Nations in Transit - Czech Republic (2006)

Capital: Prague
Population: 10,200,000
Status: Free
PPP: $7,150
Private Sector as % of GNI: na
Life Expectancy: 75
Religious Groups: Atheist (59 percent), Roman Catholic (26.8 percent), Protestant (2.1 percent), other (12.1 percent)
Ethnic Groups: Czech (90.4 percent), Moravian (3.7 percent), Slovak (1.9 percent), other (4 percent)

NIT Ratings	2003	2004	2005	2006
Electoral Process	2.00	2.00	2.00	2.00
Civil Society	1.50	1.50	1.50	1.50
Independent Media	2.25	2.25	2.00	2.00
Judicial Framework and Independence	2.50	2.50	2.50	2.25
Corruption	3.50	3.50	3.50	3.50
Governance	2.25	2.25	N/A	N/A
National Democratic Governance	N/A	N/A	2.50	2.50
Local Democratic Governance	N/A	N/A	2.00	2.00
Democracy Score	N/A	N/A	2.29	2.25

Executive Summary

An October 2005 survey of young people expressed the Czech Republic's current situation. A majority of the country's youth – for whom Communism is nothing more than a distant memory – look to the future with optimism, believing in economic growth and higher living standards over the next five years. They consider unemployment a problem but do not fear poverty. Two-thirds believe the European Union (EU), which the country joined in May 2004, has a positive influence. On the other hand, in their view corruption and politicians are shaming their country. And despite economic development, they believe corruption will only worsen.

Many older Czechs would also agree with this assessment. The country's first year in the EU proved successful. The economy surged, with one of the highest growths in exports in the world, and the agricultural sector made an astonishing comeback. The warnings of Euro-skeptics that unemployment and inflation would skyrocket were not fulfilled. Economic prosperity continued to spread, and a growing number of people were satisfied with their personal lives and ability to pursue a decent livelihood. One poll, conducted by the Median agency, showed that nearly 74 percent of Czechs agree that in 2005 their personal lives finally began to change for the better. By now, the vast majority have no doubt that their fundamental freedoms are guaranteed and democracy is assured.

Yet the country and its leaders appear to lack any grand strategy to advance the Czech Republic to the next stage of development. Few politicians inspire the electorate, and in the Median poll, more than two-thirds of respondents said political life was as bad as, if not worse than, previous years. Too many reforms remain unfinished in key areas, such as the fight against corruption, pension and education systems, transfer of authority to regional administrations, speed of the judicial system, and integration of the Roma minority. Success appears to be measured by scoring political points rather than passing effective legislation.

Unfortunately, the major events of 2005 indicated little to no progress in most of these areas, and the fall of Prime Minister Stanislav Gross over allegations of financial impropriety in his personal life highlighted issues of poor governance, corruption, and stunted political party development. Parliamentary elections in June 2006 will indicate whether widespread disappointment with the political elite will translate into apathy or high turnout at the ballot box.

National Democratic Governance. The first quarter of 2005 was mired in political crisis as Gross refused to step down, disorienting and disgusting much of the Czech population. The scandal confirmed many citizens' assumptions about overlapping political and business interests, the pervasiveness of corruption, and clientelism. While Gross's replacement, Jiri Paroubek, dramatically improved the government's perceived effectiveness, an approaching election year, a fragile coalition, and political infighting combined to prevent the radical reform necessary in areas such as health, education, and social security. The Czech Republic often resembles a fully functioning democracy – stable and secure, with checks and balances in place – but the inability to solve the political crisis highlighted the distance the elite must travel to improve efficiency and accountability. As a result, the national democratic governance rating stays at 2.50.

Electoral Process. The Gross scandal created the very real possibility that the ruling Social Democratic Party (CSSD) – the only party aside from the outcast Communists offering a leftist political alternative – might fade forever from view. But Paroubek resurrected the party's chances for the 2006 parliamentary elections, ensuring a strong alternative to the right-wing Civic Democrats, who dominated the Senate and local elections in 2004. However, the Czech system allows little room for new faces or parties, and civic participation remains stunted. With little to no progress in political party development and inclusion of the Roma minority, the country's rating for electoral process remains unchanged at 2.00.

Civil Society. The reputation of nongovernmental organizations (NGOs) has continued to grow, with roughly half the population characterizing NGOs as influential in helping to solve society's problems. On the other hand, many politicians consider the more advocacy-oriented organizations, especially those attempting to change public policy, as unnecessarily interfering in and complicating their work. Continued growth in the reputation and activities of NGOs are offset by disparaging comments from the president and little happening on the legislative side; the rating for civil society remains at 1.50.

Independent Media. Czech media are independent and diverse, but critics continue to speculate about behind-the-scenes political and financial interference. Parliamentary deputies finally approved increased license fees to support public television but widely banned advertising, raising questions about the financial future. The cancellation of a popular political program on public television and press partisanship raised serious questions about the effect of the upcoming elections on the hard-earned independence of recent years. Unfortunately, an apparent backsliding in independence offset gains in quality and plurality, leading to an unchanged rating of 2.00 for independent media.

Local Democratic Governance. Over the past few years, the system of local government has improved considerably, especially at the regional level. Regionally, considerable progress has been made in tackling problems neglected by the central government, including education and health care. However, the flow of funds from the center has failed to keep pace with these newly added responsibilities, leaving local administrations short of funds and frustrated with the little control they have over their budgets. With a solid system of local democratic governance proving its worth, but needing to secure resources and combat corruption, the rating for local democratic governance remains at 2.00.

Judicial Framework and Independence. Reforms that would speed up judicial processes remained under development, legislation to combat discrimination languished in the Parliament, and provisions to improve gender equality were ignored. Yet the year did mark some improvements, especially with a long-awaited wave of judicial appointments and pay raises. Political meddling in court cases declined relative to previous years, and landmark rulings in cases involving discrimination against Roma were made. No real judicial reform took place, but incremental progress in addressing some of the courts' ills warrants a slight improvement in the country's ranking for judicial framework from 2.50 to 2.25.

