Crisis and funding of research

By Katka Svickova

In normal times, politicians of all strands are unanimously committed to the support of education, research and development. They never forget to stress how important these areas are to secure future prosperity. In crisis times, the “now” becomes more important than the future prosperity as governments are confronted with hard choices how best to use public funding to alleviate the negative effects of the economic crisis and help to re-start the up-cycle. Instead of the promised growth, public budgets for education and research either stagnate or fall in several Central and Eastern European countries (and as might be the case elsewhere in Europe, too).


A few months ago, investing in research and development was still promoted as one of the solutions to the economic crisis. Accordingly, the Czech national anti-crisis plan committed to increasing the R&D public spending over the next three years. Originally, the spending on research should grow by 8 % in 2010. Yet at the end of June, the government decided to freeze the annual outlays on research over the next three years at the level of 2009.

In addition to this, the Czech university and research community is in a sharp dispute over the allocation of these research funds. The conflict in essence boils down to rebalancing the spending to favor applied at the expense of basic research. The prevailing “now before then” logic favors the applied research – as a means to give a boost to industrial innovations. The funding allocations should be more result - and performance - oriented but the criteria, according to which the evaluation of performance is done, are far from perfect and heavily disputed.

Within Central and Eastern Europe, the Czech Republic actually belongs to countries with comparatively high governmental outlays to research: in 2007, it was 0,58 % of GDP as compared to the CEE average of about 0,4 % of GDP. However, both Czech Republic as well as the region are below the EU-27 average of 0,67 % of GDP spent on research from public funds (comparisons and calculations are based on available Eurostat data).

The education and research budget is now under strain not only in the Czech Republic. In Latvia, for example, the spending was reduced by about 65 million EUR affecting teachers’ salaries and resources to vocational schools, scientific institutions, state universities and colleges. The cuts were adopted under the pressure to trim the public budget in a country perhaps most stricken by the economic crisis in Central and Eastern Europe so far. They brought students and teachers to demonstrate in the streets in the course of spring. Also in Poland, discussions are under way to cut educational and research spending.

The developments show that despite the continuous mantras about the importance of research and development, these sectors are also subject to economic cycles and the workings of politics. A question that emerges from the Czech debate and governmental action is whether the cuts as well as the new rules for dividing public funding for research were passed after a profound weighing of short-term and long-term consequences of these decisions. To the most important consequences of the current decisions affect the capacity to engage in basic research. The abrupt shift of funding from research institutions such as Academy of Sciences (and to lesser extent universities) that are focused on basic research to institutes of applied research that are connected to various ministries and major industrial firms, may in the long term undermine both.

From the short-term perspective, more support to applied research in the situation when the budgets of the private sector are strained might bring more immediate results and help to increase the competitiveness of the industry. However, the private sector is also more likely to finance this type of research itself after the worst effects of the crisis on firms are over. On the other hand, basic research requires a lot of funds with uncertain and long-term results, and is thus not so attractive for the private sector. Moreover, the institutes focused on basic research are fundamental for creating the necessary human capital that allows applied research institutes to operate successfully within the global research networks. It is therefore here where public funding plays a crucial role.

Making public choices about educational and research priorities, and subsequent reforms of the system, including how public funds are allocated, are relevant in all conditions. However, the “now” perspective of crisis times should not prevent a decision-making based on sound weighting of both short-term and long-term consequences of the different options.

Read more on Crisis and funding of research

Anti-crisis policies in the Czech Republic and Slovakia: what do they have in common?

By Lucia Kurekova and Katka Svickova

Czech Republic and Slovakia have diverged in their developmental paths and policy choices over the course of transition. In spite of common institutional legacy and very similar export profiles, sixteen years after separation, the policy choices frequently differ, perhaps not least because of opposing political orientations of their governing elites during different periods of transition. This is the case also today, when individual countries are facing the world economic downturn in their local shapes and forms: Slovakia is governed by social democratic/third way SMER in coalition with centre-right HZDS and nationalist SNS while the Czech Republic is headed by a centre-right government of Miroslav Topolanek. In spite of many similarities in how the crisis has been affecting these two countries, which are both heavily dependent on automotive industry, the remedies that the governments have passed are quite different.

The governments of both countries, however, shared a similar initial denial that the global crisis might have any significant effects on their domestic economies. In both countries, too, the opposition was coining a different message and suggesting their own recipes for a remedy. And in both countries, the governments have not been really listening to these voices. While the wounds to the economies of both countries have been caused by a deep dip of external demand for their exports of consumer durable goods, the reactions of both countries in the form of adopted anti-crises measures have been different. Is the reason for these different reactions an underlying difference in the state of these economies, as persuasively argued in the last week’s issue of the Economist, or is it purely an outcome of different ideological orientations and tastes of the governments steering the countries?

