Wayzata World Factbook 1995/World Factbook - 1995 Edition - Wayzata Technology (1995).iso/mac/text/Build/orig BACKGR/BNOT0031.TXT

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National Trade Data Bank
ITEM ID     : ST BNOTES CZECH
DATE        : Oct 28, 1994

AGENCY      : U.S. DEPARTMENT OF STATE
PROGRAM     : BACKGROUND NOTES
TITLE       : Background Notes - CZECHOSLOVAKIA

Source key      : ST
Program key     : ST BNOTES
Update sched.   : Occasionally
Data type       : TEXT
End year        : 1992
Date of record  : 19941018
Keywords 3      :
Keywords 3      : | CZECHOSLOVAKIA

US DEPARTMENT OF STATE
BACKGROUND NOTES:  CZECHOSLOVAKIA


Official Name:  Czechoslovak Socialist Republic

PROFILE

Geography
Area:  127,896 sq. km. (49,381 sq. mi.); about the size of New York.
Cities:  Capital-Prague (pop. 1.2 million).  Other cities-Bratislava
(413,000), Brno (385,000), Ostrava (327,000), Kosice (220,000),
Plzen (Pilsen-175,000).  Terrain:  Rolling area in wet, low mountains
to the north and south, hills in the center, rugged mountains in the
east.  Climate:  Temperate.


People

Nationality:  Noun and adjective-Czechoslovak(s).  Population (1988):
15.6 million.  Annual growth rate:  0.25%.  Ethnic groups:  Czech
(64%), Slovak (31%), Hungarian, Polish, Ukrainian, German.
Religions:  Roman Catholic, Protestant, Orthodox, Jewish.
Languages:  Czech, Slovak, Hungarian.  Education:  Literacy-99%.
Health:  Life expectancy-males-67.5 yrs; females-75 yrs.  Work force
(7.8 million):  Agriculture-14%. Industry, construction, and
commerce-64%. Services and government-22%.


Government

Type:  socialist republic.  Independence:  Czechoslovak state
established 1918. Constitution:  July 11, 1960 (being redrafted during
1990).

Branches:  Executive-president (chief of state), prime minister (head
of government), cabinet.  Legislative-bicameral Federal Assembly.
Judicial-Supreme Court (1960), Constitutional Court (1968).

Political parties:  With free parliamentary elections set for 1990, many
new parties are emerging to challenge the Czechoslovak Communist
Party for power.  Suffrage:  Universal over 18.

Administrative subdivisions:  Two semiautonomous "republics"-Czech
Socialist Republic (Bohemia, Moravia), Slovak Socialist Republic
(Slovakia); 10 administrative districts and 2 city administrations.

Defense:  7% of 1987 state budget.

Flag:  A blue triangle extending the length of the staff side, with its
apex toward the center, a white band on the upper half of the
remaining space, and a red band on the lower half.
Economy
GNP (1987):  $107 billion.  Annual growth rate (1987 est.):  2.6%.
Per capita income (1987): $6,900.

Natural resources:  Coal, coke, timber, lignite, uranium, magnesite.

Agriculture (7% of GNP):  Products-wheat, rye, oats, corn, barley,
potatoes, sugar beets, hogs, cattle, horses.

Industry (60% of GNP):  Types-iron and steel, machinery and
equipment, cement, sheet glass, motor vehicles, armaments,
chemicals, ceramics, wood, paper products.
Trade (1987):  Exports-$8.4 billion:  machinery, iron and steel,
chemicals, raw materials, consumer goods.  Imports-$8.4 billion:
machinery, equipment, raw materials, consumer goods.
Partners-Austria, Bulgaria, East Germany, West Germany, Hungary,
Romania, Soviet Union, Yugoslavia.

Exchange rates (January 1990):  38 crowns=U.S. $1.

Membership in International Organizations

UN and its specialized agencies, Council for Mutual Economic
Assistance (CMEA), Warsaw Pact.


GEOGRAPHY

Czechoslovakia borders on Poland and East Germany to the north,
the Soviet Union to the east, Hungary and Austria to the south, and
West Germany to the west.

Czechoslovakia's three principal regions are Bohemia, Moravia, and
Slovakia.  Bohemia, the westernmost region, is politically and
economically the most important part of the country.  Its largest city,
Prague, is Czechoslovakia's capital.  The landscape consists of
rolling plains, hills, and plateaus surrounded by low mountains to the
north, west, and south.

