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The Czech Republic, at the close of 2009, found itself in an uncharacteristically difficult position. For most of the 20 years since the fall of Communism, the country had it relatively easy. Helped by a massive influx of tourist dollars, billions more in foreign investment, and a post-revolutionary president, Václav Havel, admired around the world, the Czech Republic was arguably the most successful of the former Eastern bloc states. The country was among the first former Soviet satellites to be brought into the NATO military alliance (1999) and entered the European Union in the first wave of Eastern expansion in 2004. The economy had been on a 20-year bender with no signs of letting up. Then came the 2008-2009 global economic downturn to crash the party. Though Czechs appear to have escaped the worst of the downturn, they nonetheless felt the global chill in trade and investment; 2009 was the economy's worst year since the Velvet Revolution.

To make matters worse, the Czech Republic's two main political parties are again at each other's throats as this book goes to press. Political infighting brought the government down in the middle of 2009 (inconveniently coming as the country held the E.U.'s rotating presidency), and as of late 2009 the parties were still squabbling over fresh elections to choose a new government. Fortunately for short-term visitors, none of this is likely to matter much. The Czechs have seen their share of unstable governments and the country continues to soldier on.

Not even the weak economy could prevent Prague from embarking on its most ambitious series of capital investments since the building of the metro in the 1970s and '80s. Everywhere you look these days, you see cranes, backhoes, and scaffolding. The Charles Bridge is being ripped up and reassembled in stages in a multiyear renovation project that officials say is needed to keep the bridge from falling apart. It's still crossable but the scaffolding mars the experience somewhat. Work was expected to be completed sometime in 2010.

The main train station, Hlavní nádrazí, is in the midst of a 5-year rebuilding phase until 2013 that's hoped to clean it up and make it a more attractive gateway to the nation's capital. The building booms in the outlying neighborhoods of Holesovice, Karlín, and Smíchov continue apace. These riverside districts, paradoxically, got a new lease on life in the devastating flood that struck the city in 2002. The cleanup that followed focused public and private attention on areas that had previously been little more than slums.

The biggest project of all, and one of the costliest construction feats now underway in the entire E.U., is the Blanka Tunnel in Letná, north of the Old Town across the Vltava river. The tunnel stretches several miles underground and one day will form part of an ambitious ring-road system to route vehicles away from the center.

Domestic Politics

While the average visitor isn't likely to notice, the Czech Republic is blessed (if that's the right word!) with perhaps Europe's most dysfunctional government (and with Poland, Slovakia, and Hungary in the mix, that says a lot). The two main parties, the center-right Civic Democratic Party (ODS) and the center-left Social Democratic Party (CSSD), are locked in constant battle, though neither party commands a sufficient majority to form a stable government. The result has been a succession of weak coalitions involving one or the other main party and linking smaller parties with often-contradictory aims.

These dysfunctions were on display for the whole world to see in 2009 when the Czech Republic held the rotating presidency of the European Union. Just as the Czech government was engaged in fighting the global economic crisis and flare-ups in the Middle East and everything else, the opposition party (in this case, the Social Democrats) called a no-confidence vote and the government collapsed. The E.U. was essentially without a presidency for 3 months running. As 2009 was drawing to a close, the country was still without an elected government.

Add to this volatile mix President Václav Klaus, the man who succeeded Václav Havel as president in 2003. Apart from having the same first name, Klaus bears absolutely no resemblance to his predecessor. He's carved out a niche as a right-wing iconoclast (some would even say "kook"), firmly anti-E.U. in his politics and a strong opponent of climate-change legislation or anything else that in his eyes smacks of "Bolshevism." Though he's far to the right of most of his countrymen, he continues to enjoy broad support.

Economy

The global economic downturn of 2008-2009 hit the high-flying Czech economy disproportionately hard. Before the crisis, the economy was growing on the order of 5% to 6% a year. This level of growth was considered necessary if the country hoped to catch up with western Europe in a generation. While annual figures for 2009 were not available as this book was being researched, the economy for the year was expected to contract by around 4%. While you're not likely to notice while strolling through Prague, the Czech economy is actually highly industrialized. Exports include automobiles and big-ticket capital goods like trams, trains, and buses. Orders for all of these dried up as the downturn swept across Europe and the rest of the world.

Still, the Czech Republic appeared to be weathering the storm better than its peers in central Europe. There was no run on the Czech crown, for example, comparable to Polish zloty or Hungarian forint. Indeed, the crown held its own with respect to the euro and strengthened against the U.S. dollar. Prague, with its reliance on tourism, was partially buffered from the economic malaise, but the capital too suffered from a drop in the number of visitors. Many restaurants and shops dependent on the tourist trade suffered through what was generally viewed as the worst year in a decade, and several properties went belly up. Hotels responded by discounting room rates to a fraction of 2008 levels, and depending on the night, in 2009 it was possible to snag a four-star room in the center of town for under $100.

It's not clear if these discounts will continue to be available. Much will depend on the speed and timing of the economic recovery. Already in the fall of 2009, there were signs the tourist trade was coming back. If the world economy continues to deteriorate, expect continued low rates for hotels. One note of caution: because of the economic crisis, some of the properties listed in this book may no longer be in business by the time you are reading this. At press time it was impossible to predict with any accuracy who might and might not survive.

Note: This information was accurate when it was published, but can change without notice. Please be sure to confirm all rates and details directly with the companies in question before planning your trip.