Václav Klaus: Europe needs more than reform – it needs fundamental change
More than 35 years after the fall of communism, how close is the Czech Republic to the free society and free-market economy envisioned in the early 1990s? In this episode of Czechast, former Czech president and prime minister Václav Klaus argues that much of Europe is now moving in the opposite direction. Speaking to Vít Pohanka, he discusses the European Union, the euro, the war in Ukraine and the political forces challenging Europe’s mainstream.
From transformation to “the opposite direction”
Few Czech politicians are as closely associated with the economic transformation that followed the fall of communism as Václav Klaus. As finance minister and later prime minister, he became one of the principal architects and most forceful advocates of the transition from a centrally planned economy towards capitalism.
More than three and a half decades later, however, Klaus believes that the direction of travel has changed. He divides the post-communist period into two broad phases: an initial movement towards greater economic and political freedom, followed by a gradual return of regulation and central administration.
“There are definitely two phases, two stages. In the first part, especially the 1990s, there was really the move towards freedom and a free society, free markets and a free economy. And in the middle of the last 35 years, it radically changed, and we are moving in the opposite direction, to my great regret.” Klaus, who teaches a course on the transformation of the Czech economy at the Prague University of Economics and Business, says he sometimes feels that a second course is now needed – this time describing what he regards as a reversal of that transformation.
He places much of the responsibility on regulation coming from the European Union, although he also acknowledges domestic mistakes. And he cautions against assuming that the rejection of communism after 1989 automatically meant widespread support for classical liberalism and free markets. “Everyone was against communism,” he says, “but it doesn’t mean that everyone was for free markets and a free society.”
The EU, the euro and an administered economy
Klaus has been one of the Czech Republic’s most persistent critics of deeper European integration. He also remains a firm opponent of adopting the euro, arguing that a common currency makes little economic sense across countries whose economies are too different.
But his criticism goes beyond monetary policy. Klaus believes Europe has increasingly developed what he calls an “administered economy” – one that may not rely on the explicit central planning familiar from communist regimes but nevertheless directs economic activity through extensive regulation.
For Klaus, reducing bureaucracy alone would therefore not solve the underlying problem. Asked what he would do if he once again had the opportunity to reshape Czech economic policy, he returned to the principles of the early post-communist transformation.
“I remember the whole transformation after communism was done with four slogans: to liberalize, to deregulate, to privatize and – this is the point – to de-subsidize. Communism was based on all kinds of subsidies because of the irrationality of prices. So I would start with de-subsidizing, which is also the only way to balance the budget in the Czech Republic.” His view of the European Union is similarly radical. Klaus argues that ordinary reform would not be sufficient because the problems he identifies are systemic.
He also questions whether democracy can operate at the EU level in the same way it does within individual nation states. Europeans may share elements of a common culture, he argues, but they do not constitute a single political “demos” – a people capable of sustaining a European democracy comparable to national democracies.
“I would say that the European Union needs something more than a reform, in what is usually understood by this term. It needs a fundamental change, fundamental systemic restructuring.” Klaus says he is not particularly optimistic that such a transformation will happen soon.
Russia, Ukraine and stopping the fighting
The interview also returned to an argument Klaus made almost two decades ago about Russia. In a 2009 appearance at the Ronald Reagan Presidential Library in California, he argued that communism and Russia should not be treated as synonymous and warned against continuing to fight the battles of the Cold War.
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Listening to those remarks today, Klaus says he would change very little. He continues to insist on distinguishing Russia from the Soviet Union and Vladimir Putin from Soviet leaders such as Leonid Brezhnev. His views on Russia and the war in Ukraine have made him a controversial figure in Czech and European public debate. Klaus has repeatedly criticised the Western response to the conflict.
Asked what Europe, the United States and NATO should do to help end the war, he rejected what he described as overly simple solutions but said the immediate priority should be ending the fighting itself. “I am absolutely convinced that the first task is to stop the war, to stop the fighting, to stop every morning asking how many people died during the night bombing. That is evidently task number one. And task number two is to create a long-term solution to that issue.”
Klaus pointed to frozen conflicts elsewhere in the world, including the Korean peninsula, to argue that ending active fighting does not necessarily require simultaneously resolving every underlying political dispute.
A political marathon
Klaus also views the rise of political movements challenging the European mainstream positively, while stressing that he does not necessarily agree with everything such parties advocate. He believes their growing strength could eventually help change the direction of European politics. But even significant electoral successes, he argues, would represent only the beginning of a much longer process.
Changing what Klaus sees as the underlying political and economic trajectory of Europe, he says, will be “a marathon run, not 100-metre hurdles.” Despite his strongly critical assessment, Klaus does not portray the Czech Republic as a country in crisis. He points to its long industrial tradition and its relative prosperity compared with other formerly communist countries in Central and Eastern Europe.
The Czech Republic remains a functioning and comparatively prosperous democracy, he says, without major social upheaval. His dissatisfaction is instead focused on the direction of political development and what he considers unnecessarily slow economic growth. In that sense, the problems facing the country more than 35 years after the Velvet Revolution are very different from those Klaus confronted at the beginning of the 1990s. They are, as he puts it, now the “standard problems of a developed democracy, of a democratic society.”
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Czechast, Radio Prague International
Czechast is a regular RPI podcast about Czech and Moravian culture, history, and economy.
