VZCZCXRO5476
RR RUEHAST
DE RUEHPG #0771/01 1921352
ZNR UUUUU ZZH
R 111352Z JUL 06
FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC 7618
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 PRAGUE 000771 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/NCE 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EZ
SUBJECT: CZECH ELECTIONS: IMPASSE UNBROKEN BUT TWO MAIN 
PARTIES SLOWLY GRAVITATING TOWARDS EACH OTHER 
 
REF: PRAGUE 737 
 
PRAGUE 00000771  001.2 OF 002 
 
 
¶1. (SBU) SUMMARY. Five weeks after Czech general elections 
resulted in a draw, the winning party, the right-of-center 
Civic Democrats (ODS), has yet to form a coalition 
government. The current Prime Minister Jiri Paroubek, whose 
left-of-center Social Democrats (CSSD) came in second, is 
using various means to delay or prevent the formation of a 
coalition government that does not include him, other members 
of his party, and some of his party's programs. Progress 
towards the installation of a new government has up to now 
been held up by the new parliament's inability to elect new 
leadership, including the Speaker, Deputy Speakers, and 
Committee Chairs.  Only then can the proposed 100-seat 
coalition of the Civic Democrats (ODS), the Christian 
Democrats (KDU-CSL) and the Greens (SZ) try to win the 
confidence of the 200-seat assembly, which looks increasingly 
unlikely. Two attempts to elect a Speaker have failed.  A 
four-party coalition of everyone but the Communists was 
proposed by ODS, but this idea also gained no traction. In 
the end, the most likely way out of the stalemate could be 
some pragmatic arrangement between the two main parties, ODS 
and CSSD, which would be bad news for the country's smaller 
parties, but should allow strong U.S.-Czech relations to 
continue. END SUMMARY. 
 
¶2. (U) The ODS/KDU-CSL/SZ Coalition suffered a humiliating 
defection during secret-ballot voting on the new Speaker of 
Parliament June 29. During the voting on the candidacy of ODS 
MP Miroslava Nemcova, one coalition deputy changed sides. 
CSSD, in a clever if undemocratic move, maintained its own 
party discipline by instructing its deputies to abstain and 
to show their unused ballots to the party leadership. As 
expected, the Communists voted against Nemcova. 
 
¶3. (SBU) Finger-pointing over the anonymous defection 
received widespread press coverage, with some notable 
attention focused on outgoing FM Cyril Svoboda (KDU-CSL), 
because his political preferences are more to the left than 
those of his party leader Miroslav Kalousek. Svoboda defended 
himself publicly, claiming that he had shown Kalousek his 
marked ballot during the second round.  The suspicions 
surrounding Svoboda are understandable as he and Kalousek are 
rivals for the party leadership.  Kalousek has pulled the 
party from its centrist kingmaker role to being an 
unambiguous ally of the right-of-center ODS.  If, after 
failing to form a coalition with KDU-CSL,  ODS now turns to 
CSSD to arrange some form of a partnership government, 
Kalousek will suffer. 
 
MAYBE THEY SHOULD TRY PENALTY SHOTS? 
 
¶4. (U) On July 7, The coalition tried again, this time 
putting forward KDU-CSL Deputy Chairman Jan Kasal as the 
candidate for Speaker.  He too failed in two separate votes, 
one of which again featured a defection by a member of the 
proposed coalition.  During the first week in July, Communist 
Party (KSCM) Deputy Chairman Jiri Dolejs suggested that 
parliament's oldest member,  77 year-old law professor Zdenek 
Jicinsky (CSSD) be temporarily made Speaker until Parliament 
held its vote of confidence on the proposed three-party 
coalition. That would at least break the deadlock and let 
Parliament begin its work. After initially rejecting the 
idea, the coalition accepted it on July 10.  But Jicinsky 
rejected the idea on July 11, which means it is unlikely to 
go forward. 
 
¶5. (U) A July 4 meeting of all five parties of the parties in 
Parliament failed to break the impasse, with the Social 
Democrats refusing to accept a deal that would give them the 
position of Speaker in exchange for their support for the 
ODS-KDU-Green coalition. Paroubek wants CSSD to get the 
Speaker's post because the Speaker gets to nominate the 
person to make the third and final attempt to form a 
government, if the first two efforts fail.  A CSSD speaker 
would potentially give Paroubek a chance to try to form a 
minority CSSD government. The next attempt to elect a Speaker 
could come as early as Friday, July 14. 
 
¶6. (U) On Monday, July 10, ODS Chair Topolanek made an 
unexpected overture, asking Paroubek and CSSD to join what 
would be a rainbow, four-party coalition. But Paroubek is 
known to prefer an arrangement with ODS that cuts out the two 
smaller parties, the Christian Democrats and the Greens, whom 
he dislikes. In addition, on July 10 ODS MEP and shadow 
foreign minister Jan Zahradil announced that the party is 
shelving plans to join British MEPS in the formation of a new 
 
PRAGUE 00000771  002.2 OF 002 
 
 
eurosceptic bloc in the European parliament.  Zahradil said 
the move was taken to prevent the formation of the new group 
from conflicting with coalition talks in Prague.  The move is 
being seen by some in Prague as a gesture by ODS, since 
strong relations with the EU has long been one of the things 
CSSD requires from its partners. 
 
¶7. (U) COMMENT:  For most Czechs, summer holidays and weather 
are more likely topics for discussion than politics. Even the 
new parliamentarians,  who have been drawing salaries since 
June 3 and have yet to discuss a single piece of legislation, 
feel little sense of urgency. So far, most of the 
negotiations have been relatively transparent and inclusive, 
and have been covered well in the media. It is difficult to 
say how much longer the negotiations will last, as the Czech 
constitution doesn't give deadlines for many of the steps 
taken to form new coalitions. There is also little historical 
precedent to go by.  After each of the elections since the 
constitution went into effect in 1993, governments have been 
formed on the first try. If the talks do drag on, as many 
observers predict they will, the political uncertainty could 
make it difficult for the government to reach any high-level 
decisions this summer.  However, it is worth noting that the 
Czech Crown, which last year strengthened more than any other 
currency in the world,  largely because of the inflow of long 
term capital, particularly from foreign direct investment, 
seems unaffected so far. 
 
¶8. (SBU) COMMENT CONTINUED: There is a certain mathematical 
inevitability to an arrangement between ODS and CSSD. 
Although bitter rivals, they are the only two parties that 
can form a majority coalition.  ODS will continue to try to 
form a center-right three-party coalition and almost 
certainly fail. Paroubek will do all he can to block the 
attempt and force negotiations on a government, perhaps a 
caretaker government of experts, or some form of a grand 
coalition, that includes CSSD personnel and programs. In that 
case, both parties would have to make some compromises on 
their policies, though they could agree to make changes to 
the electoral system that would benefit the larger parties. 
If CSSD gets the Speaker's post, it will give Paroubek more 
leverage in his talks with Topolanek. In the end, Paroubek 
hasn't relinquished his hopes of forming a minority CSSD 
government, and if the defections on the votes for the 
Speaker's position are anything to go by, there could be 
enough votes for him to succeed.  A pragmatic arrangement 
between ODS and CSSD will cut out the smaller parties, but 
leave the current strong ties between the U.S. and the Czech 
Republic unchanged.  A CSSD minority government is still 
something of a long shot and would likely result in weaker, 
though still positive bilateral ties than an ODS-CSSD 
government.  END COMMENT. 
 
 
 
 
 
 
 
 
 
 
 
CABANISS