Volume 9 Numbers 1/2

Winter/Spring 2000

Constitutional Watch
     A country-by-country update on constitutional politics in Eastern Europe and the ex-USSR

Czech Republic - Czech politics remain dominated by a defacto coalition that consists of the ruling, nominally left-of-center Czech Social Democrat Party (CSDP) and the opposition, nominally right-of-center Civic Democratic Party (CDP). On January 26, Prime Minister Milos Zeman (CSDP) and parliament's speaker, Vaclav Klaus (CDP), renegotiated the terms of their original agreement. Under the new arrangement, five CSDP ministers will be dismissed and replaced with new CSDP members, in return for CDP's support of CSDP's proposed budget. The two parties also agreed to continue the attempt to amend the Constitution in order to reduce the president's powers and to alter the electoral system to favor the larger parties. This would be achieved by increasing the number of electoral districts from 8 to 35. They also agreed to push the country along the path of EU harmonization.

On January 28, the Chamber of Deputies (parlia-ment's lower house) passed a variety of amendments to the Constitution that would curb the president's power. (Neither house had voted yet on the other amendments regarding the electoral formula.) Specifically, the amendments would strip the president of his constitutional authority to appoint the prime minister, the directors of the central bank, Supreme Court judges, and the head of the Supreme Control Office and to grant amnesties before trial; the amend-ments would also add additional grounds for recalling a president. Though CSDP and CDP have the neces-sary three-fifths majority to revise the Constitution in the lower house, they are just one vote short in the Senate (the upper house). The Christian Democratic Union-People's Party (CDU-PP), Freedom Union (FU), and the Civic Democratic Movement (CDM) will vote against the amendments because the new electoral system-assuming it is passed-is designed to eliminate them from the political scene and because of their political alliance with President Vaclav Havel. Czech Republic.The Communist Party of Bohemia and Moravia (CPBM), which holds the balance in the Senate on this issue, tends to oppose the changes because it, too, fears losing some of its parliamentary representation in an increasingly majoritarian electoral system.

Further constitutional changes were stalled because of continued bickering between CSDP and CDP over which four ministers to replace (a substi-tute had already been found for the minister of health), and whether these replacements will be made before or after the budget is adopted. Clearly, CDP has a greater interest in changing the Constitution than CSDP since it believes that a majoritarian elec-toral system is likely to favor it at the expense of other center-right parties; it also regards the president's prerogatives as the chief threat to any future CDP government's freedom to maneuver.

On February 24, the Chamber of Deputies passed another constitutional amendment giving the govern-ment the authority to send Czech soldiers abroad and to station foreign troops on Czech soil without parliamen-tary approval for up to 60 days. The amendment is intended to facilitate Czech participation in NATO and in various peacekeeping operations.

Not every legislative issue involved the Constitution or the EU. On November 4-after years of debate-parliament passed a law creating the office of ombudsman. According to the law, the office will be located in Brno and will have an annual budget of approximately one million dollars. The ombudsman can both represent citizens who believe they have been discriminated against by the state and criticize the actions of state authorities. The government rejected a proposal by Peter Uhl, the chief human-rights commis-sioner and a former Charter 77 dissident, to create a special office for ethnic equality and integration intended specifically to address Romany (gypsy) affairs.

A few laws that had come into effect at the begin-ning of 2000 led to considerable confusion because the authorities in charge of implementing them were not informed by the relevant ministries of the new rules or were not told how to apply them. For example, a new law on prison conditions was interpreted differently by various prison authorities. Although the law limited the number of packages prisoners can receive (to prevent drug smuggling) and required that prisoners pay for their food and accommodations, some prison directors thought the new code was instructing them to intro-duce stricter, harsher regimes into their prisons. Inmates responded with riots, protests, and hunger strikes. The prisoners also protested against poor hygienic standards, overcrowding, and the low quality of food. (The press noted that the daily cost of feeding police dogs was higher than that of feeding prisoners.) The revolts ended on January 13, when the Ministry of Justice agreed to consider the prisoners' complaints and allowed them to buy more goods in the prison shops to compensate for the loss of food sent from home.

The new law on border regulations required foreigners to present the border police with a form filled out in the Czech language and two photographs. Under this law, border police also may require foreigners to present proof of accommodation in the Czech Republic, health insurance, and financial support. Citizens from 26 "nonproblematic countries" (EU member states, the US, Canada, Israel, and the like) are exempt from the regulations. The new require-ments were not publicized in advance, and many visitors were left unprepared, creating great confusion at airports, as border police detained visitors from presumably "problematic" countries, including a group of South Korean business executives. More confusion resulted from another recently enacted law requiring all car owners to have insurance. The law resulted in a stampede of owners of broken-down or abandoned cars hoping to avoid fines by declaring that their cars no longer required insurance.

The European Commission recently issued a report concluding that the salaries of Czech judges are disproportionately high relative to the amount of work they actually perform. The report stated that Czech judges work slowly and ineffectively against organized crime and white-collar crime. The average monthly salary in the public sector is 9,000 crowns ($257), while the typical judge takes home 52,000 crowns ($1,486). A

Supreme Court judge is paid 71,000 crowns ($2,000) a month. Deputy Minister of Justice Josef Baxa countered that judges must receive high salaries to compete with what lawyers earn in the private sector. The commission further claimed that judges were insufficiently special-ized and, in addition, spend an excessive amount of time on administrative duties. The report also noted that the judges' working conditions are unsatisfactory, their offices often lack modern equipment and infor-mation technology, and that many positions in local and regional courts remain vacant. As a consequence, the backlog of unresolved cases is now approaching a quarter of a million.