 Moravia, the central region, has important coal and steel industries
in the north and agricultural areas in the south.  It is bordered on the
north by mountains and generally has more hills than Bohemia.
Bohemia and Moravia make up the historic Czech lands, now
forming the Czech Republic.

 Slovakia, in the east, has rugged mountains in the central and
northern part and lowlands in the south that are important for
agriculture.  Traditionally less developed politically, economically, and
culturally, Slovakia has become more important since
Czechoslovakia's independence; it now forms the country's second
republic.

  Before World War II, Czechoslovakia encompassed a fourth region,
Ruthenia, in the Transcarpathian Ukraine.  The Soviet Union annexed
that section after the war under a treaty between Prague and
Moscow.

The climate in most of Bohemia and Moravia is temperate.  Lush
springs and pleasant autumns alternate with cool summers (average
July highs-lows: 740-580F) and cold, overcast winters (average
January highs-lows: 340-250F).  Slovakia is characterized by wider
extremes-warmer summers in the south and colder, more severe
winters in the mountains in the north.  Precipitation in Prague is
low-about 51 centimeters (20 in.) annually.


PEOPLE

The 15.6 million people of Czechoslovakia include about 65% Czechs
and 30% Slovaks.  Although the Slovaks are a nationality distinct
from the Czechs, most favor working with the Czechs in a common
federal state with extensive autonomy for Slovakia.
Other ethnic groups include about 600,000 Hungarians in Slovakia,
smaller numbers of Ukrainians, Germans, and Poles, and about
250,000 gypsies, the fastest growing ethnic element in the
population, who live mainly in Slovakia.

Although the government has a regulatory role in religious
organizations, laws promulgating religious freedom were passed in
late 1989.  The major denominations and estimated memberships are
the Roman Catholic Church (10.5 million), the Czechoslovak Hussite
Church (400,000), the Slovak Lutheran (Evangelical) Church
(400,000), the Evangelical Church of the Czech Brethren (265,000),
the Greek Catholic Church (450,000), and the Eastern Orthodox
Church (150,000). About 10,000 Jews remain of the prewar
population of 360,000.


HISTORY

The Czechs lost their national independence to Austria in 1620 at the
Battle of White Mountain and, for the next 300 years, were ruled by
the Austrian monarchy.  With the collapse of the monarchy at the
end of World War I, an independent country of Czechoslovakia was
formed with the assistance of President Woodrow Wilson.  The
Slovaks, ruled by the Hungarians for 1,000 years, joined in the
common country with the Czechs.  The Slovaks were not at the
same level of economic and technological development as the
Czechs, but the freedom and opportunity found in the new
Czechoslovak Republic enabled them to make rapid strides toward
overcoming these differences.
Although Czechoslovakia was the only East European country  that
remained an effective parliamentary democracy throughout 1918-38,
it was plagued with minority problems, the most important stemming
from the country's large German population. Constituting more than
22% of the population and largely concentrated in the Bohemian and
Moravian border regions (the Sudetenland), this minority was
encouraged to reject Czech-German reconciliation in the new
Czechoslovak country by nationalistic elements urged on in large
part by Nazi Germany.  Internal and external pressures culminated
in September 1938, when, at Munich, France, Italy, and the United
Kingdom acceded to Nazi pressure and agreed to force
Czechoslovakia to cede the Sudetenland to Germany. Fulfilling
Hitler's aggressive designs on all of Czechoslovakia, Germany
invaded what remained of Bohemia and Moravia in March 1939,
established a German "protectorate," and created a puppet state out
of Slovakia.

With the support of Slovak communists, Slovak democratic forces
engineered a revolt in the summer of 1944.  It failed because of
German military action and the Soviet refusal to intervene or to
permit more than token U.S. and British help (including a U.S. Air
Force airlift of supplies and an Office of Strategic Services mission).
Soviet troops overran all of Slovakia and Moravia and much of
Bohemia, including Prague, were overrun in the winter and spring of
1944-45.  U.S. forces liberated the city of Plzen and most of western
Bohemia in May 1945.  In Prague, a civilian uprising against the
German garrison had taken place in early May 1945.  Following
Germany's surrender, some 2.5 million ethnic Germans were
expelled from Czechoslovakia.

