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PROFILE

OFFICIAL NAME:
Czech Republic

Geography
Area: 78,864 sq. kilometers; about the size of Virginia.
Cities: Capital--Prague (pop. 1.2 million). Other cities--Brno (387,000), Ostrava (324,000), Plzen (175,000).
Terrain: Low mountains to the north and south, hills in the west. Climate: Temperate.

People
Nationality: Noun and adjective--Czech(s).
Population (est.): 10.5 million.
Annual growth rate: 0.1%.
Ethnic groups: Czech (95%), Germans, Roma, Poles, Silesians, Slovaks.
Religions: Roman Catholic, Protestant.
Language: Czech.
Education: Literacy--99%.
Health: Life expectancy--males 68 yrs., females 75 yrs.
Work force (5.2 million): Industry, construction and commerce--47%. Government and other services--41%. Agriculture--11%.

Government
Type: Parliamentary republic.
Independence: The Czech Republic was established January 1, 1993 (former Czechoslovak state established 1918).
Constitution: Signed December 16, 1992.
Branches: Executive--president (chief of state), prime minister (head of government), cabinet. Legislative--Chamber of Deputies, Senate. Judicial--Supreme Court, Constitutional Court.
Political parties (June 1998 election): Czech Social Democratic Party (CSSD), 74 seats; Civic Democratic Party (ODS), 63 seats; Communist Party of Bohemia and Moravia [KSCM], 24 seats; Christian Democratic Union-Czechoslovak Peoples Party (KDU-CSL), 20 seats; Freedom Union (US), 19 seats. Suffrage: Universal at 18.
Administrative subdivisions: Two regions--Bohemia and Moravia; seven administrative districts and Prague.
Flag: Blue triangle on staff side; upper white band, lower red band.

Economy
GDP (1998 est.): $54.54 billion.
Per capita income (1998 est.): $5,454.
Natural resources: Coal, coke, timber, lignite, uranium, magnesite.
Agriculture: Products--wheat, rye, oats, corn, barley, hops, potatoes, sugarbeets, hogs, cattle, horses.
Industry: Types--iron, steel, machinery and equipment, cement, sheet glass, motor vehicles, armaments, chemicals, ceramics, wood, paper products, and footwear.
Trade (1997): Exports--$21.850 billion: machinery, iron, steel, chemicals, raw materials, consumer goods. Trading partners--Austria, Belgium, Commonwealth of Independent States, France, Germany, Hungary, Poland, Slovakia, Switzerland, United States.

PEOPLE
The majority of the 10.5 million inhabitants of the Czech Republic are ethnically and linguistically Czech (95%). Other ethnic groups include Germans, Roma, and Poles. After the 1993 division, some Slovaks remained in the Czech Republic and comprise roughly 3% of the current population. The border between the Czech Republic and Slovakia is open for former citizens of Czechoslovakia. Laws establishing religious freedom were passed shortly after the revolution of 1989, lifting oppressive regulations enacted by the former communist regime. Major denominations and their estimated percentage populations are Roman Catholic (39%) and Protestant (3%). A large percentage of the Czech population claim to be atheists (40%), and 16% describe themselves as uncertain. The Jewish community numbers a few thousand today; a synagogue in Prague memorializes the names of more than 80,000 Czechoslovak Jews who perished in World War II.

HISTORY
The Czech Republic was the western part of the Czech and Slovak Federal Republic. Formed into a common state after World War I (October 18, 1918), the Czechs, Moravians, and Slovaks remained united for almost 75 years. On January 1, 1993, the two republics split to form two separate states.

The Czechs lost their national independence to the Austro-Hungarian Empire in 1620 at the Battle of White Mountain and, for the next 300 years, were ruled by the Austrian Monarchy. With the collapse of the monarchy at the end of World War I, the independent country of Czechoslovakia was formed, encouraged by, among others, U.S. President Woodrow Wilson.

Despite cultural differences, the Slovaks shared with the Czechs similar aspirations for independence from the Hapsburg state and voluntarily united with the Czechs. The Slovaks were not at the same level of economic and technological development as the Czechs, but the freedom and opportunity found in Czechoslovakia enabled them to make strides toward overcoming these inequalities. However, the gap never was fully bridged, and the discrepancy played a continuing role throughout the 75 years of the union.

Although Czechoslovakia was the only east European country to remain a parliamentary democracy from 1918 to 1938, it was plagued with minority problems, the most important of which concerned the country's large German population. Constituting more than 22% of the interwar state's population and largely concentrated in the Bohemian and Moravian border regions (the Sudetenland), members of this minority, including some who were sympathetic to Nazi Germany, undermined the new Czechoslovak state. Internal and external pressures culminated in September 1938, when France and the United Kingdom yielded to Nazi pressures at Munich and agreed to force Czechoslovakia to cede the Sudetenland to Germany.

