Little Czech Nation Latches onto a Big Neighbor, Germany

Article excerpt

THE border divides an economic powerhouse and a poorer nation it once invaded. But the region near Germany in the Czech Republic, far from being tense, is booming.

Souvenir shops decorate the approaches to border towns like Cheb, where Czech motorists line up at the frontier on their commute to work in neighboring Bavaria.

"Europe's zone of prosperity is expanding, and we're fortunate to be located right next to the continent's strongest economy," says Jan Mladek, director of the Czech Institute of Applied Economics in Prague.

Germany surrounds half of the Czech Republic. It has six times as many people as its eastern neighbor and an economy 50 times as large. Germany is its biggest foreign investor and among its most important allies.

No one doubts that the Czechs' road to European Union membership runs through Germany. Bonn is lobbying for early Czech, Hungarian, Polish, and Slovak membership in the EU, while German companies like Siemens, the electronics giant, and Volkswagen have injected more than $1 billion into the Czech economy. A tidal wave of German tourists bring billions of Deutsche marks more into the country annually, spending on everything from Prague restaurants to Cheb dentists.

Some 50,000 Czechs living in the border regions commute to Germany each day under a special bilateral agreement, fueling the local economy with Deutsche marks.

"They work in construction, retail trade, and nursing -- areas where it is difficult to find German citizens willing to do the work," says Peter Utsch, Germany's commercial attache in Prague. "There's a growing understanding that the Czechs are a major buyer of German products, thus securing jobs for Germans as well. …