VZCZCXRO2657
OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHPG #1548/01 3561230
ZNR UUUUU ZZH
O 221230Z DEC 06
FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8395
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 02 PRAGUE 001548 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/NCE 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EZ
SUBJECT: CZECH PRESIDENT REJECTS PROPOSED GOVERNMENT, 
HIGHLIGHTING TENSIONS WITHIN ODS 
 
REF: PRAGUE 737 
 
¶1. (SBU) SUMMARY: Czech President Vaclav Klaus has rejected 
the government put forward by Prime Minister Mirek Topolanek 
(ODS), prolonging at least temporarily the half-year search 
for a new government. Klaus's decision is only a delaying 
measure as under the Constitution he has no choice but to 
eventually accept the Prime Minister's proposal, but it will 
at least force Topolanek to make some changes to the 
hastily-conceived three-party coalition government. The 
latest developments highlight personal and factional 
differences within ODS, the party founded by President Klaus, 
and there is no guarantee that Topolanek will not, in the 
end, be replaced as party leader. But for now, the outgoing 
Topolanek government remains in charge and the holiday season 
in Prague will be marked by behind-the-scene maneuvering, 
with a revised version of the three-party coalition likely to 
be presented to the President early in the new year.  END 
SUMMARY. 
 
¶2. (U) Recent weeks have witnessed a flurry of activity as 
Czech political leaders struggled to put together the second 
coalition since the deadlocked June 2-3 elections.  Outgoing 
PM Topolanek, whose minority ODS government was installed in 
early September and lost a vote of confidence one month 
later, was given the mandate to form a new government in 
early November.  Serious work on this did not begin until 
after an ODS party congress in November and the Christian 
Democrats' (KDU-CSL) selection of new leadership earlier this 
month.  A grand/rainbow coalition between ODS, the opposition 
Social Democrats (CSSD) and the KDU-CSL looked likely to move 
forward until ODS regional representatives, in a surprise 
move last week, voiced last-minute objections.  Topolanek 
then moved quickly to put together a coalition with KDU-CSL 
and the Greens -- the same coalition he had assembled back in 
June that he had to abandon when it became clear that it 
would not win a vote of confidence with only 100 votes in the 
200-seat chamber.  The difference between now and the summer 
is that two CSSD deputies have since left the party, and one 
announced he would support the center-right coalition. 
 
¶3. (SBU) On December 21, as he promised one week earlier, 
Topolanek presented the list of ministers in his three-party 
coalition to President Klaus. He also presented a government 
program that drew largely from the agreement concluded in 
June (reftel), but gave increased importance in two areas: 
the urgency for economic reform, and a basket of policies 
important to the Greens, who over the past six months have 
improved markedly in opinion polls. With even CSSD Chairman 
Paroubek admitting that he expected his party to go into 
opposition (i.e., that the vote of confidence for this 
government would succeed), most observers expected the 
President to accept the offer, despite his known preference 
for a grand coalition.  But in a surprise move, President 
Klaus rejected the list. He cited his earlier statements that 
he would not appoint a government that relied on the votes of 
one or two renegades. Klaus instructed Topolanek to go back 
to his partners and other parties and try to put together a 
government that would be more stable, more likely to have the 
support needed to push through controversial reforms, and 
likely to last to the end of the electoral term. 
 
¶4. (U) Klaus's rejection of the proposed cabinet raises a 
number of questions, not least of which is the constitutional 
issue of whether the President has the legal authority to 
reject ministers put forward by the Prime Minister. The Czech 
Constitution (Article 68) only says that the President 
appoints the ministers at the recommendation of the Prime 
Minister, but is generally interpreted as allowing the 
President to decide how expeditiously he carries out this 
task. This debate has been held on several occasions in the 
past, when both President Havel and Klaus objected to 
individual cabinet appointees, but eventually made the 
appointments when they could not convince the Prime Minister 
to change his mind.  Justice Vojtech Cepl, one of the 
co-authors of the Constitution, reacted to Klaus's decision 
by saying, "the gentleman at the Castle (i.e. Klaus) should 
read the Constitution." The Constitution allows for three 
unsuccessful attempts at forming a government, i.e., a failed 
vote of confidence, before early elections are called. 
Klaus's decision is not the end of one attempt, but merely 
prolongs the second attempt that began when he re-named 
Topolanek as Prime Minister last month. 
 