Fulfilling Hitler's aggressive designs on all of Czechoslovakia, Germany invaded what remained of Bohemia and Moravia in March 1939, establishing a German "protectorate." By this time, Slovakia had already declared independence and had become a puppet state of the Germans.

At the close of World War II, Soviet troops overran all of Slovakia, Moravia, and much of Bohemia, including Prague. In May 1945, U.S. forces liberated the city of Plzen and most of western Bohemia. A civilian uprising against the German garrison took place in Prague in May 1945. Following Germany's surrender, some 2.9 million ethnic Germans were expelled from Czechoslovakia with Allied approval under the Benes Decrees.

Reunited after the war, the Czechs and Slovaks set federal and national elections for the spring of 1946. The democratic elements, led by President Eduard Benes, hoped the Soviet Union would allow Czechoslovakia the freedom to choose its own form of government and aspired to a Czechoslovakia that would act as a bridge between East and West. The Czechoslovak Communist Party, which won 38% of the vote, held most of the key positions in the government and gradually managed to neutralize or silence the anti-communist forces. Although the communist-led government initially intended to participate in the Marshall Plan, it was forced by Moscow to back out. Under the cover of superficial legality, the Communist Party seized power in February 1948.

After extensive purges modeled on the Stalinist pattern in other east European states, the Communist Party tried 14 of its former leaders in November 1952 and sentenced 11 to death. For more than a decade thereafter, the Czechoslovak communist political structure was characterized by the orthodoxy of the leadership of party chief Antonin Novotny.

The 1968 Soviet Invasion
The communist leadership allowed token reforms in the early 1960s, but discontent arose within the ranks of the communist party central committee, stemming from dissatisfaction with the slow pace of the economic reforms, resistance to cultural liberalization, and the desire of the Slovaks within the leadership for greater autonomy for their republic. This discontent expressed itself with the removal of Novotny from party leadership in January 1968 and from the presidency in March. He was replaced as party leader by a Slovak, Alexander Dubcek.

After January 1968, the Dubcek leadership took practical steps toward political, social, and economic reforms. In addition, it called for politico-military changes in the Soviet-dominated Warsaw Pact and Council for Mutual Economic Assistance. The leadership affirmed its loyalty to socialism and the Warsaw Pact but also expressed the desire to improve relations with all countries of the world regardless of their social systems.

A program adopted in April 1968 set guidelines for a modern, humanistic socialist democracy that would guarantee, among other things, freedom of religion, press, assembly, speech, and travel; a program that, in Dubcek's words, would give socialism "a human face." After 20 years of little public participation, the population gradually started to take interest in the government, and Dubcek became a truly popular national figure.

The internal reforms and foreign policy statements of the Dubcek leadership created great concern among some other Warsaw Pact governments. On the night of August 20, 1968, Soviet, Hungarian, Bulgarian, East German, and Polish troops invaded and occupied Czechoslovakia. The Czechoslovak Government immediately declared that the troops had not been invited into the country and that their invasion was a violation of socialist principles, international law, and the UN Charter.

The principal Czechoslovak reformers were forcibly and secretly taken to the Soviet Union. Under obvious Soviet duress, they were compelled to sign a treaty that provided for the "temporary stationing" of an unspecified number of Soviet troops in Czechoslovakia. Dubcek was removed as party First Secretary on April 17, 1969, and replaced by another Slovak, Gustav Husak. Later, Dubcek and many of his allies within the party were stripped of their party positions in a purge that lasted until 1971 and reduced party membership by almost one-third.

The 1970s and 1980s became known as the period of "normalization," in which the apologists for the 1968 Soviet invasion prevented, as best they could, any opposition to their conservative regime. Political, social, and economic life stagnated. The population, cowed by the "normalization," was quiet.

At the time of the communist takeover, Czechoslovakia had a balanced economy and one of the higher levels of industrialization on the continent. In 1948, however, the government began to stress heavy industry over agricultural and consumer goods and services. Many basic industries and foreign trade, as well as domestic wholesale trade, had been nationalized before the communists took power. Nationalization of most of the retail trade was completed in 1950-51.

Heavy industry received major economic support during the 1950s, but central planning resulted in waste and inefficient use of industrial resources. Although the labor force was traditionally skilled and efficient, inadequate incentives for labor and management contributed to high labor turnover, low productivity, and poor product quality. Economic failures reached a critical stage in the 1960s, after which various reform measures were sought with no satisfactory results.

