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UBS Gala Dinner Speech

English Pages, 10. 5. 2015

Mr. Chairman, Ladies and Gentlemen,

Thank you for inviting me to be with you this evening, thank you for choosing Prague for your annual gathering and thank you for organizing your gala dinner at the Prague Castle. I was very privileged to spend ten years here, in this beautiful place, in this unique complex of historic buildings. This hall is the place where I – among many other events – used to address the ambassadors from all over the world on the occasion of the Czech National Day. I always return to the Prague Castle with some – perhaps subconscious – feeling of interest and curiosity. I hope you will also enjoy the very specific atmosphere here tonight.

As I said, I am glad you are here. In his letter of invitation, UBS Chairman Axel Weber wrote that your group would be composed of “top industrialists, owners of significant businesses, leading families as well as finance and economic experts”. It is nice to have you all in Prague, I have no problem with that. He added, however, that you all “have a strong interest in the emerging markets”. This is a problem. If it is really so, why would you want to be in Prague? Do you consider this country an emerging market?

I have to confess that already as an academic economist, in my prepolitical era more than 25 years ago, I had serious doubts about the usefulness of the term “emerging markets”. It has never been defined. It is not a textbook term. Does it mean

- less developed countries?

- countries undergoing transition from centrally planned and state-owned economies to market economies?

- countries moving from closed and weak markets to full-fledged markets and open economies?

- countries in the past hidden behind the Iron Curtain and, therefore, unknown to and underestimated by the people who were privileged to live in the second half of the 20^th century in a free society?

All of that is possible, but I am not sure whether this term is sufficiently descriptive, useful or helpful and in any way interesting.

I have to argue that the country you are just visiting is institutionally fully harmonized with the rest of the EU. The transition from communism is over. Twenty five years after the fall of communism we consider ourselves a normal European country, which is, however, a mixed blessing these days.

In one respect, this may be a positive label, in other, I am afraid, it is not. It also means that we are already equally rigid and bureaucratic as any of the old EU countries, equally excessively socially overburdened, equally environmentally confused and economically irrational, equally aging, equally unsovereign, equally unhappy with its existence in a post-democratic European setting as any other European country.

I don´t think – to my great regret – that we could be considered a new, unknown, promising emerging market just waiting to be discovered. We are a standard, slow growing European economy with a lower GDP per capita (as compared to the EU average but with the highest GDP per capita in Central and Eastern Europe) which means that the non-genuine, by the EU externally enforced and undoubtedly premature harmonization and standardization are very costly for us.

On the other hand, the Czech Republic is a decent country, a country with relative order and authentic discipline (German word “Ordnung” would be more accurate), a country with a long democratic tradition, a country that is economically as well as culturally very open. We are a highly industrialized country where the industry survived 40 years of irrational communist experimentation with the economy. We are a country with the highest share of industry in GDP in Europe and with one of the highest shares of foreign trade on GDP. The size of our exports in absolute terms is greater than that of e.g. Austria or Sweden. Prague – as you could see – is flooded with tourists, which is the same throughout the whole year.

We are a truly Central European country. The distance between Prague and Kiev is more than twice as big as the distance between Prague and your headquarters in Zurich and between Prague and Donbas more than three times. We know both the West and the East. Our communist past gave us an increased sensitivity and enabled us to see even the – at first sight almost innocent and negligible – symptoms of the deterioration of the political and economic systems. This is what we currently see in Europe and in the whole West. And that’s the reason why I am, and some of us are, now more worried about the old markets than about the emerging ones.

I wish you a very pleasant and fruitful stay in Prague. Thank you for your attention.

Václav Klaus, UBS Gala Dinner Speech, Prague Castle, May 9, 2015.