To summarize, the set of Czech anti-crisis measures has a strong pro-business flavor while the Slovak government has concentrated more on supporting the ‘ordinary citizens’ and keeping employment almost at any cost. Further, while the Czech measures are partially forward-looking and have a modernizing aspect (support for environmental measures, increase of R&D investment), this can hardly be said about any of the three Slovak anti-crisis packages. While the government of Robert Fico fiercely refuted any opposition calls to decrease further the 19% flat tax rate, the “tax package” that it passed in the end will make most of working Slovaks richer by about 10 euro per month via the raised tax deductible minimum. The Czech Republic, on the other hand, will not only reduce the corporate tax by another 2% in the next two years (only reaching, however, the current Slovak level of 19 %) but has also decreased social insurance deductions on salaries for employees by 1,5%. Instead of up to 2000 euro ‘srotovne’ (bonus on buying a new car and recycling an old car) passed after its success in Germany last week also in Slovakia, the Czech Republic decided to reduce the VAT for cars. Additional changes to the administrative and institutional business environment in the Czech Republic include an amendment of the insolvency law, faster depreciations, an abolishment of the obligation to pay an advance on income tax for self-employed and small enterprises (below 5 employees) or enhancing the provision of export loans to businesses and loan guarantees for SMEs. The overall goal is to reduce the cost of labor and thus, desirably, preserve employment and facilitate the cash-flow for businesses. Fairly enough, Slovakia passed a handful of pro-business oriented measures too, among them easier book-keeping for self-employed and SMEs, faster depreciations, a quicker return of VAT to businesses or state guarantees for loans (up to 55% of the loans for companies employing less than 100 people).

However, the core of Slovak anti-crisis tools is in its ‘social package’. The leitmotif of the government is ‘keeping employment at any price’, which is not surprising in the light of the Slovak structural (read “high and persistent”) unemployment nightmare that has been present during the whole transition. Yet the set of job creation measures passed by the government is not only extremely complicated, but there are fears that many of them are very corruption-prone and might lead to more – rather than less - red tape. Measures such as state help to employers who are experiencing serious operational problems to cover the compulsory health and social insurance payments for their employees for a maximum of 60 days, or intentions to subsidize new jobs for a period of 12 months up to 15% of the costs of a new job in Bratislava region and 30% in the other regions of Slovakia are only examples of ways where crony practices and potential waste of money are likely to loom in unless the system is properly monitored and the support is given to enterprises with good prospects of future growth and innovation. The law on the support for one-man businesses started during the crisis, for example, had to be amended shortly after it came into effect following cases of its misuse.

There are a few instances, however, where the countries seem to stand out in a positive way. Bratislava has been praised for keeping its investment incentives to foreign firms - and extending them to domestic investors. Czech Republic, on the other hand, plans to invest more into R&D, a field where nearly every country has been trying to save during the crisis. Both of these measures are forward-looking. And although they are unlikely to act as immediate fire-fighters against the slump, which is projected to be the deepest in the next moths, the countries will be grateful for them in the mid-term to long-term period.

To answer our question from the beginning on the cause of the divergence of policy reactions in the two countries, the color of the governing coalitions seems to explain a lot of the outlined differences. At the same time, however, Slovakia has a long-lasting experience with high unemployment to which the society is extremely sensitive. In addition, both countries will need to deal with the issue of migration, but from very different ends: the Czech Republic is trying to figure out how to send back some of its foreign labor that has served it well until now, while Slovakia should start monitoring who and in which proportions is coming back to the country from nearer (Czech Republic) or farther abroad (Britain and Ireland). Lastly, Slovakia, now an EMU member, is not spending any of its energy on defending its currency, while the Czech Republic is less lucky in its respect. But then – it has one more tool at hands in dealing with the crisis cycle and its exporters are more competitive than the Slovaks exporters.

This brief comparison of reactions to the domestic repercussions of the world economic crisis in two Central and Eastern economies also contributes to underline a broader trend of divergence in the development of the countries from the whole Central and Eastern European region, despite a shared legacy as centrally-planned economies.

Read more on Anti-crisis policies in the Czech Republic and Slovakia: what do they have in common?

Roadmap for Czech tertiary education reform

By Katka Svickova

In January 2009, the Czech government adopted the White Book on Tertiary Education, a document which defines where the Czech tertiary education should be heading in the next ten to twenty years. It foresees a complete overhaul of the Czech tertiary system in terms of structure, governance and financing. In addition to their two traditional roles of education and research, tertiary education institutions shall play a third, equally important role: in the “production of knowledge and creation of the innovation potential of the society“.


The White Book promises to let fresh wind into the whole system that faces similar problems like systems in the whole Europe (also in my post from May 2008). However, given the low proportion of tertiary educated people in the population and comparably low spending on education overall, the overhaul is particularly pertinent in the Czech Republic. How to make tertiary education more open and accessible while at the same time not to undermine the quality of teaching? How to make tertiary education more sustainable financially? How to increase the volume and quality of research and its application in the economic sphere? These are just examples of questions that the White Book promises to answer. So what does it propose?

