Dr. Vaclav Klaus, President of the Czech Republic, told a small group of business and university leaders on Friday that Europe is witnessing two defining movements - Central and Eastern Europe’s continuing transition from Communism to a free society, and the push of Western Europe to form a unified European state.

President Klaus was in Chattanooga attending The Mont Pélerin Society conference, an event that convenes 200 of the world's top classical liberal scholars, to analyze the prospects for freedom, entrepreneurship, and prosperity in the 21st Century. He gave a private speech at UTC Friday afternoon sponsored by the Probasco Chair of Free Enterprise and the College of Business at UTC.

On his own country’s social, political and economic transformation, President Klaus said, “The fall of Communism in 1989 was followed by enormous expectations in my country and around the world. People thought that if you remove the barriers and constraints, everything will be fixed. But the reality could not satisfy the enormous expectations.”

This environment is what President Klaus calls the expectations-reality gap, and it can lead to real problems for a country in flux. “This transition process is a costly one that some people don’t want to accept. This is why those supporting free market society are now in the opposition party in most central and eastern European nations.”

But even with a reality that could not live up to expectations, President Klaus insisted that the reality in the Czech Republic was a success. “We have totally changed our country.”

The difficult transition began with the “Velvet Revolution” in 1989, and was made possible by the growing weakness of the communist regime and a political ideology that President Klaus said “no one took seriously.”

“No one is a true believer in Marxism. I always said that there are more true, genuine Marxists at the University of California at Berkeley than in the whole Communist country of Czechoslovakia,” the speaker said. “The books show a hypothetical model of Marxism, but the reality is always very different.”

While some have criticized former Communist countries for the messy transition that often follows a political revolution, President Klaus said there is no script for overthrowing a government. “It could have been better, of course, but that is an easy criticism. This was done live and the basic changes could not have been done differently.”

And the changes have been extensive, according to President Klaus. He said that several years after the Velvet Revolution, a visiting American friend asked his son to name the biggest change in his country since the revolution. “Two or three years ago, I could walk a mile from my house and pass not one private shop or restaurant or hairdresser or car repair store,” his son replied. “As a child, I had never seen a private business. But now, I can make that same one mile walk, and I see not one government-owned shop or hairdresser or restaurant.”

“In this respect,” President Klaus said, “the change has been enormous. There is no way to describe it. The privatization of our society has been transformational.”

President Klaus also shared with the audience his concerns about the expanding powers of the European Union. The Czech Republic joined seven other former Communist countries in joining the EU this year. They will be officially inducted in May of 2004.

While his country has spent the last five years accepting EU legislation as a condition for entry, President Klaus said living under the Union’s policies have been “a very heavy burden on our transitional economy.”

He also expressed doubts about the latest draft of the EU constitution. “It is a radical document with huge implications for national sovereignty,” he said. “If this constitution is ratified, the EU will derive its power not from its member states, but from its own constitution.”

Questions on the level of integration in member states as well as issues of currency, borders and passports also concern President Klaus. “After a half century of Communist rule, I’m happy to be a Czech citizen with a Czech passport and I’m not so eager to throw it away for a European passport.”

President Klaus said despite its problems, the EU was an organization that his country was committed to joining. “The Czech Republic is the heart of Europe, so it would be very difficult for us not to have a part in the process,” he said.

“Europe is at a crossroads. Our only choice is to be in the EU and work to change it from the inside, not the outside.”