Speech of President of the Czech Republic at the occasion of opening of Export Festival CZ 2016

June 15, 2016,

Good day, Ladies and Gentlemen,

Thank you for the invitation to Export Festival and let me in a short, approximately five-hour speech explain some of my views on the so-called policy of economic diplomacy.

You know, that small or medium-scale country acts somewhat ridiculously, if its foreign policy is based on moralist chaplain speeches, while the other countries are happily doing their business. Therefore, I think that a pragmatic approach based on economic diplomacy, and thus on promoting exports, on the one hand, and the promotion of foreign investment, on the other hand, is the only sensible solution for the country of our range.

However, I’m not here to say the obvious. This means that, as usually, I would offer for our discussion a few provocative theses, which may not satisfy you, but don’t be afraid, I will stay only at two of them.

Thesis number one. It’s nice that exporters are cheering over the devaluation of the Czech Crown and, in the short term, it is certainly an impulse for them. However, from a long-term point of view, I believe that the weak Crown leads to laziness, leads to a reduction of the innovative impulses, productivity, and competitiveness. By the way, I see a certain analogy here with the undercutting whatever cheap currency or cheap labour. There are people who say that we need to reduce secondary labour costs, which objectively means that this will be the means dedicated for pensions or health care, and that we have to compete just with cheap labour, which maybe was our comparative advantage in the 1990s, but is definitely not a comparative advantage today. Tony Blair once said, we have to compete with well-paid and highly skilled work force, and I agree with this view.

We all know that the average Czech employees’ wage is approximately 30 percent of the average wage in Germany, and every politician should, inter alia, to strive for that standard of living increases in his country. Therefore, once again, a cheap Crown and cheap labour are good tools for the short term, but in the long term, if we want to be really advanced country, we must strive for the opposite.

Thesis number two. I meet and see them here, both the representatives of EGAP, with the representatives of the Czech Export Bank. I am glad that their capital will be increased, but on the other hand, I cannot forgive my opinion, that in some cases they are concluding reckless trades. They do not verify enough their foreign partner and then they just wave their hands and say the trade didn’t come out, EGAP will pay it. Therefore, and exporters don’t too much like me because of this, I support the proposals that, within the conclusion of insurance contracts, there should be at least 10% filling in the case of the trade doesn’t work, from the party who unwisely closed this trade, and in addition, I’m glad I came to meet Export Bank, and I believe that there are cases where it is worth to initiate a penal procedure, also for the reason that anyone else, for example, the Financial Analysis Unit, wouldn’t do so instead of us.

So those are the two unpleasant thesis. I dare not say the truth, the truth is always relative, but these theses do not please the exporters too much.

And now something positive. Let us not to forget that we have reached a fairly significant success in a variety of entrepreneurial missions, no matter if these missions were organised by the Prime Minister, the Minister of Trade and Industry or anyone else, including the President. I think that one of the most important achievements has been meeting leaders of Czech economic life on the Prague Žofín Palace, on the occasion of the Czech-Chinese investment forum with the personal participation of the Chinese President and me. There came people who usually do not appear at all in public, and when they appear, so certainly not together. And I think that what has succeeded in a breakthrough on the Chinese market, we now have to repeat on other markets.

I self-critically recognize that assistance of the President is more advantageous for Czech exporters in countries with a presidential regime, including China, because in countries with a parliamentary regime, these paths are sometimes rather political tourism events than real economic action. But we have plenty of presidential regimes in the world, and I sometimes notice with envy how my foreign partners can with only one command solve problems, whose resolution in a parliamentary democracy takes years and years.

In conclusion, I would like to say that I feel inspired by the opinion of one, as usually intelligent, political commentator, who said that I reduce politicians on travelling salesmen by just this, what have I told you now. So let me finish by that I consider myself as a travelling salesman of the Czech Republic.

Thank you for your attention.

Miloš Zeman, President of the Czech Republic, Prague Holešovice, 15 June 2016

Note: This is working approximate translation

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