Klaus's "Middle Game": Repercussions
of Privatization and Democratization
in the Czech Republic
Brad A. Helicher
Addressing Harvard University in 1995, Czech premier Václav Klaus explained:
At the beginning, five years ago, I was using an analogy of the game of chess. I begged my fellow countrymen not to ask me what the situation on the chessboard would be after the 25th move of the white bishop. I suggested instead that we test my knowledge of the theoretical opening strategies of the game. The opening is over now. We are well into the middle game. As every chess player knows, the middle game is based less on theory, more on intuition and spontaneity. We are getting closer to the end of the game, but I am sure I still have time to study the well-known ending strategies. 1
Václav Klaus used this analogy to parallel the opening, middle, and end game of chess with the Czech economic and political transition. I intend to assess the linkages between the period of early privatization and democratization (the "opening game") and the period of economic and political repercussions (the "middle game"). After the Velvet Revolution of 1989, a united government quickly dismantled the 100 percent centrally planned economy by installing model political institutions and introducing successful economic reforms. Approaching Western standards, the Republic executed a rapid transformation, known briefly as the "Czech miracle," and quickly distanced itself from neighboring transition countries.
Prematurely drunk with success, the Czechs entered the "middle game" in 1996, faced with numerous economic and political complications. Challenged by repercussions of the voucher scheme, a damaged financial sector, and incessant scandals, the Klaus administration undid the once-successful privatization and democratization of the Czech Republic by mismanaging the economy and