CZECH REPUBLIC: TOPOLANEK GETS A QUALIFIED OK FOR

UNCLAS SECTION 01 OF 02 PRAGUE 001430

SIPDIS

SENSITIVE
SIPDIS

EUR/NCE FOR EFICHTE

E.O. 12958: N/A
TAGS: PREL PGOV EZ
SUBJECT: CZECH REPUBLIC: TOPOLANEK GETS A QUALIFIED OK FOR
TALKS WITH PAROUBEK ON MULTI-PARTY COALITION

REF: PRAGUE 1032


1. (SBU)SUMMARY. The Civic Democrats (ODS) held their annual
party Congress November 17-18, and gave Party Chair Mirek
Topolanek the support he was looking for to begin
negotiations with the party's main rival, the left-of-center
Social Democrats (CSSD),on a coalition that would also
include one or two other small parties. His mandate is to
either form a stable coalition that will win the backing of
parliament and be able to pass many of the party's key
reforms, or to push for early elections in 2007. In general,
an ODS-led coalition would be a good thing for bilateral
relations. Talks on the policies and personnel of this
potential mutli-party coaltion will take place over the
coming days and weeks. The outcome is still unclear. END
SUMMARY

2.(U) Topolanek, who ran unopposed for the position as
Chairman, was re-elected with 330 of the 476 votes. The
support, roughly 70%, is down from the 90% he received in
2004 and reflects the strength of opposition within ODS to
any deal with CSSD. The congress passed resolutions saying
ODS should not enter into an exclusive agreement with CSSD,
meaning that a grand coalition or opposition agreement is
unacceptable. The congress also passed a resolution saying
Topolanek should not allow the emergence of a CSSD government
that relies on the Communists (KSCM). By passing resolutions
telling Topolanek what he must not do, the delegates have
left him some space, albeit limited, for his talks with CSSD
Chairman, Jiri Paroubek, and the smaller parties.

3.(U) Paroubek appeared on a Sunday talk show to repeat his
position that CSSD is willing to join ODS in a coalition that
he himself needn't be part of. He said he was ready to
discuss a cut in corporate taxes, a key ODS platform. But
Paroubek also categorically refused to accept the concept of
a flat tax, or university tuition, two other ODS priorities.
CSSD, which has been doing poorly in recent polls, is also
strongly opposed to any elections before the middle of 2008.
One thing Paroubek has going for him is the fear many ODS
parliamentarians have that another failed vote of confidence
would lead to the resignation of the Speaker of the House,
constitutional uncertainty, a possible CSSD attempt at a
government, or the loss of jobs if early elections were to be
held in 2007.

4.(U) The ODS congress also elected one Principal Deputy
Chair and four Deputy Chairs. Prague Mayor Pavel Bem easily
won the party's number two spot, beating out the incumbent,
Minister of Labor and Social Affairs, Petr Necas. Bem did so
well in the October local elections that ODS can now rule
Prague without the support of any other parties, a position
the party wishes it were in at the national level. Bem is
considered a strong follower of President Klaus and a
potential competitor for Topolanek's job. Necas, who had
always been a loyal number two, was elected as the 4th Deputy
Chair, a slight demotion. Petr Bendl and Ivan Langer were
re-elected as Deputy Chairs. Former Deputy Miroslava Nemcova,
whose speech at the congress was a well-received and
impassioned plea to avoid any compromises that would hurt the
party in the long-run, was replaced among the deputies by
Petr Gandalovic, Minister for Regional Affairs and former
Consul General at the Czech Mission in New York.

5.(U) If ODS and CSSD do come to an agreement, the two
parties would have 155 of the 200 seats in parliament and
would be in a position to easily pass legislation or changes
to the constitution. If the Christian Democrats (KDU-CSL)
join the coalition, which they have indicated they are
willing to do, they would add 13 seats, a mathematically
insignificant number. Critics of the potential arrangement
between the big parties say an ODS/CSSD/KDU-CSL government is
little more than a grand coalition with a false mustache. But
KDU-CSL's inclusion would give the arrangement a multi-party
veneer allowing Topolanek to claim that he is staying with
the ODS congress mandate, and would also help prevent any
constitutional changes that might strengthen the larger
parties at the expense of the smaller. The Christian
Democrats will hold an extraordinary Congress December 7 and
will make their position clear at that time. In theory the
Greens could also join the coalition, though party Chair
Martin Bursik has expressed reservations.

6.(SBU) COMMENT. December 2 will mark six months since the
stalemated June 2-3 elections. The Czech public is showing
few signs that it demands an immediate solution to the
problem. Topolanek and Paroubek will begin tough talks this

PRAGUE 00001430 002 OF 002


week and could announce a new government in the weeks ahead.
One unaffiliated cabinet minister, whom Ambassador Graber is
scheduled to visit mid-December, told poloff November 17 that
he thought the new government would be appointed before then.
But Topolanek and Paroubek have been on the brink of a deal
once before. The previous agreement, on a two-party
coalition, broke down in August.(Reftel) If Topolanek and
Paroubek are serious about an agreement, they will have many
policy questions to debate, particularly on labor and social
issues, though they have far fewer differences when it come
to foreign policy. In the days preceding the ODS congress,
the Czech press ran unsourced stories saying former Speaker
of Parliament Lubomir Zaoralek (CSSD) would replace Alexander
Vondra as Foreign Minister in the proposed coalition. While
Zaoralek would not be as friendly to the U.S. as Vondra, he
has proven to be somebody the Embassy can work with. Vondra,
who was elected to the Senate as an independent on the ODS
ticket, but officially joined ODS earlier this month, is not
out of the game yet. He was singled out for praise during
Topolanek's weekend speech and was an active participant in
the congress, unlike some of the other current non-party
ministers. He continues to give every impression that he
intends to stay in the job for some time.
GRABER