Corruption. The level of everyday corruption is slowly being reduced, but much of Czech society believes that graft is still widespread at both national and local levels of public administration. Faced with numerous cases of corruption throughout the year, the lower house of Parliament finally passed a conflict-of-interest law in January 2006. The Czech Republic's corruption rating remains at 3.50, though the passage of conflict-of-interest legislation may yield positive results in 2006.

Outlook for 2006. After Prime Minister Paroubek rescued the CSSD from potential oblivion, opinion polls at the end of the year showed that the CSSD and the Communist Party would acquire a majority in the next parliamentary elections. Paroubek's refusal to reject unambiguously the notion of a minority government backed by the Communists led some to worry that such a partnership would negate the possibility of reform in key areas and might force the CSSD to curb its enthusiasm for European integration. However, by early 2006, the two parties had lost their majority in opinion polls, as the Green Party rapidly gained support – enough to possibly play the role of kingmaker in a close election. Never before represented in Parliament and with a new chairman, the Greens would represent an unknown wildcard in any attempt to form a stable coalition, a real challenge in the current embittered political climate.

Electoral Process (Score: 2.00)

The Czech Republic is far beyond the fundamental electoral challenges facing parts of Eastern Europe and the former Soviet Union. No one doubts the fairness of the electoral process or reports on intimidation, fraud, or any other type of manipulation on the part of the authorities. Political organizations have no problems either registering or campaigning. Although a shaky coalition government has been in power for the last few years, the system itself is solidly multiparty, with a strong opposition and diversity at all levels of government.

The Czech Republic uses a parliamentary system with two houses. Real political power resides in the Chamber of Deputies, the 200-seat lower house, with deputies elected by proportional vote on party ballots. The 81-seat Senate is elected on the basis of single-mandate districts. Though serving as a check on the Chamber of Deputies, the upper house is weaker and continues to suffer low regard among the general public and some political parties. The Senate can return approved bills to the lower house, but the Chamber of Deputies can override the Senate by a simple majority. In a joint session, both houses elect the president for a five-year term by a simple majority.

In 2005, the Czech Republic did not conduct parliamentary, presidential, or local elections, nor did it carry out elections to the European Parliament. Although virtually unclear at the time, the CSSD's decision in April to support Jiri Paroubek, then minister of local development, as Gross's replacement as prime minister proved the most important vote of the year.

When Paroubek came to power, the CSSD seemed in free fall, a party left for dead after the failures of two past prime ministers – Vladimir Spidla and Gross. With plummeting support and the potential of a split between a leftist core and a younger, more progressive wing, CSSD's collapse could have altered the Czech political system for years to come, leaving a dominant right in control of all levels of power and the Communists inadequately representing the Left. This would have also left the ODS and the KSCM (both Euro-skeptic and against greater European integration) the two most powerful parties in the country.

Instead, Paroubek almost immediately reversed the CSSD's fortunes, uniting the party and quelling left-wing dissent to such an extent that he later received 130 of 132 votes in favor of his leading the CSSD in the 2006 parliamentary elections. He quickly gained the image of a man of action and looked likely to preserve the shaky coalition until the end of its term. That Paroubek had ordered a brutal police breakup of a techno music festival, that he followed coldhearted pragmatism rather than lofty convictions, and that he considered closer cooperation with the KSCM failed to affect his popularity. By the end of 2005, he narrowed the gap between the ODS and the CSSD in opinion polls to only a few percentage points.

The elections in June 2006 will clarify whether the electorate's indifference in several past polls was less a continuation of a long-term trend and more a reflection of the dislike of the Senate and ignorance of the European Parliament. Apathy has certainly played a key role in the stunted development of direct or participatory forms of democracy, such as petitions, demonstrations, and referendum drives, notes the UN's Human Development Report. Although starting from a low point in the 1990s, use of these tactics has increased in the past few years with some success.

Current legislation on communal referendums has also impeded increased public engagement in political life. According to the law, a referendum is valid only if 50 percent of the electorate participates. Even seemingly important issues in smaller towns and villages – such as closing a nursery school or founding a hospice – have attracted minuscule turnouts. Such examples have discouraged local activists and politicians who believed that issues closer to home would reverse voter apathy, reports the newsweekly Tyden.

Continued low membership in political parties does not help the situation. The KSCM remains the largest party (around 90,000 members), followed by the Christian Democrats (50,000), the ODS (around 20,000), the CSSD (17,000), and the Freedom Party (1,100). Several new parties formed in time to compete in elections to the European Parliament, but these have very small membership bases. Low figures persist despite generous state funding – to qualify, parties have to receive only 1.5 percent of the vote (well under the 5 percent threshold in the Parliament).

The parties' low membership base has clear repercussions for the political elite: With relatively few members to choose from, parties often recycle the same personalities, leading to a feeling that talented new faces rarely surface. Parties also often reward loyalty rather than expertise, handing out ministries to individuals whose only qualification is their long service to the party. Add to these deficiencies the continued poor management and insufficient democracy within parties, mediocre policy teams, and – still too often – arrogance of power, and it becomes clear why many analysts believe the current political class does not possess the capacity to push the country forward at a dynamic pace. Leading elite members are unable to seek, let alone achieve, consensus on issues of national interest and major reforms.

In addition to these problems, the country's largest minority, the Roma, are effectively shut out of participation in national politics. Although the number of Roma is estimated at between 200,000 and 250,000, there are currently no Roma parliamentarians. Prospective Roma politicians find themselves caught in a catch-22 situation: Mainstream parties believe that Roma candidates on their lists may do them more harm than good among average voters, while Czech Roma are not organized politically to compete actively for votes. There are, however, a handful of Roma who are active at the local level.

