched
an ambitious economic reform programme, notably through
a strategy of "voucher privatization" by which
the ownership of almost all companies was transferred to
the public (see section 4 on the economic environment).
In December 1996 the Czech government formally presented
the request to join the European Union.
In 1998 there was a shift in the political centre of gravity
as Milo Zeman's Social Democratic Party won the elections
and became the largest party in Parliament. Zeman's minority
government served a full term in office on the basis of
the "Opposition Agreement" whereby consensus was
established with the Civic Democrats on major policy issues.
This government secured membership of NATO in 1999 and intensified
preparations for accession to the European Union.
Following the June 2002 elections the Social Democrats remained
the largest party and Vladimír pidla replaced
Mr Zeman who retired from his post as Prime Minister. Mr
pidla went on to form a coalition government, with
a narrow majority, with the Christian Democrats and the
Freedom Union. The Civic Democrats are the largest party
of opposition whilst the Communists continue to maintain
a significant number of seats.
On 2 February 2003 President Havel brought to a close his
second full term in office, the maximum permitted by the
Vaclav Klaus was elected President of the Republic in early
IV. THE ECONOMIC AND BUSINESS ENVIRONMENT
Czechoslovakia entered the reform process
after the Velvet Revolution in 1989 with favourable initial
conditions as the Communist regime had maintained prudent
macroeconomic policies. The economic transformation proceeded
rapidly with the liberalisation of prices, the restitution
of most properties to their pre-1948 owners and the mass
privatisation of most companies through two waves of voucher
privatisation. After the Velvet divorce with Slovakia in
1993, the Czech Republic experienced the so-called Czech
miracle, a combination of a rapid transfer of ownership
to the private sector, low unemployment and no hyperinflation.
The country's mineral resources include coal and lignite,
and deposits of mercury, antimony, tin, lead, zinc and iron
ore, and uranium. Processing industries (particularly for
machinery, steel, chemicals, glass, and agri-food) are highly
developed. The country's main exports include manufactured
goods, machinery, cars and transport equipment, and beer.
Cereals, sugar beet and hops are intensively cultivated,
although agriculture plays a comparatively small role alongside
the traditional engineering and other industries.
Following a balance of payments crisis the country experienced
a recession between 1997-1999. This revealed an unfinished
reform agenda, notably concerning the financial sector where
the major banks were still state-owned as well as the corporate
sector which was unprofitable due to a lack of restructuring.
Moreover, improvements in the legal framework had not been
as rapid as the change in economic structures, and had allowed
the development of 'tunnelling' ( asset-stripping).
The authorities took a number of corrective measures. The
privatisation of the banking sector was completed in 2001
after a public bailout of the banks and their bad debts.
Particular attention was paid to the restructuring of the
largest loss-making companies. Finally, the legal framework
was improved especially in terms of combating economic crime
and establishing more efficient bankruptcy procedures.
A determined effort was aimed at attracting foreign direct
investment, which reached 10% of GDP and made the Czech
Republic the main recipient of FDI per capita in Central
Europe. For instance, new foreign direct investment has
been attracted from Toyota Motor Corp and PSA Peugeot Citroen
- a Euro 1.5 billion greenfield car assembly plant in the
Central Bohemian town of Kolín (the largest greenfield
investment in the country). In a bid to diversify, the public
investment promotion agency, Czech Invest, has recently
been targeting investment incentives on hi-tech services.
Spurred by FDI inflows, the Czech economy has resumed growth
since 2000 in a context of low inflation and stable but
significant unemployment. The economy has weathered the
recent global slowdown well, with real GDP growth at 3.3
percent in 2001, and 2.7% in 2002. Strong fixed investment
and buoyant household consumption - underpinned by robust
wage growth and modest gains in employment - helped sustain
domestic demand. Moreover, the external current account
deficit narrowed in 2001. Inflation remains subdued at 2%.
However, the public deficit has been rising and needs to
be stabilised. Also, enterprise restructuring has led to
rising structural unemployment and large regional disparities
in unemployment rates.
The privatisation programme is still not completed in the
steel, petrochemical, energy and telecoms sectors.
UNICE, the European employers organisation, supports the
accession of the Czech Republic, which it considers "a
frontrunner", with the Czech economy making good progress.
Further reforms need to concentrate on the administrative
and legal framework and corporate restructuring.
||Czech Republic (came into
being on 1/1/1993)
Constitution entered into force on 1 January, 1993
||Universal direct suffrage
for party proportional representation, subject to
After World War II, the political system in Czechoslovakia
was greatly affected by the introduction of a Soviet-style
Communist regime, as it was in the other countries of central
and eastern Europe. The system of power was distorted. In
effect this imbalance meant that the three branches of power
necessary for democratic development - executive, legislative
and judicial - were substituted by a unified Communist power.
Its power was based on the constitution and for forty years
it ruled all layers of social and political life throughout
the country with the help of oppressive institutions. After
February 1948, the Communist Party became the only autonomous
political entity. It allowed a few other parties to exist
within the so-called National Front; however, these parties
held no real power and were created to provide an outward
image of Czechoslovakia as a democratic state.
After the revolutionary events of November 1989 which brought
about the downfall of the Communist regime, the entire country
faced the uneasy task of resuming its pre-Communist traditions
and building a democratic political system. A wide diversity
of political parties were well-established even before the
break-up of Czechoslovakia on December 31, 1992. The constitution
of the Czech Republic, which became valid on the
day of the birth of the new state, explicitly defined civil
rights, the relationship between the executive and legislative
branches of power, and the independence of the judiciary.
Head of State :
President Vaclav KLAUS, elected March 7th, 2003
CURRENT GOVERNMENT (As of March
|Dr. Vladimír Spidla
||Deputy Prime Minister and Minister of the Interior
|Dr. Cyril Svoboda
||Deputy Prime Minister and Minister of Foreign Affairs
|Minister of Justice
||Deputy Prime Minister for Research and Development,
Human Rights and Human Resources
||Minister of Finance
||Minister of Defence
|Minister of Industry and Trade
|| Minister of Labour and Social Affairs
|| Minister of Transport
|| Minister of Agriculture
|Dr. Marie Soucková
|| Minister of Health
|Dr. Petra Buzková
|| Minister of Education, Youth and Sports
|| Minister of Culture
|Dr. Libor Ambrozek
|| Minister of Environment
|| Minister for Regional Development
|| Minister for Information Technologies
||State Secretary for European Affairs