>Czech Republic: Ghost of a Blue Chance?

> The Czech Civic Democrats entered the 2005-6 election seasons trumpeting a extensive and radical package of flat taxation and welfare reform, prepared over several years. The party’s Pyrrhic victory in the election, which leaves it without a majority even when the eco-liberals of the Czech Greens Party as political partners, leaves only the ghost of a Blue Chance likely to be implemented and some difficulty questions about this politically unsaleable last legacy of the Klaus era.

The programme had its origins ODS’s traumatic departure in late 1997 from office amid financial scandal and the acrimonious split that followed, which produced the now oh-so-defunct Freedom Union. Overshadowed first by political crisis and later the eurosceptic rhetoric of of the party’s 2002 election campaign (the last under Klaus), few people really noticed that the party’s extraordinary conference of 13-14 December 1997 adopted adopted four rather vague ‘articles’ intended to define the party’s determination to press ahead with market reform and show it wasn’t the unprincipled power and cash-hungry monster that its detractors claimed. The ‘articles’ inlcuded flat taxation reformed, lean ‘cheap state’ and some form of welfare reform based on individual accounts – came to fruition in Blue Chance

It developed more fully in 2003-4 partly under the influence of Slovakia, Estonia and other flat tax success stories and the need to define the party in the post-Klaus era – or perhaps to ensure that VK did not continue to try and run it from Prague Castle (his CEP thinktank staged a conference on flat taxation). . By July 2003 when the package was first launched in outline form, the ‘guaranteed income’ proposal to replace all welfare benefits with a flat rate universal basic income seems to have found it way in. Free market economists were not enthused about it. Whether this was a political move to spike the kind of opposition which was to derail Civic Platform in Poland or a genuine effort at welfare reform is an open question. Finalized in late 2004 it ran to over 200 pages

The Blue Chance was a sitting target for the left and despite the slickness of its campaign, the party had no real strategic or tactical ability to sell the programme. Incompetence aside, ODS seems not to have realised that Czechia was not Slovakia and the Czech Social Democrats, despite their woeful, scandal-ridden performance, splits and frequent change of Prime Minister – were not Mečiar. (Indeed, apart from a commitment clientelistic politics and economics not offset by a modern, modernizing ideology, Mečiar posed an obstacle to reform because of his enduring relatively popularity and his party’s long-term imperviousness to splits). Polls showed that the same 25-30% of voters that votes for right liked the proposal and that many voters misunderstood it or simply didn’t have the foggiest

Politically, caught out the result is both a watering down of their proposals both in negotiations with coalition allies (currently delicately balanced) and – more significantly – as unspecified concessions to the opposition Social Democrats as the price of their ‘toleration’ for a minority government.

The result in policy terms– like the result of every election since 1996 arguably– will, it seems be a kind of social-liberal centrist politics by default. All Czech parties after all, Communists perhaps excepted, do agree in principle that taxation is too high and budgeting too inflexible , so perhaps there will be a simplification of the tax system, say, with some mild general downward pressure on tax rates.

As some commentators Jiří Pehe for one argue, the Czech Republic (and also Slovakia) may not end up the any worse for such centre politics by default even if will not win (any more) plaudits from The Economist.

Oddly, however, inPehe’s reflections the issues of which policies are right is overshadowed by (and indeed confused with) the question of preventing a slide into Mečiar-style clientelism and abuse of power via a rough balance of political forces, given (he assumes) a weak civil society and weak rule of law. Here I think he is slightly re-living the politics of the 1990s. At least I hope he is…

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