HE government hopes to combine the illusion of ownership by the population with the employment of the capitaliststyle skills of fund managers. But the scheme represents a big step into the unknown. The Communist Party and trade unions have even created their own privatization funds, to protect jobs and promote self-management.
The Investment Privatization Funds
(IPFs) introduce some of the most modern features of capitalism to Czecho-
Slovakia. Professional managers will run funds and interact with company managers, while players on the international capital markets can easily compare the results and risks of a Czecho-Slovakian portfolio to that of a Kenyan or Thai fund. Many funds already have foreign financial backing. Austrian banks like
Kreditanstalt and Volksbank run funds through their Czecho-Slovak subsidia-
Most adult citizens have registered for the coupon privatization, and, by the autumn, should know which companies they (or the IPF representing them are shareholders of. Formally, the citizens can control the new companies through shareholders meetings. In reality the mass of shareholders will be passive, and funds and banks controlling only, say,
10% of shares will play a disproportionate role.
And this is the main purpose of the coupon privatization. The state is transferring state property to the hands of capitalist-style managers, who will be motivated by profits. Any opposition by existing state managers has been neutralized by encouraging them to write the privatization plan for their enterprise, and even to form their own IPF.
Foreign investors are already contac-
10 ting the funds and enterprise managers directly and will be able to buy directly from "the people" rather than seek state approval. The federal government hopes that this liberalization of investment conditions will attract investment away from Poland and Hungary and will enable even medium sized German and Austrian firms to invest in the border regions.
The Czech elite has accepted that this internationalization means they will become a comprador layer, managing the territory for owners abroad. 80% of total investment so far has come from German and Austrian companies, and the danger of a split between the Czech and Slovak republics comes increasingly from Czech leaders, who see Slovakia as a brake on their "return to Europe" — that is, integration into the west European and German economic space.
An inland offshore centre
The Slovak capital Bratislava, only an hour from Vienna, is becoming an "offshore" service and production centre for Austrian capital and consumers. The situation for Slovakia as a whole is desperate. Slovak unemployment is already 14% compared to 4.1% in the Czech Lands and the Slovak bureaucracy wants a stronger role for state investment to protect key industries. There is also anger at the Prague government's decision to close down the arms industry (two thirds of which is in Slovakia) at the request of major investors in the Czech Republic (but not Slovakia) from Britain, France and the USA — the biggest arms exporters in the world.
The fledgling Czecho-Slovak market is operating without even the limited regulation common to Britain or Australia.
There are no laws which even pretend to oblige fund managers to honestly follow mass of small unregulated IPFs are some run by crooks who will defraud their coupon-investors in any one of the ways known to Western markets.
In any case, the simple transfer of ownership does nothing to change the nature of Czecho-Slovak industry - outdated, uncompetitive and short of customers since the government destroyed trade links with the USSR and Eastern Europe.
The restructuring of Czecho-Slovak industry would be a long and expensive process under any economic and political system. In the extreme free market monetarist conditions currently in force, the best estimates are for 20% of firms to go bankrupt this year, with only 35% of firms likely to survive five years. Federal government estimates for 1992 of 12% inflation and a 10% fall in Gross Domestic Product (GDP) should be doubled.
### Collapse of industry
In such conditions, the government's fast privatization will accelerate the collapse of industry, and may prove a political time bomb. The IPFs, as private owners, will close factories rather than lose money. They may prefer asset stripping and property speculation to the massive task of reconstruction.
Some ministerial advisors have warned that the fund-managed contraction of industry will be so sharp that the state will have to re-nationalize to prevent mass closures, electricity cuts and strikes. Western fund managers expect only 30 to 60 of the privatization funds themselves to survive two years. Bank failures and bail-outs happen in the West, but will pro-free market government leader Vaclay Klaus dare to renationalize the privatization funds? Citizen share holders who see their "share" of the national property disappear almost as soon as they receive it, and who have never been warned about the dangers of committing their savings to the IPF scheme, will be deeply disillusioned with the reform process, to say the least.
