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U.S. Department of State

Diplomacy in Action

II. Country Assessment--Czech Republic


U.S. Government Assistance to and Cooperative Activities with Central and Eastern Europe
Bureau of European and Eurasian Affairs
January 2007
Report
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Country Overview

Country Facts
  • Map of Czech RepublicArea: 30,450 sq mi (78,866 sq km), slightly smaller than South Carolina 
  • Population: 10,235,455 (July 2006 est.) 
  • Population Growth Rate: -0.06% (2006 est.) 
  • Life Expectancy: Male 72.94 yrs., Female 79.69 yrs. (2006 est.) 
  • Infant Mortality: 3.89 deaths/1,000 live births 
  • Gross Domestic Product (GDP): $199.4 billion (2005 est.; purchasing power parity) 
  • GDP Per Capita Income: $19,500 (2005 est.; purchasing power parity) 
  • Real GDP Growth: 6% (2005 est.)

Overview of U.S. Government Assistance

In FY 2006, the USG provided an estimated $10.07 million in assistance to Czech Republic, including:

  • $2.05 million in democratic reform programs; 
  • $0.03 million in humanitarian programs; and 
  • $7.99 million in security, regional stability, and law enforcement programs.

The last year for new SEED bilateral funding to the Czech Republic was FY1997, although some additional SEED funding for public diplomacy and democracy initiatives were provided to Czech Republic and other graduated countries through FY 2006. Some forms of non-SEED funded U.S. assistance to the Czech Republic continued through FY 2003.

FY 2006 Assistance Overview

U.S. STRATEGIC INTERESTS & FOREIGN POLICY PRIORITIES

The U.S. and the Czech Republic share strong historical ties and fundamental values of democracy and market economics. As a legacy of its struggle against communist dictatorship, the Czech Republic has embraced a pro-transatlantic foreign policy and supported democratic transformation around the world. With its membership in the North Atlantic Treaty Organization (NATO), European Union (EU), and the World Trade Organization (WTO), combined with increasing awareness of its role in international affairs, the Czech Republic has proven an important ally in promoting democracy, market reforms, anti-terrorism, and non-proliferation.

FOREIGN ASSISTANCE PRIORITIES

Due to the Czech Republic's success in implementing free market, democratic reforms, the USG no longer provides broad, transitional assistance. In FY 2006, the vast majority of USG funds provided to the Czech Republic went towards promoting peace and security by improving the Czech military's professionalism, interoperability with NATO forces, and niche capacity.

OPERATING ENVIRONMENT

The Czech Republic has transitioned into a mature and open democracy. The June 2006 general elections resulted in a stalemate with the Civic Democrat party (ODS) winning the largest number of votes but not enough to form a majority government. After numerous attempts at forming a coalition, the ODS opted for a minority government, which resulted in a failed vote of confidence on October 3. The Czech Constitution calls for three attempts at government formation before early elections are called. As of December 1, 2006, the second attempt at government formation is underway without a predictable outcome. The situation dampens prospects for serious economic reforms.

The Czech Republic remains very receptive to U.S. military assistance and training. In recent years the Czech Republic has participated fully in international crisis interventions. A NATO member since 1999, the Czech Republic has been a good example for later entrants and aspirants - reforming its military and specializing in its strengths with a world-class nuclear, biological, and chemical defense capability. The country's transatlantic orientation is evident in its strong support for Alliance enlargement, and its active cooperation in responding to the threat of terrorism.

FY 2006 Country Program Performance

Governing Justly and Democratically

Despite the success of the Czech Republic in transitioning to an open parliamentary democracy, a September 2005 public opinion poll identified corruption as the leading problem in the Czech Republic. Several attempts were made to deal with the problem, including introduction of a conflict of interest bill and a code of ethics in parliament. As of year end, neither had been successfully implemented.

U.S. ASSISTANCE PRIORITIES

The USG no longer provides bilateral transition assistance to the Czech Republic for democratic reform. However, in FY 2006 the USG provided several small grants to promote further reform in priority areas. Alumni activities for prior assistance recipients remained a productive way for the USG to engage the Czech Republic on a range of civic and democracy-related issues.

DESCRIPTION OF PROGRAMS, OUTPUTS, AND IMPACT

The USG provided small grants to Czech non-profit organizations for projects related to democratic reform. These projects included: support of multicultural and human rights education; enabling free access to information; and developing codes of conduct for government officials. Cooperation with former assistance grantees continued in the broader field of promoting corporate social responsibility, raising public awareness of corporate philanthropy, and NGO management.

