Unless you were hiding under a rock on the 1st of May, you know that Europe recently added another ten countries to its growing roster. Whether you believe, like President Vacláv Klaus, that the Czech Republic will be subsumed into a monstrous European super-state, or, like Prime Minister pidla, that the French and Dutch are no less French or Dutch after nearly 50 years of membership, there is no doubt that EU accession is, after joining NATO, the most significant political step the country has taken since the Velvet Revolution.
There has a been a lot of talk concerning the new Europe - a continent ravaged by war and the threat of war for centuries, which maintains that it is now ready to turn over a new leaf and usher in the first generation of peace and prosperity for all.
Martin Jahn, the young and engaging CEO of CzechInvest, spent some time with the Prague Compass and shared his views, beliefs and opinions regarding the brand new face of an old, troubled land.
Prague Compass: Now that the EU weekend celebration and hangover has passed, what is the general sentiment of the Czech people concerning the induction of their country into the EU?
Martin Jahn: I don't know if I can generalize on behalf of the Czech nation, but among the people I talk with, there is a sense that we are finally there, we are where we belong and we are quite happy about it.
PC: What do people expect to gain from the EU?
MJ: I think it's important to understand that all the changes over the last five years have been happening in anticipation of our full membership. All new investments coming in and most Czech exports are the result of our EU membership. I think our accession is an evolution not a revolution, which means little is going to change this week or next week. We are now a normal, stable country with free access to a large European market, enjoying free movement of capital, goods and, to some extent, labor. The fact that some countries have imposed a transition period will no longer apply in a couple of years and over the next hundred years we will still be an integral part of the EU. There are reasonable expectations that we will continue to grow and complete our restructuring from our socialist past to a free market economy.
PC: What do you think people fear the most?
MJ: The fears are simple, the most prevalent fear is of increasing costs and prices. Companies may fear increased competition and tighter regulations and restrictions from Brussels, that the implementation of EU rules concerning hygiene, the environment, etc will toughen conditions for businesses. They also fear facing the Brussels bureaucracy, that it will be difficult to draw on structural funds. I have to say from my experience over the last year that all the problems have been created by the Czechs. The EU provides us with a window within which we have to adopt our own laws and we very often tend to choose the strictest limits to our own disadvantage. So most of the negative elements of EU accession have come about because of our legislation, not the EU itself.
PC: What sectors of the Czech economy stand to benefit the most from EU accession?
MJ: In terms of manufacturing, automotive, electronics and aerospace. We hope to add more life sciences: medical equipment, development of pharmaceuticals. We will also see a strong increase in social development. I personally believe that our agriculture will also benefit , not only from subsidies, but from export opportunities because it is very competitive, and maybe later from investments into agriculture in the Czech Republic. Also some traditional sectors, such as food processing, the rubber industry and engineering, will do well, so we are not really trying to focus on a few sectors. We would like to use the full potential of the Czech Republic.
PC: what do you think is the most attractive aspect of the Czech Republic for foreign investors?
MJ: I think our location is still very important. Nobody is going to take that away from us. I think that by enlarging the EU and moving closer to the member states we are now really in the heart of the new Europe. So location is one. Secondly, labor skills, technical skills; the ingenuity of the Czech people is a very big attraction. Costs are still attractive. We are not the cheapest country in the region but we are still three or four times cheaper than Germany or the UK so overall cost savings are still a big advantage. I would also say that the quality of our infrastructure is a big plus. We still have the best infrastructure in the region in terms of highways and telecom infrastructure. The Prague airport is booming and I sincerely believe there will be more flights to Brno and Ostrava this year.
PC: How will this affect the next wave of expatriates? Do you think there will be more or less?
MJ: That's an interesting question and I don't have a good answer to that. I don't really know. On the one hand, Czech managers prove to be quite sophisticated and capable so you have large numbers of expatriate managers who are leaving because companies don't need them here and they can substitute them with cheaper and equally competent Czech management. On the other hand, our entry to the EU should bring some international or European organizations that will need other languages like Greek or Swedish, so there could be job opportunities for people from these countries. Maybe there will be more foreign students. My guess is it may slightly increase. We may also see an inflow of pensioners from abroad. I've seen several ideas to set up retirement housing. It could be a very good opportunity to spend some years here because it's cheaper and quite a pleasant environment.
PC: How will the visa situation change for foreign nationals, particularly EU citizens and North Americans in terms of work visas, residence visas, etc?
MJ: Well, for non-Europeans the system shouldn't be very different from that already existing in other EU countries. We're going to publish a brochure on visa and permit issues with the Ministry of Foreign Affairs and the Ministry of the Interior that will outline very clear conditions binding on everyone. I think the biggest problem with our system is that each embassy and foreigners police station requires different sets of information and we hope that publishing this brochure with the two respective ministries will provide everyone with clear guidelines. Because of the threat of terrorism security measures will not soften very much, but I'm hoping that we're moving towards a standard that you would expect in any other country in Europe.
PC: What is your opinion on the original EU countries, save England and Ireland, placing restrictions on the influx of workers from the new member states?
MJ: I personally think it's foolish, especially with regard to the Czech Republic. On the one hand Germany ran a proactive campaign to lure Czech engineers and now they're trying to limit the inflow of people. Personally, I don't want people to move to Germany. I want there to be enough jobs for them here with foreign investors. I want them to stay here, or maybe to move away for a couple of years to learn English and some special skills and then come back. Our population is aging. We have to import people from Kazakhstan, from the Ukraine and Bulgaria so we have an active policy to import skilled people. In general, Czechs will not be leaving whether Germany imposes restrictions or not. Mobility of labor here is very low. People don't want to move 50 kilometers for a better job so why would they move 200 kilometers away? Plus I think that people can have similar living conditions here. In Germany or France you have bigger salaries but higher costs as well.
PC: What do you expect the course of the Czech crown to be before it becomes the Euro?
MJ: My hope is that it will slightly strengthen. I think now and over the next two years 32 to 33 crowns to the euro is about right.
PC: Are Czech companies ready for the competition they will face from their neighbors in the West?
MJ: This isn't my idea but I like quoting it. I think that the companies who are prepared will survive and those who are not are already dead. In general, I think Czech companies will survive. Then again if you look at manufacturing output here, foreign companies produce over 50 percent of it and 70 percent of our manufacturing exports. These are German, American and Japanese companies and they are obviously ready. There is also a group of eager Czech companies and they will be successful too. The rest will die out. It's a normal process.
PC: A lot of emphasis has been placed on the concept of creating a new, peaceful Europe through trade and commerce. What are your hopes for seeing this dream fulfilled?
MJ: My hopes are very high. I've spent the last 10 years trying to improve the competitiveness of the Czech Republic and Czech companies and now we can only be competitive if the rest of Europe is. It's very important that this dream comes to pass, because otherwise all of Europe will start to lose business and trade to North America and Asia.For me an enlarged Europe is about competing with North America and Asia and nothing else. I think we definitely need it and I'll do what I can to make it successful.