CZECH REPUBLIC: COALITION AGREEMENT REACHED

UNCLAS SECTION 01 OF 02 PRAGUE 000719 SIPDIS SIPDIS SENSITIVE STATE FOR EUR/NCE EFICHTE E.O. 12958: N/A TAGS: PGOV PREL EZ SUBJECT: CZECH REPUBLIC: COALITION AGREEMENT REACHED REF: A. Prague 610 ¶B. Prague 607 PRAGUE 00000719 001.2 OF 002 ¶1. (U) The Civic Democrats (ODS),Christian Democrats (KDU- CSL),and the Green Party (SZ) signed a coalition agreement and finalized ministerial nominations late June 23. ODS, which won the largest number of votes in the June 2 - 3 election, will hold 10 posts including that of the Prime Minister, and Christian Democrats and the Greens will each hold three. Whether and when this new government is able to secure a vote of confidence from the new Lower House, which begins its new session June 27, remains a big question mark. The outgoing Premier and Chairman of the Social Democrats (CSSD) Jiri Paroubek has announced that the vote of confidence would be conditional upon significant policy concessions by the new coalition government, plus the post of the Speaker of the Lower House and some other influential positions for CSSD. Even if the three-party coalition gets the vote of confidence, the result will still be a weak government that is very much dependent on the CSSD for legislative support. ¶2. (U) In terms of timing, the vote of confidence will likely take weeks rather than days since the Lower House must first settle on its leadership (Speaker of the House), only after which the outgoing government can submit its resignation, and after which the new government can request a vote of confidence. According to the Czech constitution, once the new government is submitted to the President (June 26),the government has 30 days to request a vote of confidence. What ODS and CSSD are able to negotiate during that time will determine the outcome. If the three-party coalition fails to make mutually acceptable concessions with CSSD, the newly formed government has no chance to survive the vote of confidence, and President Klaus will have to select a second appointee to form a government. It is widely believed that Klaus will give Topolanek a second chance, although the possibility of Prague Mayor Pavel Bem getting that opportunity still remains. ¶3. (U) The post of the new Foreign Minister will go to Alexandr Vondra (independent but nominated by ODS). As a former dissident, Charter 77 signatory, human rights activist, and a staunch supporter of NATO and the transatlantic concept of the Czech foreign policy, Vondra 
would continue the foreign policy line pursued by the outgoing Foreign Minister Cyril Svoboda. As a former Ambassador to Washington, D.C. and a great friend of the United States, he would make a Foreign Minister with whom Washington could establish exceptional relations. ¶4. (U) The newly established post of the Minister for European Affairs will go to Petr Gandalovic (ODS). Until last week, Gandalovic was Mayor of Usti nad Labem, where he beat PM Paroubek in the June election. As a Mayor, he has ample experience in handling the EU portfolio with respect to regional politics, funding EU-related projects, and EU integration in general. Mr. Gandalovic served as the Consul General of the Czech Republic in New York from 1997 to 2002. He is a graduate of the International Visitors program(1991). ¶5. (U) For the first time in Czech history, a woman will hold the post of the Defense Minister. Vlasta Parkanova (KDU-CSL) is a former Justice Minister (1996 - 98) and a long-time parliamentarian. She has served on the Defense Committee in the Lower House and was the leader of the House permanent delegation to the NATO Parliamentary Assembly. As a member of the Christian Democrat party, she is expected to continue the current foreign and defense policy line of her predecessor, who is from the same party. ¶6. (U) Coalition agreement priorities are listed below and mostly address EU and domestic policies. In terms of international and security issues, the coalition agreement supports the establishment of an effective system of development and humanitarian assistance, liberalization of world trade, preserving intellectual property rights, further development of transatlantic links between the U.S. and the EU, building a professional military focused on quality and effectiveness, and democracy promotion worldwide. -- COOPERATION AND SECURITY WITHIN THE EUROPEAN UNION (e.g., support for EU enlargement, support for EU policy reform such as agriculture, greater responsibility for security) -- CITIZEN, FAMILY, SOCIETY, EDUCATION AND CULTURE (e.g., pension reform, education reform) PRAGUE 00000719 002.2 OF 002 -- RULE OF LAW/ANTI-CORRUPTION (e.g., deadline for court rulings, simplification and rationalization of judicial system, increase transparency of public tenders) -- PUBLIC FINANCE REFORM (e.g., reduction of overall tax burden for private citizens and businesses, flat tax, introduction of energy and ecology tax starting August 2008) -- ECONOMIC MODERNIZATION AND INCREASED EMPLOYMENT OPPORTUNITIES -- IMPROVED QUALITY OF LIFE IN CITIES AND IN REGIONS (rent deregulation, limit on brown coal mining, restrict new nuclear power plants) -- COALITION COOPERATION (i.e., a "coalition proposal" shall be a proposal for which at least half of the ministers from each of the three coalition parties. This principal shall apply to the budget, taxes, investment, foreign policy, and defense policy) ¶7. (U) The critical next step is winning the vote of confidence in Parliament, with Parliament divided evenly with the center-right coalition holding 100 seats and the center-left (CSSD and the Communists) holding 100 seats. Both the ODS and the CSSD are interested in the post of the Lower House Speaker. Even if the new coalition government would support the CSSD nominee (outgoing Speaker Lubomir Zaoralek) for the post, it would not mean CSSD would automatically support a vote of confidence since PM and CSSD Chair Paroubek has said publicly that such support would also depend on program/policy concessions. President Klaus has stated he expects CSSD to support the nascent government coalition in exchange for the post of the Lower House Speaker. He also added that if CSSD does not support the new government, he would not/not appoint Paroubek for that opportunity. ¶8. (SBU) COMMENT: What this new coalition government would mean for Czech foreign policy and the USG is continuity. All the controversy and difficulties surrounding the coalition agreement, and even with the opposition CSSD, has been about domestic and EU policy issues, not/not foreign policy and relations with the U.S. We can expect the Czech Republic to remain strong on NATO and the transatlantic relationship. This is all the more so given Vondra and Gandalovic in their respective posts as Foreign and EU Affairs Ministers. The only unknown factor for the USG is the new Defense Minister Parkanova due to posts' limited and dated interactions and first-hand knowledge of her inclinations. CABANISS