Prague Debates Privatization

AS Czechoslovakia's President Vaclav Havel visits Canada and the United States this week to press for closer economic ties, economic reformers back home are running into problems that go beyond winning Western cooperation. Heading the list is the government's apparent inability to come up with a clear vision of what kind of system it wants to have.

No one country can serve as a model, because Czechoslovakia's assets and problems are unique, says Jaromir Matejka, a member of the two-month-old Economic Council charged with drafting Czechoslovakia's economic policy.

But other sources in the government say the real problem is the bickering among council members over how far to go with privatization.

The widest gulf appears to have developed between two camps: Vice Premier Walter Komarek's, which advocates decentralized planning but extensive state ownership, and Finance Minister Vaclav Klaus's, which urges all-out privatization.

The bickering has impeded progress in formulating an economic blueprint. But the country is also hampered by a simple lack of tools to get its economic transition under way.

Michal Mejstrik, an analyst at Prague's Institute of Economics, says the organization's 100 economists have to share six computers to get their work in print.

The Society of Entrepreneurs is another example. It was created two months ago to provide advice and solidarity to aspiring entrepreneurs. Neklan Mastalir, a government liaison officer who works with the group, says the society already has 100,000 members, but can't find the cash to rent office space or buy typewriters or a fax machine. Plans to start a newspaper are on hold.

Initially, Mr. Klaus and Mr. Komarek are concentrating on getting a set of laws in place that will define property rights and open doors to entrepreneurs. Experts are dusting off regulations from the Austro-Hungarian Empire and borrowing from other democracies for ideas.

Starting April 1, it will be legal in Czechoslovakia to open a private business.

The term ``privatization,'' however, will be avoided in public statements, says Tomas Jezek, an adviser to Klaus in the Ministry of Finance. ``Some people are so indoctrinated by 40 years of socialism that when they hear the word `private,' they imagine we'll give everything to one person.''

Western financial institutions like the International Monetary Fund also recognize the importance that attitudes will have on the success or failure of Czechoslovakia's economic experiment.

``The reforms look wonderful on paper, but actually implementing those reforms and getting the people behind you is not an easy thing,'' says an IMF commentator. ``You have the reformers in power, and certainly they want to reform the economy. But it is Joe Blow in the street after all who has to do this stuff - that's where the problem lies.''

Although thousands of Czechoslovaks have expressed readiness and even eagerness to open their own businesses, the majority seem to have only a foggy idea of the work ethic. Absenteeism is high, motivation is low, and service in stores and restaurants is grudging at best.

Komarek wondered at a recent press conference if citizens realize how much they will have to sacrifice in the next few years.

``People still haven't learned what it is to work hard,'' he says. ``It is not going to the country house every weekend, but working day and night.

``It is a big shift from the comfortable life we've been having. People do not realize how comfortably and without worry they have been living up to now. They'll have to sacrifice themselves and work, learn, and study in programs that will not be easy for them.''

Once a legal framework for privatization is in place, the government hopes to break up cumbersome state-owned enterprises into smaller, more manageable parts.

Shares will be sold to the public, with discounts to enterprise employees. State subsidies will gradually disappear, a stock market will open, and if all goes well, the Czechoslovak crown will be a convertible currency in three to five years.

Prague applied in December for membership in the International Monetary Fund and the World Bank, and should join them within the year. Both groups are likely to provide the kind of advice that the country needs to overhaul its economy.

Prague officials say there has been ``an avalanche'' of offers from investors in the West, including the US, Austria, West Germany, and Britain.

One reason for the West's generosity is Czechoslovakia's relatively high standard of living. After Romania, its foreign debt is the lowest in the former East bloc, at $4.6 billion.

Because of its solvency, Czechoslovak leaders expect little trouble getting Western credit. At a meeting of Western economic leaders last month in Davos, Switzerland, Komarek, Klaus, and other officials emerged enthused at what Klaus described as the ``enormous'' interest of investors.