Supreme Court chair Eliska Wagnerova recently reported that her court's productivity had increased, concluding 400 more cases in 1999 than it had in 1998. At the same time, it received 3,003 appeals, 346 more than in the previous year; 2,000 cases remain unre-solved, although fewer than 10 have been pending for more than two years. Wagnerova attributed the court's increased productivity to organizational changes and the temporary assignment of eight criminal-court judges to the Supreme Court for six months.

In other judicial matters, on November 8, the Constitutional Court denied the appeal of Romany (gypsy) parents, who wished the Ministry of Education to send their children to ordinary schools. As many as 50 percent of Czech Romany children are sent to "special" schools, usually for the mentally disabled or otherwise problematic children. The Romany parents argued that this practice constitutes a denial of their children's right to receive an education. The Court concluded that it lacked the authority to order the Ministry of Education to introduce a new policy designed to abolish racial discrimination. It reasoned that the decision to send Romany children to special schools was properly taken by teachers and psycholo-gists. The Romany parents plan to appeal the ruling to the European Court for Human Rights in Strasbourg.

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The most notable court battle of late was over the control of TV Nova-the largest television station in the Czech Republic. The case pitted Ronald Lauder, American businessman, philanthropist, and former ambassador to Austria, against Vladimir Zelezny, the chief executive of TV Nova and an important figure on the Czech political scene who is not affiliated with any party. The station's popularity makes it significant from both economic and political perspectives.

CET 21, a company controlled by Zelezny, owns TV Nova's broadcasting rights, which were licensed for free from the State Council for Radio and Television Broadcasting. In 1993, Zelezny received the capital to create the television station and later for buying the company that controls CET 21 from Lauder in exchange for Zelezny's committing himself to voting his majority share in accordance with instructions from a Lauder-owned company, CME; Zelezny also undertook to purchase services only from a subsidiary of CME, CNTS, which he managed as well. According to CME, Zelezny began stripping the assets of CNTS after he gained control of it in 1998. Asset stripping by managers is rampant in the Czech Republic. What is unusual about the TV Nova case is that Zelezny allegedly did to a large foreign investor what Czech managers often do to state banks, holding companies, the National Property Fund, and the like.

Although fired by CME in March 1999, Zelezny has continued to manage the television station under a new corporate name and ceased to purchase the services of Lauder's CNTS. In other words, Zelezny executed an internal takeover of a company, effectively separating it from its owner. Lauder sued Zelezny in the Czech Republic and asked the Council for Radio and Television Broadcasting to restore the original owner-ship structure. The chances of a foreign investor in the Czech courts succeeding against one of the country's most influential and powerful men are less than promising. Given this state of affairs, Lauder also sued Zelezny for $300 million and the Czech state for $500 million at the International Commerce Court of Arbitration, in Stockholm. In response, Zelezny sold most of his shares in the company that owns TV Nova to two companies that are owned by his friends and associates. This transfer of ownership occurred despite an order by a Czech court to freeze the ownership of TV Nova. On November 12, the International Commerce Court issued a preliminary injunction in favor of Lauder's CME against Zelezny, who ignored the court's ruling. Lauder's suit for damages against the Czech state-for failing to honor its international and bilateral Czech-American agreements to protect foreign investment-will be decided later this spring.

Meanwhile, since Lauder realized that Zelezny could be defeated by political-rather than legal- means, he proceeded to exert pressure on the Czech government. American congressmen Tom Lantos and Benjamin Gilman wrote to Prime Minister Zeman on his behalf; the issue was raised, as well, by Secretary of State Albright in her meetings with Zeman in the US, in November. During that visit, Lauder placed full-page advertisements in the New York Times and Washington Post, warning potential investors against doing business in the Czech Republic.

In response, Zeman stated that the government had no legal right to interfere in the dispute because the media are regulated by the independent Council for Radio and Television Broadcasting. The council, however, refuses to get involved, at least until the courts decide on the matter. Later, however, the council approved Zelezny's transfer of his shares. Even if he is forced to hand over all his remaining shares to Lauder, it would amount to only a small minority of the total shares he once owned. Czech journalists speculated that this development may strengthen Lauder's case in Stockholm, and that the Czech government may, as a result, attempt to come to some compromise agreement with Lauder, for example, by giving him another television station to run, such as CT2, the better of the state-owned networks.

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The anticorruption Clean Hands Operation, announced by Prime Minister Zeman on assuming office in the summer of 1998, collapsed amid mutual recrimination and finger-pointing between Zeman and Minister without Portfolio Jaroslav Basta, who led the operation's work investigating financial and industrial criminality. Basta headed the Committee for Protecting Economic Interests and an advisory group within the committee. Zeman headed a government committee.that had identical anticorruption functions, and Basta and Zeman each accused the other's committee of inac-tivity and incompetence. Basta was replaced in a government reshuffle by the 27-year-old Karel Brezina, former chief of staff of the government office, who will now direct the anticrime effort.

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