CZECH POLITICS: NEW GOVERNMENT TAKES POWER WITH

C O N F I D E N T I A L SECTION 01 OF 02 PRAGUE 000025

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/09/2017
TAGS: PGOV PREL EZ
SUBJECT: CZECH POLITICS: NEW GOVERNMENT TAKES POWER WITH
ONLY MEDIOCRE CHANCES OF SURVIVAL

Classified By: Political-Economic Counselor Mike Dodman for reasons 1.4
b+d


1. (SBU) SUMMARY. On January 9 Czech President Vaclav Klaus
officially appointed the second government of Prime Minister
Mirek Topolanek (ODS),launching the latest chapter in the
electoral saga that began with the deadlocked June 2-3
parliamentary elections. Topolanek's center-right coalition
with the small Christian Democrat and Greens parties has 30
days to schedule a vote of confidence. However, with exactly
half of the seats in the parliament, Topolanek needs to win
over at least one opposition MP in order to pass the vote of
confidence, and both opposition parties have said they will
not support the new government. Further, Topolanek's own
position is under fire within ODS, meaning he will have to
struggle even to win all his own coalition's votes. If the
upcoming confidence vote fails, the new government will
remain in power for potentially several months while a third
coalition attempt is made. Topolanek's new government will
largely be a continuation of the outgoing government in terms
of foreign policy and has the potential to be even stronger
than previous governments on issues of transparency, ethics,
and free markets. END SUMMARY


2. (U) While chances for success of the newly appointed
Topolanek government -- led by Topolanek's center-right ODS
party and including the small Christan Democrats (KDU-CSL)
and Green (SZ) parties -- are not good, the coalition has
nonetheless set out an ambitious program. The new government
intends to reduce taxes and introduce a flat tax, eliminate
certain social benefits, introduce co-payments in health
care, privatize, and increase the retirement age. The list
of reforms is ambitious considering the fact that the
government will not have a majority in parliament and will
make it very difficult for any left-of-center opposition
parliamentarians to cross the aisle and support the
coalition. Former Prime Minister and Chairman of the
opposition Social Democrats Jiri Paroubek announced after the
new government's appointment that Topolanek's second
government is even less acceptable than his first, which
failed its vote of confidence on October 3rd, 2006; two
recent defectors from Paroubek's party have recently said
that they do not intend to support the government. The
Communists also said they will not support the new government
partly because of its energy policy, which is perceived as
anti-nuclear at a time of increasing concern about energy
supplies. There has been much debate the new government's
energy policy, much of it spurred by opponents of the Green
party, and unfortunately aided by missteps from the Grens
themselves (including a statement from the new Education
Minister that government wants to close the Temelin nuclear
plant -- a stance rejected by Green Party chairman, and new
Deputy PM, Martin Bursik).


3. (C) In terms of foreign and security policy, the new
Topolanek government should perform very much like the
previous, despite several new faces. Outgoing Foreign
Minister and former Czech Ambassador to the U.S. Alexander
Vondra (ODS) has been promoted to Deputy Prime Minister for
European Affairs. While he will not have line authority over
either the MFA or MOD, we expect that Vondra will remain
influential on these questions, particularly as those
ministers are new to their position. Vlasta Parkanova
(KDU-CSL) will take over as the country's first female
Defense Minister. Although she has served on parliament's
defense committee and was Justice Minister in the late,
Parkanova is expected to be a rather weak minister. Senator
Karel Schwarzenberg takes over as Foreign Minister.
Schwarzenberg's appointment has generated considerable
discussion. He is a well-respected former exile who spent
most of the communist period living in Vienna (although he
has dual Swiss-Czech citizenship). He comes from a Czech
noble family that continues to own vast tracts of rural land.
He served as Chief of Staff to former President Havel in the
1990s, and has led many NGOs. He is a well-known promoter of
democracy and human rights, who in 2005 was expelled during a
visit to Cuba. He is also very close to Vondra.
Schwarzenberg is a member of the small ODA party, which years
ago broke away from the ODS; he was nominated as minister by
the Greens. Schwarzenberg's links to Havel, ODA, the Greens,
and numerous human rights NGOs have all earned him the ire of
President Klaus, who criticized the appointment but
eventually agreed he had no choice but to appoint Topolanek's
full cabinet, including Schwarzenberg. We have long worked
closely with Schwarzenberg on human rights and other
international issues, and expect he will introduce very few,
if any, personnel or policy shifts at MFA. He has not spoken
extensively on missile defense, but several MFA staff have
told us that they know he supports Czech participation in the
project and will not "rock the boat"; his new link to the

