Government Survives No-Confidence Vote but PM Topolanek

UNCLAS SECTION 01 OF 02 PRAGUE 000757 SIPDIS SENSITIVE SIPDIS E.O. 12958: TAGS: PGOV ECON PREL EZ SUBJECT: Government Survives No-Confidence Vote but PM Topolanek Faces Rift Inside His Party REF: PRAGUE 698 ¶1. (SBU) SUMMARY AND COMMENT: Although PM Mirek Topolanek's coalition government survived the June 20 vote of no-confidence called by the opposition Social Democrats, his troubles do not end there. Not only does he have to fight a tough battle for his reform package against opposition MPs in August (reftel),he also faces significant opposition inside his own party. Former Minister of Finance Vlastimil Tlusty announced the creation of a new faction inside the Civic Democratic Party at a press conference just a few hours after the vote of no-confidence was over. So far, eight Members of Parliament have joined the faction. While it remains to be seen how numerous and powerful the faction will become in the course of time, a secession from the ODS seems unlikely. The more likely impact is for the economic reform package itself. Although he voted in favor of the package in its first reading on June 7, Tlusty stated that to win his support, the government would have to modify the package, especially the tax structure. All this will be a subject of negotiations this summer. Having a new faction behind him, Tlusty's political backing and chances to reach at least some of his goals for more radical economic reforms are higher. END SUMMARY AND COMMENT. ¶2. (SBU) Vlastimil Tlusty, former chief party whip and finance minister of the short-lived ODS minority government of Autumn 2006, has been a staunch critic of the coalition reform package since the moment its details were released in April. Father of the ODS economic program presented in June 2006 parliamentary elections and proponent of a flat tax, Tlusty maintains that the reform package prepared as a compromise by the three parties of the coalition government is a betrayal of ODS principles. He also claims that it unevenly burdens the middle class. Consequently, Tlusty has repeatedly called for a return to the "roots of the ODS right-wing policies." The announcement of a new faction inside the ODS is just a formal expression of his long-term position. Tlusty gathers his support mostly, though not exclusively, from among ODS politicians in his own region, namely Central Bohemia. Out of eight parliamentarians who have signed in so far, five are from his district. ¶3. (SBU) While some journalistsand opposition politicians believe that the new faction is a sign of internal disintegration and weakening of the ODS, the official reaction of PM Topolanek to the announcement of the faction was calm and forthcoming. He even stated that all 28,000 members of his party, including him should join the platform because they all would like to carry out true right-wing policies of their party program. The truth is that the results of the June 2006 parliamentary elections, which resulted in a political tie and consequently a weak government, do not allow them to do so. They not only depend on the agreement with the two junior coalition parties of centrist orientation, the Christian Democrats and the Greens, they also depend on votes from two opposition rebels whose opinions about economic, social and health reforms differ dramatically. As ODS Senator Tomas Jirsa told emboff, "We can do only as much a Melcak and Pohanka [the two opposition rebels] allow us to do." However, Vlastimil Tlusty refuses to accept this fact. ¶4. (SBU) Reactions inside the party concerning the newly-created faction have been mixed. While the majority agrees that the ODS economic principles are being compromised, they do not consider an internal party faction a solution. As of now, eight out of 81 ODS MPs have signed up and only one out of 41 ODS Senators is considering joining. The reaction of ODS regional governors, who are becoming more and more prominent in the party politics, ranges from neutral to negative. It does not come as a surprise that only Petr Bendl, opponent of Topolanek and governor of Central Bohemian region, welcomed the announcement of the platform. Pavel Bem, mayor of Prague and deputy chairman of the ODS, acknowledged the legitimacy of the platform saying that it is "better to have an institutionalized platform than an individual guerilla fighting inside the party." However, he is aware of limits to political action caused by the election results and does not intend to join it. ¶5. (SBU) Even if the platform grows in numbers, observers and party insiders do not expect that it would split from the party as happened in 1997 when a group of ODS members dissatisfied with party leadership left to form the Freedom Union. The current dissenters do not seem to have a split in mind. Moreover, PM Topolanek's forthcoming position helped to defuse the existing tension. MP Jan Schwippel, a member of the new faction, told emboff that in a two-hour close meeting that he and another platform member had with Topolanek shortly after Tlusty's announcement, the PM repeatedly declared his readiness to work closely with the group. Furthermore, insiders doubt that Tlusty's ultimate aim is to bring down the government. Marek Benda, ODS member of parliament, told emboff that he was not sure Tlusty would want to topple the government because he did not have a plan on what to do next and lacked strong allies inside the party. He believed that Tlusty was mainly after PRAGUE 00000757 002 OF 002 reasserting his former strong position in the party as Finance Minister - a position Topolanek sacrificed to bring the Christian Democrats into the coalition.