11-04-2001

The resignation of Finance Minister Pavel Mertlik dominates the headlines in the Czech papers today. All the dailies list Mertlik's successes and failures, speculate about Mr. Mertlik's reasons for stepping down, and wonder who will be stepping up to replace him.

MLADA FRONTA DNES writes that Pavel Mertlik finally threw in the towel in his epic struggle with Trade and Industry Minister Miroslav Gregr. The paper blames Prime Minister Milos Zeman for being reluctant to resolve serious disputes within the cabinet. On the other hand, it admits that finance minister is one of the most difficult jobs in the Social Democrat government.

The paper says Mr Mertlik faced a near impossible task upon assuming office. On one hand, he had to heed the opposition's calls for austerity, otherwise the strongest opposition party would have sent the minority government under. On the other hand, he had to look for ways to fund an extremely expensive, overly generous social state as envisaged by the Social Democrats.

Today's PRAVO produces its own version of the background of Mr Mertlik's resignation. The paper is convinced that the main reason for his departure were drastic austerity measures he was planning for next year's state budget. Cutting budgets of some ministries by 50 percent sealed his fate, PRAVO writes. Mr Mertlik simply wasn't able to defend his concept against the views of his cabinet colleagues.

LIDOVE NOVINY points out that the freshly-elected Social Democrat leader Vladimir Spidla will have a hard time finding a decent replacement not only for Mr Mertlik, but also for the head of the government's privatisation agency, the National Property Fund, who has also resigned. Both are going to be very difficult tasks, as Mr Spidla will be facing severe pressure from different factions within his party.

Elsewhere, LIDOVE NOVINY arrives at the conclusion that Mr Mertlik's resignation will delay the privatisation of the remaining state-owned companies, especially in the energy and telecommunications sectors. What's worse, the government was counting on revenues from privatisation in its priority programmes, namely large- scale housing construction and investment in transport infrastructure.

The business daily HOSPODARSKE NOVINY points out that the financial markets have clearly shown what instability at the Finance Ministry means to them - the resignation of a good economist and a reasonable guardian of the treasury. Foreign investors are anxious to see whom Prime Minister Zeman selects for the newly-vacated post.

Should it be someone like Trade and Industry Minister Miroslav Gregr, then the stock market will probably continue to fall, HOSPODARSKE NOVINY forecasts . There is also a good chance that in such a case, the yawning state budget deficit will widen even further due to increased expenditure, and privatisation of state-owned companies will be delayed even further.

11-04-2001