Old Political Structures Jiří Suk
In the 1990s, the term “old structures” became widely used and popular in Czech. It even infiltrated variety and chat shows on television and this to some extent took the sting out of its originally rather sharp connotations. The popularized terms used for the totalitarian regime and the communist nomenklatura—totáč (Czech: “totality”) and staré struktury (Czech: “old structures”)—testified to the fact that most of society had adapted to a specific postcommunist normality. In general, the term “old structures” was used to denote former functionaries of the Communist Party of Czechoslovakia and its repressive apparatus. In the first years of the postcommunist transformation, they successfully transferred the political, social and material assets that they had at their disposal under communist hegemony into know-how and private business. Many joint stock and limited liability companies, banks, consulting firms, and all manner of businesses that appeared early as 1990, were initiated and established by these so-called old structures. Not all of them launched their entrepreneurial activities on a fraudulent or criminal basis, but in the first phase of the transformation period almost all of them made use of the unavoidable confusion resulting from the change of legal guidelines and customs.
At the time when the problem first emerged, the political representation of Občanské fórum, OF (Czech: “The Civic Forum”) was creating its own concepts: “the nomenklatura brotherhoods” and “the communist mafia.” In 1990, President Havel, who as a dramatist had a particular aptitude for the expressive naming of political realities, used expressions like “powerful structures,” “old bureaucracy,” “suspicious joint stock companies,” “totalitarian mafia,” “the dark veins of Slušovice,”1 and so on. This shows how powerfully the problem was perceived in the first year of the great change. Many of the “brotherhood” and the “mafia” established themselves during the time of preprivatization agony, and especially in the later privatization processes. Attitudes toward what is known as the Czech road to capitalism, ending in the late 1990s with failure and a massive inclination of the Czech economy toward foreign investors, are largely connected with them to this day.
Dissatisfaction with the handling of the communist issue became one of the key problems behind the rapid splintering of the united antitotalitarian Civic Forum movement. It culminated after the successful elections of June 1990, when Civic Forum politicians occupied the highest positions in state administration, although this was not as yet reflected on positions at middle and lower levels. The disproportion in the power structure generated permanent political tension between leading Civic Forum politicians and the lower structures of the movement. For example, a delegate from Kutná Hora warned the Civic Forum congress on June 30, 1990, that “the communist nomenklatura brotherhood” was moving from the political to the financial sphere and there was a danger that “former comrades” would soon be “financially the strongest sector of the population.” And he was far from being the only person to say so. Throughout the summer, warnings were sent from the regions to the Civic Forum Coordination Center in Prague. On their basis, a recapitulative situation report was prepared in mid-August which concluded that the situation was critical: organized brotherhoods were holding onto and consolidating their positions in local and regional administrations and enterprises with the aim of taking possession of power and property. They intended to grab power by legal means—victory in the November local elections would be “revenge” for losses incurred in the parliamentary elections; they were continually muddying the water, slandering the new elite, sacking Civic Forum activists, channeling assets from municipal or public enterprise budgets into newly founded joint stock companies, manipulating tenders, using threats and bribes. The placatory policies of the center, represented above all by Czech Prime Minister Petr Pithart, were grist for their mill. “This is actually paralyzing the [regional] Civic Forums and they do not know what they can, and cannot, do. The communists are laughing at them.”
To help us understand the urgency of the problem, let us take a look at the content of a letter from the District Congress of the Chrudim Civic Forum, written on June 26, 1990. The letter states that although the Civic Forum won the parliamentary elections, “in the economic sphere the influence of the old nomenklatura cadres continues” and that is alarming. It calls on the political elite of the Civic Forum to fulfill its responsibility, asking: Where is the promised scenario of economic reform? What happened to the investigation and prosecution of former functionaries for abuse of power and theft of property, as promised by the prosecutor Rychetský? How come charges of high treason have not been brought against certain communist politicians for their actions in August 1968? Why did the nationalization of the Communist Party’s vast properties end up in a cul-de-sac? Who is monitoring the movement of agents of the KGB and the StB (State Security Service, also referred to as the secret police) into the business sphere? Why has the investigation into the events of November 17, 1989, been stopped? Why is the rehabilitation of the victims of communism not continuing? Why do former prominent communists still collect enormous pensions? Given the nature of this situation, how could the deputies of the legislative assemblies have approved a parliamentary holiday for themselves? How could Czech Premier Pithart defend the representatives of the old regime on television for a second time given the current state of affairs? “The local mafia are laughing in our faces.” Hundreds of such letters were arriving at the Civic Forum Coordination Center in Prague.