From May 1945 until the spring elections of 1946, the country was
ruled by a coalition government that included Communist Party
members. The democratic elements, led by President Eduard Benes,
hoped the Soviet Union would allow Czechoslovakia freedom to
choose its own form of government, and aspired to a
Czechoslovakia that would act as a bridge between East and West.
This objective was sustained by Czechoslovakia's highly developed
economy, its strong democratic traditions, and its readiness to
accept considerable socialization of the economic system. The
Communist Party, however, which won 38% of the vote in the 1946
election, held most of the key positions and gradually managed to
neutralize or silence anticommunist forces. Although the Benes
government initially hoped to participate in the Marshall Plan, it was
forced by Moscow to back out. Under the cover of superficial
legality, the communists seized power in February 1948.

After extensive purges modeled on the Stalinist pattern in other East
European states, the Communist Party tried 14 of its former leaders
in November 1952 and sentenced 11 to death.  For more than a
decade thereafter, the Czechoslovak communist leadership was
characterized by its stability of tenure under the leadership of party
chief Antonin Novotny.

The 1968 Soviet Invasion
The communist leadership allowed only a little relaxation in the early
1960s.  However, in the mid-1960s, discontent arose within the ranks
of the Communist Party Central Committee because of the slow pace
of economic reform, resistance to cultural liberalization, and the
desire of Slovaks within the leadership for a larger share of the
country's investment resources.

The discontent culminated with the removal of Novotny from party
leadership in January 1968 and from the presidency of the republic
in March.  He was replaced as party leader by a longtime,
Soviet-educated party activist of Slovak origin, Alexander Dubcek,
and as president by Gen. Ludvik Svoboda, a military hero of both
world wars.  In addition to Novotny, many other orthodox
communists were subsequently forced from party and government
positions.

After January 1968, the Dubcek leadership began practical steps
toward political, economic, and social reforms that promised a better
life for the Czechoslovak people.  In addition, it called for
politico-military changes in the Soviet-dominated Warsaw Pact and
Council for Mutual Economic Assistance (CEMA).  The leadership
affirmed its loyalty to socialism and the Warsaw Pact but also
expressed  the desire to improve relations with all countries of the
world regardless of their social systems.

A program adopted in April 1968 set guidelines for a modern,
humanistic-socialist democracy that would guarantee freedom of
religion, speech, press, assembly, and travel; insulate the
government from the Communist Party; create independent courts;
introduce multiple-choice, secret-ballot elections; and effect economic
reforms.  After 20 years of little participation, the public gradually
began to take an interest in the government and leadership.  Dubcek
became a popular national figure and the first Czechoslovak
communist leader to enjoy broad public support.

Internal reforms and foreign policy statements of the Dubcek
leadership created great concern among some of the other Warsaw
Pact communist governments and parties.  On the night of August
20, 1968, Soviet, Bulgarian, Hungarian, Polish, and East German
troops invaded and occupied Czechoslovakia.  The Czechoslovak
Party and Government immediately declared that the invading troops
had not been invited into the country and that their invasion was in
violation of socialist principles, international law, and the UN Charter.

The principal Czechoslovak leaders were forcibly and secretly taken
to the Soviet Union.  Under obvious Soviet duress, the
Czechoslovaks engaged in a series of negotiations at Moscow on
August 23-26, again on October 2-3, and finally at Prague on
October 16. On that day, Soviet Premier Aleksei Kosygin, acting on
behalf of all the invading countries, and Czechoslovak Premier
Oldrich Cernik signed a treaty that provided for the "temporary"
stationing of an unspecified number of Soviet troops in
Czechoslovakia.
In November, the troops of the other countries and some of the
Soviet forces were withdrawn. In addition to accepting the
"legalization" of stationing Soviet troops in Czechoslovakia,
Czechoslovak leaders were forced to censor the media and to curb
virtually all of the reforms that Dubcek had promoted.
Dubcek was removed as party First Secretary on April 17, 1969, and
was replaced by another Slovak, Gustav Husak.  Later, Dubcek and
many allies within the party were stripped of their other party
positions in a purge of the Communist Party that lasted until 1971
and that reduced party membership by almost one-third.

