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N°94 - Deuxième trimestre 2011

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  S.E.Mme / H.E. Marie Chatardová

Fostering More Dynamic Cooperation with France

A long-standing partner of France in Central Europe, the Czech Republic remains one of the region’s soundest economies and has become a key player in the European Union’s neighborhood policy. H.E. Marie Chatardova, the Ambassador of the Czech Republic to France, outlines the steps being taken to reenergize the Franco-Czech partnership and shares her country’s view on Europe’s strategy for overcoming the reverberations of the global financial crisis.

The Diplomatic Letter : Ms Ambassador, the Czech Prime Minister paid his first visit to France as Head of the Czech Government on 10 and 11 February 2011. What do you have to say about the decision to rekindle the 2008 strategic partnership between your two countries? Which areas is the new action plan for 2011 to 2013 going to be focusing on?

H.E. Marie Chatardová:
The partnership between France and the Czech Republic goes back a long way and is for the long term. The political declaration and action plan for the French-Czech strategic partnership, which was signed in Prague on 16 June 2008, was one chapter in this long story. It was signed just before the EU Presidency switched from France (in the second half of 2008) to the Czech Republic (in the first half of 2009). Both countries decided to deepen their ties on several fronts – encompassing European and foreign policy, and energy, environmental, economic, defence, security and cultural policy – before that. They agreed to negotiate an action plan for 2011-2013. That was what Prime Ministers Petr Necas and François Fillon discussed when they met.
This new plan involves cooperating on several policy fronts, including foreign policy, energy, trade, the environment and sustainable development, science, education and culture. The main focus will be on energy, research and development, and education. A French-Czech energy task-force has been appointed to step up institutional cooperation in the nuclear-energy realm, and to organise student and scientist exchanges in that field.
When French Industry, Energy and Digital Economy Minister, Mr Eric Besson, visited Prague on 18-19 May 2011, he signed a roadmap for French-Czech cooperation in the nuclear-energy field with his Czech counterpart, Mr Martin Kocourek, to provide concrete milestone for cooperation on research, education, expert training, expertise and information exchanges, and nuclear security. A cooperation agreement between the Commissariat à l’Energie Atomique (CEA) and Ústavu Jaderného Výzkumu (UJV) Rez, respectively France’s and the Czech Republic’s national nuclear research agencies, was also revived when the two governments signed that roadmap, and the agreement stretched to encompass hydrogen and renewable energies. The French and Czech independent authorities will be concluding another agreement, on nuclear security this time, by the end of 2011.

T.D.L.: Areva, a French company, is planning to bid on plans to extend the nuclear power plant in Temelín. That project could open up new opportunities for bilateral economic cooperation but how might the disaster in Fukushima undermine those plans? Where else can you see promising prospects for synergies between the Czech and French economies?

H.E.M.C.:
The Fukushima disaster has had no effect on the RFP to extend the nuclear plant in Temelín. The preparation work is rolling out on schedule: the documents that have to be circulated before the companies can submit their bids will be ready in 2011, companies will be able to bid in 2012 as requested, and the final decision will be made in 2013.
The specs may naturally evolve in synch with European regulations to step up nuclear security in the EU due to Fukushima. We are expecting new European reactor licensing and building standards to come through. And it is in everyone’s interest to have those new standards drawn up by experts such as WENRA and ENSREG.
The synergies between the Czech Republic’s and France’s economies are part of a bigger picture: the Czech economy’s performance.
It took 20 years of hard work but the Czech Republic is back where it was before 1938, when it ranked among the world’s 10 most developed countries. And, if you look even further back, you will see that 2/3 of the Austro-Hungarian Empire’s industry was in our country in those days.
Today, the Czech Republic attracts more foreign investment per inhabitant than any other country in Europe and Greater Prague is Europe’s 6th richest region (ahead of Ile-de-France, i.e. Greater Paris). Our public debt ranks among the lowest in Europe, as do our child-mortality rates (ahead of the Scandinavian countries).
The number of 20- to 24-year old-youths with secondary-school or higher degrees is among the highest, and the number of youths who have dropped out of school before finishing junior secondary school is among the lowest in the EU.
We have mapped out our future economic relations in that light to focus on the sectors that create the most value (in particular aviation, information technology and the associated industrial machinery, and biotechnologies). This growth springs from our powerful industrial tradition, which in turns stems from the Czech people’s expertise and taste for this field (especially for the consumer-goods, automotive and, more generally, metalworking industries).
Direct investment from France has branched out into various fields but several leading French groups have become key players in the Czech economy.

T.D.L.: The worldwide financial crisis dealt the Czech Republic a severe blow in 2009, but your country has bounced back remarkably well, with growth over the 2% mark in 2010. How did that happen? And why is the Czech Republic Government ranking public finances so high on its agenda when your country’s debt is comparatively very reasonable?

