TALKS ON ODS MINORITY COALITION CONTINUE: CHANCES

UNCLAS SECTION 01 OF 02 PRAGUE 000636

SIPDIS

SIPDIS

STATE FOR EUR/NCE ERIC FICHTE

E.O. 12958: N/A
TAGS: PGOV PREL EZ
SUBJECT: TALKS ON ODS MINORITY COALITION CONTINUE: CHANCES
ONLY S0-S0.

REF: A. PRAGUE 610

B. PRAGUE 607

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1. SUMMARY. The Civic Democrat party (ODS),which won the
largest number of votes in the June 2 - 3 elections, is
pushing forward with its plan to form an ODS-led minority
government with the Christian Democrats and the Green Party,
although the Greens do not yet seem fully on board.
Meanwhile, the main opposition Social Democrats are
threatening to block ODS' attempt to form a three-party
coalition government by preventing it from passing the vote
of confidence it needs in Parliament. Even if ODS succeeds,
the result will likely be a weak government. If ODS fails,
President Klaus could ask Prague Mayor Pavel Bem (ODS) to
make a second attempt at forming a government. If that fails,
the Social Democrats could get their chance. END SUMMARY


2. As expected, the first week after the June 2-3 general
elections, where none of the parties got enough votes to form
a majority government and the center-right and center-left
prospective coalitions each hold the same number of
Parliamentary seats, did not produce any resolution to the
uncertainty surrounding the formation of the next government.
The center-right coalition of Civic Democrats (ODS),
Christian Democrats (KDU-CSL) and the Greens (SZ) each formed
three-person teams to negotiate a possible minority
government. ODS is represented by Chairman Mirek Topolanek
and Deputy Chairs Petr Necas and Vlastimil Tlusty. The
Christian Democrats are represented by Chairperson Miroslav
Kalousek and Deputy Chairs Jan Kasal and Milan Simonovsky.
The Green team includes Chairperson Martin Bursik and Deputy
Chairs Dana Kuchtova and Petr Stepansky.


3. The parties have had three-way talks, as well as
individual sessions between potential partners. Leaders of
the three parties have acknowledged a desire to form a
government, but many policy differences still have to be
resolved. Even without knowing the policies of a potential
ODS-led government, some members of the Green Party are
wavering; As of June 9, only two of the 14 regional
committees of the Green Party are supporting the coalition
plan. The Green Party's executive team will meet again June
10 to discuss the party's position. The three parties are
expected to continue meetings through the weekend and into
the week of June 12, by which time they hope to have reached
agreement on the main policies and personnel for the next
government. If successful, they will present the names to
President Klaus, who is expected to approve, then face a
Parliamentary vote of confidence within 30 days.


4. ODS Party Chair Mirek Topolanek has also met with his main
rival Prime Minister and CSSD Party Chair Jiri Paroubek.
Both Topolanek and Paroubek are publicly stating that CSSD
will not support an ODS-led minority government in a
Parliamentary vote of confidence. Given that the
center-right coalition and the center-left coalition each
have 100 seats in a 200-seat Chamber of Deputies (Lower House
of Parliament),if Paroubek can hold his party together and
bring the Communists on board as expected, it is possible
that the ODS-led minority government would not get the simple
majority (of those present to vote) needed to pass a vote of
confidence. Meanwhile, both sides are maneuvering behind-the
scenes. Paroubek is working on certain members of the Greens
while Topolanek and ODS are trying to persuade a small number
of CSSD moderates not to oppose him.


5. Chances for Topolanek are not great, but he can succeed.
If he does, he has the benefit of an ODS-led Senate (Upper
House of Parliament) and an ODS President. The 81-member
Senate is dominated by ODS with 38 members. ODS coalition
partners KDU-CSL has 6 Senators and the Greens have one. By
contrast, the Social Democrats have only 7 and the Communists

2. So while the Chamber of Deputies is evenly split 100-100,
the partisan balance in the Senate is 45-9, with the
remaining 27 Senators affiliated with independent clubs. The
Czech Constitution allows the Senate to veto or add
amendments to bills from the lower house. The President also
has the authority to veto bills. The lower house needs 101
votes to overturn either veto. Therefore, an ODS-led
minority government with 100 seats is likely to be much more
effective than a CSSD-led government with 100 seats; ODS can
count on ODS Senators to shape legislation through amendments
that they could not push through in the Chamber of Deputies,
which the CSSD and Communists in the Chamber of Deputies
would then be unable to veto.


6. Prime Minister Paroubek has also met with President Klaus
this week. After the meeting, Paroubek said he told Klaus
that CSSD should get the chance to form a government if

PRAGUE 00000636 002.2 OF 002


Topolanek's efforts fail. However, most observers believe
that Klaus will choose Pavel Bem, ODS mayor of Prague and one
of Klaus' strongest supporters within ODS. Bem is expected
to take a different path than Topolanek, offering CSSD some
form of partnership, but on ODS terms. The pre-nuptial
agreement could include a promise to help re-elect President
Klaus in 2008, agreements on pension reform, energy, or
changes to the election law that would disadvantage smaller
parties. The two sides could also agree to disagree on
health care, labor or other issues for which the parties have
fundamentally different views.


7. Parallel to the talks on the formation of a minority
government, talks between each of the five parties in
parliament began June 9 to choose a Speaker of the lower
house, five Deputy Speakers, and assignments for the fourteen
Parliamentary committees. The Speaker's post is particularly
important because should the first two attempts to form a
government fail (the winning party's attempt to form a
government, then if that fails, an attempt by whomever the
President chooses to try and form a government),then the
Speaker will choose the person who gets to make the third and
final attempt to form a government before early elections are
called. CSSD has already let it be known that it feels it
deserves, as the party that came a close second in the
elections, to have one of its members, possibly Paroubek, as
the Speaker. Current speaker Lubomir Zaoralek (CSSD) would
like all the assignments completed before the first sitting
of the parliament, which he has said would not be earlier
than June 27. If CSSD gets the Speaker post, and if the
first two attempts to form a government end if failure, CSSD
could either try to form a minority government with the
Communists and possibly (but unlikely) with the Greens, or it
could go back to ODS to discuss some form of power sharing,
but this time on CSSD terms.


8. COMMENT: ODS Chair Mirek Topolanek is vigorously pursuing
his best option and trying to consolidate his election
victory around a minority, reform-minded, pro-business
government. Meanwhile, PM Paroubek will do all he can to
stay in the game by thwarting Topolanek's efforts. The
composition of Topolanek's government could be known as early
as the week of June 12. However, Parliament is not expected
to hold the vote of confidence until the end of the month, if
not later. In the meantime, President Klaus and ODS have
called on the outgoing government not to make any major
decisions. President Klaus might even try to dismiss the
Paroubek government as early as next week, once he receives
the names in Topolanek's cabinet and approves them.
CABANISS