The Czech Republic is an EU leader in inequality of access to tertiary education by social background. The proposed solution focuses on lifting the disadvantages of a student´s social background on the one hand, and broadening of the educational offer on the other. The first goal should be achieved, above all, through a change in the financing of the tertiary system – instead of all public finances going directly to the educational institutions, part of them should be redirected to the students themselves in the form of educational grants and special educational loans. This shall allow students to pay tuition fees, enable students from socially disadvantaged families that cannot afford to support their child at university to cover his or her expenses, and bring more competition for students among tertiary education institutions. The second goal of broadening the educational offer should be achieved by a greater diversification of tertiary education and expanding considerably the two and three year long bachelor programs both in terms of capacity and variety of offer. The bachelor degrees should be practice- and profession oriented.

The White Book also correctly posits, though, that the solution to the problem of accessibility lies to a large extent outside the tertiary education institutions. Decreasing the selectivity and improving the quality of primary and secondary education are also of key importance, together with spreading the culture of overall appreciation of tertiary education and the aspirations for acquiring it in all groups of the society.

The diversification and the financing reform (increase in financing from both public and private sources, the latter predominantly in the form of tuition fees, but also better spending of these resources) shall go hand in hand with a change in governance of the tertiary sector towards more autonomy. This autonomy will also relate to internal structuring of the individual institutions and allocation of funds in research-related activities inside them. The White Book also seeks to eliminate barriers between the university research and the private sector whereby higher autonomy should create the necessary space for finding the best arrangements for individual tertiary institutions.

Of course, the brief summary above cannot go into all the complexities of the reforms outlined in the strategic document. And surely, the White Book does not address all needs of the tertiary sector in sufficient detail and thoroughness. What the document does, though, is a fair attempt at an analysis of the strengths and weaknesses of the current system, perceiving them in their complexity and inter-relatedness. The reform outlined on this basis reflects these complexities well.

In all, the document is well thought-through and well argued, taking clear positions e.g. on the above mentioned overhaul in the financing structure of tertiary education and introduction of tuition fees, on broadening of the bachelor level education and connecting it with practice, or on the concept of universities as places of “knowledge production” for the market. This poises it to become a subject of controversy among experts and politicians – and rightly so given the pertinence of the issue. It would be a pity if the current financial crisis pushed such a debate too much into the background. A high-quality and well-functioning educational system is not only one of the essential ingredients of a sustainable, diversified and sophisticated domestic economy but can also serve as an important social cushion. Tertiary educated people have generally better chances on the labor market and so far, the lay-offs in Central Europe caused by the crisis have taken their toll predominantly among the lower educated labor force (see one of my previous blog posts on this topic). Even though this might change as the crisis unfolds, tertiary education can significantly increase one´s chances of finding another job.

The problems that the Czech tertiary education is facing and the directions proposed in the White Book do not differ substantially from the situation and debates in other European Union countries. However, hidden in the text of the document is a precondition for undertaking and success of the reforms outlined: the existence of healthy and well-financed tertiary sector institutions in which teaching as well as basic research are at high level and independent of commercial activities. Reaching this standard alone is a daunting task: yet we all should wish and care about its successful completion.

Read more on Roadmap for Czech tertiary education reform

Who loses in the economic crisis?

By Katka Svickova

As the crisis progresses from the financial into the real economy and starts hurting the businesses as well as their staff, what is a better defense of an individual against its vagaries: his or her brain- or muscular power?

At the moment, we do not yet have a clear picture about how badly hit in terms of real production cuts and subsequent unemployment the Central European economies really are and will be by the global financial crisis. Yet there are already a few signs of who is affected...

In the Czech Republic, especially the trouble of the car and car part manufacturing sectors are put into spotlight. Skoda Auto, the Czech Republic's largest car manufacturer and a subsidiary of Volkswagen since 1991, has cut down production. The Czech Automotive Industry Association predicts that nearly 10 percent of the country's auto workers, or around 10,000 people, could lose their jobs within six months. So far, however, the redundancies started with contractual manual workers, partially „imported“ from countries like Vietnam and Mongolia to overcome bottlenecks on the domestic labor market. Also in the case of the glass, textile and logistics branches, the unemployment hit predominantly manual workers. In the whole Czech economy, up to 40 000 more redundancies are expected in 2009. Conversely, Slovakia, called also the Detroit of Europe, has not yet heard of any mass lay-offs by the automotive investors or in any other economic sectors.

At the same time, reading these forecasts, one should not forget that the seasonally adjusted unemployment rate in the Czech Republic was 4,4 % in October 2008 (Eurostat) – one of the lowest in the EU. Besides lay-offs, there are also many vacant positions on the labor market (albeit their number is lower than a few months ago). Qualified and skilled IT workers and engineers are still in high demand.

Also in Hungary, which was hit very hard by the financial crisis, the real economy started to feel the pain. National Labour Service (AFSZ) reported that there were 420 000 job-seekers in October 2008 whereby their number increased by 21 000 in a single month. As of February, further 14 000 employees could lose their jobs besides the already announced lay-off plans. Firms cutting their staff are for example Laird Technologies (electronics component manufacturer), Suzuki, Foxconn (manufacturer of spare parts for mobile phones), Videoton or General Electrics. In all, the crisis is felt most in the construction, automobile, electronics, IT and equipment manufacturing, tourism, hotels and processing industries.

