Reviving political relations between the Czech Republic and Slovakia should be a logical presage of also a reviving economic cooperation. ???? gave the monthly Slovak Trade FORUM an interview on this subject matter with vice-chairman deputy of the Czech Government for economics Jan Mládek.

What are priorities of the Czech Republic in Czech-Slovak economic relations?

The primary goal is to establish within the Customs Union a maximum volume of foreign trade between the Czech Republic and Slovakia. Despite certain problems of quotas or reexports set out as exports from Slovakia to the Czech Republic, the Customs Union means a common policy toward third parties. The Czech Republic is concerned in having the new government help Slovakia with the process of integration into the European Union.

Your anwer sounds nice, but what specific may the Czech Republic do for Slovakia's integration.

Of course it is not enough for the Czech Republic to utter a wish and Slovakia will be admitted to the first group of countries aspiring for integration into the EU. The Czech Government, however, must to its own interest seek Slovakia's incorporation into Europe. EU officials in their visits to Prague keep on bringing out how desirable it is that Czech-Slovak economic relations be as good as possible. Or even otherwise: in order for the Czech Republic itself to have a chance of being admitted to the EU, it must have the best possible relations with Slovakia and it is to its interest to show that it is capable of helping the Union. At a Prague meeting of the CEFTA prime ministers last September a relatively principal turnabout occurred. Prime Minister Miloš Zeman unlike former Prime Minister Václav Klaus endorsed the possibility of setting up a standing CEFTA economic secretariat in Bratislava. The fact that it finally was not approved was caused by the Hungarian prime minister because of a fresh Slovak-Hungarian problem of Hungarian wheat imports to Slovakia. The establishment of this CEFTA secretariat would be of both a practical and political significance. The seat of a certain international institution would, for one thing, belong to Bratislava and then, in the situation that Slovakia is in the EU later on, the CEFTA secretariat would be a good contact point between the Union and the CEFTA. This is not a phrase, the Czech Government is eminently concerned in improving relations between the Czech Republic and Slovakia.

The Hungarian wheat is already even a Czech problem. May we thus expect that efforts of Czech officials regarding the setting up of a CEFTA standing secretariat in Bratislava will meet in the close future with understanding of the Hungarian prime minister?

Yes, I believe it.

It has followed from your words that the European Commission attaches a high importance to the CEFTA block.

Not only the European Commission. The CEFTA is a major economic bloc of interest to the U.S., too. Every U.S. firm doing business in Central Europe is interested in the largest possible economic area where equal conditions apply.

What was in your opinion a reason for a certain Czech snub toward Slovakia - apart from the fact that the Customs Union has managed to stay alive and that the CEFTA is functioning?

It was a reflection of politics of the former Czech prime minister's government. Václav Klause personally had built his politics on the division of Czecho-Slovakia and had to legitimize this step.

He had to assure the citizens of the Czech Republic that the division of the state without a referendum was correct. Now a shift is taking place, the government of the Social Democrats professes to above-standard relations between the two parts of the former federation. This is still being prevented by an uncompleted division of the former federation property, thus also of Slovak gold, ČNB accounts receivable, etc.

Do you think that only the uncompleted division of the former federation property prevents the above-standard relations? Still, it is no longer a secrecy that right the government of the Social Democrats is about to cancel the significant hitherto above-standard that the Klaus Government had kept in place: reliefs in employing Slovak nationals in the Czech Republic. Slovaks will already be treated in applying for a job and doing business in the Czech Republic according to a law under preparation as all the other foreigners.