Hope for wide-ranging economic reform came with Alexander Dubcek's rise in January 1968. Despite renewed efforts, however, Czechoslovakia could not come to grips with inflationary forces, much less begin the immense task of correcting the economy's basic problems.

The economy saw growth during the 1970s but then stagnated between 1978-82. Attempts at revitalizing it in the 1980s with management and worker incentive programs were largely unsuccessful. The economy grew after 1982, achieving an annual average output growth of more than 3% between 1983-85. Imports from the West were curtailed, exports boosted, and hard currency debt reduced substantially. New investment was made in the electronic, chemical, and pharmaceutical sectors, which were industry leaders in eastern Europe in the mid-1980s.

The Velvet Revolution
The roots of the 1989 Civic Forum movement that came to power during the "Velvet Revolution" lie in human rights activism. On January 1, 1977, more than 250 human rights activists signed a manifesto called the Charter 77, which criticized the government for failing to implement human rights provisions of documents it had signed, including the state's own constitution; international covenants on political, civil, economic, social, and cultural rights; and the Final Act of the Conference for Security and Cooperation in Europe. Although not organized in any real sense, the signatories of Charter 77 constituted a citizens' initiative aimed at inducing the Czechoslovak Government to observe formal obligations to respect the human rights of its citizens.

On November 17,1989, the communist police violently broke up a peaceful pro-democracy demonstration, brutally beating many student participants. In the days which followed, Charter 77 and other groups united to become the Civic Forum, an umbrella group championing bureaucratic reform and civil liberties. Its leader was the dissident playwright Vaclav Havel. Intentionally eschewing the label "party," a word given a negative connotation during the previous regime, Civic Forum quickly gained the support of millions of Czechs, as did its Slovak counterpart, Public Against Violence.

Faced with an overwhelming popular repudiation, the Communist Party all but collapsed. Its leaders, Husak and party chief Milos Jakes, resigned in December 1989, and Havel was elected President of Czechoslovakia on December 29. The astonishing quickness of these events was in part due to the unpopularity of the communist regime and changes in the policies of its Soviet guarantor as well as to the rapid, effective organization of these public initiatives into a viable opposition.

A coalition government, in which the Communist Party had a minority of ministerial positions, was formed in December 1989. The first free elections in Czechoslovakia since 1946 took place in June 1990 without incident and with more than 95% of the population voting. As anticipated, Civic Forum and Public Against Violence won landslide victories in their respective republics and gained a comfortable majority in the federal parliament. The parliament undertook substantial steps toward securing the democratic evolution of Czechoslovakia. It successfully moved toward fair local elections in November 1990, ensuring fundamental change at the county and town level.

Civic Forum found, however, that although it had successfully completed its primary objective--the overthrow of the communist regime--it was ineffectual as a governing party. The demise of Civic Forum was viewed by most as necessary and inevitable.

By the end of 1990, unofficial parliamentary "clubs" had evolved with distinct political agendas. Most influential was the Civic Democratic Party, headed by former Prime Minister Vaclav Klaus. Other notable parties that came into being after the split were the Czech Social Democratic Party, Civic Movement, and Civic Democratic Alliance.

By 1992, Slovak calls for greater autonomy effectively blocked the daily functioning of the federal government. In the election of June 1992, Klaus's Civic Democratic Party won handily in the Czech lands on a platform of economic reform. Vladimir Meciar's Movement for a Democratic Slovakia emerged as the leading party in Slovakia, basing its appeal on fairness to Slovak demands for autonomy. Federalists, like Havel, were unable to contain the trend toward the split. In July 1992, President Havel resigned. In the latter half of 1992, Klaus and Meciar hammered out an agreement that the two republics would go their separate ways by the end of the year.

Members of the federal parliament, divided along national lines, barely cooperated enough to pass the law officially separating the two nations. The law was passed on December 27, 1992. On January 1, 1993, the Czech Republic and the Republic of Slovakia were simultaneously and peacefully founded.

Relationships between the two states, despite occasional disputes about the division of federal property and governing of the border have been peaceful, Both states attained immediate recognition from the U.S. and their European neighbors.

GOVERNMENT AND POLITICAL CONDITIONS
The Czech political scene supports a broad spectrum of parties ranging from the semi-reformed Communist Party on the far left to the nationalistic Republican Party on the extreme right. Czech voters returned a split verdict in the June 1998 parliamentary elections, giving the left-of-center Social Democrats (CSSD) a plurality but the right-of-center parties a majority. The results produced a CSSD minority government tolerated by the largest right-of-center party in parliament, former Prime Minister Klaus' Civic Democrats (ODS). Prime Minister Milos Zeman is the head of government and wields considerable powers, including the right to set the agenda for most foreign and domestic policy, mobilize the parliamentary majority, and choose governmental ministers.