Hungarian government plans to linder the effects of the crisis on workers by creating jobs in public work programs: in 2008, 25,000-30,000 poor and jobless Hungarians had temporary work and further 50,000-90,000 jobs should be created. This indicates a message about the skill level of workers made redundant – these public work programs can be hardly dominated by highly-skilled positions. Moreover, engineers, IT graduates and other tertiary educated workers are still demanded by employers.

Polish economy is also bracing for lay-offs in its glass, steel, chemical, automotive and electronics branches. At the same time, exporters in Poland were threatening to lay off staff already in summer 2008 (so before the economic crisis). According to forecasts, the unemployment may exceed 10 % - but this is hardly a steep jump compared to 9,6 % in June 2008. One of the sources of increased unemployment is going to be, according to expectations, a return of a part of the large Polish emigrant workers pool from Western Europe.

In all, at this stage, it seems that the adverse development in the real economy has not yet bitten the well-educated core of the labor force in Central Europe. Rather, it will probably lead to tuning down of the outcries about the scarcity of welders, metal turners and other manual professions, and the need for more young people to learn these professions.

In the end, therefore, the cloud of unemployment might have a silver lining: a clear message to the policy makers as well as individuals that investment into people´s brains has good and stable returns. Moreover, this kind of investment may not vanish into thin air so easily, like the billions sunk in sub-prime financial investments did.

Read more on Who loses in the economic crisis?

On Roma minority in East-Central Europe: From Political Correctedness to Balanced Employment Activation Approach

by Lucia Kurekova

Roma minority is among the most populous and the most problematic in the East-Central European countries (CEE). In spite of various work activation attempts and welfare tightening efforts implemented by the CEE governments in the near past, Roma population has largely remained out of the labor force. This has been so in spite of buoyant labor markets and vast labor shortages which were troubling domestic and foreign-owned employers. Logically, in the situation of high labor demand caused both by successful and rampant economic growth as well as by high rates of out-migration of human capital from CEE to the UK and Ireland, one would expect improved possibilities of employment even for those alienated from the labor markets during the periods prior to the EU accession, such as Roma.


While Roma are certainly among the disadvantaged (largely due to their educational and skill levels) and discouraged (not looking for work) workers, hard data about the extent and the character of their joblessness are scarce. Quantitative information about Roma in CEE which would be comparable to the majority population is nearly non-existent. This is so largely due to the push for political correctedness among the EU and other international authorities on the Roma issue which has in turn illegitimized the inquiries on Roma ethnicity in survey questions. Equally scarce is the estimation of the possible impact of various policies and labor market developments on Roma social inclusion or exclusion.

To fill the gap in data about their Roma citizens and to understand better the forms and channels of Roma labor market exclusion, the Czech government together with the World Bank carried a unique research project in order to estimate how Roma fare in the Czech labor market and to determine labor market barriers in their complexity. The Czech Roma World Bank study in my view breaks down a number of stereotypes, re-iterates some of the hunches which have not yet been robustly empirically confirmed, offers a complex assessment of the problem and – most importantly - a series of rather provocative policy recommendations.

On the basis of comprehensive survey carried out in the marginalized localities and targeted at the Roma, the Report finds – perhaps unsurprisingly – that Roma living in marginalized communities in the Czech Republic continue to face severe and multiple forms of labor market exclusion. The empirical findings put forward nuanced evidence on the multifaceted nature of Roma labor market marginalization. Starting with pointing out that Roma situation surpasses the categories of employment versus unemployment and moves to the arena of discouragement (not searching for work), the survey confirms that Roma suffer from low educational attainment. Leaving aside the reasons for this outcome, it has been found that majority of the Roma lack even basic functional and numerical literacy which in effect makes them absolutely unsuitable for the knowledge-biased new employment opportunities emerging in the CEE economies. These facts are complemented by strong gender and generational aspects to Roma labor market exclusion. While a good share of Roma men are employed (mostly in precarious and casual jobs), this is hardly the case for Roma women. Most strikingly, the survey results have revealed a strong generational dimension of the problem – there is a mounting evidence of the worsening of educational attainment and a significant downward mobility among Roma raised during transition.

Drawing Roma into education and into employment – the goals that the governments in the region have been trying to follow – scores again as a clear first-hand solution to the problem: the level of educational attainment, acquired skills and previous on-the-job experience predict well the success of Roma on the Czech labor market. In the Czech case, literacy and numeracy skills increase the probability of employment by a factor of two. If we seem to know where the solutions lie, the question emerges why have the attempts seen only very limited success so far?

