The Czech Car Growth-Engine?

News today which is of more than passing interest from the Czech Republic. The South Korean industrial group Hyundai has announced that it is going to build its first European car plant at Nosovice. The factory – which is scheduled to cost around one billion euros – should begin production in October 2008 with full capacity of 300,000 vehicles a year being reached in 2009. This new output, when added to added to the 600,000 cars or so produced annually by Volkswagen’s Skoda Auto and the Franco-Japanese joint venture, TPCA, will bring the Czech Republic into the front line – along with Germany, France and Italy – of the European automotive industry.

As elsewhere this will have its good and its bad side.
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EU Energy Policy II

Well the new EU energy plan has been released (and here, and you can also find the actual Commission statement here). The final product is pretty much as the leaks suggested.

As was indicated yesterday, Russia related concerns are central. The FT comments:

Russia supplies a quarter of Europe’s gas needs and the Union’s dependence on the country for energy was illustrated in January when a dispute between Moscow and Kiev disrupted gas deliveries to the EU.

All of this was I think anticipated on this blog back in January when the Gazprom/Ukraine dispute first really broke into the public arena. What wasn’t anticipated was this, and especially the gas related dimension of the Suez/Gaz de France merger.

The major changes taking shape in Europe’s energy sector at present undercut the arguments of those who have long been predicting a gradual break-up of monopolies and the disappearance of the industry’s biggest players. The planned merger of Suez and Gaz de France to counter an offensive by Enel and Veolia and the fight between Gas Natural and E.On for the hand of Endesa make it abundantly clear that concentration remains very much a watchword in the branch and that even powerful old public monopolies like Electricite de France could be forced into marriages with others in future.

None of the reasons trotted out to justify the merger between Suez and Gaz de France, to cite but that operation, dwelled on the future role of Russia in Europe’s energy landscape. True, the Russians aren’t directly involved in any of the operations underway in Western Europe. On further examination, however, Gazprom’s moves in recent months could be seen as justification for the consolidation.

The future Suez/Gaz de France grouping will become the leading buyer and the top supplier of gas in Europe. As such, it will rank as one of Gazprom’s prime customers in the world. That, however, isn’t necessarily good news for Gazprom. In its dealings with such a powerful client the Russian monopoly won’t be able to exert as much pressure upon it as upon a smaller entity, let alone bully it.

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The Booming Czech Republic

The Czech Republic is booming apparently. Both per-capita GDP and fertility are definitely on an upswing, although surprisingly perhaps, for once I am not going to try and suggest that these are connected:

The Czech republic has joined Slovenia among new member states with higher levels of wealth per capita than old member Portugal, according to European Commission statistics.

This raises interesting questions which I just touch on in this AFEM post here. (Incidentally, you can find a one-page set of economic statistics for the Czech Republic from the OECD here).

What is perhaps most interesting about the Prague Post article is the way they explicitly link the increase in preganancy to a recent reform in maternity provision (due to come into effect in April), and to the fact that the ‘postponement phenomenon‘ often leads to a spike in births as women who have postponed reach the new ‘childbearing age’.

“The Labor and Social Affairs Ministry recently launched its own reforms aimed at encouraging couples to have children. The reforms provide generous benefit packages and require companies to hold the jobs of employees on leave for up to four years, and, as of April, women will begin receiving a state subsidy of 17,500 Kč ($725) for each newborn child — more than double the current amount.”
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The Czech Growth Engine?

Interesting news from the Czech Republic in this week:

The Czech republic has joined Slovenia among new member states with higher levels of wealth per capita than old member Portugal, according to European Commission statistics.

The central European country enjoyed gross income per capita of 73 percent of the EU 25 average last year compared to 71 percent in Portugal, according to the latest estimate by the commission’s statistical wing, Eurostat….

The results have left Slovenia and the Czech republic chasing Greece, on 83 percent, as the next old member state to overtake, with Slovenia set to draw level with Greece by 2007 and the Czech republic to narrow the gap further in the next two years, the study predicts.

This now raises some interesting questions. How will Slovenia’s future growth compare with that of the Czech Republic (remember Slovenia is about to join the eurozone on 1 January 2007 while the Czech Republic is in no particular hurry to join)? What is the relation between Portugal’s low-growth and eurozonemembership? Will the Czech Republic now overtake Greece?

We can also, I think, see more clearly some appropriate comparisons for testing the ‘euro has been a spectacular success’ hypothesis: we can look at the UK vs France, Finland vs Sweden and Denmark, and we can look at the Czech Republic vs Portugal.