¶5. (SBU) In his announcement Klaus made a point of singling 
out one of the proposed ministers for criticism.  He said 
that the proposed Foreign Minister, Senator Karel 
 
PRAGUE 00001548  002 OF 002 
 
 
Schwarzenberg, a member of ODA -- a nearly defunct party that 
split with ODS in the 1990s because of differences with 
then-ODS Chairman Klaus -- who was nominated by the Greens, 
was inappropriate given the "current fragile relations with 
Austria."  Schwarzenberg lived in Austria for many years 
prior to 1989.  But it is more likely that Klaus's real beef 
is the fact that Senator Schwarzenberg was Chief of Staff to 
President Havel and Klaus has never liked Havel or those 
close to him. Schwarzenberg was a surprise choice, whose name 
only emerged as a possible candidate hours before Topolanek 
presented his list. After his meeting with Klaus Topolanek 
defended Schwarzenberg, saying he respected the Greens' 
choice. 
 
¶6. (SBU) Klaus wasn't the only ODS insider (he remains 
honorary chairman of the party) to find fault with 
Topolanek's cabinet. ODS controls 13 of the country's 14 
governorships. Those regional leaders have few ways of 
raising funds themselves and have to depend on Prague and 
Brussels for most of their revenues. Therefore, for the 
governors, the two most important ministries are the Ministry 
of Finance and the Ministry for Regional Development. In the 
cabinet rejected by Klaus, those two ministries went to the 
Christian Democrats even though the party is consistently 
coming in fifth of the five parliamentary parties in 
popularity polls. The regional leaders, as well as Prague 
Mayor Pavel Bem (ODS), who is much closer to Klaus than to 
Topolanek, reacted to the cabinet list with surprise and 
dismay, reflecting either a failure of Topolanek to 
adequately consult in-house, or a maneuvering for position 
within the party, or both. 
 
¶7. (SBU) In general, Topolanek's proposed cabinet would have 
been a government that supported reform and strong 
transatlantic ties. Current Foreign Minister Alexandr Vondra 
was to be elevated to Deputy Prime Minister, with 
responsibility for European Affairs -- a suitably vague 
position from which he could have exerted considerable 
influence over relatively weak Foreign and Defense (Vlasta 
Parkanova of KDU-CSL) Ministers. Seven of the ministers would 
have been ODS members serving in the current Topolanek 
government, most of them serving in key economic ministries. 
The only notable departure was ODS Finance Minister Tlusty, 
who has never been close to Topolanek and who damaged his 
position by refusing to vote in favor of the budget this 
month. The cabinet would have included other friends of the 
U.S. such as former Foreign Minister Cyril Svoboda (KDU-CSL), 
who would have become Minister of Culture, and former Consul 
General at the Czech Mission in New York, Petr Gandalovic 
(ODS), who would have become Agricultural Minister. The 
government's proposed agenda included a number of reforms, 
including lowering taxes on personal and corporate income to 
a flat rate between 17 and 19 percent, raising the retirement 
age, introducing patient co-payment for medical services, and 
eliminating some social benefits. 
 
¶8. (SBU) COMMENT. For now, the outgoing Topolanek government 
remains in charge. The cabinet that was rejected on the 
afternoon of December 21 was still being cobbled together 
just hours beforehand, with perhaps insufficient consultation 
within ODS itself, and certainly with the President. 
Topolanek has said he intends to stick with his three-party 
cabinet, although insiders tell us there will certainly be 
some changes considered during the pause provided by the 
holidays.  We do not expect any significant announcements, 
nor a return trip to the Castle, until January. What is 
unknown is how significant the power struggle within ODS will 
be over the coming weeks. Topolanek has upset many 
influential figures and groups within the party, although it 
is far from clear that a tipping point has been reached. The 
debate within ODS, rather than any interparty talks, will 
shape what sort of coalition emerges in the new year.   END 
COMMENT. 
GRABER