Roman Kramarik, Partner at JSK in Prague, is making every effort to distance himself from politics, although he reports that “you can’t even call it politics anymore, but rather a showing off of the state’s executive power.”
Kramarik reports being worried what the future might hold for the Czech Republic. “We don’t know how far this might go. As a result of the recent pandemic outbreak, the executive is able to take even more control over our lives.” He sighs. “In the end, we might find ourselves in times worse than those during Socialism.”
Kramarik reports that Czech Republic is in a three-week lockdown, and he says he is happy with the Government’s fast reaction in imposing measures to stop the spread of the virus. “The Czech Government was one of the first in the region – if not the first – to impose these measures,” he notes. “In addition to the lockdown, people are obliged to wear face masks everywhere outside their homes. The poor availability of most products during the Socialist times taught the Czechs to be DIY experts. This included sewing. So our wives have pulled the sewing machines from the cabinets and knit loads of masks at home overnight. Within a day from announcement of the masks mandate, everybody was already wearing them. Even the widow of the late President Havel, who is an actress when theaters are open, got involved. So the true heroes of this war in our country are not only the hospital staff and firemen, but also our wives. And that’s even before I mention home schooling.”
He says that the crisis could have a negative impact on European integration, as, “even though the EU Commission imposed some measures, its general response was perceived as disappointing, and this might mean that the future of EU is at stake.”
As in most other countries, recent legislation in the Czech Republic has mainly been focused on the pandemic. For instance, Kramarik says, “a new law on Insolvency has been quickly proposed and is now being approved in the Parliament. Government has started handing out money to those in need, but their measures are seen as somewhat insufficient and too budget-minded. Other countries have been much more generous.”
The Czech Republic’s economy is heavily based on export, Kramarik says, mainly to Germany. As a result, the impact of the crisis on Germany’s economy is extremely significant to Czech prospects, as “if Germany catches a cold, we might suffer from something much, much more serious.” In addition, he says, “Prague has always been a tourist hotspot, and the fact that travel has been completely banned has hit hard. A lot of people whose livelihoods depend on tourism, such as waiters, guides or people who used to rent places on AirBnB, are going to struggle.”
Like so many, Kramarik concedes that there is a discrepancy between what he hopes will happen and what he is bracing for in the foreseeable future. “I hope that the situation goes back to normal in the next few months, and that our most serious worries will remain only the cancellation of events and certain travel restrictions,” he says. “Those things may hurt, but they are not essential for the economy, regardless of how frustrating they will be.” Unfortunately, he says, “what we must be prepared for is much worse. The crisis might have colossal effects. The globalized economy’s response to this unprecedented disruption could be hiding something we can’t even predict at this point. Because it is unknown, it is hard to prepare. And panic is not a preparation. In fact, self-induced damages from the panic can do more harm to the economy than the virus and all of the restrictive measures combined."
Ultimately, Kramarik looks to the past for analogy. "Take September 11th – most people worried that the world would not remain the same, when they watched the twin towers live on TV, as they were collapsing. And did it change? Certainly much less than people feared. The economy is as much about people’s hope in the future as it is about their actual current output. Even though we need to be prepared for some economic decline, which is inevitable, we must not lose our hope for the future and our ability to cope with whatever it brings. This was the mentality of our grandparents, who lived through the war. And we need to learn from it and keep that in mind in these difficult times. After all, look at the silver lining: this is only nature. An external enemy, not another human. And we are quite a resilient and adaptive species when it comes to dealing with nature. And the nations’ response so far has been amazingly humanistic.”