Civil Society (Score: 1.50)

The reputation of nonprofit organizations has continued to grow and recover from several scandals that tarnished their early post-Communist existence. Most Czechs now see NGOs as not only legitimate, but valuable instruments for creating and preserving social cohesion. Roughly half the population characterizes NGOs as influential organizations essential to a well-functioning democracy that help solve social problems. In a 2005 survey commissioned by the Donors Forum, almost 81 percent of respondents felt foundations were important and performed work the state did not; 83 percent found that foundations highlighted neglected issues in society. Consequently, there has been an increase in donations to nonprofits from both companies and individuals. In an April 2004 survey on civil society issues conducted by STEM, a Czech polling agency, 47 percent of respondents said they had made a donation to a nonprofit organization, up 4 percent from 2000.

Four kinds of NGOs exist in the Czech Republic: civic associations, public benefit organizations, foundations, and foundation funds. The most common form is the civic association – a legal entity comprising groups of individuals in pursuit of a common interest. By September 2005, the Ministry of the Interior had registered 54,373 civic associations, ranging from political think tanks to hobby groups and sports clubs – a growth of around 2,000 over the past year – and 368 foundations. According to the Czech Statistical Office, there were 4,600 church charities, 918 foundation funds (similar to foundations but not operating any of their funded assets), and 1,125 public benefit organizations (entities providing general services to recipients under the same conditions).

The relationship of the political elite to the nonprofit sector varies. The state provides extensive financial support to NGOs through grants and coordinates policies through the Council for NGOs. NGOs have the ability to influence decision making in the council and through various advisory bodies at ministries. In the country's most recent UN Human Development Report, Pavol Fric, one of the country's leading experts on the nonprofit sector, described the relationship between public administration and NGOs as positive, even though most NGOs still feel more like supplicants than true partners.

On the other hand, many politicians consider more active organizations, especially those that attempt to influence public policy, as unnecessarily interfering in and complicating their work. The political elite is particularly wary of what it considers more "aggressive" forms of action, such as demonstrations and petition drives, and is quick to label the initiators as politically motivated, although they usually are not. Many officials would prefer that NGOs serve strictly as service providers, filling in where the state cannot or will not, according to the UN report. This overall attitude may explain the remarkably small number of truly independent public policy organizations or think tanks in the Czech Republic.

Since the 1990s, when he served as prime minister, Czech president Vaclav Klaus has exemplified the political establishment's leery attitude toward the NGO sector. This reached new levels in 2005, when at a Council of Europe meeting Klaus called for a fight against so-called postdemocracy, whereby various NGOs supposedly attempt to influence public life without an electoral mandate – which he called a risky and dangerous phenomenon of the past few decades. Almost 90 Czech NGOs united to request an apology. Klaus refused, claiming he never spoke against the sector as a whole but only against those groups that misuse their standing for political purposes. Later in the year, at another conference, Klaus said that disappointed people expecting miracles from democracy turned to the "evangelists" of civil society and NGOs, losing trust in the parliamentary system. He then claimed that "NGOism" was almost on the same level as Communism.

The legal environment – already disobliging to NGO fund-raising through taxpayer incentives – has improved slightly in recent years. However, these legal deficiencies appear to be the result of the state's insensitivity to the plight of NGOs rather than a concerted effort to apply financial pressure on their activities and limit their impact. Following the country's entrance into the EU, in 2004 the Parliament passed a new Law on Value-Added Tax, which lowered the limit above which organizations must pay a value-added tax to 1 million crowns (US$43,000). For NGOs gaining funds through their own activities, the change was significant, as no distinction is made between for-profit and nonprofit organizations. Additionally, the Donors Forum coalition has been unsuccessful in attempts to change tax laws to allow individuals to give 1 percent of declared taxes to socially beneficial projects. On the positive side, amendments to the Law on Value-Added Tax in early 2006 removed that tax from donations made through mobile phone text messages, a popular form of giving in the Czech Republic. According to the Donors Forum, since April 2004,90 foundations and charities have benefited from over 4.2 million text messages valued at around US$5 million.

Local donations from individuals and companies are increasingly critical as foreign funding becomes more difficult to obtain. A decline in international funding may make some NGOs more dependent on the government for financial support, especially at the local level. Corporate philanthropy has increased in the past few years, with research conducted in 2004 by the Donors Forum showing 67 percent of companies engaged in sponsorship activities and/or donations. Yet companies complain about limited tax benefits and a lack of appreciation among the public and media. Current trends also show corporate philanthropy supporting recreational activities and young people more than issues such as human rights or ethnic minorities. While international companies have increased their grant programs, Czech firms lag in the area of corporate responsibility, rarely initiating their own projects.

Although Czech civil society is certainly more vibrant than a few years ago, grassroots initiatives are still not commonplace. The STEM research found that 14 percent of respondents had participated in a protest demonstration over the past five years; 43 percent had signed a petition; and 12 percent had written at least one letter to a newspaper. But motivation is often limited to a core group of activists. Several referendums have not had sufficient participation, and at the same time, a survey by the Center for Research of Public Opinion showed that only one-tenth of the respondents were satisfied with the level of citizens' participation in public life, a decrease from earlier surveys.

Regarding the "negative" side of civil society growth – that is, the emergence of extremist organizations – the situation in the Czech Republic appears to have settled down. Violent attacks on foreigners and the Roma minority occur less frequently than in the 1990s and remain out of the headlines. However, in 2005 Jewish groups, among others, criticized the police for taking a passive approach to several neo-Nazi meetings and concerts where participants allegedly violated hate speech measures. Finally changing tactics in the fall, law enforcement agencies broke up a skinhead concert, prevented another from taking place, and charged several people with incitement to racial hatred after searching concert organizers' homes and finding explosives and Fascist/anti-Semitic materials.

Some continue to see the KSCM as an extremist group. Unlike its counterparts in other Central European countries, the KSCM remains largely unreformed, having failed to renounce its past. Prime Minister Paroubek has sent mixed signals about future cooperation with the Communists. During the 16th anniversary of the fall of Communism, he said that the party did not represent a threat to democracy. He also proposed the cancellation of the 1991 lustration law forbidding former secret police agents from holding positions in the state administration. On the other hand, the prime minister vowed not to form a government with the KSCM, regardless of the election results. Additionally, the official CSSD party line explicitly prohibits a coalition with the Communists, and the ODS, critical of supposed CSSD-KSCM cooperation, governs along with the KSCM in 31 cities across the country.

