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Czech Republic: Dispute Raises Issue Of Private Property Versus Public Good

By David Reed

A young hairdresser from a Moravian village is standing in the way of the Czech Republic's largest industrial development project since the end of communism. Marketa Regecova is refusing to sell her one-hectare garden plot -- the final piece of land needed for the project -- until she receives a fair price for her land. A government agency is now pushing for a substantial change in the country's property law that would allow the state to confiscate private land for non-public industrial developments. RFE/RL's David Reed reports.

Prague, 5 March 2001 (RFE/RL) -- Depending on one's point of view, Marketa Regecova is either a heroine or a greedy land speculator threatening several thousand jobs in a poor region of the Czech Republic.

Regecova is the owner of a one-hectare garden plot -- the final link in a large-scale investment project that could bring much-needed jobs and money to the town of Hranice, in the eastern province of Moravia. But so far she has refused to sell her land to local authorities, saying she deserves to have a fair price.

Regecova's lawyer, Petr Ksada, says the stand-off in Hranice could have been avoided if the mayor and town council had offered Regecova a reasonable price for the plot from the start, even before she knew the giant Dutch-owned company Royal Philips Electronics wanted the land: "The whole problem arose due to the town's arrogance. In the beginning, the town did not consider it important to negotiate with someone like a hairdresser."

Philips, Europe's largest electronics company, announced last March that it would spend nearly $200 million to build a television picture tube manufacturing plant in Hranice. The company plans to provide 1,250 jobs initially, and up to 2,000 more when a $250 million expansion is finished in six years.

Philips chose the Czech Republic over Hungary, Poland, and Slovakia among others in part because of huge incentives approved by the Czech government last year. Philips received incentives valued at $44 million -- including tax breaks, road construction, employee education subsidies, and 53 hectares of free land in northern Moravia, where unemployment is higher than the national average.

Hranice Mayor Rudolf Novak says the Philips plant also will stimulate the creation of thousands of additional jobs, such as those at a Belgian company that is building a plant nearby to supply parts to Philips.

Philips spokesman Andre Manning says the project is still on schedule to be finished this summer. He says the company is confident that the town will eventually obtain the last piece of property it needs and has no contingency plan in case it fails.

But in January, a Czech regional court rejected the town's request that it force Regecova to sell her land for less than $100,000, and ordered the mayor to pay court costs. Ksada, in turn, says Philips is already using her land and has asked the court to revoke the building permit the town issued to the company. Last week, parliament rejected a proposal that would have allowed the state to confiscate the plot with compensation.

Both court cases are pending, and Regecova's small plot of land, surrounded by a nearly finished factory and criss-crossed by bulldozers, has become a battleground of questions over private property versus the public interest.

Before the Philips plan was made public, Regecova would have sold her plot for $4 per square meter. But once the news of the Dutch project broke, she hiked her demand to more than $40 per square meter, or about $400,000 for the entire plot. Ksada says that government representatives used scare tactics to convince Regecova to sell her land.

Martin Jahn, chief executive officer of Czech Invest, the government agency responsible for promoting investors' needs, says the land dispute "is definitely not helping" the Czech Republic's image as a good place to build businesses.

"The land dispute obviously has been very unpleasant, but so far the Philips project has not been delayed. But it raises concerns and questions that we have to answer and explain."

Hranice Mayor Novak calls Regecova's demands "absurd." Philips says it will not interfere in the dispute.

Jahn of Czech Invest says government officials are planning ways to prevent this kind of problem in the future and to hold down land speculation, which has risen in the wake of the Hranice case.

Officials now obtain all the land needed for industrial parks before negotiating with companies looking for a plant site. And Czech Invest is promoting a significant change in the law that would expand the government's "eminent domain" -- the right to appropriate property for the public good.

The law until now has been used for public projects like roads and schools. A draft bill that would have added private projects like the Philips plant to the law recently failed by a narrow margin in parliament. But Jahn says the bill is being modified and he is confident it will pass "in the second half of this year."

"There are cases when individuals should not stop a project that would benefit the whole region, and if the government sets a reasonable price for the purchase of that land, we think that is quite fair."

Jahn says both the United States and European Union countries have similar provisions for private industrial projects that provide public benefit.

But Ksada says it is a bad idea to allow the government to buy private property for private companies because it threatens personal property rights. He compares this practice to communist times, when the government could easily seize property for the "general good."

"It is a very sensitive question concerning property, and the possibility of the state taking away someone's property."

Ksada said Regecova has shown her willingness to compromise by dropping a lawsuit accusing the Hranice mayor of slander. But he says that, despite the mounting pressure, she is not willing to give in entirely.