The World Bank suggests that the culprit should be sought in (lack of) the quality and targetedness of the policy interventions aimed at Roma. To be precise, the limitations stem from the fact that the policies and approaches aimed at employment activation and labor market inclusion have not been sufficiently aimed at Roma. The policies have failed to recognize multifaceted nature of their distance from the labor market (lack of skills, welfare trap, heavy indebtedness, mismatch between jobs and skills, other labor market barriers) and to individualize the employment services. Welfare adjustments and public works program have not proven effective in providing longer-term solutions and bringing Roma out of poverty trap into labor market. The World Bank calls for a more balanced policy activation approach based not only on the responsibilities of job seekers but also on enhanced performance of the Labor Offices which need to focus on client profiling, integration of services in order to address multiple disadvantages, more culturally sensitive provisions and the introduction of performance measurement and evaluation of public servants. The policy adjustments further call for an enlarged partnership with private and NGO sectors and the enhanced focus on the next generation of Roma youth.

The fact that the recommendations coincide both in timing and in content with the basic principles and interests of the EU structural funds allocation is very good news for the CEE governments.

Reference:
Czech Republic: Improving Employment Chances of the Roma. Report No. 46120 CZ, The World Bank. October 2008.

Read more on On Roma minority in East-Central Europe: From Political Correctedness to Balanced Employment Activation Approach

Reforming Slovak primary and secondary education. Or not really?

By Katka Svickova

After the summer holidays, the roughly 830 thousand Slovak pupils and secondary school students should return into a different school than the one they left at the end of June. At least this is what the new Law on Education passed by the Slovak Parliament in May 2008 envisages. And at least for a part of the pupils at first, as the law will be implemented gradually. However, what this new school will ultimately really be like, and how new it really will be, is uncertain as the real changes can only be seen in the classroom and in a few years at the earliest. In spite of this uncertainty (or perhaps facilitated by it), the reform triggered a strong critical reaction.



Main features of the Slovak educational reform

On paper, the reform goes with the freshest winds of change blowing across Europe: education should be based on new, creative approaches, explorative, project- and problem oriented methods, on own activity and participation of the pupils in their education, on new content of subjects stressing competences and capabilities rather than memorized knowledge. The number of pupils or students per class should be reduced. Schools are promised more autonomy in determining the content and the form of the subjects taught. Parents, pupils and representatives of employers´ organizations should obtain more space for direct participation in the governance of schools and in the creation of educational programs. Last but not least, the choice between schools should be free and so should be the offer of educational opportunities. So can the pupils be looking forward to an educational paradise unfolding over the next few years?

Not really, say the critics. While they agree that the educational reform is long overdue, most of them call for its further postponement – for reasons connected both to its content and to the capacity of the current system to implement it. Indeed, the reform was really fast, and there was little time for a thorough public debate: the draft was presented in September 2007, the law was passed in May 2008 and its implementation starts in September 2008. In other countries, a similar process took normally between 3 and 4 years. In the Czech Republic, for example, the educational reform, launched in September 2007, was more thoroughly debated in its preparation phase and schools got more than 2 years to get ready for it.

Given the almost astronomic speed of the reform in Slovakia, the question is how significant changes it indeed brings. And if it really signals a watershed change - breaking with the traditional centralised system oriented at pupils cramming and reproducing facts - why the scope for the discussion was deliberately so limited. Reform of the educational system turns almost all members of the society into stakeholders. One would hardly find a person today, who would doubt that education is of crucial importance for the development of the individual as well as the whole society. Yet even the short time allowed for public debate could hardly hide lack of interest from the public.

What is really in the magic box?

The critics, who raised their voice most loudly, pointed out that the new law is not a reform at all but rather a bundle of atomistic and often second-rate regulations. Moreover, its effect will be contrary to the one promised. Instdead of more autonomy, it will bring more centralization and control. Yes, individual schools should create their own educational programs. Yet according to the critics, the binding framework educational programs set by the Ministry of Education, prescribing obligatory content and conditions of education, do not give much space for schools to add their own content. As a representative of a secondary schools association said, the secondary schools will copy the ministerial framework educational programme to 95 %. And yes, the law proclaims more freedom of choice; yet at the same time, there will be always only one textbook available for free for individual subjects, approved by the Ministry. The freedom of choice of school will allegedly be limited by the power of the Ministry to set limits for the number of pupils in the individual study programs of secondary professional schools. The critics also say that the reform does not address a serious problem of inequality of chances in education. (However, besides a call for personal assistants and an improvement of the quality of elementary education, they also do not suggest any concrete proposals how to solve this complex problem). In all, despite the huge need for reform, the new law does not deviate too much from the old system.

Perhaps, the character of the law was best pronounced by the Minister of Education, Jan Mikolaj, when presenting its draft: „Do not search for liberal values in this reform, I openly say, I think that we are not in such a deep mess.“ But perhaps, the audience should look for nationalistic values instead. The Ministry of Education is in the hands of the Slovak National Party, whose leader, Jan Slota, is (in)famous for numerous anti-Hungarian statements. The Hungarian minority in Slovakia feels the limitation in the choice of schoolbooks as a measure against them. No wonder - after a statement by Slota who called Stephen, the Hungarian king and saint who is depicted on the cover of a current textbook used by the minority, “a Hungarian clown on a horse.“ In its introduction, the law also states that one of the aims of education is to enhance the respect to national traditions, values and state language by all citizens.

