Czecho-Slovakia

The Germans occupied as ‘protectors’ until they were defeated in 1945. Prague was liberated by the Red Army of the Soviet Union and Czecho-Slovakia became a part of the Soviet Zone of influence as agreed by the alliance in 1944 at Yalta. In 1948 the communist party organised a ‘coup d’etat’ and Czecho-Slovakia became a communist country. All private property was seized by the state. Just about the only bad things that hadn’t happened to Czecho-Slovakia was that Prague had not been bombed during the Second World War and the country had survived the war without being excessively damaged. Prague today is one of Europe’s most beautiful cities.

Czecho-Slovakia had been plagued by ethnic diversity when it was created. By 1948 ethnic groups and their lands had been transferred to Germany, Hungary, Poland and the USSR. In 1993 Czecho-Slovakia split into the Czech Republic and the Slovak Republic, two independent nations. It had taken 75 years to solve the ethnic problems.

The Czecho-Slovaks were unlikely communists. They had had a functioning democracy for 20 years before the Nazis invaded and they tried to re-constitute their democracy in 1945 even though the Soviets were in occupation. Throughout the Second World War there had been a government in exile in London. The Czechs in particular were a cultured people with a long history of artistic achievement but they lived in Middle Europe and were a small land-locked country of around 15m people surrounded by big, powerful and oft-times aggressive neighbours. Many Czechs and Slovaks emigrated when they could. Dvorak’s ‘New World Symphony’ captures eloquently the joy and sadness of the Czech émigré. The 1948 communist regime was brutal and effective. There were times when it was relatively easy to leave but there was no way of returning.

It would be 20 years before resentment and anger at the regime surfaced in the Prague Spring of 1968. A peaceful request was made for the introduction of human rights. Moscow’s answer was to send the armies of its Warsaw Pact
allies to crush the idea and re-instate a hard-line regime. In 1969 Czecho-Slovakia became a federation of socialist countries, the Czech Republic and the Republic of Slovakia. The resistance went underground and re-emerged in 1977 when 800 people signed Charter 77, published in a West German newspaper, calling for human rights. These people were arrested, beaten and stripped of their jobs and careers. Many left the country as soon as they could.

I visited for the first time in 1977. It was a drab place. The Charter 77 affair was frightening many people. They were worried about the tanks arriving from Moscow. I was there to find out about running a business in Czecho-Slovakia. It wasn’t promising.

In the planned economies of Eastern Europe, direct contact between foreigners and local companies was prohibited. Each local company was State-owned and operated within a specific industrial grouping. Each group had a Foreign Trade Organization [FTO] that represented the company in foreign trade matters both import and export. Only companies with substantial hard currency earnings were considered candidates for importing foreign technology. The currencies of Eastern Europe were not convertible so Western companies wanted hard currency. Czecho-Slovakia had a solid reputation for trade. Some 50% of its foreign trade was with Moscow and 80% of its foreign trade was with communist countries at that time. People normally spoke three languages –Czech or Slovak, Russian and German. The Czech lands had originally been the most industrialised but in the 1970s and 1980s Slovakia probably became the most industrialized. The products produced were generally of better quality than those found in other satellite countries and some products were world class viz. explosives [semtex], small arms, beer, crystal glass, some chemicals and forestry products. Without the planned economy, the politicisation of every workplace, the lack of investment, the over-bearing bureaucracy, the stifling of creativity and the police state, there was the wherewithal to be a successful economy. The standard of living even under the communists was better than in Poland, Hungary and the USSR but still far behind Western Europe. As in other communist countries, special shops, called Tuzex in Czecho-Slovakia, were available to provide goods not otherwise available in regular stores for hard currency or vouchers. The vouchers were provided to party members.

In Middle Europe the Trade Fair has been for centuries the place to do business. In fairness it is a model found across continental Europe but it was particularly important in Eastern Europe because the countries there were closed to Western European companies. The Trade Fair, if you could get a booth and visas, was the place to put your wares on display. The main fair in Czecho-Slovakia was the Brno Fair, held in September each year, a huge extravaganza that was part business and part social and included domestic, Soviet Bloc and Western participants. At the fair, prospective buyers and sellers would meet under the watchful eye of the FTO representative and sometimes the secret police and the sales dance would begin. If all went well for us, 6-9months would elapse before contract and implementation would be 6-9 months after contract. As we became more established, Brno Fair became the show-place for signing contracts. All contracts were subject to export licences being available. Sometimes for reasons best known to UK government and NATO authorities it was more difficult than usual to get licences. The contracts included hardware and software supply, spares packages, testing equipment, UK training for systems and maintenance engineers and management training. All contract monies were to be paid in advance in hard currency. Our sales and support staff had been resident in Prague since 1974 and were mainly Czech nationals. We navigated the tortuous bureaucracy and other issues to achieve accreditation on a totally legal basis. We even had a Czecho-Slovak ‘company’ under local law. And Czecho-Slovakia was a communist member of the Warsaw Pact! The communists needed western technology and they were prepared to bend to get it .Over time it became easier to directly visit with our clients without going through an FTO. Contact became more westernised. While most of our contracts continued to include UK training, which was much prized, in the 1980s we started some direct maintenance activities in Prague. We had engineers in Prague to provide back-up to customer site engineers and it was a small step to take on some direct maintenance as we did in the UK.

