The Czech Republic, under the go-ahead but pragmatic leadership of prime minister Vaclav Klaus, for a while overtook Hungary as the number one economic and political success story in Eastern Europe. (On 28 November 1995 the Czech Republic became the first former communist country to become a member of the OECD.) Despite the later tarnishing of his reputation for political and economic management (e.g. financial scandals and a poor record in industrial restructuring), Klaus achieved a generally rapid economic transition while using subsidies to avoid sudden large-scale bankruptcies and lay-offs. Klaus also did a good job of 'selling' a consistent policy line to the Czech public. He has made something of a political comeback at a time when the reputation of his arch rival President Vaclav Havel (who has been in poor health) has been damaged somewhat at home by events such as his second marriage.
Communist or socialist parties appear to have little chance of making a comeback. David Ottaway (IHT, 28 May 1994, p. 5) suggests two possible reasons: (1) the 'velvet revolution' was so rapid that little real reform took place within the Communist Party; (2) in reality prime minister Klaus has followed a highly statist approach to economic reform, carefully incorporating trade unions as partners and allowing heavy state spending on social welfare measures and subsidies to hold down unemployment.
The Economist (22 October 1994, p. 26) talks of a tacit social contract in which workers accept low wages in exchange for high employment and a low cost of living. (Note that housing rents and most utility prices are controlled.)
From now on the main thrust of government and business policy will shift increasingly from the macro to the micro level, concentrating above all on the restructuring of the industrial sector. Here, Premier Klaus appears to have been right. His view has been that the process of restructuring, which will take a very heavy toll, can be more easily weathered, at a more bearable