NATO summit: make profit, not war

Written by: Jasna Skorov

For the first time, a NATO summit will be hosted by a post-communist country. This is not only an honor with political and military significance, but also a chance for Pragues business community to boost its global reputation.

LIKE ANY OTHER undertaking, the summit needs a budget. The Czech government approved CZK 800 million, an appropriate sum for such a mega-event. This money will be used to finance the convention, accompanying events, transport, and security. Other assets will flow from private subjects and embassies, because the two-day meeting will be accompanied by many social get-togethers. The delegates themselves pay for their transportation to the Czech Republic and their housing, which itself accounts for at least another CZK 100 million. This injection and promotion for Prague makes Prague hoteliers happy. I can see promotional spots on CNN for Vienna or Budapest, and our capital city has a handicap in these terms, says Michal Chour, sales director for the Radisson SAS hotel. Furthermore, Prague hoteliers find themselves in a rather complicated situation this year. The first six months saw fewer tourists than last year visiting the Czech Republic, and then Prague was inundated by catastrophic floods. The Hilton, which was damaged by the waters, reopened in September, and the Inter.Continental should resume operation in the beginning of November. Some hotels, such as the Four Seasons, will unfortunately be unable to complete their repairs before the NATO summit opens. According to Alexandr Vondra, the governments commissioner for summit preparations, the summit provides great motivation for firms to restore their operations to normal. He says that global television networks will be steadily observing Prague for two days, this time in a context that is not catastrophic, which should help the travel industry here. In connection with the NATO summit, people frequently speak of positive indirect economic impacts more tourists will come in the future, and Pragues prestige as a convention-friendly city will rise. However, critics point out that there were similar expectations before the IMF meeting, which did not pan out. References matter One need not look for only indirect positive effects. The money that the state freed up for the convention budget will enter the economy directly. The amount that will be used for organization comes to CZK 340 million, and, according to Halka Kaiserov, spokeswoman for the NATO Summit Office (KSN), most of this figure will go to supplier firms. There were forty tenders in all, and about 100 contracts have been signed, Kaiserov says. Contracts were closed with firms with no competition in their fields (e.g., the Congress Center). Tenders were not required by law, because this is an event associated with state visits, Kaiserov adds. Although KSN wants the entire process to be as transparent as possible, in two weeks it was unable to provide The Prague Tribune with a complete list of suppliers, or more detailed rules for tenders and controls. Although the names of the firms are not confidential, only a few names have been made public the Congress Center will be equipped with Dell computers; Sanjiv Suri, owner of the catering firm Zti Group, will be in charge of catering, in cooperation with other restaurants and firms like Golem. Furniture for the convention will be provided by Alax, and VPU Deco, along with other firms, will be in charge of construction modifications. The Adecco agency is in charge of staffing, as it was for the IMF meeting. Firms agree that references are more important to them than the job itself. The sheer number of firms restricts the budget, so suppliers often reduce their margins or provide their services free of charge in exchange for the prestige. One such example is the Import Volkswagen Group, the official summit partner that arranges for koda and Audi limousines, passenger cars, and minibuses. Not surprisingly, the convention also means unpleasant administrative tasks. If we were to compare the enormous amount of work with the financial returns we will get for our services, we would not be involved in such an event, says Jindich Chytrek, sales director for the catering company Golem. His 250 employees will have to go through security screening, which means lots of extra administrative work. For us, the biggest business lies in the references, Chytrek explains. Proof of fitness The NATO summit has a final, but no less significant, business dimension military. The security arranged will show whether the Czech Republic is an equal alliance partner. Additionally, there will be experts among the delegates who can appreciate the technologies used. Some of the hallway meetings will probably include military business. There is some consideration being given to the Czech Republic becoming a part of a defensive nuclear umbrella. This would bring contracts for arms companies, as well as for the building of infrastructure roads and missile silos, notes a military technology expert who wishes to remain anonymous. Additionally, the Czech army wants to reinforce its position as a trainer for armies of eastern countries that are NATO candidates. But western armies also like to rent our military facilities, such as Ralsko and Doupovsk hory. So the NATO summit will be good advertising not only for the travel industry, but also for these services, he adds.

Photo: V. Weiss

Alexandr Vondra, the government commissioner for summit preparations, is known as a former dissident, the Charter 77 spokesman, and as the Czech ambassador to the US in the 1990s. Now he is in charge of coordinating the biggest convention in the history of the Czech Republic. He points out that the events success could have a positive influence on the entire country.

Like many others, you support the indirect effects of the NATO summit on the local economy. But after the IMF meeting there was no great increase in tourism or the convention industry. What makes the NATO summit different from that convention? As far as tourism goes, Prague has prospered in the last ten years. But it has been grievously affected by the floods, and we believe that the NATO summit and the journalists that cover it will help bring the tourists back. Revenues from the travel industry are in the billions of crowns every year. Conventions are also very important to Prague. In October alone several big conventions were organized here FORUM 2000, the Trilateral Commission, and others.

How did your office select the large number of suppliers? We called tenders for most of the services, and we prepared the methodology in cooperation with the consulting firm Arthur D. Little. Overall there were about forty tenders for transport, catering, lodging, and Congress Center equipment, to name a few. The tenders, which were generally called by addressing multiple firms, were always won by firms that best met our requirements, and price was the main criterion for selection. We are trying to handle our assigned CZK 340 million economically.

Do you think that cooperation in the organization of the NATO will be a significant reference for firms in their future business activities? I think it could be. Of course it depends on how the individual firms manage to make use of their participation in their marketing activities. For example, in the area of transport, we managed to arrange free insurance on delegates cars due to great interest on the part of insurers.

Can the organization of the summit have an impact on winning military orders such as the Czech Republic joining the defensive anti-nuclear umbrella? Anti-missile protection is currently under discussion as to the projects feasibility. If NATO agrees that such a project is possible for the protection of Europe, it could be an interesting challenge for Czech firms. Interview by Jasna Skorov

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NATO summit: make profit, not war