Economic Policy Making and Parliamentary Accountability in the Czech Republic

Responsibility and accountability are major issues in every democracy, and are especially important in countries that are building democratic systems and market economies. Accountability is closely linked to the issues of delegation of power, the existence of traditional democratic checks and balances, and sanctions. The treatment of accountability in a legal system requires a framework for the system’s functioning, but the reality may differ from the ideal. Legislation is generally created gradually; practice often precedes the formation of rules or reveals the weaknesses of existing laws. These problems can be ameliorated by simply gaining experience over time, by the professionalization of elites and, sometimes, by external political and economic influences.

In this paper, Zdenka Mansfeldová emphasizes the legislative power of parliament and the ways in which the government attempts to coordinate the decision-making process in the field of economic policy. The paper highlights six areas: 1)The economic transformation in the Czech Republic and the evolution of economic policy making; 2) Policy-making styles during economic transformation, the creation of independent authorities—in particular the independent Czech National Bank (CNB)—and their relationship with legislative authority, and the role of international financial institutions and their influence on economic and political transformation; 3) The nature of the political system and the relationship between the legislative and executive branches; 4) Parliamentary participation in economic policy making during the phase of decision making or, ex post, during the phase of control; 5) The process of bargaining on the state budget; and 6) Participatory aspects of technocratic governance, the role of interest groups and the emergence and development of a social dialogue.

In the Czech Republic, the initial period of transformation between 1990 and 1992 was crucial for the creation of democratic institutions and the formation of the political spectrum. At the same time, a major decision was made about how economic reforms would be carried out. The process during the first few years of the transition pushed the issue of accountability into the background, although a legislative framework for accountability was created. The emphasis on rapid economic reform, the process of privatization and the underestimation of the legislative framework and its ethical dimensions created problems, especially in the second half of the 1990s, when it became apparent that individual aspects of the reform programme had not been sufficiently coordinated. The lack of experience among the new political elites also played a role in this dilemma. The 1990s, however, also brought considerable professionalization of political elites. In the process of consolidating democracy in the Czech Republic, the Parliament has become functionally embedded in the constitutional system.

The programmes that democratic political parties presented in the first free elections in 1990 after the fall of communism were typical of efforts to return to democratic Europe, which in concrete terms meant the inclusion in those international institutions and organizations of which Czechoslovakia had been a member before the communist regime, or which were created during that regime. These programmes were an important step at the beginning of the political and economic transformation because, among other things, they made possible foreign loans and expertise from international organizations. This, in turn, helped develop new legislation and create new institutions.

The establishment of an independent central bank, the CNB, was an important part of the economic reform process. Nonetheless, the high degree of independence guaranteed to the bank under the law created tensions between the CNB and the government. It routinely became a subject of political disputes related to the economic development of the country. The means by which the government wanted to resolve such problems often clashed with the position of the bank. The independence of the CNB has never been questioned; the issues were related to increasing the accountability of the institution vis-à-vis the elected representatives (the members of Parliament); addressing accountability from a legal perspective; and ensuring communication with the cabinet. In the second half of the 1990s, cooperation between the CNB and the European Union and European Central Bank increased in the areas of monetary policy and banking, and in matters related to the anticipated accession of the Czech Republic to the European Union.

In the last section of the paper, Mansfeldová examines the role of interest groups, especially in the area of labour and capital, with respect to influencing the direction of economic policies during the transformation. She maps the development of an institutionalized social dialogue, its role in the transformation process and the new challenges related to accession to the European Union.