Independent Media (Score: 2.00)

For the most part, the Czech media display sufficient independence and practice a decent, if unremarkable, level of journalism. Press freedom has long been secure in the Czech Republic, and no major media are state owned. Media are generally free of political or economic bias, though allegations still surface of pressure from both business and political interests. Rarely do newspapers publish comprehensive analyses getting to the heart of policy issues. Instead they prefer shorter, sensational articles. Still, they do provide the population with an adequate overview of the main events and issues facing society.

Anecdotal evidence suggests that media interference still takes place – especially in public broadcasting, with timid responses from management – but hard proof of direct pressure from politicians or financial groups rarely surfaces. Such was the case in December 2005, when Czech TV, the public television station, canceled its top-rated journalism program after Prime Minister Paroubek repeatedly complained about its objectivity. Management claimed to have canceled the program because it was expensive and an independent analysis had shown it to be unbalanced, rather than as a result of pressure. Many doubted this explanation, given the approaching elections.

The national print media offer a diverse selection of daily newspapers, weeklies, and magazines. Foreign corporations own many of these publications, including nearly all the dailies. (Media-related legislation includes minimal ownership restrictions and none on foreign ownership.) In contrast with the situation a mere six or seven years ago, the "serious" press has now matured to a point where it offers more balanced political coverage and opinions. However, some analysts believe that upcoming elections have prompted a relapse, with the press returning to the political polarization of the 1990s. Sacrificing impartiality and fairness in favor of waging thinly veiled wars against political enemies, some papers periodically publish attacks on the government based on hearsay and rumor.

According to ABC Czech Republic, the Audit Bureau of Circulations, Mlada Fronta Dnes, the most popular serious daily, sold an average of 290,424 copies in December 2005, as compared with the tabloid Blesk at 507,220, Pravo at 167,228, Hospodarske Noviny at 68,174, and Lidove Noviny at 66,473. Respekt, a well-regarded independent weekly, suffers from low sales (15,426 copies). More popular are Tyden (62,556 copies) and Reflex (52,091 copies), both respected weeklies concerning culture, society, and politics, and Nedelni Svet (26,773), the country's first quality Sunday newspaper. Many Czechs also receive their news from Web sites run by major dailies, though overall Internet usage continues to lag behind that of the West owing largely to very high dial-up costs. Estimates vary, with some figures quoting "Internet penetration" at nearly half of the population and others offering considerably lower numbers. However, the market has grown for high-speed mobile phone and wireless access, which should boost these numbers significantly.

Even with the wide range of publications available, true investigative journalism remains at a premium, appearing occasionally in some daily newspapers and on some television stations, but regularly only in Respekt. Some media analysts worry about the impact on investigative journalism of amending the criminal code to ban the use of hidden cameras (making it an offense punishable with up to five years in prison). Supporters of the bill – approved by the lower house – have insisted that the change was made to protect people from unscrupulous private security services, extorters, and aggressive tabloid newspapers and point out that the civil code allows exceptions for journalists who act in the public interest.

In September, the Constitutional Court set a precedent by ruling that journalists do not have to disclose their sources, a landmark decision that could in fact bolster investigative journalism. The ruling effectively strengthened the 2000 Law on the Press – which provides the right to hide a source for publishers rather than individual journalists – and formalized an exception to the penal code, which mandates full cooperation with the police. Changes to the Law on the Press may be on the horizon, however. Disgusted by the media coverage of his party, Prime Minister Paroubek has repeatedly threatened to change the law if he remains in power after the 2006 elections. In contrast, the Czech Syndicate of Journalists puts the fault not with the law's inability to deal with libel, but with the slow consideration of complaints by relevant courts.

Some media critics have charged that certain publications practice a form of self-censorship by shying away from stories that capture top advertisers in a poor light. Others surmise that commercial TV stations occasionally ignore stories that might harm their parent companies' financial interests. In 2005, the editor in chief of an English-language publication, the Czech Business Weekly, resigned, saying that the owner of the paper, a powerful Czech businessman, had attempted to interfere in an article about one of the businessman's companies.

Journalists are loath to complain about ethical violations; they fear dismissal and know all too well the small size of the media market, where a huge number of applicants compete for each newly available position. (Along those lines, true media criticism hardly exists in the mainstream press because journalists refrain from antagonizing potential employers.) Furthermore, some foreign media owners have been denounced for not adhering to the same employment standards followed in their home countries. The lack of a collective bargaining agreement at the national level between publishers and the Czech Syndicate of Journalists means employers are bound only by normal labor law. The syndicate, which counts few influential members, has played a largely insignificant role post-Communism. It does, however, work in the field of media ethics, which includes setting standards.

Unfortunately, the public television station, Czech TV, is unable to fill the market's gaps in terms of independence and high-quality news programming. Czech TV's news programs have improved in recent years, but the station's financial difficulties make it particularly vulnerable to political and business interests. The Chamber of Deputies appoints Czech TV's supervisory board and controls viewer fees – the station's lifeblood. In 2005, parliamentarians decided to phase in higher fees and ban advertising except during key cultural or sporting events. Some called the decision a gift to commercial stations a year before a tight election battle. It has long been assumed that the private stations' powerful lobbying has had an undue influence on parliamentary deputies, resulting in laws favoring commercial stations over public broadcasters.

Digital television should eventually help level the market and provide more plurality in broadcasting – if additional stations receive licenses. Up to now, the debate on digitalization has fallen victim to a heated dispute over license regulation, and progress has been slow. The Parliament finally approved the necessary legislation in February 2005, but politicians have reportedly applied pressure to stagnate the licensing process to increase their control – despite attempts by the Radio and Television Broadcasting Council, the industry regulator, to accelerate the process of granting digital licenses.

