Académique Documents
Professionnel Documents
Culture Documents
Author
Davide Tarasconi (S081N0057)
info@davidetarasconi.net
Course
Current European Issues (IREL361)
Spring 2008
University of Nicosia
Licence
This paper is released under a Creative Commons Attribution
1
NonCommercialNoDerivativeWorks 3.0 Licence .
I NTRODUCTION
The Czech Republic was among the lastentering Member States in the
biggest and historical European Union enlargement of 2004: the former
peacefullysplit neighbor Slovakia and Lithuania, Estonia, Latvia, Poland,
Malta, Cyprus and Hungary.
integration and economical performances.
1
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The willingness of being the most important addition to the European
Union has led and is leading Czech Republic toward better and better
Anyway the difficulties for the integration of this former Soviet country are
solid and real: great efforts must be taken to overcome management and
organizational problems as well as social and policies issues.
During the next paragraphs I will present a sort of comprehensive profile of
integration problems facing European Union’s enlargement.
Economical profile
Czech Republic is one of the most promising EastEuropean country in
interest rates fostered a GDP growth from 2% up to 6% from 2002 to 2005,
pushing the growth levels of this postsoviet country far beyond other East
an WestEuropean countries.
10
9
8
7
6
5
4
3
2
1
0
Figure 1 Long Term Interest Rates, percentage, 2006. Source: OECD Factbook 2008: Economic,
Environmental and Social Statistics ISBN 9264040544 © OECD 2008.
Just after the inclusion in the European Union, an important recognition for
came from the World Bank, which entitled Czech Republic, in 2006, as an
official “developed country.”
2
In the words of Markéta Šichtařová , a leading Czech economist, Czech
Republic
behind almost 20 years ago, it is a member of the European
Union, our interest rates are lower than in the Euro zone. In no
regard does it fulfill a general image of a transformation country
2
“Study ranks Czech Republic first among transforming countries” – (see “Other web references”)
anymore.”
production of iron and steel, metalworking and in general heavy industries
fields along with chemical production. In particular the industrial machine
performance due to exports and imports to the European Union, especially
with an industrial giant like Germany.
Being part of the EU’s common market increased Czech Republic trades
with other European countries, finding new markets for its products and
offering itself as new market for foreign products: due to its growing and
foreign investors.
Manufacturing Services
50
45
40
35
30
25
20
15
10
5
0
Apart from the industrial and agricultural sectors (mainly hops, wheat,
potatoes, fodder roots and sugar beets), Czech Republic, and mostly its
capital Prague, is a wellknown attraction for European tourists: the low
cost nightlife of the capital and the beautiful hiking and skiing landscapes
ignite the tourism sector, which accounts for 5,5% of the Gross National
Product and employs 110000 people – over 1% of the population.
The heritage from the communist era is still a burden for Czech Republic’s
businesses, fighting a high rate of corruption (which is among the highest,
even if in a decreasing trend, in the EU), as well as continuing the
privatization process in banking and health care system.
Even with such a good performance Czech Republic’s economy will face
some difficulties in the near future: an inflation’s spike is expected during
2008 as a result of new taxations rules, aimed to enforce a more strict
fiscal policy required by EU’s standard.
The positive trend of Czech Republic’s economy is expected to continue
as the country is approachin the last stage remaining for the switching to
the Euro currency in 2010.
Policy priorities
The process of Czech Republic’s integration began in 1999: that was a
particular difficult time for the country that was facing an increasing of
inflation rate from 1998 (the first serious economic crisis since ’89
jeopardized the speed of the integration processes.
3
in 1998. It fell in 2000, 2001 and 2002, and was down to 7.3% in 2002
neighboring Slovakia).
20
15
10
Figure 4 Unemployment rates, As a percentage of civilian labour force, average 19962006.
Source: OECD Factbook 2008: Economic, Environmental and Social Statistics ISBN 9264
040544 © OECD 2008.