By October 27, 1969, the Soviets had achieved their basic objectives:
the Czechoslovak liberalization movement was dismantled; elements
of the orthodox Communist Party were back in control; and Soviet
troops remained stationed in Czechoslovakia.  On that date, General
Secretary Husak, Prime Minister Cernik, and President Svoboda
signed a joint communique with the Soviets at Moscow that justified
the invasion, accepted the Brezhnev doctrine of limited sovereignty,
avowed that stationing Soviet troops in Czechoslovakia was essential
to the security of Czechoslovakia's western borders, and opened the
way for the further integration of Czechoslovakia's economy with that
of the Soviet Union.  This relationship was further formalized in a
20-year Soviet-Czechoslovak Treaty of Friendship, Cooperation, and
Mutual Assistance signed on May 6, 1970. In May 1975, Gustav
Husak replaced the ailing Svoboda as president, retaining at the
same time his position as Communist Party General Secretary.  Milos
Jakes, who presided over the purge of party members after the 1968
invasion, succeeded Husak as party general secretary in December
1987.


POLITICAL CONDITIONS

In November 1989, student protests of police brutality ushered in a
period of rapid changes that culminated, by year's end, in a new,
noncommunist government and the election of dissident playwright
Vaclav Havel as president.  The new government ended the
Communist Party's leading role in political life, eliminated restrictions
on travel abroad, and passed legislation guaranteeing freedom of
speech, freedom of assembly, and freedom of conscience.  All
political prisoners were freed, and work began in earnest on
democratic political reform.

After Husak had consolidated the "normalization" of the post-1968
period, Czecholslovaks generally had retreated from political life.
The roots of 1989's Civic Forum movement that effected the "gentle
revolution" can be found in human rights activism.  On January 1,
1977, more than 250 people signed a manifesto called Charter 77
criticizing the government for failure to implement human rights
provisions of documents it had signed, among which are the
constitution; the International Covenants on Political and Civil and
Economic, Social, and Cultural Rights; and the Final Act of the
Conference on Security and Cooperation in Europe.  Although not
organized in any real sense, Charter 77 constituted something of a
citizens' initiative aimed at inducing the Czechoslovak Government
to observe its formal obligations to respect the human rights of its
citizens.

To stifle opposition, Husak subjected Charter 77 signatories and
other "dissident" groups to periodic harassment and persecution.
This included both judicial and nonjudicial measures, ranging from
loss of job or denial of educational opportunities for children to
detention, trial, and imprisonment. The government also induced or
forced human rights activists into exile abroad and deprived them of
their citizenship.

In October 1979, the government staged a "subversion" trial of six
leading activists of the Committee for the Defense of the Unjustly
Persecuted as a warning to other "dissidents." As political tension in
neighboring Poland mounted during 1980-81, the government,
perhaps fearing a "spillover" effect, became increasingly repressive
in its treatment of Charter 77 and other activists.  In March 1987,
government efforts to neutralize the Jazz Section of the Czech
Musicians' Union, which sought to promote freedom of cultural
expression, resulted in the trial of several of the section's leaders
after months of detention.

Despite persecution, Charter 77 had grown to at least 1,500
signatories in 1989. More important, the charter had become only
one of many independent initiatives critical of the government.  These
new groups helped launch a series of peaceful demonstrations by
thousands of citizens in Prague in late 1988 and early 1989 that drew
worldwide attention and a strong government response. The regime
forcibly dispersed a series of demonstrations in January 1989 and
subsequently imprisoned several prominent human rights activists,
including Havel who served 4 months in prison on charges of
incitement.

In the events of November 1989, these disparate groups united to
become Civic Forum, an umbrella group championing bureaucratic
reform and civil liberties.  Civic Forum quickly gained the support of
millions of Czechs, as did its Slovak counterpart, Public Without
Violence.  Faced with overwhelming repudiation by the population,
the Communist Party all but collapsed.  Its leaders, Husak and party
chief Milos Jakes, resigned in December 1989.


GOVERNMENT

A coalition government in which the Communist Party has a minority
of ministerial portfolios was formed in December 1989.  The
government is drafting a new constitution to replace the one
promulgated on July 11, 1960.   A 1968 law revised some sections
to establish more equitable representation between Czechs and
Slovaks in federal bodies and in economic development.  The law
canceled the historic preferential treatment of Czech lands by
increasing the autonomy of national (Czech and Slovak)
organizations in the formation, administration, and operation of the
economy.  In practice, however, exercise of political power
resembles a unitary system more than a federal one.

