News agencies recently circulated various images of the attack on Czech President Václav Klaus, whose country currently holds the presidency of the European Union. He boldly criticised the Lisbon Treaty, which establishes the principles of the Union, in front of the European Parliament, highlighting its legal inconsistencies that undermine the principle of political and economic equality between the peoples of Eastern and Western Europe. This came after European voters had previously rejected the new constitution, which had been promoted as the final step towards comprehensive integration among these nations. His remarks provoked the ire of many European leaders, as he dared to challenge the foundations upon which the Union was built. This stance reinforced the image I had formed of him following his recent visit to the economics department at the American University in Cairo several months ago, during his trip to Egypt.
Klaus is always a controversial figure, known for his bold approach to addressing the issues around him. During his visit, the university made extensive preparations and arrangements in coordination with the Egyptian presidency, and everyone was honoured to receive him as the head of a European state visiting one of its departments. It is worth noting that before assuming his current position, Klaus was an economics professor at several European and American universities, which likely explains his acceptance of the department’s invitation. What was amusing about his visit, however, was the visible anger he displayed at the beginning of the seminar held in his honour. He refused to speak for nearly ten minutes, openly declaring that he had come for the university’s students, not for the crowd of distinguished guests and professors. Indeed, he only began speaking after confirming that most attendees were students, particularly those from the economics department.
Klaus spoke as a university professor, as if delivering a lecture on the nature of the Czech economy and the predicament it faced when he took over as finance minister in the early 1990s. The communist regime had deeply infiltrated all aspects of life in his country, even the simplest commercial activities and daily services, which the previous system had left under state ownership. He stated, ‘The state owned everything, even barber shops, and no individual could engage in any activity without state ownership.’ At that point, everyone realised the enormity of the task he faced in transitioning the collapsed economy from total state ownership to private ownership after the fall of the Soviet Union. He joked, ‘Margaret Thatcher, the British prime minister in the 1980s, decided after extensive study to privatise three companies a year. But in the Czech Republic, given the state of collapse, we had to privatise three companies an hour, and we did so with the highest efficiency.’
I was not convinced by his use of the phrase ‘highest efficiency’ and immediately recalled the chaotic privatisation processes in most Eastern European countries, marred by blatant corruption. We, too, were not far from replicating these flawed processes under pressure from the World Bank and the International Monetary Fund. I raised my hand to ask a question, and he allowed it. I asked him directly, ‘How can you convince us that all those privatisations, perhaps the largest in modern history, were carried out with the highest efficiency, when the Czech Republic, like other Eastern European countries, experienced corruption and a lack of transparency?’ As is customary with our tendency to flatter and idolise leaders, some attendees were displeased with my question, considering it impolite. However, true to his style as an economics professor, Klaus appreciated the question and saw it as an opportunity to explain his unconventional approach to executing this massive privatisation process, from banks down to barber shops.
Klaus began by explaining his privatisation strategy. He formed a team of economists to conduct a comprehensive survey of all industrial, commercial, and even artisanal institutions. He decided that the process would occur in two stages, with the condition that the people would genuinely participate in the birth of a new national economy—this time, a free one, unlike its predecessor. The first stage, contrary to global practices, involved selling small entities classified as artisanal or simple commercial activities, such as grocery stores. To ensure the transparency that was central to my question, he designated every Sunday as a national day for public auctions across the country. Citizens were provided with a statement detailing everything up for auction, from shops to small businesses, allowing ambitious individuals to bid. This was transparency at its finest—‘right before your eyes, trader.’
The second strategy, which focused on large entities like factories and banks, presented Klaus with a critical dilemma. His people were extremely poor, and none had the means to purchase such high-priced institutions. This conundrum troubled him greatly, especially as he wanted the Czech Republic to truly belong to its people. Predictably, both the World Bank and the IMF pressured him to allow foreign buyers and move towards absolute liberalisation of privatisation, as had been the case in other countries. While he was not opposed to foreign investment, he considered it the final stage of liberalisation. Despite his weak position, he firmly rejected these pressures. He barred current and former state officials from attempting to purchase these entities and introduced what he economically termed ‘voucher privatisation’—a scaled-down version of the conventional share system. He divided ownership rights of these institutions into extremely small shares and offered them to citizens from all social strata. He explained this with an analogy: ‘A Czech citizen could buy a share in one of the banks for the price of a necktie.’
Thus, we see Mr Klaus, with his bold and controversial personality, adhering to the path that aligns with his principles, whether we agree with them or not. He is a believer in the mechanisms of the free market and in lifting the state’s hand from the economic practices of the people, driving his country to undertake the largest privatisation processes known to date. Yet, he did not allow the rights of ordinary citizens to be undermined, ensuring their participation in decision-making and allowing them to witness, with the highest transparency, the privatisation of everything. He made sure that his country’s economy did not fall into the hands of those who did not care. This is also why European Union leaders attacked him, accusing him of lacking political acumen, just as the World Bank and the IMF had done before. Figures like him, with their decisive voices and boldness, have no place in today’s world, and it seems his days are numbered, as he is no longer a desirable player in the game of international interests.
This article is originally published by AlBorsa in Arabic and later AI-translated by South Push.