There’s no need to say that political life in Czech Republic in the last
decade has been animated by support for the integration of the European
Union’s common policies’ body, also known as Community Acquis.
ECONOMICAL REFORMS
On the side of economic reforms, Czech government had to establish a
set of shortterm policy priorities, dealing with EU’s guidelines, aimed to
3
“Czech Republic: Adoption of the Community Acquis” (see “Other web references”)
market.
Moreover, the renewal of some strategic sectors, like heavyindustries and
banking, was highlighted as crucial by the EU to allow Czech Republic’s
main industrials’ drivers to compete against the most developed industries
and sectors in the common market. Even if Czech Republic is not in a
hurry in joining the Eurozone, a lot of policies and control measures has
been taken in order to stabilize and to benchmark the national currency
performance inside the common exchange market.
ORGANIZATIONAL AND INSTITUTIONAL REFORMS
Apart from strictly economical aspects, a lot of decisions have been taken
European Union required Czech Republic to undergo a deep revision of its
institutions require, in general, more efficient supervision abilities, in order
to reduce corruption problems and to increase transparency.
TRADE AND MARKETS REFORMS
One of the keyword regarding policies implementation is “standardization”,
in other words the ability to align national laws and regulation with
European Union’s ones: strong efforts toward standardization have been
regulations aim to eradicate legal and illegal monopolies that can be easily
Czech Republic.
Since the accession process began, Czech Republic, like any other
successfully organize the funds, a complete new set of institutions have
been created following EU’s guidelines to ensure the highest level possible
of transparency.
The same transparency regulations for standardization are applied to the
free movement of goods, capital and services in order to strengthen the
ties between Czech internal market and EU common market.
Needless to say that transforming a communist economy into an almost
fully integrated common market in less that 15 years should make both
European Union and Czech governments very proud of the work done.
Entering the EU and receiving aid scheduled by the Common Agricultural
Policy forced Czech Republic to reform some of its agricultural institutions
to achieve higher standards on hygiene and public health issues, as well
as modernizing milk and meat production industries.
SOCIAL REFORMS
commonlyshared policy that enhance employment and social security: for
this reason Czech government is required to apply policies to protect low
incentives for subcontracting with selfemployed workers.
2000 2050
100
80
60
40
20
Figure 5 Ratio of the inactive elderly population aged 65 and over to the labour force, percentage.
Source: OECD Factbook 2008: Economic, Environmental and Social Statistics ISBN 9264
040544 © OECD 2008.
Like the vast majority of other EU countries, Czech Republic has to face a
serious social issue coming from an ageing population: discussions about
reforming the pension system are one of the main political topics as the
country entered the EU.
Being part of a common market has advantages but also some
drawbacks: new skills are required by information technology and tertiary
sectors and Czech educational systems should be able to change at a
knowledge and to improve knowledge of the existing workforce through
training programs.
Society
policies that all Member States have to follow. There can be problems of
compared to the other EU’s populations.
Czechs seem to have a perception of their social reality that is, generally
policies and in particular the percentage of Czechs that are aware that
their country is benefiting from EU aid is pretty high (73% against EU27
4
average of 70%) .
inflation and unemployment rate, Czechs complain about a general feeling
of lack of social security regarding jobs and rising prices.
Because of their fresh communist past Czech population seem to have a
general lack of faith in national government and institutions: the picture is
about a population that holds more faith in EU initiatives than from its own
government. Only 34% of Czechs trust their government and just 21%
trust the Parliament while the 58% of the trust the EU (EU27 average is
5
48%) .
The huge change of the economical environment in the last fifteen years
understand the opportunities coming from the opening markets while they
can also perceive that working conditions in some sectors are not going to
improve, especially regarding career prospects.
