I just finished reading the piece by Timothy Garton Ash on Central Europe in the most recent New York Review. Most of it is a rumination on the meaning of "Central Europe" (and a mild critique of Samuel Huntington), but along the way he tells a story about Slovakia, its fall and redemption. I have no love, of course, for the ethnic chauvinism and authoritarianism of Meciar, but it seems to me that Garton Ash seriously misrepresents the economic realities of Slovakia and the Czech Republic. He lists "genuine free market economics" as one of his criteria of virtue, so perhaps this should come as no surprise. My understanding is that Garton Ash is wrong about both countries. Slovakia, according to most accounts, is muddling through economically. It is undergoing a slow, uneven transition toward a market economy, with enterprises gradually becoming more professionally managed. It has respectable economic growth, and seems to be proceeding at approximately the same rate as Hungary (especially if one excludes Budapest). I'm not endorsing this approach to transition, of course, simply placing Slovakia within the spectrum of CEE transitioners. The Czech Republic, on the other hand, is a disaster zone. Pseudo-privatization has given the cronyklatura a corrupt grip on enterprises, few of which have even begun to transform themselves. The combination of abrupt openness in trade and finance, along with the failure of transformation, has created a gaping hole in the current account. The crisis has been delayed due to the absence of initial external debt in 1989 (perhaps the only positive bequest from the Stalinist era) and large tourism receipts in Prague, but as foreign exchange disappears the moment of reckoning draws imminent. (The Czech economy is already in a recession, alone in central Europe, that marks just the first stage in a painful process of current account adjustment.) This is terrible news for the people of the Czech Republic, of course, but it also casts a shadow over conventional views of that country and its figurehead, Vaclav Havel. If this description is accurate, the Czech miracle is a sham, and the philosopher-king presides over a Potemkin economy of charlatans and kleptocrats. So: is this in fact a fair description of where Slovakia and the Czech Republic stand today? And if so, how to explain the acquiescence of not only Garton Ash, but nearly all journalists, academics, and officials of international agencies, in a fraudulent story that will be smashed sometime within the next year or so? Peter