What can pupils expect when they return to school in September?

Based on the Czech experience, where educational reform, on paper very similar to the current Slovak one, has been implemented since last September, not much groundbreakingly new should be expected from the initial phases of the reform implementation. The Czech discussion shared some similarities with the Slovak one. Its conclusions and lessons learned from a year of implementation indicate that much more depends on the individual teachers and school directors than on what is written on paper in the Ministry. Many schools started experimenting with new methods and new teaching approaches much earlier than they were told by the law. Those which did not want to or could not do this, just produced and handed in the obligatory school programe, and (with a few cosmetic changes) continued their business as usual. This might be the case of many Slovak schools too. Since indeed, the teachers and schools got very little time to prepare for the changes.

Although the critics of the educational reform in Slovakia pointed to some pertinent (but at the moment unresolvable) issues, the attention left several other, equally if not more important ones, in the background. In particular the issue of school financing, governance and teachers´ remuneration (and the level of autonomy schools really have here), the education and motivation of teachers (ensuring that they also actually have the competences they are expected to develop among the pupils in the classroom), or active involvement of stakeholders (especially parents).

All worth, at least, of prospective blog posts ;)

Read more on Reforming Slovak primary and secondary education. Or not really?

Nuclear Energy revival in Czech Republic, Slovakia and Hungary

By Andrej Nosko

Czech ambassador-at-large for energy Bartuska recently compared European countries' nuclear power policy to people, that want to legalize marijuana, while half of them already smoking in private, being afraid to admit it in public. In this post I look at three of these smokers - Czech Republic, Hungary and Slovakia.


Czech Republic, Slovakia as well as Hungary are experienced 'smokers.' Generating around 40%, 55% and around 40% of their electricity by nuclear respectively.

Czech Republic has two nuclear power plant (NPP) sites - Dukovany (2x WWER 440 / V213) and Temelín (2x WWER 1000). Slovakia has had two NPPs Jaslovské Bohunice (WWER 440 / V213) last two of its five units are scheduled for shutdown by the end of 2008 after the political decision during the EU accession negotiations; and Mochovce with two units functioning (WWER 440 / V213) and two more units foreseen to be completed in 2012 and 2013 respectively doubling its overall capacity. Hungary has a single NPP site at Paks, operating four WWER 440/V213 units (one of which was bought from Poland, after its nearly completed Żarnowiec NPP was abandoned)

The renewed interest in nuclear is not confined to CEE countries, whole world is reconsidering nuclear, since, although leaving many questions open, it currently is the only commercially tested and viable technology that provides CO2 free alternative to fossil fuels.

The debate was stirred-up again just before the Brussels summer holidays at July 2, 2008 conference, when Known supporter of nuclear energy, Hungarian MEP Edit Herczog (MSZP) mentioned that Hungary should increase its nuclear potential.



This comes at the same time as Czech ČEZ announced that it would double the capacity of its Temelín NPP, and Slovak PM mentioned at various occasions that political decision to close Bohunice NPP should be reconsidered, or a new NPP should be constructed at the site, as well as at other sites.

These moves are not limited to our three regional 'smokers,' Italy, country that shut down its NPPs after a referendum in 1987 has announced that it would go nuclear again. Poland, which after a local referendum suspended construction of its first NPP seems to be reconsidering its anti-nuclear stance and should join the 'smokers' club by 2020.

Map depicts NPPs only in CEE:

View Larger Map

Although nuclear is currently the only viable solution if EU is to stay true to its aims of cutting the CE2 emissions, it is not without problems. Most of the EU countries have not considered answers to the question of spent fuel and associated waste. Also the question of nuclear proliferation is one that needs to be taken very seriously. Nonetheless, just like with the smoking, pretending that it doesn't happen is not helpful, we need to talk about the associated problems and weight the solutions.

EDITED 18/12/2008:
On December 18, 2008 Slovak government announced its selection of Czech national energy champion CEZ, as its strategic partner for construction of the 5th unit. This should be done by a common company with shares of 49%CEZ and 51% Slovak government to be set-up next year. New NPP unit should be operational in 2020. Minister of economy Jahnatek mentioned 7 points criteria for selection, including (quoting Minister Jahnatek):
- ability and experience with building 3rd generation reactors
- whether the company is vertically established in Slovakia
- opportunities and ability in terms of dynamic stability of transport network and grid
- sufficient financial backing

Minister mentioned EdF and Enel as trailing in the second group behind CEZ, according to government information, 10 companies were in the selection process.
The event gain attention in Slovak news primarily through the voiced criticism of government for not announcing a open competition, or transparent selection of this strategic partner.

Read more on Nuclear Energy revival in Czech Republic, Slovakia and Hungary

How do you tell a difference between political, and commercial? (Oil Cut to Czech Republic)

By Andrej Nosko

How does one tell what is politics and what is business? If business uses the state to further its interests, people call it state capture. How do you call it when state uses business to further its interests? Raison d'etre?
Following the recent news in Czech Republic makes one wonder about Russia, or maybe rather about the rest of the Europe? Is not Russia the 'normal' one in the equation? It is doing what states have been doing for hundreds of years - maximizing its power.

