Jan Macháček

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Czech Business Weekly

ČSSD’s legacy from Zeman to Paroubek

28. 08. 2006
So the 16-month reign of PM Jiří Paroubek (Social Democrat, ČSSD) is ending, as is the party’s eight year dominant position in national politics: A good opportunity for a brief evaluation.

Journalists tend to emphasize the negative, but now that we’re saying goodbye, we shall try to “accentuate the positive,” as the song goes.

Let’s start with evaluating the ČSSD. Even in times of sharing power with the Civic Democrats (ODS) within the so-called opposition agreement under PM Miloš Zeman, it managed to achieve a few good and important things.

The most important was the privatization of banks. When the center-left ČSSD was taking over the reins from the ODS, all the major banks were still under state – and political – control. Bank privatization meant the end of “banking socialism” and the “soft market environment” and expensive experimenting with a “Czech way” toward capitalism and market economy.

Zeman’s privatization record in other sectors wasn’t very impressive, apart from selling Transgas, the gas importer and distributor, for a very reasonable price. The rest of industrial privatizations were pretty much failures. Imposing forced administration of IPB, the country’s second-largest bank, was also a good move, an important and symbolic defeat of a mighty financial mafia allied with political parties.

Zeman’s government also implemented an investment incentives system, which not only opened the country to foreign capital and know-how, but welcomed the foreigners themselves; Václav Klaus’ (ODS) government had been extremely unfriendly.

There were many dark sides to Zeman’s government, with growing corruption the most sinister (and for which the highway D-47 tender became a symbol); the opposition agreement meant there was no real opposition, no political checks and balances. Zeman also surrounded himself with some very strange advisers from old communist nomenklatura circles. His crude manner and arrogance were equally repugnant.

Zeman’s successor Vladimír Špidla (ČSSD), now an EU commissioner, should be remembered for many things apart from ending the false and pretentious opposition agreement era. Špidla’s government lowered corporate taxes and improved the system of investment incentives, which are the basis of today’s economic growth. Klaus’ ascension to the Prague Castle further divided and weakened the ČSSD.

Then came PM Stanislav Gross; he’ll be remembered for being pushed out over his personal finances, and a record low 10 percent support in opinion polls and the corresponding rise of the Communists (KSČM). But even his government achieved something positive; such as the privatizations of Český Telecom and Unipetrol. At the end of the day, Gross, Špidla and Zeman limited the state role in the economy.

Paroubek’s legacy is mainly partisan. He imposed internal discipline and brought the ČSSD back to the 2002 levels of support, although the ODS won the elections, the ČSSD now has more seats in Parliament than in the time of Zeman and Špidla.

There are two positive things. Paroubek apologized to anti-fascist Sudeten Germans and kicked out nearly everyone tainted by scandal. Before his tenure, corrupt politicians and top-level bureaucrats took months to resign. But as for economic policy, Paroubek didn’t move a finger other than to boost the role of the state, increase social payments and rollback pro-market reforms.

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