CZECHOSLOVAKIA A BLEAK ECONOMIC OUTLOOK THE FOLLOWING ARTICLE IS TRANSLATED FROM ISSUE NO.12 (JUNE 1974) OF INFORMANI MATERIALY, A CZECH-LANGUAGE BULLETIN PUBLISHED IN WEST BERLIN. In looking at the development of the Czechoslovak economy, one cannot ignore certain factors that are slowly but surely leading toward on economic crisis. The world energy crisis that has already made itself felt in the Western world will further worsen the economic situation in Czechoslovakia. For although Czechoslovakia has been only lightly affected by the increase in oil prices on the world market, the effects of the increases have been felt nonctheless. To keep up their own production Czechoslovak factories need a series of raw materials and semifinished products that are imported from capitalist countries. For the most part, this trade is conducted through short-term agreements often concluded on a cose-bycase basis -- which means under conditions that are unfavorable to Czechoslovakia. The cost of production (in which energy costs play a big port) is reflected in the prices of these imports, including the increase in oil prices. A monetary crisis is consequentl; developing for the Czechoslovak economy. The cost of production of Czechoslovakian goods is increasing, and, at the same time, the bulk of these goods are extary intervention and line up "the Iranian people" behind the interventionist policy, whose declared goal would be "protecting the Iranions" against the "expansionist aims of the Arabs." In 1970 PFLOAG responded clearly to Teheran's policy, asserting in its program: "The British colonialists and the Iranian and Arab reactionaries are trying with all the means at their disposal to transform the struggle against British imperialism in the region into a chauvinist conflict between Arabs and the national minorities that moved into Oman and the Gulf after the discovery of oil and to whip up racial hatred between Arabs and Iranians. " If can be seen, then, that PFLOAG intends to develop its struggle against the collusion between Sultan Cabus of Oman and the shah of Iran on the basis of on internationalist position. So for the development of a broader struggle throughout the Arab-Persian Gulf region, it is all the more important for Iranian revolutionary militants to be able to develop solidarity actions with the fighters of Dhufar and to denounce the policy of the shah of Iran from a clear internationalist perspective. parted to Comecon countries at prices fixed by long-term agreements that are not easily modified. During the period extending from the second half of 1973 to March 1974, the losses suffered by our economy as a result of this system amounted to some S11,000 million. It is clear what this means for our economy, which already finds itself in a chronically serious situation with no apparent way out: Estimates of the rate of inflation range from 2.5 percent (the official figure, on which the State Plan is based) to 6 percent (the figure suggested by skeptical economists). While our economy was able to sustain lost year's price increases (not, however, without demanding repayment of the long-term loans accorded to the developing countries), this is no longer the case today. In 1974 Czechoslovakia lacks currency to buy raw materials on the capitalist market. And, concurrently, it must be added that if the present drought results in a bad harvest, money will have to be found to purchase food, and that will further aggravate the balance of payments problems. The causes of the crisis of the Czechoslovak economy must be sought outside the energy crisis, which has affected the situation only slightly. It is rather a question of a heritage from the pest. The costs of production of Czechoslovak industry have always been high: in 1971, for each crown's worth of gross national product, 0.44 crowns were expended for materials. That represents an increase of 6.4 percent as com-
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pared to 1970, although the State Plan anticipated an increase of "only" 3.3 percent. The share of material expenditures in the price of commodities was 65.1 percent in 1970 and 65.5 percent in 1971. For 1971 this represented a loss of 5,000 million crowns. At the same time, the growth in basic production, which averages 5 percent a year, shows that productivity is not increasing that much either, contrary to what official propaganda continually claims. The increase in productivity is a result of the introduction of new industrial investment, and not of rationalization. The leadership of the Czechoslovak Communist party is going to try to find a solution to this situation, and there is no doubt that this will have the effect of raising prices. But it can be predicted that price rises will not be enacted in the form of massive and generalized increases of the sort that provoked work stoppages in Poland in 1970 and 1971 or of the sort that had been planned in Czechoslovakia for June 1973. Even though the new price lists had already been printed and distributed, those increases were not put into effect, for the bureaucracy feared the reaction of the population. Another increase had been planned for April of this year, but after receiving reports from the secret police on the state of the spirit of the population, the CP leadership had to recognize that it was still too dangerous. So the price increase was introduced by stages -- by making various changes; by going back to (higher) inifial prices; by surcharges; by substituting new, better quality but more expensive, products for older ones; by changing the names of some