From 1977 to 1990 business was very good. There was the occasional problem with licences always more political than practical and funding was sometimes problematical. These problems were always sudden and unpredictable.
But they were always resolved and in this period we built a client base of 450 of the largest organizations in Czecho-Slovakia. The performance of our local company was always at the top of the ROCC internal league tables. It was of course a very special situation because of the closed market but later in the 1980s the market began to be more open And there was strong competition. We were probably the largest supplier of PCs and our telecommunications skills, even within the rigorous restrictions of the export licences, enabled us to build the first commercial data communications systems. Our largest clients included; the Czech Savings Bank, the Czech Insurance Company, Centrotex[textiles], Chemopetrol [chemicals] ,Cechofracht[road transport], Slovnaft [petro-chemical industries}, Koospol [food products], Benzina [gas stations], Paper Industry, Slovak Railways, Mototechnica [automotive parts], Czech Breweries including Ceske Budojovice, Steel Industry including VZKG, Coal Mines, Federal Ministry of Finance, Federal Prices Office, Motokov Foreign Trade Corporation, Slovak State Savings Bank, Czech and Slovak State Forestry Commissions, Slovak Ministry of Culture, Danube River Authority and Slovak Parliament.

Over this time our operations in Slovakia developed considerably. We even built the first Annunciator System for the Slovak Parliament in Bratislava. At one time the British Prime Minister Margaret Thatcher had visited the Parliament Building and the chair that she had sat upon had been preserved and mounted on a pedestal. We wondered if she had been offered the local delicacy of pigfat soup. There were huge mixed messages coming out of the Parliament. Partly it was because the communist party was splitting into ‘reform’ communists and old traditional communists who missed the Stalinist ways, and partly it was because Slovak nationalism was stirring. Gorbachev’s pursuit of ‘perestroika’ in the USSR was also sending out mixed messages to the communist apparatchiks. From the mid-1980s there was a definite thawing of attitudes towards the West in the country although the political rhetoric in foreign affairs did not reflect this.

In 1989 the dam broke and the Soviet Bloc started to implode. The Berlin Wall came down and the Czecho-Slovak communist party collapsed as it couldn’t decide what to do about the democracy demonstrators on the streets. The President resigned. Unbelievably the communist deputies in the Parliament elected a playwright and dissident who was not even a member of the Parliament as its new President. President Vaclav Havel was elected on December 29th 1989. And then, almost overnight the communists disappeared. No-one had ever been a communist. No-one had ever known a communist. No-one had ever heard of communism. Mass amnesia covered the land.

President Havel immediately announced elections for June 1990, the first democratic elections since 1946. It was called the Velvet Revolution. In Slovakia it was called the Green Revolution and it did not end there until 1993 when Czecho-Slovakia was formally split into two sovereign independent democratic republics, the Czech Republic and the Republic of Slovakia. The name ‘Velvet Revolution’ reputedly came from dissidents who used to meet in theatres where there were velvet decorative ropes. The revolution was bloodless.

I was in Prague during the revolution and the subsequent election. It is hard to describe the joy, excitement, optimism and stunning disbelief that the ordeal was over. People were hugging and crying. They were elated. But the elections were to prove challenging.

There were no opposition parties. It was a one-party state. A loose coalition of anti-communists came together as ‘Civic Forum’ to fight the election. They had no experience and no organization. We offered to help and we donated 50
PCs for voter registration and voter turn out operations. In June 1990, Civic Forum had a huge win. The leaders of the group were Vaclav Havel and Vaclav Klaus. Havel was already President and became the first President of the Czech Republic in 1993 when Czecho-Slovakia was dissolved. Vaclav Klaus later became President of the Czech Republic and from January 2009, the first Czech President of the EU.