In the meantime, the past year has seen growing competition in the traditional television market. Prima TV's success has been reflected in a record share of the market, up to 28 percent, and declining numbers for TV Nova, now at around 38 percent, according to Czech Business Weekly. Czech TV's two channels garner together almost 29 percent. These stations are more politically balanced than several years ago, when the most powerful station, TV Nova, was often accused of supporting the ODS.

Adding to the growing competition, the year saw the appearance of several new sources of quality information. Despite its continued financial troubles, Czech TV launched the country's first all-news channel, CT 24. Although the station is available only to a small percentage of the population through the Internet or satellite, the majority will have access with the introduction of digital broadcasting. In addition, Centrum, the Czech Republic's second largest Web portal, unveiled Aktualne.cz, the country's first exclusively online daily. The site has a staff of 60 editorial employees, including talented investigative journalists, and plans to compete by offering a serious alternative to the sensationalism of much of the print media. On the downside, the Czech service of the BBC will be closing in 2006 as a cost-cutting measure. The station's hard-hitting interviews and commentary will be missed.

Judicial Framework and Independence (Score: 2.25)

The four-tier judicial system consists of district courts (86), regional courts (8), high courts (2), and the Supreme Court. The Czech Constitutional Court is a well-respected institution that may be addressed directly by citizens who believe their fundamental rights have been infringed. In 2005, President Klaus completed the process of appointing new Constitutional Court justices (following a drawn-out dispute with the Senate), appointing individuals reportedly close to his political philosophy. The independence of the Constitutional Court has, according to some respected constitutional experts, seriously declined.

Although the Czech judiciary is constitutionally independent, the minister of justice appoints, transfers, and terminates the tenure of the presidents and vice presidents of the courts. Recent reform attempts preserved the Ministry of Justice's central role in overseeing the judiciary and drew criticism that the executive continued to compromise the true independence of the courts, as noted in a report issued by EUROPEUM Institute for European Policy. However, there is more talk about the potential for abuse and systematic pressure on judges to follow the ministry line than about cases of overt meddling, which remain rare.

The critical financial situation in the judicial branch eased in 2005, and the year saw the first significant batch of new judicial appointments in recent years. In the process, however, President Klaus clashed with the Union of Judges when he refused to appoint several dozen judicial trainees under 30 years of age. (Although stipulating this age minimum, current legislation makes an exception for the current trainees because they joined the profession before the stipulation took effect.) Critics of Klaus's move complained that youth and lack of experience have not prevented many younger judges from outperforming their older peers.

The situation also improved with respect to salaries. Over the course of the year, the average pay of judges and state attorneys rose by around 18 percent. Judges also applauded the Constitutional Court decision that the state pay them the bonus salaries from 2003 and 2004 that were abolished through the passage of an austerity law. The Court ruled that the cost-cutting measure clashed with the principle of judicial independence, placing judges' compensation at the whim of the cabinet and the Parliament.

The Czech Republic continues to pay a monetary price for its slow judicial system, losing numerous cases in 2005 at the European Court of Human Rights in Strasbourg over the length of court proceedings. Some individuals have waited over a decade for decisions in business disputes; others have been illegally held in detention for extensive periods of time. In general, while some areas continue to have large problems – such as the settling of commercial cases – the backlog seems to be shrinking and the overall situation improving slowly. Laggards now face a greater likelihood of disciplinary action or even dismissal.

Although the public and much of the media continue to see the inefficiency of the judicial system as a direct result of too few judges, experts say this is an oversimplification. In fact, a Ministry of Justice report from 2004 concluded that the country actually has the highest per capita number of judges in the EU. The problem, says the ministry, lies in the departure of many compromised Communist-era judges in the 1990s and the subsequent abundance of unresolved cases from those years, including many complicated business and civil disputes. In addition, as the weekly Respekt has pointed out, the courts move slowly because the lack of reform has meant that judges continue to perform many chores, including administrative work. As a result, statistics have shown that raising the number of judges has not dramatically shortened the length of court proceedings. Once reform does arrive and judges manage to clear the backlog of old cases, there may very well be too many judges.

In October, the Ministry of Justice and the chairmen of the country's highest courts closed a series of agreements designed to ease some of these problems. The ministry pledged to enshrine in law the position of court assistant, who would handle much of the court's administrative work, freeing up judges, and also pledged to hire new judges and concentrate on sending them to understaffed regions. The deal also included a provision to quickly identify long-delayed cases. However, legal analysts have doubted whether these reforms will actually be implemented in the near future as a result of Justice Minister Pavel Nemec's lame duck position – his Freedom Party will almost certainly not gather enough votes to remain in the Parliament after the 2006 elections.

With some exceptions, fundamental freedoms – enshrined in the Charter of Rights and Freedoms section of the Constitution – are generally thought to be well protected in the Czech Republic. However, the country has dragged on passing antidiscrimination legislation in line with the UN Convention and European standards. The government finally approved the bill in December 2004, but it has since languished in the Parliament. Although an amendment to the labor code in 2001 mandated equal treatment for all employees, implementation lags as women remain underrepresented in senior positions and are paid materially less than men for similar jobs. No significant government measures have been undertaken to remedy these problems, and the bodies that do exist to combat discrimination remain powerless to do more than simply report it, according to a recent Open Society Institute report on equal opportunity. The report found lack of political will as a serious obstacle toward promoting gender equality.

The government is planning a major campaign to promote gender equality, but as the daily Mlada Fronta Dnes pointed out, increased activity comes at a time when political parties have recently made clear that few women will appear at the top of candidate lists for the 2006 parliamentary elections. Overall, few women hold seats in the Parliament or attain other positions of leadership. Only 2 of 18 ministers are women, and there are no women regional governors. The country's first women's party – Equality – was officially registered in 2005, with the party's leaders describing as their main goal to increase the number of women in politics.

Discrimination against the Roma in employment and housing is also a serious problem, and a government report released in January 2005 showed that the situation worsened over the past few years. The report, which compared the current state of Roma affairs with that of the second half of the 1990s, found 75 percent of Roma out of work for over a year and at least 18,000 Roma living in growing ghettos. There were some bright spots, however. Fewer Roma children are being automatically sent to schools for the mentally handicapped, and many more are entering higher education, according to Mlada Fronta Dnes.

