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Home » Archives » Business

Czech businesses courting Russia

Largest-ever delegation joins President Klaus on visit

By Riva Froymovich
Staff Writer, The Prague Post
May 2nd, 2007 issue

Recognizing the undeniable economic pull that Czech businesses feel toward Russia, Václav Klaus became the first Czech president to officially visit the country and meet with its president last week.

He was joined by the largest delegation of Czech businessmen to ever participate in an official trade mission.
“Russia has always been one of our most important partners,” said Dagmar Kuchtová, the business group’s organizer and head of foreign relations at the Confederation of Industry of the Czech Republic, on the eve of the April 27 trip.
“After the changes here in November 1989, many companies escaped the Russian market for various reasons,” she said. “That may not have been a very good strategy, because Czech products and deliveries were quite popular in Russia.”
Now, companies are going back in a strong way, she explained — and not just in Moscow, but throughout the country. Manufacturers, construction companies and banks, from Škoda Auto to Alta and HVB Bank, have all hopped onto the bandwagon.
“Czechs are investing more and more in foreign countries,” Kuchtová said, citing Romania and Bulgaria as other examples. With those nations, she added, “It’s much easier.”
On the other hand, Russia represents the “greatest challenge,” Kuchtová said. After so brisk an exit, the country’s competitive market is resistant to re-entry, she said.
Instead, Czech-based businesses have mostly turned toward the European Union nations, which represent about 80 percent of the country’s foreign trade, said Jan Zahradil, a Czech representative in the European Parliament.
“Over the last 15 years, the role of mutual trade declined [with Russia], and this is natural because of our reorientation to the West,” he said.
Members of the government and the Czech business community hoped progress made during the Moscow trip could help spur business relations. The countries signed several agreements, including treaties to avoid double taxation between the states and to protect intellectual property.
Companies on the mission signed pacts to advance their ties with Russia as well. Genoservis Olomouc negotiated farming ventures with SamaraProdRezerv and Plemzavod Ramenskoe. Alta joined with Russian holding company Titan to build a bioethanol plant valued at 100 million euros ($137 million/2.8 billion Kč). It also signed a 300 million to 1 billion euro rail-supplies agreement with Uralvagonzavod.
Finance Minister Miroslav Kalousek was set to renew agreements concerning the protection of mutual investments and to discuss new investment vehicles, his spokesperson said prior to the trip.
The minister also planned to discuss cooperation between the nations on banking issues, including the transformation of two Eastern and Central European cooperative banks — the International Investment Bank and the International Bank for Economic Cooperation — into one international development bank.
Other government officials on the mission included Industry and Trade Minister Martin Říman, Senator Jiří Šneberger and Deputy Chairwoman of the Chamber of Deputies Miroslava Němcová, as well as a number of deputy ministers.
And there was Klaus, of course.

Two of a kind

This is not the first official meeting between Klaus and Putin. Last year, they met when Putin came to Prague — the first visit of a Russian president to the Czech Republic in 13 years.
The two presidents share a history and a political approach, most often characterized as pragmatic or efficient. They care about the bottom line.
While other politicians held their guard during the Prague visit, Klaus played to Putin. They spoke to one another in Russian.
Putin was expected to do the same this time — mostly. While he continued to show strong reservations about the construction of a U.S. missile-defense base in the Czech Republic, he showed no qualms over conducting business as usual.
Much changed during the more than decade-long diplomatic chill between the countries that existed since Boris Yeltsin met with former Czech President Václav Havel back in 1993, experts agreed. Czechs were reminded of those differences April 23, when the former Russian president passed away. On Friday, April 27, Klaus laid a wreath at his grave.
The Czech Republic is a member of the EU and the North Atlantic Treaty Organization, both of which have visibly sensitive relationships with Russia.
Most recently, in the aftermath of the EU-Russia Forum April 23, attended by Prime Minister Mirek Topolánek, EU Trade Commissioner Peter Mandelson told reporters that trust between the EU and Russia had reached its lowest level since the end of the Cold War.
In Putin’s state of the nation address April 26, he warned Russians of nations seeking to “gain unilateral advantages” — seen by many as a jab at the U.S. plan for missile-defense bases in Central Europe.
The issue led to a resurfacing of tension between the nations and passionate responses from its leaders.
Prime Minister Topolánek told Der Standard April 24 that Russia “still views the Czech Republic and Poland as its sphere of influence.”
“I think for all Central and East European countries, for so-called new EU members, there is a particular concern with relation to Russia because of some of these elements of history,” said Zahradil, the Czech MEP.
“Of course, our main goal is to have good and stable relations with Russia,” Zahradil said. “Good trade and economic links.”
That leaves the Czech Republic, like other former Warsaw Pact countries, suspended between the West and East. As a nation on the rise, it is seeking to take advantage of all economic opportunities, including in Russia, observers said. Political passions and challenges aside, the value of expanding business into the once “mother country” is overwhelming.
“We have an advantage because of a shared mentality and history,” said Kuchtová, from the industry group.
Hela Balínová and Naďa Černá contributed to this report.

Riva Froymovich can be reached at rfroymovich@praguepost.com


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