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DE RUEHPG #0002 0030943
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R 030943Z JAN 06
FM AMEMBASSY PRAGUE
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C O N F I D E N T I A L PRAGUE 000002 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/NCE AND INR/EC 
 
E.O. 12958: DECL: 01/03/2016 
TAGS: ECON EINV PGOV PINR EZ
SUBJECT: NEW CZECH DEPUTY PM FOR ECONOMIC AFFAIRS JIRI 
HAVEL IS NO MARTIN JAHN 
 
REF: 05 PRAGUE 1586 
 
Classified By: Acting Pol/Econ Counselor Karen Reider for reasons 1.4 b 
+d 
 
¶1. (U) Czech Deputy Prime Minister for the Economy Martin 
Jahn left office as expected December 31.  Jahn is expected 
to begin working for an unnamed private sector firm in 
February; he is rumored to be assuming a position on the 
managing board of Skoda Auto.  Jahn's replacement is Jiri 
Havel, Chairman of the Czech Power Utilities (CEZ) 
supervisory council, member of the ruling Social Democratic 
Party's (CSSD) national economy commission, and former head 
of the National Property Fund (FNM).  President Klaus 
approved Havel's appointment on January 3.  Havel will have 
to give up his chairmanship of CEZ's supervisory board before 
taking up the position as Deputy PM. 
 
¶2. (SBU) While analysts agree that Havel is academically well 
qualified for the job, his appointment is seen as based on 
his loyalty to CSSD and personal friendship with PM Paroubek. 
 Analysts point out that Havel has less experience in the 
business sector than Jahn who, prior to his appointment, was 
head of CzechInvest.  According to media reports, during his 
days as a student, Havel was a member of the Communist Party. 
 In the early 1990's Havel unsuccessfully tried to establish 
a left-leaning party called Independent Left.  Havel entered 
politics in 1998 as an adviser to then-finance minister Pavel 
Mertlik (CSSD), who in 1999 appointed Havel to FNM 
management.  Havel is currently a member of the CSSD, but 
will not run for the Chamber of Deputies in the mid-2006 
elections. 
 
¶3. (U) BIOGRAPHIC DATA: Born August 20, 1957.  Educated at 
Prague Economics University, Political Economy Faculty, 1982. 
 June 2005 until present: Chairman of Czech Power Utilities 
(CEZ) supervisory board.  April 2001 until present: Lecturer 
at the Institute of Economic Studies at Charles University 
Social Sciences Faculty.  January 2003 until June 2005: 
member of the Unipetrol Board.  March 2000 until April 2001: 
FNM Chairman.  1999 until March 2000: FNM executive committee 
member.  He is the author or co-author of numerous specialist 
economic publications on capital markets and economic 
transformation. 
¶4. (C) Comment:  FDI inflows into the Czech Republic doubled 
in 2005, and many would say this was due in large part to 
Martin Jahn.  Jahn was a favorite of the business community 
and a positive face for the CR abroad.  But in fact, his 
legacy is mixed and his departure from government was no 
surprise.  Jahn's greatest achievement was passage of the 
Commercial Registry reform, which had long been championed by 
the business community (with the AmCham in the lead) as a way 
to streamline business creation.  He devoted countless hours 
to bankruptcy reform, which remains ontrack but unfinished. 
However, he and his hand-picked staff (nearly all of whom 
will leave government with him) developed extensive reform 
measures to help the CR meet the EU's Lisbon criteria and 
generally complete the long-overdue economic structural 
reforms; none of this has been implemented.  Given his 
limited political influence within the Paroubek government, 
his departure is not seen as a harbinger of any shift in 
economic policy.  In fact, the shift has been underway for 
some time.  In his final months in office, Jahn was powerless 
to stop the pre-election spending increases that forced the 
Central Bank President to issue a rare public protest late 
last month.  The question is whether Havel, as a CSSD 
insider, will be even more accommodating of this economic 
loosening, or will perhaps be more successful in convincing 
Paroubek of the long-term dangers.  Either way, like Jahn in 
recent months, Havel is expected to play a limited role in 
policy making. 
DODMAN