The government is aware of these risks, but accepts them in pursuit of their short term goal of winning the June 1992 elections. The last elections, in 1990, were effectively a referendum on the
Adam Novak is a journalist living in Prague and a member of Leva Alternativa (Left Alternative).
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CZECHOSLOVAKIA capital
CZECHOSLOVAKIA strategy open to discussion and change by member shareholders. These shareholders have to consciously see themselves as members of a self-management movement. Self-management funds will never offer the level of dividend the big commercial bank IPFs can offer and it is irrespon sible to pretend otherwise. The attempt by the "self-management" funds to present themselves as a moderate "ethical investment"
NESTACILO BY PLOŠNÉ ZUGŘCINIT, KOLK JE U MÁS FÍZLÚ NA ETVEREÉNÍ MiLOMETRE?
alternative, robs them of their only real strength, that of offering an alternative.
The activists behind the
"Shouldn't we just announce how many informers we have to the square kilometre?" "Velvet Revolution" of 1989. The pro-capitalist policy of Vaclav Klaus' government has never been approved in an election - until now. The right needs to demonstrate that privatization is irreversible, and that the benefits are widespread. Hence the rush, and the incredible claims of the privatization ministries that 1,000 Kcs (US$35%) of coupons bought by a citizen would be worth 120,000 ($4,150) in two years. In reality, so many near bankrupt firms have been smuggled into the coupon privatization that Western bankers say citizens will be lucky if they can sell their coupons for 30,000 Kcs ($1,050) in three years. Not much for the individual's share in the state sector.
### Dismissal of federal prosecutor
Both Czech and Slovak political elites are increasingly considering authoritarian strategies for managing the crisis. The criminalization of the propagation of "communism and class hatred" (see IV no. 224) has been followed by the dismissal of the federal prosecutor Ivan Gasparovic, who claimed that there were no legal grounds for the mass prosecution of ex-Stalinists and who refused to rubber stamp new laws he considered to be in contradiction with the constitution.
The forces behind these moves are the Czech Civic Democratic Party of Vaclav Klaus and the Civic Democratic Alliance of Federal economics minister Vladimir Dlouhy and Czech privatization minister Tomas Jezek. Press support and corporate sponsorship in the Czech republic has deserted the Civic Movement, led by exdissidents like Jiri Dienstbier and unofficially supported by president Vaclav Havel, which has supplied most of the current government.
After initially opposing the coupon privatization the Czech-Moravian Communist Party (CSCM — with the support of 11% of the voters one of Europe's largest Communist parties) now argues that workers must take part, and party members have now created the Czech and Moravian National Investment Fund. The Miners', Chemical Workers' and Slovak Engineering Workers' union representatives have set up a series of funds for each sector of the economy through the union-owned Bohemia banka. These funds stress the need to avoid domination by foreign capital, to protect employment and to explore all methods of increasing worker involvement and participation in decision-making. Thanks to their low cost publicity campaigns, based on activist networks rather than TV adverts, the left fund managers are confident they will attract a large enough number of coupon holders to be able to acquire a seat on the board of a large number of newly privatized companies.
### Ethical investment management movement, this may be just ethical investment organization, the pro-
Will a trade union fund lay off its workers/shareholders? Will the Communist fund negotiate loans from Swiss banks? Will the funds avoid companies dealing with South Africa? If the answer to these questions is no, then how will they survive a deepening economic crisis? How different will they dare to be? The only hope is for these funds to make their
Czecho-Slovak "self-management" funds believe privatization cannot be left to the capitalists and the bureaucrats. They hope to gain enough power to make some improvements for workers even though their economy will remain a capitalist one. There are many parallels with the cooperative movement in other countries and many of the same problems apply.
