Czechs Rebuild Arms-Export Industry to Boost Economy

POLITICAL idealism has given way to economic pragmatism here, as Czech industry and government officials carry out plans to reenter the arms manufacturing business.

The announcement last month of a new consortium created to build and sell heavy conventional armaments came three years after Czechoslovak leaders tried to shed the country's long-standing reputation as one of the world's least discriminating arms dealers.

The Czech Parliament is considering a bill to create a licensing system for firms selling arms. The bill has not yet passed, but officials in the ruling Civic Democratic Alliance expect parliamentary approval by year's end.

Czech Minister of Industry and Trade Vladimir Dlouhy says the government will support the efforts of such companies by scrapping its highly restrictive arms-export laws. Mr. Dlouhy says he expects a new policy to allow the government to decide arms sales on a case-by-case basis.

He calls the old arms-export laws naive, something urged on them by Western countries that were selling arms on their own. "They preached to us to drink water, while they themselves were drinking wine," Dlouhy says. "Armaments are a commodity, and Czech weapons have a good reputation worldwide."

The heavy-engineering firm Skoda Pilsen announced in early June that it will form an ambitious arms-manufacturing consortium with several other Czech companies. One of their first projects will be to modify and upgrade Soviet-designed T-72 tanks to Western standards.

Additionally, Dlouhy acknowledges his ministry is reviewing the possible sale of military hardware to Iran. Czech defense electronics manufacturer Tesla Pardubice, together with its marketing partner, Omnipol, has received offers from Iran to buy six Tamara "stealth" radars. The Tamara is highly valued because it reputedly was successful in detecting the US Air Force's "invisible" B-2 "Stealth" bomber. But the Tamara's true asset is that, unlike conventional radar, it cannot be detected by aircraft.

Last month's developments contrast sharply with the heady, idealistic months following the November 1989 "velvet" revolution, which brought about the peaceful overthrow of communism in Czechoslovakia.

Almost immediately upon assuming power in January 1990, then-Czechoslovak President Vaclav Havel and Foreign Minister Jiri Dienstbier made ending arms exports the centerpiece of their foreign policy. They declared that Czechoslovakia would both halt the flow of weapons from its factories and convert its massive defense industries to civilian-oriented production.

But during the past two years, officials have backed away from Mr. Havel's policies as the issues of arms exports and factory conversion became politicized.

The now-independent Slovakia, home to much of the former Czechoslovakia's arms-manufacturing factories, has been cited by the Czech government and the European Community as regularly violating Havel's policies.

As the now separate countries of Slovakia and the Czech Republic have continued to move toward a market economy, domestic pressure has increased to retain industries in which the countries can compete internationally. Currently president of the Czech Republic, Havel remains quiet on the policy shift.

Representatives of Skoda Pilsen say their new consortium, to be called RDP (Research Development Production) Group, will seek defense contracts from the Czech military and the West.

Lubomir Soudek, Skoda Pilsen's general director, says RDP's first objective is to develop and produce modern equipment for the Czech military.

He says the company will participate in large Western defense programs, rather than catering to the Middle Eastern and developing-world countries supplied by the former communist regime. He says the RDP had already established close contact with French and German firms, and he expects the RDP to receive management assistance from the United States.

In recent years Skoda's move away from defense production was viewed as a farsighted initiative, since it freed the Czech lands from a highly centralized industry that has so far proven resistant to conversion efforts.

But the decision also left the republic's heavy armaments industry to atrophy. What was left to convert was passed over by federal government conversion programs that allotted to Slovakia 90 percent of the $72 million set aside for conversion. Few Czech defense industries received any conversion funding and many went out of business.

Minister Dlouhy says the new regulations would make it easier for companies to sell weapons legitimately, but emphasized that they would continue the ban on sales to "risk countries," such as those of the former Yugoslavia.