At the end of the summer holiday, the key bodies of the Civic Forum Coordination Center (this primarily concerns the kolegium, a weekly session of leading Civic Forum politicians from the upper bodies of parliaments, governments and other political structures) began to react to the pressure from below. The first big debate took place on July 23, when the problem of replacing the management of enterprises was shown to be closely linked with economic reform, whose definitive form was only just being drafted during highly controversial discussions. The rapid restitution of nationalized property, for example, would bring new owners into many enterprises. At that time, however, a grim battle was being fought over restitutions and its outcome was unclear. For example, the Finance Minister, Václav Klaus, considered them to represent an “immensely difficult path” which would complicate and prolong the whole process of privatization, and would still not be a guarantee of rapid change. Another way of replacing the old management was to allow foreign investors into companies, but political consensus had not yet been reached on this issue either, and the necessary legal norms and regulatory mechanisms did not exist.
The same applied to the dismissal of directors and deputies, and their replacement by people from the ranks of the membership of Civic Forum activists. The Civic Forum elite agreed unanimously that spontaneous and uncontrolled solutions could only aggravate the situation. It was often bitterly remarked in debates that there was no one available to fill a particular position, and that it would be very difficult to find anyone. It was clear that the atmosphere of permanent disquiet and mistrust (concisely summed up in Petr Uhl’s statement: “Old structures are doing business with stolen money!”) generally supported the implementation of rapid and decisive economic reform. In such an atmosphere, no form of gradualist approach had any chance of being given the go-ahead. That is why even left-leaning leading figures of the Civic Forum (e.g., Rudolf Battěk of the Association of Social Democrats of Civic Forum and Petr Uhl of the Left Alternative) supported a reform that was even radical by name.
On the other hand, it was plain that economic legislation would not be sufficient to ease the growing tension in the regions, for not even the rapid approval of transformation laws could guarantee an “active replacement of members of the nomenklatura,” as Coordination Center representative Vojtěch Sedláček stated at the start of the August 6 kolegium session. Surprisingly, the systematic pressure coming from the local Civic Forums was reflected in statements made by the Civic Forum politicians present at the session and it was evident that they were taking a harder line on many issues. The Deputy Premier of the Federal Government, Pavel Rychetský, spoke about the need for decisive changes initiated and directed from above and penetrating “institutions to a greater depth.” Communists were infiltrating leading positions and Civic Forum representatives were being dismissed; people were losing their trust—it was therefore necessary to approve and implement rules for the removal of old cadres. The President of the Supreme Court of the Czechoslovak Federal Republic, Otakar Motejl, mentioned the possibility of introducing political screening. The President of the Czech National Council, Dagmar Burešová, advocated an extensive replacement of judges who had lost the people’s trust. The head of the Czech News Agency, Petr Uhl, and the deputy chairman of the Federal Assembly of the Czechoslovak Federal Republic, Jan Sokol, warned that these solutions could not be applied across the board—it was necessary to distinguish between state administration (where it was possible to employ a directive approach) and the economic sphere (where procedural dismissal and tenders could be used). Libor Prudký, a representative of the Coordination Center Council, called for rapid changes to the Labor Code with newly defined criteria for the dismissal of leading workers. The deputy president of the Czech National Council, Václav Žák, called on all ministries to make lists of workers in leading positions who should leave their departments. Their retention or dismissal would be decided by a special committee composed of parliamentary deputies. The Minister of Economics of the Czechoslovak Federal Republic, Vladimír Dlouhý, turned the debate back to the beginning by stating that until appropriate rules were put in place, nothing could actually be done at the ministries.
