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CZECH REPUBLIC: Positive effects of IPB crisis

The imposition of forced administration on Investicni a postovni banka, the Czech Republic's third-largest bank, on June 16 and the bank's immediate takeover by Ceskoslovenska Obchodni Banka, is significant far beyond the change it brings to the Czech banking sector. It also represents a milestone in Czech politics, as the last major bastion of cronyism between banks and politicians and political parties has come crashing down.

Despite the likely burden it will place on the taxpayer, it may be the most positive development in economics or politics over the past decade.

"I think this is the coup de grace to the cosy relationship between the Civic Democratic Party (ODS) and the Czech Republic's most powerful economic actors," says Jonathan Stein, a political analyst at the Institute for East West Studies in Prague. These words were ironically supported by statements made by the ODS leader, former prime minister Vaclav Klaus, who labelled the forced administration and takeover of IPB as "Sarajevo assasination number two". Klaus has made the idea of a "Sarajevo assasination" into a myth since his ministers turned against him and brought down the government in November 1998 while he was visiting Sarajevo.

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