Credit and investment decisions in the new Czechoslovakia will be made according to capitalist profit criteria. The climate will be hostile to investment projects for creating jobs, producing socially useful products or developing economic democracy. To take responsibility for jobs and production in such a situation means that self-management may be blamed for any job losses that result. Without operating credit allocation and without state spending programmes oriented towards meeting basic needs, it will be difficult to run factories any differently from the bureaucrats or capitalists.Most workers remain suspicious of the self-management funds. The number of those willing to invest their coupons in the company where they work has now dropped from 65% in mid-1991 to under 15% now. Workers' response to the restructuring of their workplace will more likely be to begin trade union organization and strikes. "Worker-shareholders" may not act so differently from the others, nor will those who lose their jobs necessarily accept their fate for the good of self-management in the future.
The workers' movement needs to organize and educate those faced with the results of privatization so that they can oppose its worst effects. Self-management can serve as an argument of how things should be done differently, but it is not a realizable alternative without a mass workers' movement. * 11
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F!!C
Trade unions seek
International Viewpoint # 225 • March 30, 1992
CZECHOSLOVAKIA new role
AFTER the collapse of the neo-Stalinist regime of Gustav Husak in November 1989, the old state trade unions in Czechosovakia collapsed. Adam Novak looks at the problems facing the reformed unions in that country in the face of the government's pro-capitalist reforms.*
T HE old Cechoslovak trade
unions went under with the system which had created them. Workers' asociations in each individual enterprise were one of the pillars of the "Velvet Revolution" of 1989. These asociations came together to form the national "Asociation of Strike Committees", which succeeded in forcing the dissolution of the old unions and which took over their buildings and resources for the foundation of new unions, set up at the start of 1991.!
Most unions in the CSFR belong to the Czecho-Slovak Confederation of Union Asociations (CS KOS)2 which has around 5,250,000 members and brings together 41 unions.3
Despite having taken over the resources of the former state unions, the new Czech4 formations are very weak. In general it can be said that workers are not convinced of the need for unions. While many pay contributions, few identify with their union or are active within it. Only a few see it as a means for the defence of their own interests. In the enterprises the unions are usually very weak.
The most important exception is the union of miners, transport and engineering workers (Kovo).5 In these sectors there has been a considerable wave of militancy at a local level, which has led to the unions becoming real representatives of the workers, with real organizations in the enterprises and real workers support. It was on the initiative of the Kovo that in Spring
1991 some 500,000 signatures were gathered in three weeks for a petition in protest against the revision of workers' rights.
The unions share with the government the view that it is necessary to create a 12 labour market. They accept the scrapping of the rule under the previous regime that gave them a right of veto over attempts to layoff workers. They insist that the sacking of those who do not want to work will improve the climate at work and lead to a rise in the incomes of the remaining wor-
They have however rejected government assertions to the effect that the difference between wages and social security is too small. They want worker motivation to be created by methods other than those of poverty and fear of unemployment.
CS KOS has succeeded in getting the minimum wage set at 2,100 Kcs when the government had proposed 1,600. On the other hand, the unions have been happy to accept the principle that higher wages can only come about "when the economy permits". But the fact is that today one can buy less for 2,100Kcs than you could for 1,600 at the time when the minimum wage was introduced. The original proposal of the unions to support the network of price subsidies through a social grant drawn from wages has been wholly dropped, so that the government can now freely decide which prices to support and which to free.
### Effective job creation
CS KOS has called on the government to implement an effective job creation programme aimed at ensuring full employment. According to the CS KOS Vice-Pre-
"Many proposals exist on paper which have not been implemented. A real [jobs] programme, which could be accepted in the different regions, does not exist. We demand a regional employment policy since unemployment has a primarily regional character. This can best be seen in North Moravia or Slovakia.
"The employment policy must be agreed for the respective regions and branches of industry... So far massive job losses have not occurred but these will follow as a consequence of privatization. We must be ready for this.
"In some regions of the republic, job creation is only possible through investment. If the government does not find the financial means, no jobs will be created."
For a long time the unions have restricted their opposition to the government's employment policies to repeated protests in the form of press releases. But it is now clear to everyone that the government is planning to allow the unemployment rate in the Czech Republic to rise to over 10% (18% in Slovakia), putting the unions under great pressure ether to resist or at least to change their line of argument.
