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The Coalition´s package of economic measures

The package of economic measures announced last week by the three-party ruling coalition is, to a large degree, a political project. The purpose of the package was not only to correct the government's economic policies. The package was also to "jump-start" the stalled engine of coalition politics. In announcing the package, the coalition is trying to regain its previously lost dynamism.

One of the chief problems of the coalition government in the last nine months has been its inability to lead. Society has become increasingly apathetic or disenchanted with politics amid the political deadlock produced by last year's general elections

To renew the sense of dynamism, the coalition needed a clear and powerful message. Economic and other measures outlined in the package were undoubtedly needed. But all of them could have been introduced gradually, without the fanfares that accompanied the package. The timing of and the expectations generated by the package were both to convey a simple message: we are back in the business of governing and leading.

Negative economic developments or a lack of the government's emphasis on the rule of law as well as the transparency of capital markets were worrying. However, they did not represent systemic flaws in the Czech economy. In a comparative perspective, the economy is still relatively robust. It certainly is not in the kind of crisis the opposition portrayed it to be in.

Before last week's announcement, the paralyzed government had been unable to address quickly and resolutely enough certain negative trends, such the growing foreign trade deficit. It had also been unable, or unwilling, to deal with economic crime. The fact the package addresses such things is important. But the government's newly-found resolve that the package conveys is even more important.

Both the coalition and the opposition had their own reasons for dramatizing the events leading to the announcement of the package. The coalition partly wanted to use the package as a political springboard toward regaining people's confidence in the government's leadership abilities. The opposition wanted to create a sense of social crisis

In order to be able to generate the feeling it is at long last capable of dealing seriously with economic problems, the coalition needed to make the package look more important than it actually is. To be able to do so, the coalition parties accepted the opposition's game. They, too, began speaking of a possible crisis.

However, by accepting such a game, the coalition might have set a trap for itself. Should the package not bring expected improvements, the opposition will be able to speak of a real crisis. In such a situation, further corrective measures by the government will not be seen as being enough. The Social Democrats will argue it is their turn to govern

To make matters more difficult for itself, in announcing the package, the coalition committed a blunder that makes the package's failure quite likely. No personnel changes in the government accompanied the announcement of the package. As a result, people will find it very difficult to embrace the government's measures. The fact the coalition failed to replace the ministers who are responsible for the economic and other problems that prompted the announcement of the package will severely undermine the credibility of the government's measures. Trying to implement the measures outlined by the coalition with the same faces in the government will quite likely reduce the package's potential to generate fresh political energy.

Another problem with the coalition's package is that, in proposing to slow down the growth of wages in the state sector, it adversely affects exactly the social group that will be tasked to carry out some of the most important measures outlined by the government. For example, employees of tax collection offices have already announced that, in protest, they may not vigorously pursue cases of tax evasion. In general, the success of the package depends to a large extent on social peace. But trade unions have already announced that they are gearing up to fight some of the government's proposed measures.

Finally, the package was supposed to show unity among the coalition parties. In fact, it showed that the Christian Democratic Union (KDU-CSL) has ideologically moved farther away from the two civic parties than any time before. KDU-CSL Chairman Josef Lux has repeatedly complained about the "liberal" approaches of his two coalition partners and their rejection of more drastic measures, such as import tariffs. Lux has also openly advocated changes in the government. He and his party are now well poised to jump the coalition ship at the first sign of failure.

Reuters - 21. 4. 1997