Vaclav Havel, now President of the Czech Republic, is not affiliated with any party but remains one of the country's most popular politicians. As formal head of state, he is granted specific powers such as the right to nominate Constitutional Court judges, dissolve parliament under certain conditions, and enact a veto on legislation.

The legislature is bicameral, with a Chamber of Deputies and a Senate. With the split of the former Czechoslovakia, the powers and responsibilities of the now defunct federal parliament were transferred to the Czech National Council, which renamed itself the Chamber of Deputies. Chamber delegates are elected from seven districts and the capital, Prague, for 4-year terms, on the basis of proportional representation. The Czech Senate is patterned after the U.S. Senate and was first elected in 1996; its members serve for 6-year terms with one-third being elected every 2 years.

The country's highest court of appeals is the Supreme Court. The Constitutional Court, which rules on constitutional issues, is appointed by the president, and its members serve 10-year terms.

NATIONAL SECURITY
The Czech Republic became a member of NATO on March 12, 1999. A major overhaul of the Czechoslovak defense forces began in 1990 and continues in the Czech Republic. Czech forces are being downsized from 200,000 to 55,000 and at the same time reoriented toward a more defensive posture. The Czechs have made good progress in reforming the military personnel structure, and a strong commitment to English language training is paying off. Public support for NATO membership remains around 50%-60%. The Czech Government committed itself in 1996 to increase defense spending by 0.1% of GDP annually until the year 2000, when military spending will reach or exceed 2% of GDP. This will put Czech defense spending on a level proportionately comparable with other NATO allies.

The Czech Republic has friendly relations with all of its neighbors, and none of its borders are in question. The Czech Republic is a member of the UN and OSCE and has contributed to numerous peacekeeping operations, including IFOR/SFOR in Bosnia as well as Desert Shield/Desert Storm.

Principal Government Officials
President--Vaclav Havel (Independent)
Prime Minister--Milos Zeman (CSSD)
Foreign Minister--Jan Kavan (CSSD)
Ambassador to the U.S.--Alexandr Vondra (Independent)

The Czech Republic maintains an embassy at 3900 Spring of Freedom Street, NW, Washington, DC 20008, (tel. 202-274-9101).

ECONOMY
Of the emerging democracies in central and eastern Europe, the Czech Republic has one of the most developed industrialized economies. Its strong industrial tradition dates to the 19th century, when Bohemia and Moravia were the economic heartland of the Austro-Hungarian Empire. Today, this heritage is both an asset and a liability. The Czech Republic has a well-educated population and a well- developed infrastructure, but its industrial plants and much of its industrial equipment are obsolete.

According to the Stalinist development policy of planned interdependence, all the economies of the socialist countries were linked tightly with that of the Soviet Union. With the disintegration of the communist economic alliance in 1991, Czech manufacturers lost their traditional markets among former communist countries to the east, some of which still owe the former Czechoslovakia sizable debts.

The Czech Republic is reducing its dependence on highly polluting low-grade brown coal as a source of energy. Nuclear energy presently provides about 25% of total power needs, and its share is projected to increase to 40%. Norway (via pipelines through Germany) and Russia also supply the Czech Republic with liquid and natural gas.

The principal industries are heavy and general machine-building, iron and steel production, metalworking, chemicals, electronics, transportation equipment, textiles, glass, brewing, china, ceramics, and pharmaceuticals. Its main agricultural products are sugarbeets, fodder roots, potatoes, wheat, and hops.

The "Velvet Revolution" in 1989 offered a chance for profound and sustained economic reform. Signs of economic resurgence began to appear in the wake of the shock therapy that the International Monetary Fund (IMF) labeled the "big bang" of January 1991. Since then, astute economic management has led to the liberalization of 95% of all price controls, annual inflation in the 10% range, modest budgetary deficits, low unemployment, a positive balance-of-payments position, a stable exchange rate, a shift of exports from former communist economic bloc markets to Western Europe, and relatively low foreign debt.

Particularly impressive have been the Republic's strict fiscal policies. Following a series of currency devaluations, the crown has remained stable in relation to the U.S. dollar. The Czech crown became fully convertible for most business purposes in late 1995.