The union leadership believes that it can be a valuable partner for the government's social policies. However, in most cases, the government ignores the unions in devising social policy. Increasingly often the unions criticize the social system as inade-
"There is today a social security net, but it is overwhelmed; unconnected to the economic reform...the social net is built in such as way that whoever falls into it not only will not be saved, but may well never get out. This is not social security or any kind of security at all."6
The unions have accepted the government's decisions on which social funds should be kept open and which not. It is thus hardly surprising that they do not now find themselves in a situation to do more than propose a more social and somewhat softer version of the same aggressive social policy.
### Reemergence of social conflicts
When in autumn 1990 social conflicts began to reemerge, for the first time since the "revolution" , the government changed their strategy of ignoring the unions and began to consult them on the way to arrive at a "social consensus". This led to the setting up of "social consensus councils" in which workers, employers and the government are represented with the aim, amongst other things, of planning an overal! agreement on wage rises.
The unions and the public saw this plan as a legally guaranteed, binding commitment for setting the lower limits of wage rises. This would ensure compensation for the announced price rises of 50%. But when the time for the wage rises came, the government asserted that all that was involved were non-binding guidelines for enterprise managers. Most workers did not get the sugested wage rises. * The following article first appeared in the March 1992 number of Ost-West-Gegeninformationen, published in Graz, Austria. 1. For more detailed information see International Labour Reports, nos. 38 and 40, 1990. 2. In April 1991, the CS KOS (Ceskoslovenske Konfederace Odborovych Svazu) joined the International Confederation of Free Trade Unions. It is currently an active participant in the European Trade Union Forum and is negotiating entry into the European Confederation of Trade Unions.
3. In addition there is a culture and arts union, the
KUK, with some 30,000 members.
4. This article does not deal in detail with the situation in Slovakia.
5. Kovo is the second largest free trade union in
Europe (after IG-Metall). It has around a million members, organizing one out of every six unionized workers in the CSFR.
6. Sondy, December 12, 1991.
JElLie KLUB ODA POOPON/ KOU A OH SE DOHODNe S KOS-LDS A VERTURTCK SE DOSTAV!
HADROLOVIEN VETTINA POSCANCÚ, TAK MOÍNÁ DOSTANETE NOVY HOTTE PANÍ MALKOVÁ...
"If the ODA club supports the KDH and the OH reaches an agreement with the KDS-LDS and gets more than half the votes on Thursday, you may get a new broom, Mrs. Malkova!" (cartoon by Vlafimir
Jiranek from the Czechoslovak daily Lidove noviny.)
In January this year, the Slovak unions urged the Slovak government to give information on which workers had not had a wage rise of at least 10% in 1991. The Slovak government promised to give "indirect, but not financial help" to the firms concerned, by which means they hoped to achieve a rise in this year's wages.
In the Czech republic even this modest initiative has not been undertaken. The unions continue to nail their colours to the mast of social consensus although they know that the government is cynically abusing this notion. They are hoping that the growth in social divisions will force the government to accept them as partners and are defending the general consensus in the hope that it could be useful to them in the
The unions' line of argument is that privatization cannot be taken as an aim in itself but should be seen as an instrument for improving efficiency. Local union groupings often support the demand of undertaking restructuring without privatization. But the unions have not developed any alternative proposals to privatization, so that they often find themselves confined to haggling over details and the time schedule for privatization. In the few cases where workers have put forward their own plans for privatizing enterprises as workers' cooperatives, they have received union support.
Some union journals have asked their members to join in the coupon privatization? and invest in the coupon fund for their sector. Some local union groupings have supported management plans whereby workers would receive a minority share in the enterprises. Participation in privatization
The unions have hardly discussed the question of how workers should participate in the massive coupon privatization, and if they should take part at all. This could change, since now a privatization fund supported by the Czech Communist Party (CSCM) is offering to buy shares where it has "participants" and raises demands around workers co-management and employees' initiatives where it has influence over the management.
