News Wednesday, MAY 27th, 1998

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Radio Prague E-News, May 27, 1998, Vladimir Tax

Hello and welcome to Radio Prague. I'm Vladimir Tax and here's the news. First the headlines.

These are the main points and now the news in more detail.

CSSD backs down on plan to limit CNB's powers

The Social Democratic Party's main financial expert and its shadow finance minister, Ivo Svoboda, has withdrawn his proposal to limit the Czech National Bank's powers. He said that if his party wins the elections, it would preserve the central bank's independence but would seek broader cooperation between the bank and the cabinet.

The Social Democrats, tipped to win the early elections in June, shocked economic experts and politicians on Monday by announcing their intent to limit the national bank's independence. They said that if they won the elections they would introduce the British model of governing the Central Bank, where the cabinet sets inflation targets and the bank works to reach them. This would require a fundamental change in Czech legislation, which now guarantees full independence for the Central Bank.

EU negotiators caution on Czech readiness

Top European Union negotiators said on Tuesday the Czech Republic was insufficiently prepared to process and implement all the legislation needed to give foreign investors confidence.

Chief EU negotiator Nikolaus van der Pas told reporters after talks with Czech leaders on Tuesday that the Czech judiciary also needed to speed up its work in adapting Czech law to EU standards.

He said that it would take continued adaptation and reform before the business and financial world had enough confidence to invest in, and channel funds to, the Czech Republic.

And the European Commission has expressed concern about the Czech attitude towards its Romany minority, especially the recent plans of some municipalities to segregate Romanies from the rest of the population.

David Leigh, who headed the talks with the Czech representatives, also stressed the need for more liberalisation and deregulation, for example in the areas of telecommunications and energy policy.

Poll - results

According to the latest opinion poll conducted by the Sofres- Factum agency, the popularity of the Civic Democratic Party of former premier Vaclav Klaus is rising. May's results show that they would gain almost 15 percent of the vote, compared to less than 12 in March. On the other hand, the Freedom Union, established by rebels from the Civic Democratic Party, is losing support -- their popularity has fallen by more than five percent and currently stands at 7.2.

The Social Democrats maintain their lead and enjoy stable support from around 26 percent of the electorate. The third strongest showing was made by the Pensioners, favoured by almost 11 percent of those polled. The former junior coalition Christian Democrats would narrowly make it to the parliament with 5.4 percent.

Economic development risks

The biggest threat to economic development and stability in the upcoming period will be the risks connected with the banking sector, according to Czech National Bank official Ludek Niedermayer.

He pointed out that the share of Czech banks on the Czech market as well as their profitability was decreasing, which lowered their market value. That is why, he said, it is necessary to speed up the privatisation process.

In his opinion, privatisation will improve the position of Czech banks prior to the country joining the EU, strengthen the Czech financial system and limit the necessity of financial help for the banking sector from the state.

Police - heroin

Czech Police seized almost 500 kilograms of heroin on Tuesday after an eight-month operation organized by the National Anti-Drug Center. During the investigation, the Czech police cooperated with their British, Norwegian and Swedish colleagues. The result was the arrest of a complete gang of drug dealers. According to the head of the Czech anti-drug center, Jiri Komorous, the police prevented about five million doses of heroin from reaching the European market.

ODS/coalition/speculations

The Civic Democratic Party has rejected speculations about it forming a coalition with the Social Democrats, terming them groundless.

Freedom Union leader Jan Ruml said on Tuesday he had information indicating that the Social Democrats and the Civic Democratic Party, until recently the main rivals on the political scene, were laying the groundwork for a grand coalition.

Civic Democratic Party deputy leader Ivan Langer said Ruml's allegations were utter nonsense and a part of the pre-election campaign. He recalled that it was Ruml's party that had declared willingness to tolerate a cabinet formed by the Social Democrats.

Czech weather report

And finally, the weather forecast. We are expecting a partially cloudy day with scattered showers, afternoon highs should range from 20 to 24 degrees Celsius. On Thursday and Friday we should see mostly clear skies with temperatures between 22 and 26 degrees Celsius.

And that's the end of the news.