Oil supplies from Russia have been cut to Czech republic, without any warning (in accordance to the agreement with Russia, the EC should have been informed), and U.S. presidential candidate Mr. McCain, subconsciously turned-on his Cold War reflex, when he expressed “regret some of the recent behavior that Russia has exhibited [...] including reduction in oil supplies to Czechoslovakia.”

When Nicollo Machiavelli wrote to his friend Francesco Vettori 495 years ago, that he can only talk about politics, because he doesn't understand business, the political reality was quite different. In the contemporary polyarchic political systems (people sometiems call them democracies, but this is energy security section, so I leave the conceptualization issues aside) interests (whose?) tend to be aggregated through political parties. Therefore state should cater for the needs of its citizens, through politicians aggregating the preferences and interests of their constituencies to maximize their potential for re-election, (which, if democracy functions well, should happen through catering for the decisive amount of electorate). Nonetheless, this is theory, the reality is, as usual, bit different. State uses business to pursue its needs and interests, and business uses the state reciprocally. This is particularly the case in the energy sector.

Without advertising a new movie (which in itself advertises bio fuels), the first few seconds of the following clip fit this blog: "Energy is really political, and it was always political."


On the July 10, Czech Ministry of Economy confirmed cuts in oil supplies from Russia. Nothing serious, previously I have written about the fact that Czech Republic has diversified its oil supplies, it also has sufficient strategic stockpiles (at 02/06/2008 CR had more than required 90 days of its consumption of fuels) this means that Czech refineries have sufficient time to buy substitute crude oil elsewhere, and they also have alternative route to ship it into the country.

So if there is nothing serious, one could ask why this blog-post. I would like to point out couple of similarities from the history, and pose couple of questions, without any definitive answers. On July 8, Czech Republic and USA signed an agreement on 'controversial' anti-missile shield radar base to be stationed in Czech Republic. This is part of a US system, that aims to protect USA against Iran, the other part of the system to be stationed in EU - the ten interceptor missiles are planned for Poland. Russia was not happy about this. At numerous occasions Russia has voiced its discontent with US plans to station its installations in Europe. Another example is at the end of this video, when Mr. Putin, back than president of Russia, 'theorizes' over aiming missiles at Ukraine, if it joins NATO - a potential move that Russia is not very happy about.


Therefore it is interesting, that the oil supplies were significantly 'reduced' only to Czech Republic, and this happened just a day after the signing of the agreement with USA. Russian side claims reasons are unpolitical (the official press statement states reasons as "technical organizational problems in Russia"). Nonetheless, even Russian media makes the connection, see an article in Kommersant, Pravda or longer historical and regional comparison in RIA Novosti. Let's review context of similar events from the recent past, when supplies of energy were significantly reduced, or cut completely, for business or technical reasons.

Besides the well known issue of 'gas row' with Ukraine in 2006, 2007 and 2008, which would deserve a separate post, and very interesting case of gas cut for Georgia (2001, 2004, and combined with electricity in 2006 - mostly in connection with the Russian supported separatism movements), or oil cut in Belarus in 2007 (over prices of products and transit fees, followed by an agreement on early warning system), the case of Lithuanian refinery Mazeikiu deserves more attention.

In July 2006, Lithuanian refinery Mazeikiu ceased to receive its oil supplies through Druzhba pipeline allegedly due to technical problems. Ideas of some, who have pointed out, that the fact that the cut, and a peculiar fire in the refinery, occurred after Gazprom was not succesful in trying to acquire the only Baltic refinery, over Polish PKN Orlen, are supported by the fact that the supplies have still not been restored. The refinery imports oil through its Butinge terminal, originally conceived as an export terminal.

Seeing this situation, and the experience of PKN Orlen, from Lithuania, and Latvia (Ventspils bid), its Czech operator Unipetrol (owning both of the Czech Refineries), may be facing another struggle with the Russians in the eastern part of the EU. It may also be another proof, that the distance between the politics and business is much smaller than the 15 km, that Alexander Medvedev mentions. (In an interview for Euronews at 5:30"/6:55" in this video referring to the distance between the Kremlin and HQ of Gazprom in Moscow).

Read more on How do you tell a difference between political, and commercial? (Oil Cut to Czech Republic)

European Nuclear Forum is like a “Legalize Marijuana” club

By Andrej Nosko

Czech economic daily E15, in May published an interview with my favorite Czech Ambassador-at-Large for Energy Security Václav Bartuška. In his as usually very sobering remarks, Bartuška talks about short-sightedness of management of Czech energy company subsidiaries, energy policies in Europe and need for an energy crisis in Europe as a 'wake-up' call.