H.E.M.C.:
The crisis hit our growth as much as pretty much any other European country because our economy hinges heavily on exports and the countries we export to suffered. But then we harnessed the upswing, too. The Czech Republic’s Gross Domestic Product (GDP) grew 2.3% in 2010, and we are expecting 2.0 to 2.5% growth in 2011 and 2.8 to 3.5% growth in 2012. In March 2011, the Czech economy hit an all-time-high €20 bn in a month, with a nearly €1 bn trade surplus.
To understand that, you have to understand the Czech people’s mentality: we don’t like being in debt and aren’t keen on pure finance. That was already the case back in the days of the Austro-Hungarian Empire, under the First Republic and under the Communist Comecon system. Money creation reflects complex ancestral behaviour pattern. It is quite striking to track propensity to run into debt today and several centuries ago: you can see many matching patterns in several countries.
The Czech Republic’s individual debt levels are among the lowest in the EU. The reason is simple: deficits today will become debts tomorrow. So controlling public deficits is at the core of our policy today – no matter how little our country’s debt may be. The Government has pulled back the deficit to 4% of GDP but the goal is to balance the budget soon.
There is another more structural reason: the wholesale bank reorganisations in the late 1990s cleaned up the financial sector. Today, the financial economy tallies much more with the real economy, which is inter alia good news for our industrial sector.
The fact that our industrial sector is so diversified helped it to absorb some of the shock from the worldwide downturn. Our flagship automotive and transport industry is not alone: we also have large networks of companies that manufacture machine tools, consumer goods, chemicals, food, capital goods and industrial components.
Industrial output is up 13% over the past year (9.5% higher than in March 2010 and 13% higher than in February 2010). The fact that the automotive industry grew 26.2% over the year to February 2010 drove a lot of that growth. SAP (Czech Automobile Manufacturer Association) statistics show that car output increased 9.5% in 2010 versus 2009, and hit the 1-million-vehicle mark for the first time ever.
Manufacturing has grown 10% compared to 2010 and the chemical industry is back where it was before the downturn after an 18% leap.
As we are part of a global economy, we need our partner countries and organisations to be aware of all this and are delighted that the International Monetary Fund (IMF) has praised the Czech economy’s “solid fundamentals”, including our “low public debt, comfortable external position [...] and stable financial sector”, as well as our “deep economic integration with the Euro area.”

T.D.L.: The debt crisis that has hit several countries has cornered the EU into accelerating financial-regulation mechanisms and economic convergence across Member states. Under what conditions would your country be willing to subscribe to the Euro-Plus Pact adopted at the 25 March 2011 Summit in Brussels? Even though your country is not yet part of the Euro area, how are you planning to contribute to the next European construction phase?

H.E.M.C.:
The Czech Government made its position clear when the Euro Pact was signed during the Special Summit of Heads of State and Government of the Monetary Union (which the Czech Republic is not part of) on 11 March 2011: our country is not subscribing to the Euro Pact at this point in time but is not entirely ruling out the possibility of doing so in future.
The Pact’s content is not really a problem for the Czech Republic. Most of the indicators and objectives it provides match reforms that our Government is already rolling out or planning to roll out under the “National Reform Programme”. Tax harmonisation, however, is a problem.
The door is open if the Czech Republic wants to subscribe to the Pact. We will see how it works to see what our country stands to gain from it.
Our country is also actively building a decentralised cooperation network with its European partners. It has seven institutional cooperation agreements with France: between Central Bohemia and Burgundy, the Moravian-Silesian Region and Lorraine, Pardubice and Central France, Hradec Králové and Seine-et-Marne, Vysočina and  Champagne-Ardenne, Pilsen and Franche-Comté, and the South Moravian Region and the district of Gers. There are also more than 50 twinned cities and that number will be growing.
I believe that local cooperation works and that it spawns down-to-earth projects that deliver tangible results. I have been travelling across France since I got here to support all these initiatives, and I find the creativity and drive that French and Czech organisations are pooling absolutely amazing. That is how optimal monetary zones will emerge – “over time”, as economists forecast.
There is no doubt in my mind that economic success in the day of new technologies hinges on whether or not European nations can protect social welfare, the sine-qua-non for creativity and invention: the gap between the highest and lowest wages in the Czech Republic is the narrowest in Europe, and its natural poverty rates before redistribution is among the lowest. This social dimension is the single most important aspect of the true quality of the Czech Republic’s economy.

T.D.L.: The EU adopted an action plan to secure its energy supplies on 4 February 2011. Your country depends a lot on Russian nuclear fuel and hydrocarbon imports. What are you expecting to gain from this plan?