In Czechoslovakia, a distinction is made between the federal
government and the national government.  Czechoslovakia has two
national governments-the Czech and the Slovak-and one federal
government for the entire country.
The bicameral Federal Assembly, which was reconstituted from a
unicameral legislature on January 1, 1969, is nominally the highest
organ of state authority.  The Chamber of the People consists of 200
deputies elected by districts based on population; the Chamber of
the Nations consists of 150 deputies, of whom 75 are elected by the
Czech National Council and 75 by the Slovak National Council.  The
two bodies are bridged by the chairman of the Federal Assembly and
two deputies who chair the chambers.  The consent of both
chambers is required to pass a law. The number of majority votes
needed to pass a bill depends on the kind of bill under consideration
and on the chamber voting.

The election law of July 1971 lengthened the terms of the deputies
from 4 to 5 years.  Legislative reforms under way in 1990 are likely
to produce parliamentary representation similar to Western
democracies.  Until that time, the Chamber of the People will
continue to represent the National Front, a coalition of political parties
and mass organizations controlled by the Communist Party.  Apart
from the Czechoslovak and the Slovak communist parties, four
others are, in theory, noncommunist.  In the second chamber, the
Chamber of Nations, members currently are selected by the National
Councils, the legislative bodies of the Czech and Slovak Republics.

Administrative and executive powers are vested in the cabinet and
the president of the republic.  The president is elected by the Federal
Assembly for a 5-year term. With the approval of the Federal
Assembly, the president appoints a cabinet including a prime minister
as head of government.

The country's highest court is the Supreme Court, elected by and
responsible to the Federal Assembly. The lower courts are elected
by the districts and counties.  In 1990, Czechoslovakia will reform its
judicial system to introduce Western-style legal rights for individuals.


Principal Government Officials
President-Vaclav Havel
Prime Minister-Marian Calfa
Deputy Prime Ministers-Valtr Komarek, Jan Carnogursky, Vladimir
Dlouhy

Ministers

Foreign Affairs-Jiri Dienstbier
National Defense-Gen. Miloslav Vacek
Finance-Vaclav Klaus
Foreign Trade-Andrej Barcak
Interior-Richard Sacher
Premier, Czech Socialist Republic-Frantisek Pitra
Premier, Slovak Socialist Republic-Milan Cic
Ambassador to the United States-Rita Klimova

Czechoslovakia maintains an embassy in the United States at 3900
Linnean Avenue, NW, Washington, D.C. 20008 (tel. [phone]).


DEFENSE

A major overhaul of Czechoslovak defense forces is underway in
1990.  At the end of 1989, regular forces totaled about 200,000 and
included:

--  The army, with 145,000 members organized into 5 tank divisions,
5 motorized rifle divisions, 1 airborne regiment, and 1 artillery
division; and

--  The air force, with 55,000 members organized into air defense,
and a tactical air army, each with two air divisions.


--  Border guard and interior guards, with 35,000 members, and the
people's militia, with 120,000 members.


Compulsory military training for men required service of 2 years in
the army, 3 years in the air force, or 27 months in the border and
interior guards.

As a charter member of the Warsaw Pact (May 1955), Czechoslovak
forces are subject to the command and direction of the Warsaw Pact
commander, always a Soviet officer.  At the end of 1989, about
80,000 Soviet troops, including 5,000 air force personnel, were
stationed in Czechoslovakia.  Czechoslovak-Soviet discussions on
Soviet troop withdrawals began in January 1990.


ECONOMY

Czechoslovakia has a developed, but gradually deteriorating,
industrialized economy.  Its strong industrial tradition dates to the
period when Bohemia and Moravia were the industrial heartland of
the Austro-Hungarian empire.  Today, this heritage is an asset and
a liability.  Czechoslovakia has a well-educated population and a
developed transport system, but much of its plant and equipment,
inadequately modernized in almost 40 years of communist rule, is
among the oldest in Europe.  The country's centrally planned
economy is tightly linked with the Soviet Union and other East
European countries, although the coalition government challenged
traditional ties with its East Bloc neighbors at the January 1990
CEMA conference in Sofia.  The economy is characterized by low
growth, low technological sophistication, and structural imbalances
caused by inappropriate investment decisions over the last 40 years.