Economic Growth

Despite unprecedented macroeconomic stability and significant Gross Domestic Product (GDP) growth, the Czech economy continues to face significant challenges. Structural reforms in fiscal policy and labor markets are particularly pressing for Czech competitiveness in attracting foreign direct investments and for eventual adoption of the euro. In 2007, the Czech Republic is expected to miss its Maastricht criteria for fiscal deficit for the first time since joining the EU, due to new laws passed in the run-up to the June 2006 elections that significantly increased social welfare spending. Consequently, the Czech Government announced in October 2006 that it would delay adoption of the euro from 2010 to an unspecified date. With one of the fastest aging populations in Europe and one of the lowest fertility rates in the world, reform in the social benefits system will have significant impact on the fiscal sustainability of the Czech economy.

U.S. ASSISTANCE PRIORITIES

Due to the Czech Republic's successful implementation of free market reforms, the USG no longer provides broad economic development assistance. However, the USG provided small grants for intellectual property rights-related training.

DESCRIPTION OF PROGRAMS, OUTPUTS, AND IMPACT

In FY 2006, the USG provided funding for four candidates from the Czech Republic to receive training at the U.S. Patents and Trademarks Office in Washington. A fifth candidate attended the program on Czech Government funding.

Peace and Security

The Czech Republic is a member of both NATO and the European Union and contributes to several international security efforts. Defense modernization efforts continue as the Czech Government develops its security policies to ensure the Czechs are fully interoperable with NATO and U.S. forces. Czech security doctrine enhances the international deployment capabilities for its security forces.

U.S. ASSISTANCE PRIORITIES

USG assistance to the Czech Republic focused on achieving US- and NATO-interoperable "niche" capabilities as well as continuing deployment of forces to support the Global War on Terror (GWOT). Assistance related to law enforcement worked to ensure the continuation of strong and active Czech support in the battle against terrorism and against those who support or finance terrorist activities.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

In FY 2006, the USG security assistance to the Czech Republic worked to increase the ability of the Army of the Czech Republic to prepare and deploy forces that can provide required support to NATO and coalition operations, assist in the development and enhancement of NATO-supported niche capabilities and support the ability of the Czech Republic to meet its NATO Force Goals, and assist in the implementation of defense reform activities required to maximize military capabilities available to NATO and coalition operations.

USG assistance funded conferences in the Czech Republic on terrorist finance and organized crime as well as a program for investigators and prosecutors on public corruption. This assistance made possible a program on trafficking in persons and forced labor for law enforcement, judges, prosecutors and, government officials. The USG sponsored prosecutors and law enforcement professionals to participate in exchanges and visitor programs.

The USG also provided funds to the Czech Republic for training on issues such as cyber crime and organized crime, and provided small grants, exchanges, and speakers' tours on issues related to the transatlantic security dialogue, fighting global terrorism, and combating trafficking in persons.

OUTPUTS

Through USG military education and training assistance, 90 students attended training courses and educational programs in the U. S., and two Mobile Training Teams from the Defense Institute of International Legal Studies conducted training in the Czech Republic for 60 military personnel. The Czech Republic routinely placed its senior service school graduates in key leadership positions throughout its Ministry of Defense and the General Staff of the Czech Armed Forces.

The USG supported the Central European organized crime working group as well as workshops on combating public corruption, learned from U.S. counter-terrorism cases and ties between terrorism financing and organized crime. The seminar on combating public corruption funded the travel of two senior U.S. prosecutors to for workshops with Czech Government officials, law enforcement, prosecutors and judges. The counter-terrorism workshop brought three experienced prosecutors and investigative agency employees to the Czech Republic for the seminar that included representatives from the Czech intelligence agencies, law enforcement and government officials. The week-long workshop on terrorism financing and organized crime brought four U.S. law enforcement officials to the Czech Republic to work with prosecutors, judges, law enforcement and government officials. The USG also provided funding for small grants to promote transatlantic security dialogue and issues related to fighting global terrorism. The USG provided funds to support a program to assist in the area of combating trafficking in persons.

PROGRAM PERFORMANCE/IMPACT

The Czech Republic used USG military financing assistance to enhance its ability to operate in coalition and NATO operations, reform its military planning capability, and modernize its equipment. As of the end of FY 2006, active cases included modernization of the Czech rapid reaction/special forces with specialized equipment in support of their NATO "niche" capabilities and interoperability. The Czech Republic began exploring options for establishing Strategic Airlift capabilities to meet its commitments to NATO, with 2008 as the target year for the release of a tender for aircraft. U.S. officers assisted with the evaluation of the C-130J as a potential model to fulfill this commitment.

Alumni of USG military education and training programs continued to fill top leadership positions of the Army of the Czech Republic and the Ministry of Defense. USG training supported the professionalization of the armed forces, especially in the area of non-commissioned officer (NCO) leadership development, a critical requirement for the Czech armed forces since conscription ended in 2005.

The USG's working relationships with Czech entities involved in combating terrorism have improved significantly since their representatives attended various USG-sponsored counter-terrorism programs.

FY 2006 Funds Budgeted for U.S. Government Assistance to Czech Republic [PDF format]



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