Several landmark cases involving the Roma were decided in 2005. A regional court in Ostrava ruled, for the first time anywhere in Central or Eastern Europe, that a Roma woman's rights had been violated when she was sterilized without her qualified consent in 2001. Courts also found in two cases that businesses had discriminated against Roma in their hiring practices and awarded thousands of crowns in damages. The NGO Poradna sparked both lawsuits by sending Roma and white Czech women with similar qualifications to pose as job seekers. Employees at the targeted businesses told the Roma women that they had no chance for the positions but encouraged their white counterparts to apply.

Activist groups have previously complained about police brutality in detention, but the year's biggest outcry against law enforcement agencies took place after Czech police broke up a techno music festival in late July. According to media reports and complaints from many individuals who attended the CzechTek festival, police used brutal force and beat festival attendees as they lay on the ground. More than 100 people suffered injuries. The authorities claimed that such uses of force were limited to "individual excesses" as officers attempted to protect private plots from trespassers. An investigation by the Czech ombudsman deemed the police's behavior excessive, yet as of late November, 13 individuals had been accused of assaulting police officers or other crimes but no policemen had been charged.

Corruption (Score: 3.50)

Corruption is another area where gradual improvements are more a testament to the country's overall maturation than the result of concrete actions taken by the governing elite or the population at large. Ordinary people still complain about paying bribes or "giving gifts" in exchange for expediting services, as excessive regulation continues to plague parts of the public administration. Yet these are exceptions rather than the rule, and most people are able to conduct their daily lives without engaging in corrupt behavior.

Although few people encounter corruption directly, the perception of illegal activity, especially among the political elite, is widespread and escalating. That may be partly due to media and political exaggeration, but in 2005 the public did face countless examples of official wrongdoing – at national and local levels. Many view existing anticorruption measures as insufficient to dismantle the intricate web of connections between political and business elites. A September poll conducted by the Center for Research of Public Opinion showed that respondents believed bribes and corruption have the greatest influence over politicians' decision making, followed by interest groups and lobbying, and then voters and the media. Another poll by the same organization indicated that respondents were most dissatisfied with the level of corruption (83 percent, a figure growing since 2003) and economic crime (80 percent).

Expert surveys carry similarly pessimistic views, such as the Transparency International Corruption Perceptions Index, which measures the perceived level of corruption among politicians and public officials. In the 2005 survey, the Czech Republic tied with Greece, Slovakia, and Namibia for 47th to 50th places (out of 159 countries), with a rating of 4.3 (10 indicates a country without corruption). Although a slight improvement over 2004, when the country was 54th with a rating of 4.2, it was still bad enough to rate the Czech Republic with the third worst level of perceived corruption in the EU. While the situation has improved in other new member states, the rating for the Czech Republic continues to stagnate. In a press release announcing the new survey, the TIC said it viewed the situation as gravest in the areas of public contracts, conflict of interest, controls over public spending, nontransparency of the state administration, an overabundant bureaucracy, and lack of thorough and professional investigations when laws are broken. A TIC report earlier in the year estimated that in 2004, ineffective and opaque methods of awarding public contracts cost taxpayers 32.4 billion crowns: 15 billion crowns (US$625 million) at the municipal level and 17.4 billon crowns (US$725 million) at the central government level.The organization placed the greatest responsibility on politicians at all levels of the state administration who continue to influence the course of public tenders and refuse to create an effective framework for awarding public contracts or appropriate control mechanisms.

Among the most pressing control mechanisms – especially in light of the scandals that brought down former prime minister Stanislav Gross earlier in 2005 – is effective conflict-of-interest legislation. Despite widespread criticism that current regulations are insufficient and allow loopholes, it took two years of preparation for the government to finally approve a much more powerful bill in August. In January 2006, the lower house of Parliament passed the bill, which immediately faced criticism for not requiring asset declarations from the spouses of public officials covered by the law (members of the government and the Parliament, local government representatives, and others). Still, even most critics admitted the proposal was a step forward. If passed by the Senate and signed by the president, the law would become valid in 2007. A new traffic law, which will introduce a point system and stricter penalties mid-2006, should also lessen corruption among traffic police, who often accept bribes instead of applying fines.

In 2005, parliamentary chairman Lubomir Zaoralek introduced a voluntary code of ethics, which would regulate, for example, the relationship between politicians and lobbyists, the acceptance of gifts, and the employment of family members. Complaints from his colleagues forced Zaoralek to remove provisions banning meetings with unregistered lobbyists and the obligatory publication of all forms of income. Prime Minister Paroubek vowed to have each CSSD candidate in the next election sign the code beforehand, but that requirement soon turned into a voluntary measure. By year's end, according to Mlada Fronta Dnes, only 9 deputies of 200 had signed the code of ethics.

The Gross scandal set the stage for a year filled with corruption-related cases. Toward the end of the year, the press made almost daily revelations about wrongdoings. Prominent cases in 2005 included the resignation of Agricultural Minister Petr Zgarba, who, like his predecessors, presided over a string of suspicious activities at the Land Fund, which has long faced accusations of cronyism, conflict of interest, and sales of cheap land to the politically connected. The final straw came when an acquaintance of Zgarba's earned billions of crowns in another suspect deal. Also making headlines were allegations that privatization of the Czech chemical giant Unipetrol involved high-level shenanigans in both the Czech Republic and Poland. In November, eight people, including a deputy minister in the Ministry of Local Development, were accused of stealing 229 million crowns (US$9.5 million) in EU funds, and in December the Parliament was set to withdraw the immunity of an ODS parliamentary deputy accused by police of mediating a bribe.

Author

Jeremy Druker is executive director and editor in chief of Transitions Online, an Internet newsmagazine covering Central and Eastern Europe, the Balkans, and the former Soviet Union. Alice Drukerova, a freelance journalist, and Samuel Murphey, a student at Truman State University in the United States, assisted in the research for this report.