Czechoslovakia is deficient in energy resources and many raw
materials. Its major natural resources are coal (brown and hard),
timber, and uranium. Its main agricultural products include sugar
beets, fodder roots, potatoes, wheat, and hops.

Principal industries are heavy and general machine-building, iron and
steel production, metalworking, chemicals, electronics, transport
equipment, textiles, glass, beer brewing, china, ceramics, and
pharmaceuticals.

The gross national product (GNP) was approximately $107 billion in
1987, amounting to about $6,900 per capita. GNP grew steadily
during the early and mid-1970s, stagnated during the years 1978-82,
and resumed modest growth of about 2.5%-3% a year in 1983.

At the time of the 1948 communist takeover, Czechoslovakia had a
balanced economy and one of the higher levels of industrialization in
Europe. In 1948, the government began to stress heavy industry
over agriculture and consumer goods and services. Many basic
industries and foreign trade, as well as all domestic wholesale trade,
had been nationalized before the communists took power.
Nationalization of most retail trade was completed in 1950-51.
Exceptions to private ownership in these sectors are negligible and
consist mainly a few artisans.  Collectivization of agriculture began in
1949.  Today, all but about 7%-8% of the agricultural land is in the
"socialist sector," either in state farms or in state-run cooperatives.

Heavy industry received major economic support during the 1950s,
but waste and inefficient use of resources resulted from the
adaptation of centralized planning techniques to the complex
industrial sector.  Although the labor force was traditionally skilled
and efficient, inadequate incentives for labor and management
contributed to a high labor turnover, low productivity, and
unsatisfactory quality.  Economic failures reached a critical stage in
1963.

A period of de-Stalinization and economic reform was launched
during 1963-67.  Proposed reforms involved decentralized
decisionmaking, including greater freedom for managers to set
prices, production levels, investments, and wages.  The new
mechanisms were invoked with insufficient preparation and failed to
receive support from some important elements in the Communist
Party and from many economic officials and planners.  Inflationary
pressures began to develop, and wholesale prices were permitted to
rise rapidly in 1967.  Firms were making substantial profit without
having to improve productivity or quality of output.

Hope for more wide-ranging economic reform came with Dubcek's
rise in January 1968.  Under his leadership, Czechoslovakia could
not immediately come to grips with inflationary forces, much less
begin the immense task of correcting the economy's basic
problems-overconcentration on heavy industry, low productivity, lack
of modern equipment, and inferior quality.

Any opportunity the Dubcek leadership might have had to place
economic reform on a sounder footing was cut short by the 1968
invasion, which brought renewed strains on the balance of payments.
Although industrial production improved during the immediate period
after the invasion, inflationary panic-buying continued, and worker
productivity fell as demoralization spread.

Price increases and wage controls implemented under Husak's
leadership reduced inflationary pressures and, to some extent,
increased productivity.  Unfulfilled targets in housing construction
and inadequate supplies of fuels and power continued.  High rates
of absenteeism continued to reveal the attitude of workers.

The economy grew during the 1970s but stagnated between 1978
and 1982.  The Czechoslovak approach to its economic problems
has been to continue to uphold central planning.  After a 3-year
(1978-80) experiment involving about 15% of the economy, in
January 1981 the regime introduced a "Set of Measures" to improve
management of the production process.  Its general goals were to
improve export performance and the quality of production, with
particular emphasis on economizing on labor, materials, and energy.
The new measures, in addition to reinforcing central planning and
controls, included a system of rewards and penalties intended to
distinguish the performance of enterprises and workers. Ideological
campaigns were maintained to diminish apathy and aversion to the
incentive system.  The leadership later acknowledged that the "Set
of Measures" failed to stimulate exports, achieve efficiency, or
promote technological innovation.

The economy grew after 1982, achieving annual average output
growth of more than 3% in 1983-85.  Imports from the West were
curtailed, exports boosted, and hard currency debt reduced
substantially.  New investment was made in electronics, chemicals,
and pharmaceuticals, and these sectors were industry leaders by
1986.  But the economy remains troubled by central planning and
stifling bureaucracy, which produced low exports and productivity,
and overreliance on the Soviet Union and other CEMA countries as
sources of raw materials and as markets for goods.  A recent decline
in imports from the Soviet Union and problems in trade with some
other CEMA members, caused in part by their unwillingness to
accept poor-quality products, may foreshadow a gradual change in
the pattern of trade.