products, thus making them more "modern" or "nourishing, " facts that of course had to be reflected in their new prices (a typical example being the new cleaning product, IX). Price manipulations In the past, the leadership has tried to maintain control of the situation through exactly these kinds of price manipulafions. It is especially notable that since the introduction of price freezes in 1970, the prices of basic foodstuffs have not gone up. The prices of construction material, however, have gone up (in April of this year, the price of cement jumped 100 percenf). As a result, rents for apartments in newly constructed buildings affected by the change in the cost of production have risen from a monthly average of 400 crowns in 1969-70 to a monthly average of 700-800 crowns in 1973. On the night of March 27, 1974, an official communiqué was released announcing changes in the price scales for urban transportation in Prague, to go into effect on May 9, 1974. The television broadcast a conversation between Ljuba Mestekova, a television producer, and Zuzka, the mayor of Prague. Both of them praised this price increase, explaining how profitable it would be for the future; but they forgot to mention that they would not be affected. People who ride around in Tatra 603 service automobiles will surely not have to pay. Basically, we can say that the official communiqué amounted to increasing the price of urban transport. Even with the addition of cheaper monthly tickets, the price of a ride will be more than it was before the price structure was changed, probably about twenty crowns a month higher. Thus, for about half the citizens of Praguc, the cost of living will go up by 3 percent. Even though this is not a very big increase, official circles are trying in a most determined fashion to prevent anyone from seeing it as a price increase. The elimination of ticket takers on the trams will undoubtedly have 28 an effect on transport security, for the driver will have to check all six doors. The government's justification for increasing the price of transport was very weak, as was its excuse for raising the price of gasoline. Official propaganda claims that it was a question of a new struggle against the imperialists, who were coming to us to buy cheaper gasoline. But let's make a comparison: A West German worker has to work six minutes to make enough to buy a liter of gasoline, while a Czechoslovak worker has to work sixteen minutes to make enough fo buy the same quantity of gasoline of inferior quality. And this is ofter a 65 percent price increase, so that even before the price rise, he was in a wore position than his West German counterpart. The critical situation of Czechoslovak balance of payments can also be illustrated by the example of oil. A five-year confract with the USSR was signed (it expires on December 31, 1975) setting the price of a ton of oil at 32 rubles, which at the time was double the world market price. It is true that Czechoslovakia is still paying that price today, even though the price of oil per ton has risen in four years from S16 to $75-80. (On currency exchanges, one ruble is approximately equal to one dollar.) The discussion now going on within the Comecon, during which Czechoslovakia insisted that as of January 1,1976, the price of oil be set beneath the world market price, were resolved as follows, according to the newspaper Krasnaja Zwezda (Red Star): It declared (the April 25 Rude Pravo reported) that the USSR will deliver oil to its "brother" countries at the prices that were in effect at the time of the signing of the previous accord. During their visit to Prague, the Libyan leaders had demanded $300 a ton for oil and also asked for Czechoslovak investments in Libya. But the Czechoslovak leaders had to refuse. Their foreign investments have already reached 175,000 million crowns. Although the increase in the cost of living is leading to a relative decline in the standard of living, it should be mentioned that the incomes of many branches of industry have risen sharply. This is the case mainly for branches that are the property of the state or the party apparatus, like the agricultural companies. In addition, the incomes of employees in the tertiary sector (services) have risen rapidly. Once again, there are millionaires in Czechoslovakia. (In the tenth district of Prague, for example, there are eight of them, in Nymburk there are thirteen. These sums of money have been made by "accident"; artists, actors, and pop singers are already a minority of these new millionaires ple con't help but have large bank accounts, for they have no real way of spending their money.) The official figure for the size of Czech (not Slovak) savings reached 90, 000 million crowns in 1973. In addition, an unofficial source speaks of stocks of merchandise valued at 30,00D million crowns. Other sources assert that there has been an inflation of money in Czechoslovakia equivalent to 75, 000 million crowra. In light of these facts, the rumors about a monetary reform and a price increase -- rumors that spread panic among the population, which wanted to take its money out of the bank and buy all sorts of useless items -- have a rational foundation. Nevertheless, it is not likely that the government will take such measures. But we can expect one new action by the government: enactment of a new system of wages, the last word in so-called socialist rationalization. But the government has had some unhappy experiences with this measure. When it was introduced this spring in part of the Skoda state company there was a strike. And it was not