At the beginning of this year, Czech-American businesswoman Magdalena Souček took over the presidency of the American Chamber of Commerce in Prague. Souček, who is also a managing partner in the risk advisory services department at Ernst & Young, talks to The Prague Post about U.S. President George W. Bush's recent State of the Union address and its implications for Europe. She also discusses the impact that America's visa requirement for Czech travelers has on Czech-American business relations.

1. In his State of the Union address, President Bush said the United States needs to become less dependent on other countries. Is there a trend toward countries seeking more economic independence?

President Bush was referring specifically to oil. As China, India and the former Soviet economies have grown, the demand for oil has pushed energy prices to all-time highs. This certainly stresses economies, and increases the incentive to find lower-priced substitutes. Finding a way to supplement oil will likely be the great commercial and scientific challenge of this generation.

Will that search lead to protectionism and attempts to reassert greater economic independence? It would take a great upheaval similar to World War I to reverse the globalization of the economy.

2. Actually, couldn't Bush's call for greater independence also be a signal to Europe to slow down the unification of economies and currencies? Doesn't such unification create more risk than opportunity?

The unification of Europe stopped centuries of bloodshed by integrating, to some degree, the day-to-day economies of nations. Furthermore, it created a very large and very affluent market, which has stimulated standards of living across the European Union. It would take a very high risk to forgo these two benefits. Europe needs to focus more on how to compete with China and India, and less on worrying whether slowing down or speeding up unification is a good or bad thing.

3. A recent study by Ernst & Young showed that Czech companies are very vulnerable to fluctuations in international financial and commodity markets. What needs to be done to improve this situation?

Czech companies should improve their financial risk management frameworks. This means that a company should establish a risk management function, set its risk appetite, identify financial risks, and measure its risk exposure properly. It is usually the case that risk exposure is higher than risk appetite. In such a situation, a company should hedge its financial risks. The market for various hedging instruments is fairly developed and competitive in the Czech Republic.

4. If you gave your own State of the Union address on the Czech Republic, what would you identify as the particular strengths and weaknesses of the economy and business environment?

The biggest strength is its people. This is the most critical advantage any country can have, because a country full of smart and innovative people can adapt to any economic reality. The country has two weaknesses. First, its economic development policy is still focused on sustaining low-wage jobs instead of nurturing the competitive advantage of its people. Second, policy-making has been diluted by ineffective implementation.

5. U.S. institutions and investors often criticize this market for having high corruption and low transparency. What will it take to convince American investors that the Czech Republic's business environment is virtually trouble-free?

No country holds the moral high ground — there is corruption everywhere. I imagine U.S. investors will view it in much the same way they view the current scandals in Washington: Prosecution and imprisonment are far more convincing than pointing fingers at the other party. In fact, pointing fingers at the other parties actually indicts the whole system, including those who are pointing the fingers.

6. Several American companies placed bids in a recent tender to supply the Czech military with fighter jets and armored vehicles, but they weren't successful. If American companies had more success in major tenders such as this, would that likely trigger a significant influx of U.S. investors?

An Austrian subsidiary of U.S. General Dynamics was a finalist for the armored car contract. Most companies outside the defense industry tend to view military public procurement contracts as a separate area of business, and therefore are not much influenced by who wins. They are influenced by the integrity of the bidding process. It's likely that American companies would create more supplier contracts in the Czech Republic than companies that already have extensive European operations.

7. One of the most discussed issues in Czech-U.S. relations is the United States' visa requirement for Czech travelers. Do you think lifting the requirement would boost business relations between the two countries? Will AmCham lobby for the removal of the visa requirement?

It obviously would remove an obstacle, but the extent of that impact is difficult to quantify. At the moment, somewhere around nine out of 10 visa applications are approved, and I imagine the number is higher for business people. So, a visa waiver for the country might just be a symbolic boost for commerce between the countries. Nonetheless, we are already searching for a solution that would allow Czechs to enter a visa waiver program. We are, however, aware that immigration inflow to the United States and security are major and legitimate policy concerns of the U.S. government.

8. Another controversial issue is the bilateral investment protection agreement between the United States and the Czech Republic. The Czech government is considering removing protection of investment made through third countries from the treaty. How would this affect American businesses here and other potential investors?

The investment treaty has resulted in a major amount of U.S. investment in the Czech Republic — most made through European subsidiaries — including TV Nova. The treaty has been amended recently to fit within EU rules. Further fiddling with the treaty indicates a concern that one of the countries might not wish to abide by the terms of the treaty, which are to provide a level playing field for investments. That would be a very bad signal indeed.

9. Let me ask you a couple of personal questions. Before leaving

States you started studying business, and now you're a successful businesswoman. Do you ever regret not staying in medicine?

Studying business was very tangible. What I learned in school I saw in practice every day, read it in the newspapers, etc. Studying medicine was quite theoretical given [that I wanted to] be a general practitioner in pediatrics.

10. After going to the United States, you dropped the traditional 'ová' that Czech women place at the end of their last names. Have you ever considered using 'ová' again?