In addition, the government has revamped the legal and administrative structure governing investment in order to stimulate the economy and attract foreign partners. Shifting emphasis from the East to the West has necessitated restructuring existing facilities in banking and telecommunications as well as adjusting commercial laws and practices to fit Western standards. The republic has made progress toward creating a stable investment climate.

This success has enabled the Czech Republic to become the first post-communist country to receive an investment-grade credit rating by international credit institutions. Successive Czech governments have welcomed U.S. investment, in particular, as a counter-balance to the strong economic influence of Western Europe, especially of their powerful neighbor, Germany. Although foreign direct investment (FDI) runs in uneven cycles, with a 12.9% share of total FDI between 1990 and March 1998, the U.S. was the third-largest foreign investor in the Czech economy, behind Germany and the Netherlands.

The republic boasts a flourishing consumer production sector and has privatized most state-owned heavy industries through the voucher privatization system. Under the system, every citizen was given the opportunity to buy, for a moderate price, a book of vouchers that represents potential shares in any state-owned company. The voucher holders could then invest their vouchers, infusing the chosen company with valuable capital. State ownership of businesses was estimated to be about 97% under communism. In 1998, more than 80% of enterprises are in private hands. When the voucher privatization process is complete, Czechs will own shares of each of the Czech companies, making them one of the highest per capita share owners in the world. Privatization through restitution of real estate to the former owners was largely completed in 1992.

The republic's economic transformation is far from complete. A recession in 1998 revealed that the government still faces serious challenges in completing industrial restructuring, increasing transparency in capital market transactions, fully privatizing the banking sector, transforming the housing sector, privatizing the health care system, and solving serious environmental problems.

FOREIGN RELATIONS
Until 1989, the foreign policy of Czechoslovakia had followed that of the Soviet Union. Since independence, the Czechs have made integration into Western institutions their chief foreign policy objective.

Fundamental to this objective is Czech membership in the European Union. The government hopes to achieve full membership in the EU by 2003. Relations are currently governed under an association agreement which came into force in 1993. Although there have been disagreements over some economic issues, such as agricultural quotas and a recent amendment to the gaming law, relations are good, and negotiations toward full membership are proceeding smoothly.

The Czech Republic is a member of the United Nations and participates in its specialized agencies. It is a member of the General Agreement on Trade and Tariffs. It maintains diplomatic relations with more than 85 countries, of which 63 have permanent representation in Prague. The Czech Republic became a member of the North Atlantic Treaty Organization, along with Poland and Hungary on March 12, 1999. This membership represents a milestone in the country's foreign policy and security orientation.

U.S.-CZECH RELATIONS
Millions of Americans have their roots in Bohemia and Moravia, and a large community in the United States has strong cultural and familial ties with the Czech Republic. President Woodrow Wilson and the United States played a major role in the establishment of the original Czechoslovak state on October 28, 1918. President Wilson's 14 Points, including the right of ethnic groups to form their own states, were the basis for the union of the Czechs and Slovaks. Tomas Masaryk, the father of the state and its first President, visited the United States during World War I and worked with U.S. officials in developing the basis of the new country. Masaryk used the U.S. Constitution as a model for the first Czechoslovak constitution.

After World War II, and the return of the Czechoslovak Government in exile, normal relations continued until 1948, when the communists seized power. Relations cooled rapidly. The Soviet invasion of Czechoslovakia in August 1968 further complicated U.S.-Czechoslovak relations. The United States referred the matter to the UN Security Council as a violation of the UN Charter, but no action was taken against the Soviets.

Since the "Velvet Revolution" of 1989, bilateral relations have improved immensely. Dissidents once sustained by U.S. encouragement and human rights policies reached high levels in the government. President Havel, in his first official visit as head of Czechoslovakia, addressed the U.S. Congress and was interrupted 21 times by standing ovations. In 1990, on the first anniversary of the revolution, President Bush, in front of an enthusiastic crowd on Prague's Wenceslas Square, pledged U.S. support in building a democratic Czechoslovakia. Toward this end, the U.S. Government has actively encouraged political and economic transformation.

The U.S. Government was originally opposed to the idea of Czechoslovakia forming two separate states, because of concerns that a split might aggravate existing regional political tensions. However, the U.S. recognized both the Czech Republic and Slovakia on January 1, 1993. Since then, U.S.-Czech relations have remained strong economically, politically, and culturally.

Relations between the U.S. and the Czech Republic are excellent and reflect the common approach both have to the many challenges facing the world at present. The U.S. looks to the Czech Republic as a partner in issues ranging from the Middle East to the Balkans, and seeks opportunities to continue to deepen this relationship.

[This is a mobile copy of Czech Republic (03/99)]