The Primacy of Economic Power: State-Led Privatization and the Dissolution of the Czech and Slovak Federative Republic, 1990–1992

Abstract

This historical and comparative analysis shows that neoliberal economic policy creating a domestic private sector triggered a series of events that culminated with the dissolution of post-communist Czechoslovakia in 1992. Placing primary emphasis on neoliberal economic reform, this research departs from existing accounts of the breakup positing ideological differences between Czech and Slovak elites or preexisting regional economic structures as the primary factors behind the dissolution. As neoliberal policies took place through the entire federation, an unexpected boom in tourism in Prague fostered the creation of a service sector catering to visitors, lowering the capital’s unemployment rate. Outside of Prague, neoliberal policy failed to alleviate the economic crisis. As federal economic policies failed to resolve mounting economic problems in Slovakia, particularly unemployment, the perception that federal policies did not fit regional needs gained salience. By 1992, whereas parties calling for the perpetuation of the federation lost popular support, separatist political parties gained the majority of seats in both regional parliaments, leading to the dissolution of the federation.