At the third postelection Civic Forum congress on July 21, Albert Prouza, a representative of the affiliated Klub angažovaných nestraníků, KAN (Czech3: “Club of Committed Non-Party Members”), harshly criticized the policies of the Civic Forum. He turned his scarcely suppressed indignation on Czech Premier Petr Pithart, whom all radicals continued to consider the embodiment of the policies of making concessions to the “old structures.” Prouza saw things very sharply: the Civic Forum was becoming a platform for left-wing politics and was ceasing to represent the nonparty majority, which was anticommunist and wanted a decisive settlement of accounts with the totalitarian system and its remnants (in relation to this he subsequently called on all discontents to join KAN). Prouza spoke up for the Hodonín Civic Forum, which had prepared a detailed list of nomenklatura cadres in the district and had called for them to resign from their posts: “We understand that [ordinary] communists are individuals and that one has to differentiate [between them]. With the nomenklatura cadres, the situation is completely different—there is nothing there to be differentiated. This is where I see the contribution of the [Hodonín] list … A list like this should be prepared in every district. Dr Pithart found the list upsetting. Well, I was upset when I realized how his speech was helping to strengthen the communist mafia.” While according to Prouza the Czech Prime Minister (a member of the Czechoslovak Communist Party [KSČ] for several years in the 1960s) was the personification of backing down in the face of evil, the Federal Finance Minister Klaus (never a member of the Communist Party) represented the correct political course—his radical economic reform promised a “rapid return to Europe.”
At the next Civic Forum congress on August 18, a dramatic confrontation took place between Prime Minister Pithart and a number of regional Civic Forum delegates. In his introductory speech, the Chairman of the Civic Forum’s Club of Deputies, Petr Kučera, described the process of the “second revolution” (Václav Havel’s term) that was then under preparation and whose aim was “remove the nomenklatura structures.” He promised that in a matter of days the presidium of the Federal Assembly would pass a legislative measure to make this possible. Another administrative provision was needed to get rid of old structures from central bodies in line with already approved “cadre criteria.” Privatization would then follow in September, beginning with the restitution of small-scale property, continuing with a small privatization (the auctioning of smaller enterprises) and culminating with the privatization of industrial giants. In a speech entitled “I will defend the rule of law,” Czech Premier Petr Pithart decisively turned down a proposal from the Hodonín, Prague, and Hradec Králové Civic Forums, calling for the conditional suspension of all leading workers in financial and economic organizations, institutions, offices, institutes, and editorial boards, and their replacement by people who were both uncompromised and competent. He noted that Czechoslovak law did not recognize “conditional suspension,” in addition its application across the board would be very problematic, because it would mean that all administrative and specialized activities in the country would grind to a halt for some time and there was a danger that matters might slide into chaos. He also posed the question: Who would actually select the right people to take up the newly available positions? The Civic Forums or a committee made up of members of political parties? “Would such committees bestow something akin to the blessing of the nomenklatura?” The Prime Minister returned to his arguments of January 19, 1990: membership of the Civic Forum was not a guarantee of moral integrity or competence, the Civic Forum had also been infiltrated by suspicious operators, careerists, and former “fellow travelers.” Almost all citizens were, in one way or another, to some extent implicated in the structures and practices of the fallen regime; hardly anyone could claim to have a clear conscience. On the other hand, Pithart acknowledged that genuine and dangerous members of the mafia held positions in many enterprises and that they should be dismissed as soon as possible. How was this to be done? The legal provisions presented by Petr Kučera would make it possible for ministers to deal with these people effectively and in line with the law. The Czech premier himself called on his ministers to follow this approach until the appropriate provisions had been approved.