H.E.M.C.:
Energy security is a crucial issue for the Czech Republic for obvious reasons. That is why we are watching developments on that front very closely and tackled the gas crisis that hit Europe when we took over the EU Council Presidency in 2009.
Back then, about 20 countries were short of gas (mainly in the Balkans). Homes didn’t have heating, and public offices and private companies had to shut down. The fact that the EU reacted as one worked very well: the Czech Presidency and European Commission agreed to send independent Union observers to Russia and Ukraine on 9 January 2009, and gas deliveries resumed on 19 January. We learned what there was to learn from that experience, consolidated the EU’s energy strategy and took concrete measures to improve it (backflows, for example).
The European Council agreed that it made a lot of sense to interconnect gas pipes and build new energy infrastructure when it met in February 2011. The Czech Republic needs that too: it needs to ease gas flows to Europe by developing the South Corridor, it needs to diversify its sources of energy (which is what is happening with the Nabucco and Gazelle gas pipeline construction projects in Europe) and it needs interconnections between the main North-South gas pipelines. Like many other landlocked Central European countries, the Czech Republic depends a lot on one single – and ageing – oil pipeline: Druzhba. That was why we were happy to hear that the European Council had reasserted the fact that security of oil supply is essential for Central European countries on the EU’s main corridors, in the European Commission’s message about energy infrastructure in the autumn of 2010.

T.D.L.: The Czech Republic is the only former Soviet country that has joined the European Space Agency (ESA), and Prague has been home to the Galileo European satellite navigation system since December 2010. Besides that, what role is your country playing on this ambitious project and, more generally, in efforts to build Europe’s space industry? What new opportunities for cooperation with France are opening up on this front?

H.E.M.C.:
Yes, the Czech Republic was the first “new” EU Member State to join the ESA (it did so in November 2008). The ESA chose to base the Global Navigation Satellite System (GNSS) Authority in the Czech Republic in December 2010, and we started talking about transferring the GSA system from Brussels to Prague in 2011. The Transport Ministry is in charge of preparing the new main office in the Czech Republic.
The Czech Republic is working with France to draft a cooperation agreement on space operations. The goal is to ease communication between the central authorities, exchange more information, and promote cooperation between industry and academic circles on national and international projects.
Our country is actively contributing to Europe’s space policy through every European organisation in that field, several Czech industrial firms are working on the Galileo system as subcontractors, and the State is encouraging business firms and academic circles to take part in opt-in ESA programmes.
This has led to other concrete projects: the ELI (Extreme Light Infrastructure) “super laser”, for example, will be built in Dolní Břežany, near Prague, with EU funding. This centre will cost about €280 million and will be up and running in 2014. It will be a world-class scientific complex hosting the world’s most powerful laser, which will be used to examine cells and treat cancer.
There are five other large-scale scientific projects waiting for the green light from Brussels:
- The Central European Institute of Technology (CEITEC), which will involve an investment to the tune of €250 m and will probably be built in Brno. It will specialise in research for biomaterials and robot systems used for high-precision operations.
- The International Clinical Research Centre (FNUSA-ICRC), which will probably also be built in the Moravian capital and cost about €200 m.
- The BIOCEV biotechnology and biomedical centre project in Vestec, near Prague.
- The €10-million sustainable energy section of the ŘEŽ Research Centre.
- The €72-million IT4Innovations IT Centre.

T.D.L.: The “Oriental Partnership”, which kicked off in May 2009 during the Czech Presidency of the EU, was one of the main topics on the Visegrád Group’s agenda at its 20th-anniversary summit on 15 February 2011. How, in your view, can this initiative consolidate relations with the EU’s neighbouring countries? How exactly has the Visegrád Group influenced developments in this area? 

H.E.M.C.:
The “Oriental Partnership” was one of the Czech EU Presidency’s key initiatives and taking it to the next step is one of our top foreign-policy priorities today. The four Visegrád Group countries are keen on building ties with Eastern European countries – not just bilaterally but also through NATO and EU foreign relations.
That is why the Czech Republic, its Visegrád Group allies and other countries have started working through the Oriental Partnership to develop European policy vis-à-vis neighbouring countries matching the Mediterranean agenda. Our goals for Partnership countries are similar to France’s goals vis-à-vis the South: we want to cement the rule of law and respect for Human Rights, and support democratic development. And, beyond backing political reform, we have agreed to contribute to economic growth to help the people to earn a living and prosper at home, in their own countries.


T.D.L.: Defending human rights and democracy are two key issues for the Czech Republic’s foreign policy. How do you feel about the “Arab Spring”? Beyond the NATO intervention in Libya, how can European countries in general and the Czech Republic in particular, in light of its history, contribute to this movement?

H.E.M.C.:
Yes, defending Human Rights is and will remain one of the top priorities on our foreign-policy agenda, regardless of who is at the helm of the Czech Republic’s Government. Even though it is hard to predict where this movement that we poetically call the “Arab Spring” will lead, we can see two opportunities: an opportunity for the people in those countries to decide on the future they want, and an opportunity for Europe to rebuild credible relations with those countries, based on the values we believe in.
The Czech Republic’s experience negotiating its transition from a totalitarian regime to a democratic system can obviously contribute to dialogue.
But, over and above the humanitarian aid that our Foreign Affairs Ministry has already granted to those countries in the midst of their transitions, our country is ready to send NGOs to share their expertise organising political parties, opening up freedom for the press and establishing rule of law. We have already organised a seminar in Cairo, Egypt to do that.    

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