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10 years of free market disaster

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Issue 1715

The Czech Republic

10 years of free market disaster

SAM ASHMAN reports from the Czech Republic. Pictures by JESS HURD

THOUSANDS OF protesters are to descend on Prague on Tuesday to demonstrate against the criminal polices of the International Monetary Fund (IMF) and World Bank.

They will march to a conference centre that was once a symbol of Stalinist rule and has now been revamped to celebrate the free market. The Czech government is promising to mobilise 11,000 police officers and the army to intimidate the protesters and divide them from the local population.

But the people of the Czech Republic have every reason to support the anti-capitalist protests. The “Velvet Revolution” of 1989 brought down the Stalinist regime of Czechoslovakia. Soon after the country divided into the Czech Republic and Slovakia.

The IMF and World Bank told the new rulers to privatise, end state subsidies, close “inefficient” factories and cut social spending. The Czech Republic’s free market government, led by Vaclav Klaus, promised Austrian living standards within ten years if Czechs “tightened their belts”. Czechs are still tightening their belts.

Official unemployment is now 20 percent in the northern parts of Bohemia and the east of Moravia. Factories are closing. Some workers are not paid for months at a time.

The standard of living is falling as the price of essentials shoots up. Public services are in crisis. Racist attacks on Roma Gypsies have spiralled. Klaus’s government fell in 1998, embroiled in corruption on a vast scale. But the Labour-type government which replaced Klaus is following his free market policies.

It quickly announced a 43 percent increase in household electricity prices and rent rises of 27 percent. The government entered NATO, despite polls showing two thirds of people opposed to entry.

There is resistance. At the once giant Zetor tractor factory, workers protested last year because they were not getting paid and the factory was threatened with closure. They won gradual repayment of their wages. Miners at the Kohinoor pit in northern Bohemia struck and occupied earlier this year. They won a four-year reprieve from closure.

‘We’re free to be unemployed’

“THE OLD system was stupid, repressive and in the end it was very weak. The year 1989 was a great opportunity for change. Some of us came together to form Left Alternative.

We definitely believed we would create a better system, not a worse system. But we did not really know what we were fighting for. We now have a new ideology that says everything before was wrong and everything now is right. Capitalism is good because it is against socialism.

But I don’t think the old system was either communist or socialist. That would make socialism the worst thing you can imagine. I did not support the old regime, but now you are free to have no job, no money and no doctor.

People still prefer the new to the old, but you cannot see freedom. It is spoken about but it is not real.”

  • HANA MASOVA, university teacher in Prague

“I AM retired. My rent is twice what I get for my pension every month. I must still work to survive. I have a son at home who is at college. He needs help from me.

The economic situation is very bad for many ordinary people. You look at things like the Skoda factory, which is now owned by VW. The quality is top level but the wages for Czech workers are nothing like the same as for German workers just a few kilometres away over the border.

We are just cheap labour. The Communist Party is now coming second in the elections. People who are losing their jobs look back and think it was better before.

The government is closing mines but opening a nuclear power plant! I could not believe the situation in 1989. There were many leading figures who were one day Communists and the next day capitalists! Many of these people are leading figures today.”

  • OTAKAR SAFFEK, pensioner

“THE REVOLUTION didn’t give anything to the ordinary people. We get paid more now. We have more money. But the price of everything has rocketed-groceries, electricity, gas, rent, all the bills.

I work all week in a warehouse and then I work here as a security guard all weekend. Before, ordinary workers at least had some security. Now you have to travel to find work. In some factories people don’t even get paid their wages.

Banks are closing and not giving people their money. Companies are paying us lower wages. They bring their material here and get us to make their chairs or the headrests for cars, but then they take them back and make more money by selling them in Germany.

Believe me, democracy is a good thing. But we should have proper democracy, not a system where a few people are alright, not the many.”

  • THOMAS, factory worker in Havran, near Most, Bohemia

“IT IS very hard to get a job around here, especially when you have got kids. I’m 32 with three children. Employers prefer to employ you unofficially so they don’t have to pay your national insurance.

The average pay for a woman is about 4,000 crowns a month. The rent here is 4,200 crowns a month. There is racism against the Roma. My husband is Roma.

He’s a builder and has been out of work for ten years. He sees a vacancy, he rings up, they say come along and when he gets there they say sorry, the job has gone.

Skinheads roam onto the estate at night and beat people up for the fun of it. The police do nothing. A skinhead beat up one of my friends only yesterday. She had to go to hospital. I used to work at a mine. That was the best job in terms of the pay-7,000 crowns a month. But the mine shut down three years ago.

Communism was bad. But at least people had work. We didn’t have any freedom. We couldn’t travel to Britain or France for a holiday. We still can’t, because we don’t have any money.”

  • SARKA HOLUBOVA, unemployed worker in Most, Bohemia

IMF policies

“THE CZECH Republic has made enormous strides in establishing a market economy. The private sector’s share of GDP rose from less than 5 percent in 1990 to nearly 80 percent in 1999.

The transition has not always been smooth, however. An unreformed enterprise sector and imprudent lending by largely state-owned banks permitted excessive wage increases.

Large loss-making enterprises should be weaned off government support and unviable firms closed. Employment creation and job searching should be encouraged, including by cutting back on generous social assistance and eliminating rent controls.

There is a clear need to re-evaluate the scope of pensions and other social benefits.”

  • IMF REPORT on the Czech Republic, September 2000

We need to fight too

“THE ACTIVITIES against the World Bank are the most important thing for me. I am interested in ecology, and the World Bank has a big effect on the ecology of the world-particularly poor countries.

There are countries where people cannot eat and there is hunger and disease. There are such big differences between the rich and the poor countries. Debt is another big problem for which the World Bank and the IMF are to blame. There are lots of problems in the Czech Republic-bad housing, racism, poverty.

There are people in areas like Most who are angry that they do not have jobs. There are lots of people who are angry and unsatisfied. I hope these people will be on the S26 demonstration too because that would be a sign of a fightback here as well.”

  • HEDVIKA HRUSKOVA, 18 years old

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