In No Hurry

The EU Observer reports today on how some states are decidedly tardy in producing their Lisbon Agenda action plans:

Embassies are due to hand in their national plans, consisting of 30-40 page dossiers with statistical annexes, by the weekend, with EU experts flying back and forth to member states in the past few weeks to help finalise the texts.

France, Sweden and Denmark told EUobserver that they will not make the Saturday deadline however, while question marks hang over Germany and Poland as well.

Paris hopes to send in its document by the end of this month, Stockholm is aiming for 21 October and Denmark for the “next few weeks”, citing delays over the late sitting of parliament and translation back home….

The UK, the Netherlands, Greece, the Czech republic, Hungary, Slovakia and Slovenia confirmed that they will get their plans in by the weekend however, with the Czech republic claiming to have had its text finished months ago.

Mind you, we should put all this in some kind of context, according to another EU Observer article the OECD (see this post) is at pains to convince some member states that they really do need to seriously address their early retirement culture!

Europe needs to stop subsidising the early retirement of its citizens, despite social protests caused by pension reforms, according to a new OECD report…….According to the paper, several European countries have been striving to sustain their early retirement culture, introduced in the past as a way to tackle high unemployment among young people

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Austria Would Prefer Not To

Earlier this year, Eurobarometer started asking members what they thought about future EU expansion. The results (which can be found here, as a pdf) were pretty interesting.

52% of Europeans support membership for Croatia, while only 34% oppose it. (War criminals? What war criminals?) And 50% support membership for Bulgaria. But only 45% support Romania coming in. Which is a bit embarrassing, given that the EU has already firmly committed to Romanian membership, even if it might be delayed for a year.

Still, the Romanians can take comfort; they’re well ahead of Serbia (40%), Albania (36%) and Turkey (dead last, with 35% of Europeans supporting Turkish membership and 52% against).

Where this gets interesting — in a Eurovision-y sort of way — is when you start to break it down by country.
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Divided Opinions in the Czech Republic

the Czech president has become the first prominent EU politician to call for the ratification process to stop after the French vote.

According to the Czech news agency CTK, Vaclav Klaus, a well-known eurosceptic, said that to carry on the ratification process would be useless, although the Czech prime minister has said he is in favour of continuing.

“The decision has been made and I hope everybody understands it”, Mr Klaus is reported as saying.

In fact, were the ratification process to continue, the Czech Republic has still not decided the actual method of the ratification and the government has admitted it will consider limiting the procedure to a parliamentary vote after all, since the constitutionional change necessary for holding a referendum has proved difficult to agree on among the different parliamentary parties.

Czech Republic Having Second Thoughts

I missed this at the time, but apparently officials responsible for monetary policy in the Czech Republic are begining to have second thoughts about joining the euro.

“Czech central bank policy maker Robert Holman said the government should abandon plans to adopt the euro by 2010 because joining the single currency may stifle growth, the first central banker in the country to call for a delay.

“I would not rush with euro adoption because it represents significant risks for us,” said Holman, 51, who joined the bank’s board on Feb. 13, in a May 18 interview in Prague. “The euro zone economy has been growing very slowly in the past five years, and among other factors, it could have been caused by having the common currency.””
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Shaped Like Prague

Just when you thought the Czech Republic had finally turned into a normal, boring European country…

Prague blogger Doug Arellanes has re-capped the Czech PM apartment scandal story thus far, saving me the trouble. (Frankly Arellanes has told the story better than could have.) As he rightly says, the story “is taking on magical-realist tones.” It’s worth reading, just to give you a taste of what passes for High Politics in the Czech Republic these days — and, for that matter, all other days. As Matt Welch notes, “This story is somehow shaped like Prague.” (And he hasn’t lived here since, what, 1995?)

Read the story first, then click on the clickie for more goodies…
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Free movement of labor, redux

On the previously mentioned subject of Europe’s “free” movement of labor (and the possibility of a massive influx of cheap labor from the east come EU accession time) here’s an article I wrote on the topic in November for Czech and Slovak Construction Journal (for some reason the article’s not posted online).

If you’re too lazy to read the whole thing… It talks about the onset of “EU fatigue” in the east, plus it cites a bunch of studies that discredit the fear of a massive influx of eastern workers wrecking havoc on Western European job markets. And this is really about Polish construction workers already living illegally in Berlin, not Czech IT geeks in London (nor British chefs in Prague). Enjoy.
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