Landlocked in central Europe, the Czech Republic comprises the territories of Bohemia and Moravia, and for most of the 20th century it was part of Czechoslovakia. In 1989, the "Velvet Revolution" ended four decades of communist rule, and in 1993 the Czech Republic and Slovakia peacefully dissolved their federal union to become two independent states.

Czechs make up over 80% of the population; Moravians are the next largest group. Some 300,000 Slovaks were left in the country after partition, but dual citizenship is now permitted. Ethnic tensions are few, except that the Roma community faces discrimination. Divorce rates are high.

Strengths

Skilled industrial labor force. Good industrial base. Speed of privatization of state industries. Attractive to German investors. Draw of Prague for tourists.

Weaknesses

Lack of diversification in sectors usually attractive to overseas investors. Limited restructuring, banking sector problems. Pressure to cut government expenditure to reduce serious budget deficit.

The pro-democratic solidarity of 1989–1990, which saw the election of the Civic Forum and dissident playwright Vaclav Havel as president, soon gave way to a two-party system. The right-of-center ODS pursued market economics, and oversaw the split with the Slovak Republic in 1993, but lost its overall majority in 1996. It then gave tacit support to the social-democratic CSSD's minority government on the understanding that constitutional reforms would favor the two larger parties. The CSSD under Vladimir Spidla was able to form a majority government, without ODS backing, in 2002.

The Czech Republic began formal negotiations on EU membership in 1998. It joined NATO in 1999. Relations with Germany are a priority. The issue of the forced expulsion of Germans in 1945 remains a stumbling block. Austria and Germany strongly opposed the opening of the Temelín nuclear plant in 2000.

The split with Slovakia left an oversized, expensive army. In 1994, plans to cut the military by 20,000 were approved. Professional soldiers with a communist past were the first to go. The Czech armaments industry has a long tradition based on precision engineering, and the country is among the world's 20 largest arms exporters.

Copper, lead, zinc, and coal are the Czech Republic's chief resources. The government is aiming to phase out the worst-polluting coal-fired power plants. Opposition to a planned 2000 MW Soviet-designed nuclear power plant at Temelín delayed its completion until late 2000.

Pollution from the power, chemical, and cement industries and the new Temelín nuclear plant are key concerns.

There are new expressways and rail links to Germany. Prague is a busy regional center for passenger air traffic.

Health care expenditure as a share of GDP has increased by 30% since 1990. Wealthy Czechs travel to Germany for complex surgery.

Schooling has reverted to the pre-1945 system. Charles University in Prague was founded in the 13th century.

Prostitution is becoming a growing problem, especially in regions bordering Austria and Germany.

A new entrepreneurial class has emerged since the "Velvet Revolution" in 1989. Many Czechs have shares in privatized enterprises.

Revenues from tourism amount to nearly $4 billion a year and are an invaluable source of foreign earnings for the Czech economy. Germans are the most numerous among the millions of visiting tourists, mainly from Europe. Prague, which rivals Paris as the most beautiful capital in Europe, is still the main destination for visitors, although a growing proportion now seek other attractions such as spa towns and skiing in the Carpathian Mountains.

Formerly part of the Austro-Hungarian Empire, the Republic of Czechoslovakia was established in 1918. It was invaded by Hitler in 1939.

• 1968 "Prague Spring." Invasion by Warsaw Pact countries.
• 1989 "Velvet Revolution."
• 1990 Free elections won by Civic Forum; Vaclav Havel president.
• 1993 Split with Slovakia.
• 1998 Start of EU membership negotiations. Elections: CSSD forms minority government.
• 1999 Joins NATO.
• 2002 CSSD reelected.