A Level Playing Field – with Craig Stapleton
The Czech government has been lax about enforcing transparency for conducting business, as pointed out in the EU’s recent report on the status of accession candidates. While there are US investor successes, there are also difficulties. An international arbitration panel recently ruled in favor of the US investor CME, stating that the Czech Republic acted illegally in the matter and that the Czech TV station NOVA, in which CME had invested, is to pay damages. The Czechs have appealed the decision.What kind of a climate has this created for American investors?
First of all, the major international American companies are already established here. They need to be here for the long term. They’ll work through their problems as they come.
We have big privatizations coming up, in which American companies are among the bidders. It’s clear that transparency is still an issue. American companies that want to participate in those privatizations don’t believe that there is a totally level playing field, and that they are getting all the information that they need, in order to make a successful bid. They say they’re missing information, and if they don’t get that information, they can’t give it to their boards and banks which are the ones who will authorize them to make the bid.
Who isn’t giving information? The Czech side – the privatization agency and its advisors.
What will happen?
The good news is that American companies are not discouraged easily. They want to do business here for the long run, and they will try and fight this through. Prime Minister Zeman has emphasized that the Czech Republic will sell to the highest bidder. So I’m hoping that our companies get enough information so that they will be successful bidders, or if not, that they will push up the price for the Czech government.
And lose the bid?
U.S. companies don’t mind losing if they lose on the basis of price, but we do mind if we lose on the basis of not understanding what it is we are buying. If it’s a fair game and if they’ve pushed up the price, that’s good for the Czech Republic – it gets more revenue.We don’t have to win every commercial battle.We’ll fight for our companies, but we won’t be throwing down our bats and head for the sidelines if we lose tenders on a fair basis. At the end of the day, if the Czechs run the process this way, it’s going to be better for us as well as for them.
Another thing that’s important that I’m telling the Czechs is that the capital markets in the world have changed since Sept 11th. The United States has gone from a huge budget surplus and is heading toward a budget deficit. Although interest rates are lower, capital is scarce, and capital won’t come into the Czech Republic in the short term, unless it is very competitive.
We have an arbitration process and US interests on the one hand, and the need to keep up cooperation and to be diplomatic, on the other. How are you handling this delicate balance?
Every time I have met with an important minister or a member of the government or opposition, I have said that we need to get the issues that are irritating in our relationship solved. Regarding the TV station, American investors came in, thought they had purchased the rights to televise, and then found out that they no longer have those rights. It is a problem that needs to be solved from an American government perspective, to get it off the worry list.We’ve tried to encourage both sides to resolve the issue. The Embassy here as well as the United States and the Commerce Department have the best interests of the Czech Republic at heart. We’re not trying to arrange business transactions to further the short-term interest of American corporations. We have a much longer-term vision of the importance of our relationships. What we really are interested in is in the Czechs doing the right and the smart thing.
There is much being written in the Czech press about Boeing’s investment in the Czech aircraft and parts manufacturer Aero Vodochody. Many seem to view it as a failed partnership.
The issue has gotten more publicity that it’s deserved. In addition to some serious capital [Boeing invested over 50 million dollars in Aero Vodochody], Aero Vodochody seeks to become the leading aircraft company in Central Europe. That was a strategic objective for both Aero and Boeing. What are the Czechs critical about?
Czech government officials have been critical of Aero Vodochody and especially of Boeing. The Czech government wants Boeing to find export markets for the L-159. In my most recent conversations with Boeing officials, they said they think the market for the L-159 is much improved, so there is a prospect for selling planes. It is my understanding that Boeing has revamped production, brought in Sikorsky, and developed a business plan for Aero Vodochody. The U.S. government has helped by removing sanctions that had blocked possible sales to India. The Aero Vodochody problem has gotten wrapped up in the supersonic issue, which is really a separate issue. But I understand the Czech government’s frustration, that Aero hasn’t sold any planes yet outside the Czech Republic.We are still optimistic that Aero Vodochody can go in the right direction. I know that Boeing is tired of the controversy, and wants to get on with doing business.
Many Czechs view the Opposition Agreement, in which the two major opposition political parties have agreed to share power, as supporting an atmosphere of collusion.
Coalitions are a fact of life in many parliamentary systems. The Opposition Agreement is an unusual agreement, but these types of agreements are seen in other countries in the West from time to time.What is important in any democratic political system is to ensure accountability and transparency.
I think this is part of the growing pains of Czech democracy. I think the system is finding a way to sort itself out. A new election next year will challenge the political system, probably requiring another coalition arrangement. Let’s go to the bottom line – if I had 5 million USD to invest, and was considering investing it here, what would you tell me?