Premier Pithart’s defense of the rule of law did not meet with a very positive response from congress delegates. The first to speak was Chrudim Civic Forum representative Ivan Pištora, author of the letter quoted above. He said that no one doubted the Premier’s pure intentions to establish the just rule of law, but his views presupposed that the same values were recognized by the nomenklatura cadres still holding onto leadership positions in companies, official bodies and organizations. That was a serious error, however, derived from starting points that were too abstract, as well as a lack of knowledge of concrete cases and agendas. “Members of our mafia walk the streets and laugh in our faces: What more do you want? Your premier stands by us!” The proposed legal provisions of the presidium of the Federal Assembly would only correct matters in enterprises. But that was desperately little, since the situation was alarming almost everywhere: in the public prosecutors’ offices, the courts, the military garrisons, etc. “It really is necessary to intervene not only in the manufacturing sector and the economic area, but in every sphere of life.” Pištora made a decisive defense of the list of nomenklatura cadres prepared by the Civic Forum in Hodonín. Premier Pithart argued against it in his reply, saying that he had nothing against “informative summaries on individual cases,” but these were quite different from “lists” of unacceptable people which would then be circulated nationwide.
The reason I have examined the heart of the problem is to show how complicated it was from the very beginning to settle accounts with the “old structures.” The impossibility of an uncompromising settlement was given by the reality of the historic compromise (expressed in the term “velvet” revolution, sometimes also referred to as the “plush” revolution), to which the elites of the old and the new regimes had committed themselves at the end of 1989 and the beginning of 1990. In subsequent months all decommunization activities were undertaken as a result of pressure from below. The legal provision of August 30, 1990, had little impact without the expected effect, because a pragmatic inertia naturally triumphed over the requirement for across the board changes in personnel at the ministries and other state institutions where they should have been carried out. From the viewpoint of the new elite, decommunization activities were merely a complication on the technocratic road ahead. The political arena became a melting pot with constantly changing priorities. When in autumn 1990 it seemed that the need to come to terms with the past in an uncompromising manner was finally establishing itself as a generally shared priority, the Civic Forum disintegrated, and priorities were once again mixed up: economic reform (restitution, the small privatization, the large privatization, the privatization of local council property) came to the fore, bringing great expectations and feverish activity to almost the whole of society—a large majority of the adult Czechoslovak population took part in the coupon privatization. Naturally, the “old structures” also participated, since they were not banned from business activities. Marginal proposals by radical anticommunist groups (primarily the Club of Committed Non-Party Members and the Confederation of Political Prisoners) to exclude “old structures” from all privatization processes were not approved.
The case of the Bank of Bohemia can serve as a model example of the criminal business activities of “old structures.” Founded in 1991 by an employee of the former State Security Service (StB), Jiří Čadek, and other prominent figures of the fallen regime, the bank was from the start a “tunneling” (asset stripping) enterprise and its “financial activities” ended with the imposition of forced receivership in 1994, and subsequent liquidation. The entire loss of many billions of crowns was shouldered by the state. Other companies and banks, arising out of the activities of the “old structures” were considered to be firm pillars of the eulogized capitalist superiority of the Czech Republic. Nevertheless, from the mid-1990s they collapsed one after another. That was the case with the chemical giant Chemapol Group, consisting of about 100 firms and around 40,000 employees. The company was founded by persons from the former “enterprises for foreign trade” closely linked to the StB; its chief Václav Junek—a former member of the Central Committee of the Communist Party of Czechoslovakia and allegedly an agent of the StB—was the prototype of the “old structure.” Chemapol Group went bankrupt in 1998, leaving debts totaling almost 17 billion Czech crowns. A number of banks and businesses arising from the postcommunist privatization processes went bankrupt in the mid-1990s. Few of the “tunnelers” and unsuccessful privitizers were brought to trial and convicted. In 1997 the economic stagnation of Czech “bank socialism” became a political crisis and a crisis of trust. The very symbol of the Czech road to capitalism—the government of Václav Klaus—was toppled. The original terms “old structures,” “communist mafia,” and “nomenklatura brotherhood,” were compounded and replaced by the generally accepted expression “mafia capitalism.”
1 / Translator’s note: Slušovice is a town in Moravia which gave its name to a cooperative whose management used its network to close lucrative deals under communism, later successfully expanding its operations in the free market.