4
“Citizens’ perception of EU Regional Policy” – Eurobarometer (see “Statistical References”)
5
Standard Eurobarometer 68, OctoberNovember 2008 (see “Statistical References”)
I SSUES FACING E UROPEAN U NION INTEGRATION
Eurozone
As we saw before, the brilliant economic performance of Czech Republic
6
is leading the country to be part of the Eurozone : Czech government has
no rush in forcing the currency change, no date for this objective has been
set yet.
Even if its economy is working well, Czech Republic’s figures about price
levels and hourly labour costs are quite lower compared to EU and
7
Eurozone averages . However before switching to the Euro currency
Member States have to enter a kind of twoyearslong “transition program”
8
called ERM II : unlike other new Member States, Czech Republic didn’t
enter this program yet and it’s probably switching the currency not before
6
“The latest figures suggest the Czech Republic could easily meet the debt and deficit criteria to
adopt the single European currency, the euro. The Maastricht criteria set a 3.0 percent of GDP
ceiling for the public deficit and 60 percent guideline for debt.” – “Czech official data says 2007
public deficit fell to 1.58 per cent” (see “Other web references”)
7
“In 2005, the Czech price level was roughly 56% of the euro area average and 58% of the EU
average. Hourly labour costs were about 27% of the euro area average and 31% of the EU average.
The process of real convergence and the growth in the relative price and wage levels are likely to
continue.”
8
ERM II (exchange rate mechanism) is the last procedure a country must follow before switching to
euro: it consist in a twoyear period during which the national currency is locked with an “almost
fixed” ratio to the euro.
2010. An interesting result from an Eurobarometer survey is that public
opinion perception about the switching is set in reality on 2012.
Environment
Czech Republic’s industries are heavily reliant on coalbased power: the
country is one of the major greenhouse gases producer of the European
9
Union . On this particular issue there are a lot of controversies involving
from EU pollution restrictions.
Czech Republic heavily depends upon external supplies of gas (especially
from Russia) and the conversion of its coalbased industries will make the
country even more dependant on external energy sources.
Strategies for integration of the Roma
social integration problems, especially regarding Roma people. The Roma
were officially recognized and politically represented during the communist
9
“Threefifths of current Czech electricity production comes from coalfired plants, which are
amongst the biggest producers of greenhouse gases and would be penalised heavily by the
allowances purchase plan” – “Czechs urge slow phase in for carbon emissions market” (see “Other
web references”)
era, but they lost their “privileges” back in 1989, although they weren’t a
political factor, politically speaking, and their only privileges were housing
and (compulsory) employment: efforts to reintegrate the Roma population
in Czech Republic’s social, political and economical life began again in
1997.
demonstrate to the EU that the country can overcome the traditional forms
of exclusion that historically hit the Roma population in every European
Union countries.
On the other hand, some of the Roma communities, especially at a local
level, are organizing themselves, working with NGOs and the state in order
to achieve some kind of political identity.
Discrimination and isolation of the Roma are highlighted by high rates of
unemployment: in 1999 the average unemployment rate for Czech people
was around 10%, rising up to a dramatic 70% among Roma community.
The Roma were classified as a “social problem” left to local authorities
until the end of 1997, when a report about the Roma conditions was issued
by and for the Czech government. During the communist era Roma people
were involved with “informal networks” to overcome the difficulties coming
from exclusion, very often in illegal ways.
The biggest integration problem is coming from the European Union and
it’s a sort of “missing actor” in the strategic efforts Czech Republic is taking
at local levels: EU’s policies regarding employments and social aid rules
are totally unsuitable for the resolution of the Roma issue. These policies
define in a very strict way what is a wanted recruit for the labour market
(and Roma people are not) and what is an unwanted migrant.
10
There are two main alternatives for the Roma in Czech Republic : one
can be called “exit option” and it’s about finding personal, individual and
migrating from the country in an endless research for a better place.
On the other hand, the “voice option” is a more collaborative and civil one,
policies that must be understood and supported also by an almost absent
European Union.
minorities as well as an important role for a European Union finally able to
understand local policies regarding minorities.