A law on employing foreigners in the Czech Republic under preparation will definetely pose a certain problem in advocating above-standard relations between the Czech Republic and Slovakia. The measures, however, are generated by internal problems of the Czech Republic, which only now is beginning to feel a rise in unemployment approaching slowly yet surely 10 per cent. It would be irresponsible to claim that the Government of Miloš Zeman does not have contradictory, conflicting goals. Naturally, conflicts are being arising between the goal having it committed to tackling the unemployment issues and the commitment to build above-standard relations with Slovakia. Though such conflicts are more in number. For example: we intend to build the best possible economic relations not only with the CEFTA countries but also further to the East, and in so doing we are forced to impose visa requirements concretely on Moldavia. It is, of course, a conflict. The industry minister says at a government meeting that he does not wish any visas, the interior ministry calls for imposing visa requirements on those countries from which most problematic foreigners are flowing in to this country.

May the Czech economy transformation - now being criticized by the European Commission - still be a model in something for Slovakia?

I should stop talking about Czech models. I regard the fact that the role of a model for eastward countries was imposed on the Czech Republic, which our politicians were happy to assume, as unfortunate. It was no doubt pleasing for the establishment at a certain time, it was hard to resist, but it was not a truth. The problem is that we thus far have experience as to which way not to take rather than how to do something. Especially in the case of large-scale enterprises applies that there exist bad and even worse methods of privatisation. I mean of course also Škoda Pilsen in whose case I believed - and this is hard to admit - it would be one of few really Czech good firms. I simply succumbed to the concept of a so-called national capitalism, the belief that we were able to come back to the golden 1930's. I do not know whether or not it was possible from the beginning, but at the moment it is really not already possible. Simply Škoda Pilsen will not be a good Czech multinational undertaking - if it will survive in this form at all. If it will, it will have to be restructured, get rid of many productions. As regards privatisation, unequivocally best privatised have proved those enterprises where a large-scale strategic solid firm has got involved. This is exemplified by Škoda Mladá that itself has faced many problems yet on principle is part of a multinational concern and has the fundamental problem of prosperity resolved. Naturally, there have been cases of unsuccessful investment here - Cagiva invested into the declining industry of motorcycle production.

What is your opinion on the effect of coupon privatisation?

I assume that in such form as it was conducted it is the cause of the current marasmus. I do not think that the coupon privatisation is a wrong method, but it should have been limited, notably in large-scale enterprises, to 49 per cent as a maximum. Utmost bestiality was the putting of key enterprises of the Czech economy into an experiment called coupon privatisation. Slovakia did not do so and it is good. The other matter is whether that alternative method - sales of Slovak enterprises to politically related individuals - was substantially better.

What impact would a possible reprivatisation or renationalisation of badly privatised Czech but also Slovak enterprises have in the light of foreign investors?

You mean nationalisation, property confiscation. As long as a new private owner has failed to pay for it to the Naqtional Property Fund and controls it, it must be withdrawn. This a legitimate step and has no international ramifications. Similarly, if an enterprise is unbearably debt-stricken, it exchanges its debts for shares and those shares will be held by the state-run Komerční banka, nothing will happen. If the nationalisation is about taking property away from payment-defaulters or people who acquired property through a demonstrable crime or the exchange of debts for shares is the case, it is O.K. Another case would be having the Czech or Slovak Government issuing a nationalisation decree. It would be bad.

Nevertheless, proving the reasons for taking property away as indicated by you is very complicated.

One of lessons to be learned from the experiment of coupon privatisation is that there are none simple solutions in the economic area and once they are resorted to, they will prove costly. The logic the coupon privatisation was based on was that sales to foreign investors cannot be discussed owing to the slowness of such discussions. Investors will be long raking into everything, long deliberating, referring to ecologic costs, obligations toward banks. It would take much time, the privatisation needed to be accomplished fast. That quick method of ours has finally proved much slower. If an enterprise is to get a final owner, it must be undergo the process of economic and legal analysis which we feared in 1990 with foreign investors.

Will the Czech Government economic officials have at all a time and vigour - while handling their own problems - to deepen the economic cooperation with Slovakia?

Certainly. An improved economic cooperation will help both parties. This is not a zero sum game.

Slovak Trade FORUM