Economic reform is the greatest hurdle facing the post-1989
government.  Although sweeping structural changes that would
increase the role of market forces are being prepared, introduction
of those changes is proceeding slowly and cautiously.

About 80% of Czechoslovakia's trade is with other communist
countries.  The Soviet Union alone accounts for about 45% of
Czechoslovak trade and supplies the country with almost all of its oil,
natural gas and iron ore, as well as many other key raw materials.
To secure these resources, Czechoslovakia is investing large
amounts in natural gas, and iron ore extraction projects in the
U.S.S.R.  In return, Czechoslovakia supplies machines and other
industrial products to the U.S.S.R.  After the Soviet Union,
Czechoslovakia's major trading partners are East Germany, Hungary,
and Poland.  Among Western countries, Austria, West Germany, and
Switzerland account for the largest share.  In 1987, U.S. imports from
Czechoslovakia totaled $86 million, and U.S. exports totaled $47
million at the official rate of exchange.

Post-1989 Czechoslovakia had made  expanded trade with the West
an explicit policy in an effort to join the global economy.  Austrian
and West German firms already have increased activities in
Czechoslovakia, and U.S. businesses have revived their interest.

The government has justified itself largely by its efforts to improve the
material welfare of the population.  The standard of living is difficult
to measure, but it is certainly high in comparison to other Eastern
bloc countries.   Unemployment has been virtually nonexistent, the
result of inefficient use of labor.  About 7.8 million people, or half the
population, are employed.  Women make up about 47% of the labor
force.  Workers receive ample fringe benefits and an extensive social
security program.  Food and consumer goods, although by no
means abundant, are in good supply, and the level of automobile
ownership is the highest in Eastern Europe.

In January 1990, the government introduced a series of  legislative
changes designed to increase enterprise autonomy, efficiency and
productivity.  These changes could improve economic performance,
but government experts agree that more substantial reform on
private property, currency, investment, and financial institutions is
needed.


FOREIGN RELATIONS

The foreign policy of Czechoslovakia had, until 1989, followed that of
the Soviet Union, the result of the Soviet presence in Czechoslovakia,
and the country's economic and military ties to the Soviet bloc.
Since the beginning of 1990, Czechoslovakia has sought to carve a
niche as a small power serving as a bridge among its neighbors.

Czechoslovakia is a member of the United Nations and participates
in its specialized agencies.  It also is a member of the General
Agreement on Tariffs and Trade (GATT).  Czechoslovakia maintains
diplomatic relations with more than 100 countries, of which 63 have
permanent representation in Prague.


U.S.-CZECHOSLOVAK RELATIONS

President Woodrow Wilson and the United States played a major role
in the establishment of the state of Czechoslovakia on October 28,
1918.  President Wilson's 14 Points, including the right of ethnic
groups to form their own states, were the basis for the Czechs and
Slovaks joining to form the Czechoslovak state.  Tomas Masaryk, the
father of the state and its first president, visited the United States
during World War I and worked with U.S. officials in developing the
basis of the new country.  He used the U.S. Constitution as a model
for the first Czechoslovak Constitution.

Since before the founding of the Czechoslovak state, the U.S.
Government and people have maintained a friendly and sympathetic
attitude toward the Czech and Slovak people.  Millions of Americans
have their roots in the Czech lands and Slovakia, and a large
community in the United States has strong cultural and family ties
with Czechoslovakia.
After World War II and the return of the Czechoslovak
government-in-exile, normal relations were continued until 1948,
when the communists seized power.  Relations cooled rapidly.

The Soviet-led invasion of Czechoslovakia in August 1968 further
complicated U.S.-Czechoslovak relations.  The United States referred
the matter to the UN Security Council as a violation of the UN
Charter.  In a report to Congress, Secretary of State William P.
Rogers condemned the invasion as an infringement of
Czechoslovakia's sovereignty and stressed that improvement in
East-West relations must be based on respect for the principles of
sovereign equality, political independence, and the territorial integrity
of each European state, regardless of its political or social system.

