CZECH POLITICS: NO HONEYMOON FOR TOPOLANEK, BUT

C O N F I D E N T I A L PRAGUE 000071 SIPDIS SIPDIS STATE FOR EUR/NCE E.O. 12958: DECL: 01/26/2017 TAGS: PGOV PREL EZ SUBJECT: CZECH POLITICS: NO HONEYMOON FOR TOPOLANEK, BUT LIKELY TO SURVIVE DESPITE THE ODDS REF: PRAGUE 53 Classified By: Political-Economic Counselor Michael Dodman for reasons 1.4 b+d ¶1. (C) SUMMARY. Czech PM Mirek Topolanek's second government, which passed its vote of confidence January 19, faces numerous challenges. In its first week it has already had one minister resign and seen a corruption scandal emerge involving a deputy prime minister. While it is likely to overcome these and other challenges, the longevity and effectiveness of the government will depend on Topolanek's ability to maintain discipline among the three diverse coalition partners and satisfy the demands of two opposition rebels whose votes enabled his vote of confidence. Supporting Topolanek's efforts will be the natural reluctance of many MPs to see early elections. As demonstrated by its strong support for missile defense, we expect few difficulties with this government on foreign and security policy issues. We expect some progress on the coalition's ambitious economic reform agenda, but are not optimistic in terms of improving transparency. End summary. NO HONEYMOON IN PRAGUE ¶2. (SBU) Within days of winning its vote of confidence thanks to the abstention of two opposition MPs (reftel),PM Topolanek's second government suffered its first loss when the Culture Minister, Helena Trestikova (KDU-CSL),resigned on January 24. Trestikova had threatened to resign even before the vote of confidence, saying she was under pressure to appoint Frantisek Formanek as the deputy minister. Formanek is known as a lobbyist for property developers, some of whom have petitioned the government for permission to remove historic buildings in order to construct shopping centers, and is an acquaintance of CSSD parliamentarian Milos Melcak, one of the two opposition defectors who enabled the vote of confidence to pass. The Christian Democrats have replaced Trestikova with Senator Vaclav Jehlicka, who has already made clear that he doesn't want Formanek as deputy minister either. ¶3. (U) Meanwhile, Senator Jiri Cunek, the Chairman of the Christian Democrats and Deputy Prime Minister, is under suspicion of having accepted a bribe of half a million crowns (US$ 25,000),which banking records and the testimony of his former secretary indicate he may have taken from a construction firm in 2002 while serving as mayor. The Senate's Immunity Committee has recommended that police be allowed to investigate the claim. The entire Senate will take up the matter early in February. BALANCING CONFLICTING AGENDAS ¶4. (C) Both of these mean that Topolanek, who has served as Acting PM since September, has had no honeymoon since his success in the vote of confidence. While the two developments have gotten plenty of press, public attention in the past week has focused much more on the weather and U.S. missile defense (and is at least part of the explanation for why Topolanek has been so active in talking about the U.S. missile defense offer -- to be explored further septel). Topolanek can probably survive these problems. But the first week of the government has also demonstrated some of the differences between the three coalition partners that that Topolanek will have to overcome. One junior partner, the Greens, is in favor of minority rights and clean, honest government; the other junior partner is led by Cunek, who only recently rose to national prominence after forcefully evicting and relocating Roma families from the town of which he was Mayor and is now facing corruption charges. The Greens are opposed to nuclear energy; Topolanek's Civic Democrats (ODS) are proposing expanding nuclear power to increase energy security. The Greens are strongly in favor of European integration; ODS officials responsible for EU affairs are saying they will not support German attempts to revive the EU Constitution. ODS has come out strongly in favor of U.S. missile defense; the Greens are divided. ¶5. (C) The differences between the parties can easily be overstated. The Greens, under Deputy PM Martin Bursik, have proven to be pragmatic in their approach to the coalition, and also to use the situation to their advantage. For instance, the Greens have used the clamor surrounding the Cunek scandal to demand that Roma rights receive more prominence in the coalition agreement than ODS would have liked. Ondrej Liska, Deputy Chairman of the Greens, told poloff January 23 that the party would never have been able to extract so much from its ODS had Cunek not been so widely criticized and vulnerable. The Greens basically told Topolanek, we dislike Cunek so much that we will only stay in the coalition if you agree to certain benefits for the Roma -- which include a commitment for the government to purchase and relocate the controversial pig farm on the site of a former Roma concentration camp. ¶6. (C) In addition to the division among the three coalition partners, Topolanek will face challenges in meeting the demands of the two CSSD rebels. The details of the agreement Topolanek struck with Michal Pohanka and Milos Melcak have not been released, although it appears clear that some personnel appointments (e.g., Formanek as Deputy Culture Minister) were part of the deal. The true test will come when key legislation comes up for vote. While Pohanka is a relative centrist who could support some of the ODS agenda, Melcak is a member of the far left of CSSD and will not easily swallow some of the coalition's planned economic reforms. EARLY ELECTIONS NOT YET ON HORIZON ¶7. (SBU) Despite of the coalition's lack of a majority and its rocky start, the fact is that it has a fair chance of staying in power and achieving some of its policy goals. It is quite difficult to call early elections in the Czech Republic, even if most of the parties wanted them. And most parties do not. The Christian Democrats, with the Chairman being investigated by police and with public support teetering just above the 5% threshold for entry in parliament, certainly do not wish to face voters soon. The opposition Social Democrats, as well as the Communists, would, according to all recent polls, lose seats if elections were held soon. ODS itself is internally divided and many current MPs would have to wonder if they might not be replaced on party lists in a new election. The coalition leaders pledged prior to the vote of confidence that they would attach a vote of no confidence to any legislation that represented a core part of their coalition agreement -- failure to pass such a bill would permit the President to call early elections. It remains to be seen if the government will keep this promise. ¶8. (C) Looming is the presidential election in early 2008. The president is elected by both houses of parliament. Rumors persist that President Klaus's re-election prospects, and maneuverings by former CSSD Chairman Milos Zeman, drove much of the calculations made during the nearly eight months since the June 2006 national elections. As difficult as the current divided lower house may be, it seems likely that President Klaus would prefer to work with the current chambers on his re-election, rather than risk the unknown of a new election. ¶9. (C) Comment: We expect to be working with the Topolanek government for an extended period. On foreign and security policy, the performance of the government to date makes it clear there will be no significant policy shifts. The CSSD, which led the government for the previous eight years, will no doubt be a tough opposition overall, but we expect there will be the minimal level of cooperation necessary to pass legislation of importance on foreign and security policy. There will likely also be some progress on economic reforms, but with significant compromises from what ODS had hoped. One concern is transparency. While the Greens will no doubt push more for transparency than any previous governing party, and while a strong opposition will ensure that scandals are brought to light, the government's need to make deals with all sides to keep the coalition intact and pass legislation means that transparency is likely to suffer. GRABER