He admits that we underestimated the effects of dependence on Russia for oil and gas, and at the same time, the European Union and the Czech government could have reacted to some things more quickly: “It could have abandoned the holy grail of not interfering with the market. And we could have done the things that are being rapidly prepared now sometime in March or May of this year.”
Listen to Jan Bumba’s full Interview Plus. The guest is Vladimír Dlouhý, president of the Chamber of Commerce and former Minister of Industry and Trade
Major crises have their objective cause, but a certain cowardice of market participants also plays a role.
“As soon as they see even a hint of risk, they immediately want to hedge, sell or buy. This panic is transmitted, especially in the age of social media, to the population and disaster is on the table,” he explains.
Dlouhý blames the Czech government for bad communication, because advice to entrepreneurs that they should have been more careful and fix energy prices in time will not help anyone.
At the same time, he adds that no one has yet come up with a clean solution to the current situation.
In contrast to the times of the coronavirus pandemic, it is no longer compensation, because the entire economy is affected and we are limited by the state of public finances. Instead, Dlouhý sees a price cap as the solution.
“What is happening now on the stock exchanges is no longer a market. There is very low liquidity and low volumes of trades that are executed at those absurd spot prices. That market is de facto no longer a market, so there is nothing wrong with capping,” says the former Minister of Industry and Trade.
There is no time for compromise
The current Minister of Industry and Trade, Jozef Síkela, has convened an extraordinary European Energy Council for next Friday. Dlouhý adds that a working group has been established at the Office of the Government of the Czech Republic to prepare proposals for measures.
“I believe that within a few days, maybe two weeks, we could expect an announcement from the Czech government. Because if she doesn’t, it will have complicated consequences for her. I don’t just mean municipal elections, which will not change anything at the parliamentary level, but will send a signal. Inaction can bring big problems to the government in the long term,” he warns.
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According to Dlouhé, a powerful tool could be the separation of electricity prices from gas prices, which cannot be ruled out as continuing to increase. It is also said that the possibility of buying out the minority shareholders of ČEZ needs to be discussed.
On the other hand, Dlouhý is resolute on the question of whether it would not be more beneficial for the Czech economy to try to reach an agreement with Russia, as Hungary is trying to do, for example.
“At a time when Russia is conducting unprovoked aggression with victims and among civilians and is talking about fascist tendencies in the Czech Republic as well and is questioning the basic parameters on which we have been operating since 1989, until there is an interruption of military operations and action begins, we must not give not even a hint of weakness on the Russian side,” he emphasizes.
“All of us in Europe now have to be tough enough. The second thing is that the solution may mean some compromise with Putin. But let’s talk about that when it stops being open military aggression with civilian victims,” concludes Dlouhý.
Listen to the recording of the entire interview in Interview Plus. Hosted by Jan Bumba.
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