The amount you picked is an interesting amount. I think that the big companies have the staying power to sort out their operations, their marketing and their capital allocations. For the smaller investor, I think you have to have a strategic advantage. You can’t come in with a bundle of capital and throw it out there. Instead, I think you’d want to align yourself with a regional operation, a good Czech partner, and a good support structure.
Despite clear progress in the standard of living, basic freedoms, and other areas, many Czechs feel that the country isn’t moving in the right direction, that it isn’t making progress.Quite a few still believe that things were better under communism.
One of the roles of Czech political leaders is that they must convince Czechs that life can and will get better. Life will get better for a lot of people, not just the fat cats at the top of the pyramid.
Czech people and institutions should feel better about themselves than they do. They’ve forgotten their starting point. From the outside perspective, from 1938 till 1989, except for a few brief moments, someone else was calling the shots here. That’s not an environment where people show individual initiative.
I think that the country has made amazing progress, and that it is on the right track. People should feel better about where the country is going. Joining the EU will be a fantastic economic opening to Europe. Some Czechs don’t quite see that yet.
Turning to September 11th and related issues – one of the terrorists who masterminded the attack, Mohamed Atta, twice met with Iraqi officials in Prague. Could he have been the anthrax courier?
More has been said about this than needs to be said. There is a lot of speculation. Atta appeared in a lot of strange places at strange times. I don’t know if that’s the end of the story or not. I think that we are zeroing in on anthrax as being from a domestic [US] terrorist. NATO will be holding its summit in Prague in the fall of 2002.The government hasn’t been very good in pointing to its successes regarding NATO and the EU. How should Czechs be informed about this event?
First of all, it’s a big honor. There is great symbolism in the fact that the Czech Republic was picked. It’s huge international news, and will put Prague on the front page. We’ve been stressing how the Czechs have done since being asked to join NATO. This is going to have a big impact on the standards to use regarding taking in other countries.
How have the Czechs done?
I think they’ve done well. It’s not an easy job, and the Czechs are definitely going in the right direction. They raised their hand early to send forces into the Balkans, and I think they have volunteered for every mission that NATO has undertaken. Americans appreciate the NBC unit which will be deployed in 2002.
The NATO summit is a great opportunity for the Czechs. Though the logistics of organizing the summit are overwhelming, it will be a fantastic moment for the Czech Republic and for the NATO alliance.
What about the country’s lukewarm statements about NATO’s role in Kosovo, or Minister of Foreign Affairs Kavan’s recently irritating the US via his criticism of the US embargo on Cuba in the context of the recent UN Human Rights Commission report [after intense lobbying, the commission did not adopt the wording proposed by the Czech Republic criticizing the US embargo – ed.] I think the Czechs are improving all the time. They are going to be the showpiece for NATO, and for hosting NATO. I think that the aspirant countries can point to the Czech Republic as one of the reasons why it makes sense for them to go into NATO.
President Havel’s term expires in 2003. Questions abound over who will replace him, as well as the actual function of the office of the president itself. Is the US concerned?
First of all, President Havel is a very revered figure in the US. He put his life on the line to resist the communists. In that sense, he is virtually irreplaceable. He has brought tremendous prestige, courage and integrity to the office.
What we’d like to see happen is that as in the US, the office of the president become a revered institution in its own right as an institution, as opposed to the person holding it. I think President Havel has set a fine example for future presidents of the Czech Republic to emulate. How does one raise the standard of an institution such as the presidency?
By the quality of the person who serves, that’s how. Obviously, we wouldn’t give advice on whom to pick or on the political system used to name a president. In our country, voting directly for the president has formed a bond between the voter and the President. In the U.S., the president isn’t selected by Congress. He is the citizens’ President.
Since your arrival here as ambassador, what has surprised you the most?
I think September 11th, in that it has defined the whole time I have been here.
Otherwise, all of my surprises have been pleasant. Our embassy here has very dedicated people. I’m impressed with people on the Czech government side, and in the opposition. I may not always agree with them, but they are impressive and intelligent people. There are some very impressive younger politicians on all sides, and that bodes well for the future. The vitality of the business climate here is better than I thought it would be, and the NATO contributions [by the Czech Republic] are better than I was led to believe.
Before I came here, I thought that this country had a lot of potential. Now that I’m here, I am even more convinced. If they can keep up the pace that they’ve adopted these past ten years, then ten years from now, it’s going to be pretty amazing.
|The New Presence||winter 2002|
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