In the immediate days after the 29th December 1989, the dissidents who had been exiled started to return home. Civic Forum had set up headquarters in a downtown hotel in Prague where the returning exiles were brought after arriving at Prague Airport. We watched the return. Many of the exiles had been gone 20 years or more, banished from their own country. Many were old. They couldn’t believe that they were back home. They hugged each other and hugged long lost friends. One very old man said he was going back to his old university that afternoon to give his first lecture in 21 years. ’I don’t suppose they will remember me’ he said. The emotion and joy were amazing and very moving. We sat in the dining room talking to them. One unforgettable sight was Vaclav Klaus, probably the leading economic guru in Civic Forum, with a young American economics post-grad student [doing his Masters from Columbia Business School] who was acting as an aide and adviser. People were clustered around the young American throwing economic questions at him. I remember thinking that this young man was probably the only member on the team to have been born into capitalism and the only one with real experience of how it worked even if, probably, he had only flipped burgers.

Klaus was and is a fan of Margaret Thatcher. He had a picture of her on his desk. His economic views were similar to the free market capitalism as practiced by Thatcher/Reagan. He had been under investigation by the secret police for years. His private meetings had been penetrated but the police found his economic jargon impenetrable. Reputedly, the police decided that he was the rudest person in the world and as such there was no possibility of him becoming a political threat!

After the June election the celebrations continued but things also started to change. The most noticeable change was that the borders were open and people were flooding in. The single daily British Airways flight to London became several flights per day .Other Western destinations also opened up. Most of the flights were packed with business consultants and property speculators. One particular building in the Old Town was reputed to have attracted over 20 deposits to various vendors, none of whom had any claim whatsoever on the property. Mercedes and BMW cars suddenly appeared on the streets, mostly stolen in West Germany and imported with the help of border guards doing a little private enterprise. Capitalism arrived very quickly. The Communist Party had many private facilities for its top echelons. These included hotels. One of these hotels was in large, landscaped grounds in Prague. There was no signage and a machine-gun nest at the gate and we had always assumed that it was a military installation. After the election we heard that it was a hotel and was opening for business. After much ado we made reservations and became the first non-party guests a few days later .The machine-gun installation had gone and the sentry box was empty. The hotel was a modern building in the Stalinist brutalist style, concrete, big, spacious, expensively fitted, even with its own swimming pool and bowling alley. It was obviously designed by a committee and was totally devoid of character, style or charm. The staff was all old funtionaries dressed in a uniform that was a cross between railway porter and army dress uniform, with medals. We were greeted like royalty with much bowing. We noted a line of black government limos in the drive. In response to our question we were told that the limos were for our use. They were now privatised and we had to pay the drivers if we used them! There was no check-in as such. We went in a procession to our room. It was expensively fitted but about as comfortable as the average government office. We tried the restaurant. We were alone. There were no other guests although there were at least 100 rooms. The food and service were unsettling. Everything worked fine – water, electricity, heating, showers, elevators and the bed linen was good although the beds were firm. We weren’t brave enough to see if there was room service. There was no information of any kind in the room. The hotel felt like a morgue. When we came to check-out next day, we found that there was no accounting system. Previous guests had not paid. So we stood around for 20 minutes trying to agree a bill. They didn’t have a cash box. Eventually we gave them some folding money and with much bowing went upon our way.

Although all communists had disappeared virtually overnight, there was the problem of how to deal with them. There was no national stomach for a Truth and Reconciliation process. The new government took the secret police archives and published the names of every secret policeman and informer as a supplement to the main national daily newspaper .Everyone studied the names. Everyone found something surprising. One of our staff was on the list. He subsequently became a very successful entrepreneur. No further action was taken.

Another early action of the new Government was to declare that all property seized in 1948 would be returned to the rightful owners or their heirs. This was called Restitution. It had a big impact on our staff. It was a huge asset transfer.
Members of staff were ready to move on to new challenges in the New World and we bid them a fond farewell. Other members had become highly marketable to the new competitors sweeping into the market and they moved on to bigger jobs. Export licence restrictions were falling away and soon all the Western IT operations would operate in Prague and Bratislava. The terms of trade were also changing into more typical Western European models.

Our reason for being there as a preferred partner was no longer valid and although we continued to do good business during the 1990s it became more difficult and less rewarding after the 1993 split into two countries and we withdrew in 2000.

It had been a long and very successful business and, on the whole, hugely enjoyable. It had also been very educational. No-one in ROCC was in any doubt that the Czechs and Slovaks deserved to succeed and that their fortitude in adversity was admirable. Over the years we felt that we had contributed to developing the cracks in the wall of the communist dam while strengthening the local economy and improving the morale of the clients. We had made many good friends.