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FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9281
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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.