Identifier
Created
Classification
Origin
05PRAGUE1130
2005-07-29 14:27:00
CONFIDENTIAL
Embassy Prague
Cable title:  

CZECH DEPUTY PM JAHN CONSIDERS JOINING CSSD AND

Tags:  PGOV ECON PINR EZ 
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C O N F I D E N T I A L SECTION 01 OF 02 PRAGUE 001130 

SIPDIS

E.O. 12958: DECL: 07/28/2015
TAGS: PGOV ECON PINR EZ
SUBJECT: CZECH DEPUTY PM JAHN CONSIDERS JOINING CSSD AND
REVIEWS DOMESTIC POLITICAL SCENE

Classified By: ADCM Mike Dodman for reasons 1.4 b+d.

C O N F I D E N T I A L SECTION 01 OF 02 PRAGUE 001130

SIPDIS

E.O. 12958: DECL: 07/28/2015
TAGS: PGOV ECON PINR EZ
SUBJECT: CZECH DEPUTY PM JAHN CONSIDERS JOINING CSSD AND
REVIEWS DOMESTIC POLITICAL SCENE

Classified By: ADCM Mike Dodman for reasons 1.4 b+d.


1. (C) Summary: During a meeting with the Ambassador, Czech
Deputy Prime Minister Martin Jahn offered views on his
possible political future, potential political scenarios
heading into next summer's elections, and the fate of
economic legislation. Jahn confirmed that PM Paroubek has
asked him to join the Social Democratic party (CSSD) and
offered him the leading slot on the party's Prague list for
the 2006 elections. Jahn is debating the offer, torn between
his personal inclination more towards the center-right and
his desire to help the CSSD reform (not to mention his own
career ambitions). He offered strong support to Paroubek,
praising his energy and political skills. He believes that
if CSSD comes out ahead in the elections Paroubek would be
willing to form a minority government with communist support,
but expects that scenario is less likely than a formal or
informal agreement between CSSD and center-right ODS. Jahn
expects the Paroubek government will push through a
bankruptcy reform this year, but otherwise does not expect
significant reform measures before the election. End summary.


2. (C) Ambassador met over breakfast on July 26 with Czech
Deputy PM Martin Jahn, who is responsible for economic
issues. Jahn (35) is former head of CzechInvest and
currently not a member of any political party. He has been a
close and reliable embassy contact during his one year in
government, and also a close partner of the AmCham.

--------------
Jahn considers joining CSSD
--------------


3. (C) Jahn told the Ambassador that PM Paroubek had asked
him to join the CSSD and offered to place Jahn at the top of
the CSSD election list in the Prague region (subsequent press
reports made this public, adding that Prague native Paroubek
intends to run in another district, likely Usti nad Labem,
apparently to avoid a direct contest in Prague with ODS
leader Mirek Topolanek). Placement at the top of the ticket
would likely assure Jahn a seat in the next parliament. Jahn
has promised to decide by mid-August. He told Ambassador his
conditions for accepting would include the guarantee of a

ministerial slot if CSSD is a part of the next government,
and assignment as the next Czech EU Commissioner when former
PM Spidla is replaced in 2009, assuming CSSD is in a position
to make such an appointment.


4. (C) Jahn said the decision is a difficult one, as his
natural inclination is to the center-right, but that his
participation in CSSD-led governments means he has no
political alternative. Motivating him to accept the offer is
a strong desire to see a modern (i.e., liberal in the Blair
sense) Social Democratic party in the Czech Republic -- he
termed Finance Minister Sobotka the only other force in this
direction within the CSSD, and therefore sees his
participation within the party as important for this goal.
He admitted that his family is torn over the decision, but
said that even if CSSD does not form the next government,
four years in Parliament -- perhaps as head of European
affairs committee -- would not be intolerable.

-------------- --------------
Paroubek said to prefer minority government
-------------- --------------


5. (C) Jahn repeatedly praised Paroubek, terming him
extremely hard working, and making clear that he considers
nearly all other prominent Czech politicians "lazy."
Remarking on Paroubek's high popularity ratings (note: polls
released this week indicate he is now the most popular Czech
politician, surpassed only by the recently deceased Pavel
Dostal, former Culture Minister) and apparent strong support
within the CSSD, Jahn said he expects these may begin to
unravel in September when the 2006 budget debate gets
underway.