10
“Local Strategies for Civic Inclusion in a European Context: the Roma in the Czech Republic” –
(See “Other web references”)
C ONCLUSIONS
The 2004 enlargement “experiment” has been an economical success: all
the new Member States had a long period of strong economic growth,
outperforming the “old” Member States’ economies (from ’97 to 2005 new
Member States had and average GDP growth by 3.75%, compared with
2.5% by EU15).
The incomes of the new Member States are still quite lower than the ones
of old members, and this aspect highlight how much the legacy of the
slowly rising from 44% to 50% of the EU15 average while skeptical voices
highlights that with these type of rate the new Member States will attain
the same income levels of the old Member States in more than 50 years.
The overall picture of this enlargement is quite positive and all the growing
trends of economical, financial and trading sectors seem to be confirmed
also for the near future in all the new Member States: the opening of the
markets between old and new Member States increased the volume of
trades and the foreign investments are also increasing, creating new
opportunities for jobs and ventures.
80 000
70 000
60 000
50 000
40 000
30 000
20 000
10 000
Euroskeptical comments about negative factors affecting European Union
budget can be easily avoided showing that, even if the contribution of the
members one, the EU15 countries contribute only with 0.1% of their GDP
to the economic aid for the new Member States: following new directives
for new Member States development, this ratio is going to increase by
2013.
fragmentation and the integration of the Roma are for sure two of the main
issues that Czech Republic’s government must face in order to achieve
higher benchmarking abilities and improved human rights’ standards and
to become one of the bestperforming new country of the new European
Union.
If we think that the Velvet Revolution was just in ’89 and that at the present
Union’s countries in most of the economical indicators we should forget
about the critics for a while and rather think about a miracle: all the
difficulties that Czech Republic is facing come from its recent past but
there are a lot of reasons to imagine that the country is able to face all the
future challenges.
openness toward less restrictive topdown regulations and more tolerance
and diplomatic abilities to find ways to implement local and finally effective
policies.
S TATISTICAL REFERENCES
EUROBAROMETER
Source for statistics and surveys about the European Union.
http://www.ec.europa.eu/public_opinion/index_en.htm
EUROSTAT
European Union statistical service.
http://ec.europa.eu/eurostat/
OECD STATISTICS
OECD’s statistical portal.
www.oecd.org/statistics/
W IKIPEDIA R EFERENCES
“CZECH REPUBLIC”
From Wikipedia
Date of last revision: 8 April 2008 06:52 UTC
Date retrieved: 8 April 2008 11:05 UTC
http://en.wikipedia.org/w/index.php?title=Czech_Republic&oldid=204167350
“MILITARY OF THE CZECH REPUBLIC”
From Wikipedia
Date of last revision: 29 March 2008 20:38 UTC
Date retrieved: 8 April 2008 10:50 UTC
http://en.wikipedia.org/w/index.php?title=Military_of_the_Czech_Republic&oldid=20188
6121
“ECONOMY OF THE CZECH REPUBLIC”
From Wikipedia
Date of last revision: 30 March 2008 18:36 UTC
Date retrieved: 8 April 2008 11:03 UTC