Local Governance (Score: 2.00)

After long delays, the development of local government structures and authority has become one of the country's bright spots in recent years. Landmark legislation passed in 1997 led to the creation of 14 regions, which began functioning in 2001. The central government handed over significant powers to these regions in fields such as education, health care, and road maintenance. Additionally, 205 newly created municipalities replaced 73 district offices, which ceased all their activities by the end of 2002. Self-governed regions and municipalities own property and manage separate budgets. Voters directly elect regional assemblies, which then choose regional councils and regional governors. The regional councils may pass legal resolutions and levy fines. Directly elected municipal assemblies elect municipal councils and mayors. Municipalities wield considerable power over areas such as welfare, building permits, forest and waste management, and motor vehicle registration.

Some analysts consider the creation of the regions as one of the most important steps in the country's recent history. The regions have made considerable progress in tackling problems neglected by the central government. The education system is a prime example. Although the birth rate dropped rapidly from the end of Communism and reduced the number of pupils, the state failed to take the unpopular steps of closing schools and firing teachers. Since acquiring power, some regions have moved much more forcefully, shuttering schools and tying funding more strictly to the number of students. Such savings will go toward better equipment and higher salaries for teachers, reports Respekt. These improvements have emboldened regional administrations to seek more power and money from the state for education, and some regional leaders have even called for funds connected to high schools to go directly to the regions instead of the Ministry of Education, according to Lidove Noviny.

Overall, the success in regional management and greater autonomy has made a strong case for allowing regional governments to manage more of their money. They currently control only a small percent of their budgets, a fact that causes consternation among local leaders. For the large bulk of their budgets, regions essentially act as middlemen for the state, sending money to predetermined recipients, reports Tyden.

The failure of funds flowing from the center to keep pace with these newly added responsibilities has proven just as vexing for local politicians, with respect both to new laws and to EU commitments. For example, municipalities must now finance the last year of kindergarten but have not received any funds from the central government to do so. Local politicians complain regularly that the central government has transferred major tasks without the money necessary to do their jobs well. The funds they do receive, they say, should be based on their communities' relative wealth rather than sheer size. The regions are allowed to keep only a fraction of the tax money they help collect, although that is an improvement from earlier amounts. The government has assisted occasionally – approving, for example, a transfer of billions of crowns to help impoverished hospitals – but that support has been insufficient. Municipalities, in turn, believe regions do not have the competences, money, or experience necessary to effectively influence local development.

Adding to the aggravation of local authorities, the law allocates a broad range of responsibilities to regional governments, but in practice the transfer has been gradual and the regions have not yet assumed full control over promised areas. Competences have sometimes been transferred, but legislation that would force change with "ownership" has lagged. For instance, the regions now receive funds to care for socially vulnerable citizens, yet no specific law exists to bind local authorities to certain minimum standards (only guidelines). Not surprisingly, some regions have taken the initiative and improved the system, while others have done little, claiming they don't have the money for major changes.

At this stage, insufficiencies at the local level can best be explained as a combination of limited resources and inexperience in areas long neglected even at the national level, such as implementing gender equality provisions, improving civic participation, and addressing the needs of marginal groups. For instance, a Ministry of Labor report in 2005 concluded that the performance of local authorities in integrating foreigners remains very uneven, with some municipalities and regions doing virtually nothing to further integration. Saying the situation had not improved much since 2003, the report called for changes in legislation that would better define the division of powers between the state administration and local governments and encourage the creation of local strategies for integrating foreigners.

Greater transparency and corruption-fighting instruments have not kept up with the transfer of responsibilities and finances to local governments, and endemic cronyism remains a critical problem. A Transparency International-Czech Republic (TIC) study released in November indicated a widespread lack of transparency in awarding public contracts for construction projects in the country's eight largest cities. After reviewing contracts over the past five years for projects in which town halls had awarded more than 10 million crowns (US$413,000), TIC researchers cited possible favoritism and links between these companies and local officials. Among other problems, the lack of effective control mechanisms, frequent lapses in announcing open competitive biddings, and the failure to publicly announce decisions and provide other information about the tenders annually leads to enormous losses, TIC concluded.

The NKU currently has no legal right to examine the financial management of regional governments or municipalities. Although Transparency International and some parliamentary deputies favor changing the law, others argue either that local governments should implement their own controls – in the spirit of self-government – or that sufficient controls already exist. With local politicians immune from any conflict-of-interest regulations, it is no wonder that numerous cases of unethical behavior continue to occur.

Public knowledge about regional authorities has improved considerably but still leaves much to be desired. Before the last elections, in 2004, a poll conducted by the Factum Invenio agency showed that an unusually high number of people held no opinion about their regional administration, with 40 percent claiming ignorance about the services these bodies provide. Despite these challenges, some regional politicians have already made names for themselves, indicating that the development of local governance has also had a positive effect on the political elite, enhancing its breadth and variety. Increasingly, success at local and regional levels is seen as a conduit to greater power on the national stage.

National Governance (Score: 2.50)

The institutions of governance in the Czech Republic are stable and democratic. No single party dominates the political scene, and regular rotations of power occur at national and local levels. Political parties generally agree on the nature and direction of democratic change, with one major exception – the largely unreformed Communist Party (KSCM), which has not served in a post-1989 government. The party continues to attract those nostalgic for the old regime and frighten away those who worry that the KSCM will one day sit in power and backtrack on reforms. The Communists hold 41 of the 200 seats in the powerful lower house of Parliament, but other political parties' refusal to include the KSCM in coalitions has greatly complicated the process of forming stable governments among the remaining, often conflicting parties.

Although other parties may agree on the general direction of the country's development, they clash over many details and show a remarkable tendency to avoid compromise, preferring inflammatory attacks that keep the general political discourse at a comparatively low level. In 2005, the opposition Civic Democrats (ODS) adopted a policy of "zero tolerance," contesting every major piece of legislation proposed by the ruling CSSD. The party modified this approach as the year progressed, and the CSSD increased its popularity. With elections approaching in June 2006, the animosity and mudslinging will likely worsen, as exemplified by the ODS's November presentation of the "Black Book of CSSD Sins," which summarized the alleged scandals under CSSD reign.

