Czechoslovaks Brace For Reforms
Radical economic program, including price hikes, is aimed at moving country out of `limbo'
BRATISLAVA, CZECHOSLOVAKIA — JAN. 1 is looming large in the future of Czechoslovakia, but not because of New Year's celebrations. It is the day that sweeping price liberalization will take effect as part of the radical reform aimed at transferring the country's communist system to a free-market economy.
It is also the day that the Soviet Union will start demanding scarce, convertible (hard) currency for its vital oil supplies, squeezing the already tight fuel-supply situation.
All over the country, people look toward the economic changes with uncertainty and trepidation.
``We are in the midst of a transition which has never before been realized,'' Ladislaw Snopko, culture minister of the Slovak Republic says. ``Even in Spain, after Franco died, [they went from totalitarianism to democracy], but they still did it all on the basis of a market economy.''
People are convinced that the unknown will not be easy.
``They are aware that the radical economic reform over the next two years will mean a 10 to 20 percent drop in living standards and 100,000 to 350,000 unemployed,'' says Feder Gal, president of Public Against Violence, the political movement in Slovakia formed during the revolution as the vanguard of the anticommunist campaign.
``The biggest problem of the population at the moment is the fact that, for the first time in their lives, they have the future in their own hands and they don't know what to do with this freedom,'' he adds.
Privatization has begun
A privatization law approved by Parliament in October, for example, will turn over to private hands about 100,000 small shops and enterprises - a changed world for business people who have never before had to deal with competition or marketing.
A round of food and transportation price hikes this summer was a foretaste of change. In mid-October, the commercial exchange rate of the crown was devalued by more than 50 percent. Price hikes in the wake of the Gulf crisis and sharply reduced supplies from the Soviet Union have already increased gasoline prices by about 50 percent.
``It means that if we drive to Prague from our home in Bratislava to visit my parents [a round trip of about 450 miles], it will cost 800 crowns [$26], and that's impossible,'' says Krystina Rexa, whose husband, a researcher, earns the equivalent of $80 a month - a normal salary.
People save for New Year
Jan. 1 pops up in conversations like a barrier.
``I am just working and working, trying to put by as much money as I can,'' says Ondrej Ernyei, a Prague piano tuner who also earns extra money playing in a jazz band. ``I have a lot of work at the moment, too - people are buying big items, like pianos, before prices go up after Jan. 1.''
Panic buying and stockpiling of goods like sugar, flour, and rice has been reported, particularly in Slovakia.
In a sense, the economic reforms are the ``other shoe'' dropping following the far-reaching political changes over the past 12 months.
The ``Velvet Revolution'' that ousted the Communists from power a year ago ushered in sweeping political and social reforms virtually overnight: freedom of speech, religion, and travel, and free elections.
It took much longer for the new government to work out an economic reform program. Except for the food, transport, and fuel price hikes, and a limited number of factory closures, the economic situation had not changed much by the end of the summer.
``Everything that happened after Nov. 17 influenced directly only a small layer of the population - the intelligentsia,'' says Mr. Gal.
``They can travel, work in top jobs, they can publish, study, etc. But the big center below this layer - their everyday life has not changed. They too have had advantages, of course, but not direct advantages.''
``We have our freedom,'' says an elderly secretary in the office of the Czechoslovak Ecumenical Council in Prague.
``But the economy, this is the problem now,'' she adds, shaking her head.
The economic reforms will be the backbone of all other changes, insists Finance Minister Vaclav Klaus, the architect of the radical economic reforms.
Mr. Klaus was recently elected chairman of Civic Forum, the Czech political movement founded by President Vaclav Havel during the revolution and counterpart of Public Against Violence.
``The conditions we want to create in this way, conditions of economic freedom, are the basic prerequisite for all other freedoms, including political ones,'' he told a news conference.
Social concerns arise
Klaus has been criticized for his economic program by opponents who say his drive to make the transition to a market economy as fast as possible does not consider the social problems such changes will bring.
In a recent interview with Radio Free Europe, Klaus disagreed, describing the current situation as a kind of limbo that in itself is harmful.
``We cannot remain in this intermediate stage with the old system, which has stopped working completely.
``But at the same time ... the new system is not working either....
``We live in a very special situation, or rather a special kind of nonsystem, and we must change this as soon as possible,'' he said.