The philosophy that the workers' themselves should take over leadership of the enterprises has received little support from the unions. This idea plays only a secondary role among Czech workers and the left.
The confused and modestly expressed attempts of some unionists to work out a strategy that could turn the coupon plan to their own advantage has not received the needed theoretical and technical support from intellectuals nor access to the financial and media resources of the CS KOS. The result of this has been that workers are putting their trust in the coupon fund, which has been promoted through the television and direct advertising, even where its investment strategy aims at enterprise
The unions are now experiencing a number of attacks from the new private owners including bans on union membership, sacking of union activists and so on. Most people in the CS KOS now take the view
CZECHOSLOVAKIA
VAn
si that on the whole the present legal situation guarantees union rights but that capitalist (and often state) managers will only apply these laws if the unionists in the enterprises enforce them. The unions are not opposed to private property as such. According to Andrej Rady from the union
"Our starting point is essentially different to that of Western unions. What we need here (and I am talking from here and not from the West) is an increase in the private sector. It is much easier to deal with an employer who perhaps represents foreign capital and knows the value of a partnership with the unions. This would be much easier than finding a concrete basis for negotiations with these dilettante bureaucrats, many of whom are known to us from the former time."
When the workers at the Skoda car plant in Mlada Boleslav learned of the plan to sell the plant to Renault-Volvo, they threatened to strike to ensure that it would be sold to Volkswagen. Most union activists in the CSFR believed and still believe that foreign investment would ensure the survival of their enterprise along with integration into the Western market and a chance to achieve Western wage levels and working conditions.
Six months after VW took over the Skoda works discussions took place with the German management that failed to yield the hoped for improvements in wor7. Every citizen can buy a coupon book for 1,000 Kcs with which to buy shares.
8. Korak (weekly paper of the Kavo. December 13, 1 3
International Viewpoint # 225 • March 30, 1992
CZECHOSLOVAKIA king conditions and production. There was also very strong resentment against the West German unions in VW who were accused of being against a levelling up of wages and working conditions, of not understanding the situation of the Czech unionists and activists and of having backed off from cooperation with the Czech workers under pressure from the Skoda management.
The union leadership sees its role as that of a neutral or centre left negotiator for the workers. They are therefore uneasy about taking a clear position on current government policies. Thus Vladimir Petrus, the president of CS KOS' Czech and Mora-
"The unions accept every political decision-maker who works in a good and professional fashion. We will not criticize any minister on the grounds of their political outlook. Much has been said about Minister Klaus. But he is naturally only responsible for finances and not for the recession. We are naturally opposed to him when we get the feeling that this or that measure which he takes as finance minister hinders bringing the recession to an end. As unionists we really do not have a specially close relationship with Mr. Klaus, but we will certainly not attack him simply because he is the head of a party that is somewhat to the right."
More combative attitude needed
Obviously the development of a more combative attitude in the unions depends on the coming into existence of a pro-worker and socialist current which can work out a critique of the reform programme measured by its effects on the workers. Left and right wings are only slowly forming in the unions. The top levels of the unions recoil before identification with party political standpoints and even those unionists that are sympathetic to the Social Democratic Party (CSSD) rarely express themselves publicly. Furthermore the leaderships' "neutralism" largely corresponds to the sentiments of the membership. They fear that a more politically committed leadership style could repel people from joining the unions, especially in Prague where many support Klaus' Civil Democratic Party (ODS).
For the July 1992 elections the CSSD will criticize the government's economic programme on the grounds that it would also be possible to have an economic reform which did not exact a high cost from the smaller people. In such a case, a part of the union leadership will declare its support for this party to create a focus for the left independent of the Communist
14
Although around a third of workers are in favour of the unions standing their own candidates in elections, another third of the working class and most national leaders are against since they fear that this could lead to a split in the movement and tar it with a leftist image. It is thus unlikely that there will be any union candidates in the forthcoming elections, although it is possible that the more radical unions may put forward a list of demands and advise their members to question candidates about their attitude to these demands.