In the ODS's defense, political scandals involving top CSSD figures were not hard to come by in 2005, especially with the stunning fall of Prime Minister Stanislav Gross. Early in his rule, which began in August 2004, events indicated that the CSSD had made a grave mistake selecting Gross to replace former prime minister Vladimir Spidla as head of the party and the government. At 34, Gross, who had long been one of the country's most popular figures, soon revealed a profound immaturity for the position, highlighted by his clumsy attempts to deal with inquiries into his suspect personal life. A series of evasive answers concerning the financing of a luxury apartment purchased in 1999 doomed him, as did revelations that his wife's business partner owned a building housing a brothel and had been indicted for insurance fraud.

As calls for his resignation grew, Gross refused to admit any wrongdoing, apparently confident that the scandal would blow over, like the many others involving top political figures in years past. Finally, under immense pressure from the public, the media, and his coalition partners, Gross consented to step down. Throughout the crisis, the public was largely at a loss to interpret the moves and countermoves of various actors: In one poll, 71 percent of the population said they could not get their bearings in politics.

Commentators hailed the prime minister's resignation as a step forward for the country's political culture. The momentum to pass effective conflict-of-interest legislation increased, and the conviction spread that hiding skeletons in the closet might be more difficult in the future with the downfall of a prominent politician.

On the downside, the Gross affair further boosted the public's suspicion of politicians' business dealings, and other scandals throughout the year highlighted what many saw as the unethical intersection of political and economic interests in the country. Lobbying the executive and the Parliament remains largely unrestricted, and the public continues to believe that special interests play a major role in determining the political agenda (one poll placed special interests and lobbying behind only corruption in that regard). A lack of transparency in major business deals involving the state at both national and local levels remains a serious problem. While the country's highest control body, the Supreme Audit Office (NKU), has uncovered massive irregularities and overspending on various government contracts, politicians generally ignore its findings, calling the agency incompetent and toothless. Current law does not even allow the NKU to impose sanctions, reports the independent weekly Respekt. After the head of the NKU died in 2003, the Parliament was incapable of or unwilling to elect a new president until October 2005. While a Law on Freedom of Information is on the books, journalists often do not invoke their rights, and officials continue to be overly secretive.

Critics also point to political parties' widespread practice of nominating individuals to serve throughout the public administration, even at lower levels, and on the supervisory boards of companies partially owned by the state. This has increased both instability and clientelism, while interfering in the maturation of the civil service, already hampered by low wages, a poor reputation, and a corresponding turnover in qualified experts, according to the UN's Human Development Report. Implementation of the Law on Civil Service, which was to enter into force in 2005, was postponed to 2007. The government claimed that salary increases and the notion of secure positions would burden the budget.

Although the legislature is independent from the executive branch, critics charge that such autonomy has not prevented the Parliament from passing an excessive number of its own poorly prepared laws. There is also a chronic lack of skilled experts to assist in writing and editing legislation, as well as poor communication and insufficient cooperation among ministries and other bodies of the public administration. The Ministry of Justice, for example, has depended on judges to write legislation, which is problematic from a separation of powers point of view, as the branch charged with implementation should not play a leading role in the creation of laws. As a result of these deficiencies, the Parliament sometimes passes error-filled laws requiring repeated revision.

The legislative process is further complicated by the ability of parliamentary deputies to make an unrestricted number of proposed amendments during the second reading of bills. (Although most parliamentary democracies allow such additions, strict rules often apply, such as the need for a minimum number of deputies to make a joint amendment.) As the weekly Respekt has pointed out, this tradition often disorients even the most attentive parliamentarians and serves as a calculated strategy to derail long-needed legislation. In one case, the sponsors of a bill designed to protect victims of domestic violence pulled their proposal after several populistic comments during the second reading threatened the bill's integrity. While some deputies agree that this process is open to abuse and should be changed, others doubt that their colleagues will give up the power to influence legislation that this privilege grants each deputy.

It does not help matters that the executive and the legislature rarely consult civil society for input on proposed legislation. This points partially to the lack of independent public policy actors but also reflects the unwillingness of most politicians to consider civil society a potentially important contributor to policy discussions. Legislators remain much more likely to meet with lobbyists behind closed doors than attend NGO-organized events with ordinary citizens debating key issues. Since various forms of "direct democracy" (plebiscites, petition drives, demonstrations, and so forth) are also underdeveloped and underused, public pressure remains minimal. Thus policy making is almost exclusively the domain of government officials, with little outside input.

Although the legislative and the judiciary are generally thought to exercise sufficient supervision with respect to military and security services, the Gross affair raised questions over the independence of the police. Some commentators accused investigators of moving particularly slowly in investigating the prime minister's dealings, especially when compared with a high-profile, alleged bribery case involving the ODS in 2004.

Some analysts believe that the Constitution creates an overlap of executive power between the government and the president. Actual confrontations depend largely on the personality of the president, since the position is chiefly ceremonial yet retains some important powers, such as forming a government.

In key areas such as foreign policy, President Vaclav Klaus has attempted to expand his real influence on the policy-making process – surpassing steps taken by his predecessor, Vaclav Havel, and clouding, in some cases, the division of power. Despite government criticism of his activities, he has espoused his Euro-skepticism at various international forums, clashing with the official government line on issues such as the European Constitution and the introduction of the euro. In 2005, Klaus also sought out candidates closely tied to his political philosophy in appointing new governors to the Central Bank and new justices to the Constitutional Court.

During the Gross government crisis, Klaus said he would take an active role in solving the deadlock by assuming that moves not explicitly forbidden by the Constitution are permissible. He then refused to accept the resignations of several ministers, essentially preventing Gross from reshuffling his cabinet. Critics accused Klaus of not respecting the unwritten rules of the presidency – namely, not interfering in the political process. Klaus's supporters countered that the president was only stopping Gross from forming a minority government without asking the Parliament for support.