PRAGUE 00000025 002 OF 002


Green party may, in fact, be productive if and when we move
forward with the Czechs on missile defense.


4. (C) The new government comes to power at a time of
increasing disunity within the ruling ODS party. A day
before appointing the new government, President Klaus,
co-founder and honorary chair of ODS, published an article in
the popular weekly Tyden that was very critical of Topolanek
and the direction he has taken the party in, particularly in
reference to his alliance with the Greens. ODS Deputy
Chairman, Prague Mayor Pavel Bem, has also had a public
dispute with Topolanek over the past week. The press has also
run stories of a fallout between Topolanek and his outgoing
Finance Minister Vlastimil Tlusty (ODS),who is not in the
new government but remains influential within the party. It
is clear that some ODS figures are not fully behind
Topolanek. One ODS MP told us January 9 that he is
optimistic Topolanek will survive, "if" all the ODS MPs
support him. That being said, if Topolanek loses another
confidence vote, as many expect, he is likely to resign as
party chairman (he has already said he would do so) and an
extraordinary party congress would be held to elect a new
chairman. Most observers expect that Bem would win that
contest. However, the turmoil over recent weeks has exposed
many divisions within ODS and it is not certain that the
party would survive a succession battle in its current form.


5. (C) CSSD leader Paroubek told the Ambassador January 8
that he sees two scenarios ahead: Topolanek's new government
wins its vote of confidence, which he thought highly
unlikely, and CSSD enters opposition, or Topolanek fails and
talks begin on some form of power sharing between the two
main parties, the so-called grand coalition. In terms of the
confidence vote, Topolanek has said that he does not plan to
use the full 30 days. We heard from one ODS advisor Jan 9
that the vote could happen on January 30. But a Green MP
also told us the vote could happen "as early as next week."
If the vote fails, the current Topolanek government remains
in power for as long as it takes to form a new coalition
(note that the outgoing Topolanek government was in power for
over four months, despite losing a vote of confidence in its
first month). The third attempt to form a government will
likely involve the appointment of a new Speaker of
Parliament, which Paroubek told the Ambassador would be part
of the overall deal to be crafted. If the third attempt
fails, the Constitution requires new elections to be called.


6. (U) The full composition of the new government follows
below:

Prime Minister Mirek Topolanek (ODS)

Deputy Prime Minister Alexander Vondra (ODS) European
Affairs
Deputy Prime Minister Jiri Cunek (KDU-CSL) (and Regional
Development)
Deputy Prime Minister Martin Bursik (SZ) (and Environment)
Deputy Prime Minister Petr Necas (ODS) (and Labor/Social
Affairs)


Foreign Affairs Karel Schwarzenberg (ODA; appointed
by SZ)
Finance Miroslav Kalousek (KDU-CSL)
Regional Development Jiri Cunek (KDU-CSL)
Interior Ivan Langer (ODS)
Health Tomas Julinek (ODS)
Regional Development Petr Gandalovic (ODS)
Labor Petr Necas (ODS)
Transport Ales Rebicek (ODS)
Industry Martin Riman (ODS)
Culture Helena Trestikova (KDU-CSL)
Environment Martin Bursik (SZ)
Agriculture Petr Gandalovic (ODS)
Justice Jiri Pospisil (ODS)
Defense Vlasta Parkanova (KDU-CSL)
Education Dana Kuchtova (SZ)
Legislative Affairs Cyril Svoboda (KDU-CSL)
Minister without Portfolio (for Govt Advisory Bodies)
Dzamila Stehlikova (SZ)
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