Weakness of extra-parliamentary left
The extra-parliamentary left is very small and ignores the unions. The only exception is the Slovak group, Forum Robotnikov ("Workers' Forum") which propagates basic workers rights such as the right to work or the right to compensation for inflation and calls on workers and union leader to fight for these demands. The Forum has brought up to 20,000 workers into the streets. Its supporters are mostly thirty to fifty year old skilled wor-
The roots of its success are certainly to be found in the drastic deterioration of living standards in Slovakia and the widespread conviction that the Prague reformers want to reduce Slovakia to the status of an under-developed region, as it was between the wars. Conditions are less favourable for a group like this in the Czech Republic. The economic crisis is less acute and the majority of workers believe that the Czech speaking part of the CSFR can relatively rapidly approach West European living
Some union activists and full-time officials from the steelworkers, miners and transport workers union began sometime in 1991 to talk about founding a workers' party. The basis for this is the growing discontent with the government's economic reform, the extremely moderate policy of the union leadership, memories of the failure of a non-Communist left alternative in the 1990 elections and the recognition that there will again be no left alternative at the forthcoming elections apart from the Com-
A little later, a Democratic Workers Party was founded but it lacks real involvement from the union memberships or local union leaders.
Most of its members are ex-Communist Party members who belong to the intelligentsia. The party, which is of a purely parliamentary type, is already split between a very moderate leadership and a more radical minority. As is the norm among left wing ex-Communists, this party spends much time reappraising the Stalinist past and trying to define a "democratic socialism founded on modern social developments throughout the world"
Far away from the real debates, the proposals of the Czech left are very moderate and show an exaggerated trust in modern foreign management techniques (Japanese quality circles, German co-management, and American shared planning schemes) or "social models" (the "Swedish model").
From the foregoing it becomes clear that the government's approach to the unions stems from its concern about workers' activity. This is also the reason why the government introduced reforms such as wage indexation, social councils and a minimum wage.
However the government until now has kept to its agreements in these points and is looking for ways to undo the reforms since it has noticed that there is no resistance from the workers and that the unions are very weak. The unions are not fully aware of the government's strategy and continues to believe that the latter can be persuaded to negotiate. However unless they represent movement on the ground the unions are an irrelevance for the government.
Until now there has been no worker radicalization in reaction to the economic crisis. Ne int a strengthening of the worker coring. Further time w. wore life begins to flo ine union structures, and th will have little influence on th ! elections.
Several things. lappen if the the workers are to have fluence on politics in the CSFR. Worke s have to develop a critical appraisal of the government's
They need to have a clear evaluation of the possibilities and limits of negotiations and learn to use more radical forms of protest, in particular strikes. They must rely more on their own activities than on the leaderships layer.
Improved contact with the workers' movement of the capitalist world can help Czech and Slovak workers to learn to see through the strategies of the incoming multinationals and capitalist managements. As far as is possible such contacts should be established at grassroots level. And finally, in a country which is seeing fundamental change to the detriment of the working class, it is necessary to get rid of the illusion of non-political unionism. Even if there is a risk that many workers will be repelled, we must take clear political posi9. Programmatic Statement of the Democratic Workers Party, Prague 1991.
The Great Depression
EASTERN EUROPE restoration process passed so far, keeping in mind that such an historical process has never been attempted?
• How has the left oriented to the post-Stalinist political situation and what are the possibilities for a left resurgence? The Depression in Eastern
IN MOSCOW in late 1991, a rather revealing masthead appeared on the daily paper Pravda. A kicker underneath the name of the paper read, "paper founded on May 5, 1912, on the initiative of V.l. Lenin."Along the top of the page was an advertisement that read, "Shares in the All-Russian Exchange Bank, a guarantee of your success and a symbol of your prosperity". PETER ANNEAR*
HE unintentionally ironical