Jan Macháček


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Czech Business Weekly

Uncle Urban’s illusory fuel fix

02. 06. 2008
Milan Urban couldn’t resist some obvious populism last week. Wading into the fuel price debate, the former Social Democrat (ČSSD) minister of industry and trade proposed temporary consumer tax limits on gasoline.

But this move would override an important principle: high oil prices are right now a good thing, mainly because they deliver an important signal to societies and markets.

The steep prices send the message to people that in our insecure world of energy supplies many things remain to be changed and done. More capital has to be invested into oil fields and new exploration techniques. More money has to be invested into oil and energy efficiency. And people must start to think more about changing their dependency on cars and many other energy-intensive conveniences in their everyday lives.

Paradoxically, many people remember that it was former Minister of Finance Bohuslav Sobotka (ČSSD) who was once fighting against proposals from the Civic Democrats (ODS) to lower taxes charged on gasoline.

They should also face up to the unsettling realization that the chances of “Uncle Urban’s” silly and absurd proposal passing into law are not actually so low. The ruling government coalition is in a lot of trouble. If only a few ODS rebels, such as Vlastimil Tlustý, support his idea, then it could soon be waved through.

Nevertheless, before we underscore any attack on this short-sighted proposal, we should note that French “superstar” President Nicolas Sarkozy, urged on by France’s agricultural and fishing lobbies, is pushing for exactly the same thing on the European Union level. Fortunately, other EU states have so far refused to budge.

An unconstitutional Constitutional Court?

The Constitutional Court last Wednesday decided that the fees for visits to the doctor are both legal and constitutional and that the bringers of the complaint against the charges should try to achieve their objectives within the range of usual political contest. In other words: after you win the general elections, the right to cancel the fees will be yours.
This seems to be a rational and normal decision. The doctor payments are regulatory payments, while the system of general health care remains based on general insurance. Its services are therefore still somewhat the “unpaid for” or “free of charge” services that our constitution speaks about.

Nevertheless, two other important things should not be overlooked within the debate that accompanies this decision. One is consistency. Just a few weeks ago, the Constitutional Court, through Judge František Duchoň, decided that it is impossible for the first few days of a Czech worker’s sick leave to go uncompensated. Yes, such compensations are quite standard throughout Europe, but a more crucial point is that they can also be implemented or canceled “within the range of usual political contest.”

So now we see how the same court comes up with incompatible decisions within a few weeks.

The second difficulty is that the reputation of this court has been tarnished. The margins with which it ruled in favor of the doctor fees and sick leave payments were very narrow. And the dissenting judges are rather loud and articulate. Disturbingly, some of them, like Deputy Chief Justice Eliška Wagnerová, even state that the court’s doctor fee decision might be unconstitutional.

But one thing is clear. We are moving closer to the American model, in which the incumbent president nominates candidates for the Constitutional Court who loyally represent their ideological convictions. The Republicans try to take over the Supreme Court and the Democrats try the same thing. Every single justice counts, and it is quite typical for a decision to be adopted on the narrowest imaginable margin. Politics is a dogfight and so it is for the Supreme Court as well.

But aren’t Europe’s systems for the constitutional interpretation of laws more consensual? Until now, that’s what we may have thought.

Topolánek gives ‘the finger’ again

Prime Minister Mirek Topolánek refuses to disclose where he has spent his vacation and who paid for it. This is a matter of political style. European politicians generally do inform the press about their chosen holiday destination. Even though this may be an informal exercise, it says something about them. Such information can lend an insight into their political style and cultural tastes and journalists can speculate about new foreign policy tendencies (Sarkozy’s visit to the U.S., for instance, was an indicator of warmer relations between Paris and Washington). But Topolánek essentially says “f*** off” (okay, he did not say it, but he meant it).

Turning to the matter of who exactly paid for his vacation, it should be stressed that this is really not a private matter. Gifts given to politicians are supposed to be taxed. If somebody has paid something toward Topolánek’s summer break, then they have given him a gift.

Finally, might Topolánek have got involved in a conflict of interest? Given the fact that he traveled to Italy with Transport Minister Aleš Řebíček, let’s note that Italian companies are interested in the upcoming privatization of the operator of Prague Ruzyně Airport. If no one was actually involved in financing Topolánek’s trip, it should not be a problem for him to declare that this is indeed the case.

Škoda subsidies don’t add up

So, Škoda Auto is asking the government for billions of crowns of investment incentives plus additional capital for infrastructure. Well, it’s hardly surprising. Very soon now, such state incentives will no longer be a possibility. The company, of course, is making use of its last chance to bring in what state monies it can. In fact, if it didn’t do so, its management could be severely punished for inaction by shareholders.

But a perhaps more troubling scenario is seen in the wider picture. Why should Vrchlabi, the East Bohemian location that is home to a Škoda plant, want to become an industrial giant? Vrchlabi is after all a gateway to the Krkonoše mountains. It and the surrounding region do not suffer from extreme unemployment. Would it not be more sustainable and profitable in the longer term for the state to invest into golf courses, health retreats and recreational zones for the area, rather than into some rather ugly and boxy car factories that will not be needed for more than one generation?

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