The original free market leader

Updated: Nov 13 2005, 05:30am hrs
DR Vaclav Klaus, President of the Czech Republic, is a hero not only to his own countrymen but also to free marketers all over the world. It was no surprise, therefore, to find the packed audience in Delhis PHD Chamber of Commerce, Conference Room and later at the lunch organised by Delhi-based Liberty Institute, hanging on to his every word. After all, he is the architect who shaped the political and economic transformation of the Czech Republic in the aftermath of the collapse of communism in Eastern Europe.

How did he do it How did he transform the communist republic in the 16 years since its Velvet Revolution of November 17, 1989, to make it the richest of the new members of the European Union To every question, Dr Klaus had an answer, delivered in his inimitable tongue-in-cheek style.

In India, privatisation, or even that apology for privatisation, disinvestment, has proceeded at snails pace. So how did Klaus do it in an economy where the public sector was not just another sector or even a dominant sector but was, in fact, the only sector Pat comes the answer. By cashing in on the moment, by doing not just three-our privatisations per year like Margaret Thatcher but three-four per hour and keeping investment banks out!

The Czech model of voucher privatisation under which citizens (not foreigners) could buy vouchers and use these to bid in auctions of state-owned enterprises was a huge success. It made ordinary citizens active participants in privatisation with the result that soon enough they had the biggest interest in ensuring the success of the programme. So much so that two years after the collapse of communism, an economy that did not have a single private hairdresser, did not have a single state-owned shop within a 200-yard radius of Dr Klaus residence!

But then he was lucky, as he is the first to admit. The Czech people were tired of communist rule, and thanks to a brief period of greater openness in the later part of the 1960s, he had been exposed to the thinking of Hayek and Ludwig von Mises, long before they became fashionable in the West. Consequently, he was an out-and-out free marketer, one who did not feel the need for any adjectives to shelter under and was able to convince his people to not just change the old system but to overturn it completely.

And he did that by taking his message to every nook and corner of the country. There is not a single village in the whole Czech Republic (it is admittedly a small country) that the president has not visited personally. (How many of our chief ministers can make a claim like that) With that kind of commitment its no wonder that the Czech people can today hold their heads high in the community of nations.