Despite cool relations, both sides decided in the fall of 1972 on
limited steps aimed at solving some problems. Negotiations were
begun on a consular convention, a trade agreement, an accord on
financial issues dating back to World War II, an exchanges
agreement, and an accord to open consulates in Bratislava and
Chicago.  The discussions failed to produce results.

The 1980s saw modest improvement in U.S.-Czechoslovak relations
at the official level.  In 1982, agreement was reached to resolve
outstanding financial issues, including compensation from
Czechoslovakia for the U.S. citizens and corporations whose
properties were nationalized after World War II and the delivery to
Czechoslovakia of its share of the gold recovered from Germany and
other countries by the Allies at the end of the war.  The gold was in
the custody of a tripartite (United States, United Kingdom, and
France) commission established by international agreement to
allocate the pool of recovered gold among the countries from which
gold was stolen by the Nazis.  The United States blocked the gold
identified by the commission for delivery to Czechoslovakia pending
a settlement of the nationalization claims.

Another lengthy negotiation was concluded in 1986 when the United
States and Czechoslovakia signed the first exchanges between the
two countries. The agreement provides for exchanges in culture,
education, science, technology, and other fields.  In addition, the
U.S.-Czechoslovak Consular Convention, signed in 1973, was finally
brought into force by an exchange of instruments of ratification in
October 1987.

With the "gentle revolution" of 1989, bilateral relations have improved
markedly.  Dissidents once sustained by U.S. encouragement and
human rights policies reached high levels of government.  In 1990,
both governments are moving rapidly to forge close ties.

U.S.-Czechoslovak trade, hindered by Czechoslovakia's failure to
qualify for most-favored-nation tariff status and its trade orientation
toward the Soviet Union and other CEMA countries, was stagnant
until the events of 1989.  Of $47 million in U.S. exports to
Czechoslovakia in 1987, cattle hides and fertilizers accounted for
almost half.  The United States purchased $11 million in glassware
from Czechoslovakia in 1987.  Other leading imports included leather
footwear, hops and beer, and small tractors.  In 1990, as part of the
general development of warmer relations, prospects for improved
trade relations and mutual economic cooperation increased rapidly.


Principal U.S. Officials
Ambassador-Shirley Temple Black
Deputy Chief of Mission-Theodore E. Russell
Counselor for Political and Economic Affairs-Clifford G. Bond
Press and Cultural Affairs Officer (USIA)-Thomas Hull
Economic Affairs Officer-Harvey D. Lampert
Commercial Officer-Janet G. Speck
Consul-Richele Keller
Defense Attache-Col. Edwin Motyka
Administrative Officer-Steven J. White

The U.S. Embassy is located at Trziste 15, Prague (tel. [phone]).


Travel Notes

Climate and clothing:
 The climate is most pleasant during May-August; smog and
dampness prevail in November-March.  Bring rainwear and
lightweight or heavy woolens depending on the season.


Customs and currency: U.S. citizens must have visas. Tourist visas,
valid for one entry, usually can be obtained within 2 weeks.  Visas
require the tourist, upon entry, to purchase 30 West German marks
(about $17 at the exchange rate of early 1990) a day in
Czechoslovak crowns.  Crowns may not be imported or exported.


Health:  No unusual health precautions need be taken in Prague;
however, visitors coming from areas where yellow fever or cholera
are endemic must have proper inoculations.  Tapwater is usually
safe.  Bring any needed medications.


Telecommunications:  Telephone and cable service is adequate.
Czechoslovakia is six standard time zones ahead of eastern standard
time.  Because of higher Czechoslovak rates, phone calls to the
United States should be made collect, if possible.


Transportation:  Czechoslovakia has a wide network of bus, rail, and
air services.  Prague has a subway and streetcars, and trolley buses
serve cities and suburbs.  Taxis and rental cars are available. Main
roads are adequate.


Published by the United States Department
of State --  Bureau of Public Affairs  -- Office
of  Public Communication --  Editorial Divi-
sion --  Washington, D.C.-- February 1990
Editor:  Jim Pinkelman

Department of State Publication 7758
Background Notes Series  -- This material is
in the public domain and may  be reprinted
without permission; citation of this source
is appreciated.

For sale by the Superintendent of Docu-
ments, U.S. Government Printing Office,
Washington, D.C.  20402.