TIME: Almanac 1993/TIME Almanac 1993.iso/time/061791/0617004.000

Text File | 1992-08-28 | 5.5 KB | 115 lines

                                                                                WORLD, Page 42

CZECHOSLOVAKIA

Confronting a Tankless Task


The good intentions of political leaders to get out of the arms
business run into economic reality

By JAMES L. GRAFF/MARTIN


    Trick question: What country is the world's leading arms
manufacturer -- in per capita terms? Hint: it's not any of the
big five in the arms business (the U.S., the Soviet Union,
France, Britain and China). The answer: Czechoslovakia.

    With 111 factories churning out weaponry ranging from
AK-47s to L-39 Albatros jet trainers, Czechoslovakia has been
producing more than $800 annually per citizen, vs. $700 for the
U.S. But with a dissident playwright as President and a mandate
to undo the past, Czechoslovakia's postcommunist government is
determined to dismantle the country's arms industry. President
Vaclav Havel has ruefully noted that Czechoslovakia sent Libya
enough Semtex plastic explosives in the '70s and early '80s to
keep the world's terrorists supplied for the next 150 years.
Just two months after the November 1989 revolution, Foreign
Minister Jiri Dienstbier announced that Prague would "simply end
its trade in arms," without regard to economic consequences.

    But now that the economy is going through the painful
transition from communism to capitalism, Czechoslovakia is
learning how hard it is to shut down such an important industry.
As many as 80,000 jobs, the bulk of them in the restive and
depressed region of Slovakia, depend on it. The federal
government has pledged to cut output to 25% of 1988 levels by
1993, but already Slovak politicians have slowed down that
timetable to stave off mass unemployment. Last month federal
Prime Minister Marian Calfa took a scolding from his Israeli
counterpart, Yitzhak Shamir, over a still pending agreement to
sell 100 T-72 tanks to Syria in a deal worth $200 million.
"Czechoslovakia is not interested in producing tanks," countered
Calfa. "But we don't want to break the economy of a region."

    In the early days of the cold war, central Slovakia became
the heartland of the heavy-arms industry. The sleepy little
town of Martin, 145 miles north of Bratislava, was the site of
a tank factory that employed 11,000; nearby Dubnica churned out
armored personnel carriers; down the road, Povazska Bystrica
produced jet engines.

    The biggest loss for Slovakia's arms plants has been in
exports to Warsaw Pact countries. Sales to the Soviet Union,
Czechoslovakia's biggest customer, plummeted by 40% last year,
and are falling off even more steeply this year.

    The drop in East bloc sales makes the industry more
dependent on exports to the Third World, but political and
economic developments are cutting off those markets as well.
U.S. officials have joined Israel in condemning the sale to
Syria. The deal also set off a fierce struggle within
Czechoslovakia between government officials who want to bolster
the nation's international reputation and others who think the
agreement could help bridge the gap until the industry retools
for nonmilitary production. Says Slovak Prime Minister Jan
Carnogursky: "We've asked the federal government to clear the
matter up and persuade complaining governments that the deal is
harmless."

    The arms merchants are looking for government help in
getting out of the business, but in view of all the country's
economic troubles, they are not hopeful. The ZTS Martin tank
factory had to borrow $86 million to pay for tank production
equipment that the communist government foisted on it, and
director Jan Segla now wants Prague to forgive the debt. He also
wants more financial assistance to liquidate production lines
designed to manufacture tanks. "The heritage of special
production is why our factory is in such bad economic shape
today," he says. "It's the labor of Sisyphus to keep this plant
working, and we need the government's help."

    The company's harried managers hope to expand nonmilitary
production under a three-year-old agreement with the German firm
Hanomag to manufacture earthmoving equipment. ZTS Martin has
also begun working under license from the Italian manufacturer
Lombardini to produce tractor engines and other machinery. The
company eventually plans to make 40,000 engines annually, but
this year it will turn out fewer than 900. "In the first phase,
new products don't bring profits," say Segla. "What we need are
partners who have money and are willing to invest."

    Western investors, though, have been slow to come forward.
"We're sick of people coming here to organize colloquiums on
plant conversion as a social phenomenon," says Josef Fucik, a
department head in the federal Ministry of Economics in Prague.
"We're in severe need of help, not meditations on philosophical
problems."

    Slovak leaders universally acknowledge the need to
decrease their economy's dependence on military production. But
many think the federal government is moving too fast and is
sacrificing Slovak jobs without providing credible alternatives.
"The federal government understood conversion as a gesture of
cooperation toward the West," says Vladimir Meciar, the
combative former Slovak Prime Minister who railed against
federal policy and flirted with separatism until his ouster in
late April. "They hoped there'd be a payoff, but they're still
waiting." Unemployed factory workers, though, may become
restless waiting for new jobs.