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FY 1999: Czech Republic |
CHAPTER III. POLITICAL ENVIRONMENTA. Nature of the Political Relationship with the United States
U.S.-Czech relations are excellent and reflect strong historical ties. The U.S. and the Czech Republic cooperate on a wide range of issues, including in the United Nations and in trans-Atlantic fora such as the OSCE and NATO's Partnership for Peace. In April 1998 the U.S. Senate ratified Czech accession to the North Atlantic Treaty Organi- zation, which is expected to take place no later than April 1999. The Czechs continue to contribute to the NATO-led Stabilization Force in Bosnia. The U.S. supports Czech participation in Western economic and political institutions and has played a major role in facilitating the country's transformation from communism through a $150 million economic assistance program.
B. Major Political Issues Affecting the Business Climate
Parliamentary elections were held June 19-20, 1998, precipitated by the fall seven months earlier of the government of former Prime Minister Vaclav Klaus. No party won a majority, but the Social Democrats (CSSD) received a plurality of just under one-third of the vote, and reached an agreement with Klaus' Civic Democratic Party (ODS) under which CSSD will form a minority government with the "toleration" of ODS. The new government is expected to continue the country's economic transformation, and its leading economic policy officials have said they want to encourage foreign and domestic investment and improve regulation of the capital market. Less encouraging, the CSSD may tolerate a larger government deficit, and CSSD deputies were the driving force behind the so-called "lotteries law," discussed in section IV.: Investment Climate, Openness to Foreign Investment.
Some European companies have sought to use the Czech Republic's interest in EU membership to gain advantage in commercial competition. Although Czech interest in EU accession is clear, the Czechs also desire a strong U.S. presence in the country.
Political reforms made at the top level of government often have not trickled down fully to the bureaucracy. As a consequence, American and other foreign business people often cite a convoluted -- or in some cases corrupt -- system at both national and local levels as impeding market access. Potential investors often must spend considerable time and effort to finalize a deal, or to enforce the terms of a contract, and the Embassy is sometimes asked to intercede on an American investor's behalf. Government officials have proved, in most cases, to be accessible and receptive in such instances.
C. Synopsis of Political System, Schedule and Orientation of Major Political Parties
The Czech Republic is a parliamentary democracy. President Vaclav Havel, the head of state, is an internationally recognized advocate of human rights and social justice. The Prime Minister is Milos Zeman, chairman of the left-of-center Social Democratic Party (CSSD). He heads a minority government. CSSD is pro-reform, but had criti- cized the former center-right coalition government for ignoring social issues and for economic corruption. The main opposition party is the right-of-center Civic Democratic Party (ODS), headed by former Prime Minister Vaclav Klaus. Other opposition parties are the right-of-center Freedom Union (which split from ODS early in 1998), the centrist Christian Democratic Union (KDU-CSL) and the leftist Communist Party. The Czech Senate was established in 1996 -- 25 of its 81 members are Social Democrats, the rest represent opposition parties. One-third of the Senate seats will be contested in November 1998 elections.
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