Although, as usually, Ambassador Bartuska's comments would be worth translating in full. There are two comments that deserve translation for the non Czech reader above all other:
The first one is regarding the Nuclear Energy in Europe:
Original:
"[Jaderné] fórum připomíná takovou schůzku lidí, kteří chtějí prosadit legalizaci marihuany. Půlka z nich už tak potají pokuřuje na záchodě a bojí se to říct na veřejnosti."

My translation: "[Nuclear] forum reminds me of a gathering of people, that would like to legalize marijuana. Half of them smokes in private in the bathroom and is afraid to say that in public."

The second one concerns the problem of energy policy in Europe:
Original: “Evropa potřebuje týdenní blackout. Ne pětihodinový, týdenní. Aby to maso pochodovalo z mrazáku. Protože týdenní výpadek proudu vám maže civilizaci”

My translation:
“Europe needs a week-long blackout. Not five-hour, a week-long. So that the meat would walk out of the freezer. Because week-long blackout starts to erase civilization”

Further comments are not necessary.

If you'd like to read more, check out my presentation at Prague Security Studies' Summer School in Telč, and especially slides 35 and 37, but the included videos on slides 30-32 might be instructive as well.

Read more on European Nuclear Forum is like a “Legalize Marijuana” club

Reversing of oil pipelines

By Andrej Nosko

“Slovaks want to import oil from Czech Republic” reads the headline of a news feature, run on April 15, 2008 by a Czech daily E15. This story has been copied by all major Czech and Slovak news hubs. Even if one subtracts the bombasticism and ‘exclusivity’ common to the lay journalists, this news is surprising and makes one wonder about three things: authenticity of the news on ongoing negotiations, relation of this news to the wider context, and timing of this message.

Authenticity of news
It is difficult to question the authenticity of the information, whether any negotiations are ongoing between Czech and Slovak administrations, since usually these kinds of negotiations are kept confidential. Tomáš Bartovský, the spokesperson of Czech ministry of Industry and Commerce was quoted by E15 as affirming the ongoing negotiations. The direct quote refers to the situation that “would concern solving of potential supply outages,” no further context of this comment is provided. The daily further quotes director of Czech oil pipeline operator MERO ČR a.s . Jaroslav Pantůček, as saying that reversing of pipeline would cost couple of tens of millions CZK (10M CZK approx. 400k EUR), and that Slovaks would have to finance this operation. The daily further notes, unavailability of any further information on negotiations between Slovaks and German operator of TAL pipeline which feeds in the IKL from the Mediterranean port of Trieste, and which would be a necessary condition for the Slovak-Czech deal to have any substance.

Relation to the wider context
The context and timing of this message is rather bizarre. First of all, the idea of reversing Druzhba to supply Slovakia through TAL-IKL is not novel. When the IKL has been conceived in what was back then called Czechoslovakia, it was a preferred project over an idea of connecting refinery in Slovak capital of Bratislava (Litvinov 5.4 MT/yr, Kralupy 3.3 MT/yr.) to the AWPpipeline (annual capacity of 10 MT/yr) leading to the refinery close to Austrian Capital in Schwechat. (capacity of 9.6 MT/yr) which is also supplied by TAL, but unlike the branch leading to the refinery in Ingolstadt, the capacity of AWP is projected only for the needs of Austrian refinery, and thus rather limited for transporting additional supplies. It was preferred, because connector to Ingolstadt would provide for the possibility of supplying also Slovak part of the federation. Nonetheless, this possibility has to be seen in the wider context. The supplying of Slovakia through TAL-IKL would mean prolonging the transit from the oil exporting country, than loading of oil to a oil tanker, offloading the tanker in Italy, shipping it through Italy, Austria, Germany and Czech Republic further to Slovakia. When one puts this barrel of oil into such a globetrotter context, other reversing plans come to the picture as well.
The most interesting is the possibility for Ukraine to reverse its pipeline between Odessa and Brody to supply its western neighbors with oil from the modern port of Odessa should the exports of Russian oil through Druzhba cease.

Furthermore, the context of the reversing of pipelines has the other side or rather, other direction, as well. Czechs are discussing reversing of IKL to export Russian oil since the early times of IKL has been put into operation, and its capacity has been rather underutilized. This would nonetheless entail changing the technology of the Kralupy refinery, since it is currently unable to process high-sulphuric sorts of pipeline-Urals oil from Russia.
Additional option, envisaged by Transpetrol (owned by Jukos Finance) and OMV already in 2003 is the possibility of building the connector to Schwechat, this option is still on the table.

Timing of the message.
Another question that one can be wondering about, is why has this information been released now? Is it just a coincidence, or is it a part of some information game? Just few days before this message was released, Russian PM visited Slovakia, and a major Slovak daily Sme juxtaposed coverage of his visit in Slovak and Russian media. On the first sight it is quite clear, that Mr. Fico (Slovak PM) met a different Russian PM and Mr. Zubkov has apparently met a different Slovak PM than Mr. Fico, since these two people referred about their meeting in such a different ways. Nonetheless, this question should be dealt with in a different post.

by Andrej Nosko

Read more on Reversing of oil pipelines