http://en.wikipedia.org/w/index.php?title=Economy_of_the_Czech_Republic&oldid=202
106434
“POLITICS OF THE CZECH REPUBLIC”
From Wikipedia
Date of last revision: 18 March 2008 13:21 UTC
Date retrieved: 8 April 2008 11:09 UTC
http://en.wikipedia.org/w/index.php?title=Politics_of_the_Czech_Republic&oldid=19907
7142
“VELVET REVOLUTION”
From Wikipedia
Date of last revision: 6 April 2008 17:36 UTC
Date retrieved: 8 April 2008 11:07 UTC
http://en.wikipedia.org/w/index.php?title=Special:Cite&page=Velvet_Revolution&id=20
3789170
OTHER WEB REFERENCES
“WORLD BANK MARKS CZECH REPUBLIC'S GRADUATION TO 'DEVELOPED' STATUS”
Article from Radio Praha by Jan Velinger
Date of publishing: 28 February 2006
http://www.radio.cz/en/article/76314
“CZECH REPUBLIC TO JOIN SCHENGEN”
Article form Prague Post by Jeffrey White
Date of publishing: 16 December 2006
http://www.praguepost.com/articles/2006/12/13/czech-republic-to-join-schengen.php
“CZECH REPUBLIC: INFLATION SPIKE”
Article from OECD Observer
OECD Observer No. 264/265, December 2007January 2008
http://www.oecdobserver.org/news/fullstory.php/aid/2372/Czech_Republic:_Inflation_spi
ke.html
“COURT RULES AGAINST SPECIAL SCHOOLS FOR ROMA”
Article from Euractiv
Date published: 15 November 2007
http://euractiv.com/en/socialeurope/court-rules-special-schools-roma/article-168424
“EQUAL OPPORTUNITIES”
Dossier from Euractiv
Date of publishing: 17 January 2007
Date of last revision: 13 July 2007
http://euractiv.com/en/socialeurope/equal-opportunities/article-160979
“INTERVIEW: CZECHS TO PUSH FOR 'EUROPE WITHOUT BARRIERS' AT EU HELM”
Interview from Euractiv
Date of publishing: 21 February 2008
http://euractiv.com/en/opinion/interview-czechs-push-europe-barriers-eu-helm/article-
170428
“CZECH OFFICIAL DATA SAYS 2007 PUBLIC DEFICIT FELL TO 1.58 PER CENT”
Article from EUbusiness
http://www.eubusiness.com/news-eu/1207068791.03/
“CZECHS URGE SLOW PHASE IN FOR CARBON EMISSIONS MARKET”
Article from EUbusiness
http://www.eubusiness.com/news-eu/1204740124.29/
“STUDY RANKS CZECH REPUBLIC FIRST AMONG TRANSFORMING COUNTRIES”
Article from Radio Praha by Jan Velinger
Date of publishing: 19 February 2008
http://www.radio.cz/en/article/101027
“THE CZECH REPUBLIC’S UPDATED EUROAREA ACCESSION STRATEGY”
Ministry of Finance of Czech Republic, 2007
http://www.mfcr.cz/cps/rde/xchg/mfcr/hs.xsl/eu_acc_stra_33780.html
“LOCAL STRATEGIES FOR CIVIC INCLUSION IN A EUROPEAN CONTEXT: THE ROMA IN THE
CZECH REPUBLIC”
Essay from “One Europe or Several?” by M. CastleKanerova and B.
Jordan
http://one-europe.ac.uk/pdf/w34kanerova.pdf
“EXCHANGE RATE MECHANISM (ERM II) BETWEEN THE EURO AND PARTICIPATING NATIONAL
CURRENCIES”
Institutional and economic framework of the Euro, from EU’s website.
http://europa.eu/scadplus/leg/en/lvb/l25082.htm
“ENLARGEMENT, TWO YEARS AFTER AN ECONOMICAL SUCCESS”
Economical and monetary affairs: Enlargement, from EU’s website.
http://europa.eu/scadplus/leg/en/lvb/e50026.htm
“CZECH REPUBLIC ADOPTION OF THE COMMUNITY ACQUIS”
Summary from EU’s website.
http://europa.eu/scadplus/leg/en/lvb/e02107.htm
“PARTNERSHIP FOR THE ACCESSION OF THE CZECH REPUBLIC”
From EU’s website.
http://europa.eu/scadplus/leg/en/lvb/e40107.htm
OTHER REFERENCES
“EUROPEAN UNION POLITICS”
Michelle Cini
Oxford University Press
Second Edition, 2007
“CURRENT EUROPEAN ISSUES”
Slides from the course’s material.