6. (C) Jahn believes it is too soon to predict who will win
next summer's elections, but he (like all other commentators)
clearly believes that CSSD now has a good shot to come out
ahead of ODS. Jahn said Paroubek,s preference if CSSD is
victorious next year would be a minority government. He said
Paroubek would have no problem relying on the support of the
Communist Party. But Jahn expects that, in the end, ODS
would decide to support a CSSD minority government, in order
not to be accused of having let the communists into power.
(Comment: Since Jahn would potentially be a minister in this
government, this may be wishful thinking on his part.) He
also thought a "grand coalition" between CSSD and ODS was a
strong possibility.

-------------- --------------
Cabinet shuffle or removal of Gross not likely
-------------- --------------


7. (C) Looking at the months between now and the election,
Jahn said a cabinet reshuffle is not likely. Singling out in
particular Health Minister Emmerova and Justice Minister
Nemec, Jahn said he thought Paroubek would be happy to be rid
of some ministers that had proven obstructionist, but added
that Paroubek is not prepared to pay the political cost of
alienating core elements of his coalition that would surely
accompany any reshuffle. Jahn likewise does not expect
Paroubek will make a move to replace former PM Gross as CSSD
party leader. Part of the problem is that CSSD does not plan
a party congress before next June. But he also believes that
Gross retains a high level of support among party members.
Jahn believes Gross will continue to keep a low profile until
polling numbers indicate that his approval rating has
improved. (The most recent polls show Gross's approval
rating up slightly to 25%, versus 63% for Paroubek.)

-------------- --------------
Good chance for a bankruptcy bill, but not the best one
-------------- --------------

8. (C) Jahn said he is optimistic that the government will
win approval of its draft bankruptcy legislation later this
year. He admitted that the current CSSD proposal, based on
the draft prepared by the Justice Ministry, is deficient in
several areas, notably protection of creditors, rights, but
that it is a huge improvement over the existing law. (Note:
Jahn has dropped his initiative to win government approval
for his own version of the bankruptcy law, drafted in
cooperation with AmCham. AmCham has therefore shifted its
focus to the ODS, which has separately put forward a
parliamentary proposal that is essentially the AmCham, nee
Jahn, draft. This has chilled relations between Jahn and the
AmCham, although they continue to cooperate actively on other
proposals, including successful implementation of the
recently enacted improvements to the commercial registration
process.)


9. (C) Jahn thinks other significant economic reforms are
unlikely before the next election. He noted that a recent
flap over alleged Paroubek remarks that pension reform does
not need to be a top GOCR priority stemmed in part from the
fact that Paroubek was misquoted. Jahn said the PM knows
that pension reform is a priority, but realizes that it is
not something that will get done before the next election,
and the fact that the pension fund is currently in surplus
(and will be for at least another twenty years) means there
is no immediate crisis.

-------------- -
A good political move, but no guarantee of CSSD reform
-------------- -


10. (C) Comment: Jahn had made clear to us for some time
his desire to remain in the public sector, with the ultimate
goal of serving in Brussels. While the public and private
response to the trial balloon that has now been released in
the press will surely shape his decision, our assessment is
that he is likely to accept Paroubek,s offer and run for
Parliament next summer on the CSSD ticket. Ironically this
will put him in direct competition with ODS chief Topolanek,
who Jahn described as one of his few remaining supporters
within ODS.


11. (C) Bringing a prominent pro-business figure into the
party, and running him in the country's most prosperous
district (an ODS stronghold),would mark the latest in a
string of shrewd political moves by Paroubek. It would not,
however, indicate that Paroubek is committed to the "New
Labour" vision of CSSD that Gross was previously advocating.
Whether or not Jahn would be successful in reshaping the CSSD
would depend largely on Paroubek,s future political
calculations. End comment.
CABANISS