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A file photo of Petr Necas

A file photo of Petr Necas

Czech govt on brink as parties enter budget talks

Czech govt on brink as parties enter budget talks

Prague: The survival of the Czech Republic’s centre-right coalition was in the balance on Tuesday as parties prepared for talks on budget savings that prime minister Petr Necas said would determine if he keeps the cabinet afloat or triggers an early election.

The worst crisis in the three-party alliance’s rule broke out last week when its smallest member, Public Affairs, surprised its partners by demanding changes in the judiciary, welfare distribution, and a cabinet reshuffle.

A file photo of Petr Necas

Most political commentators see the total collapse of the two-year-old government as unlikely. But Necas said in a newspaper interview on Saturday he saw a 50-50 chance of government survival.

“If we have no agreement, the most reasonable solution is quick early election," he told Mlada fronta Dnes newspaper.

However, he is likely to want to avoid that possibility as opinion polls show an earlPetr Necasy election would bring the opposition Social Democrats to power.

“The likelihood of (a government fall) is still relatively small in our eyes, but the prime minister seems to be increasingly upset with the situation," Komercni Banka trader Dalimil Vyskovsky said in a research note.

Public Affairs has rowed back from a threat to resign, signalling they were willing to reach an agreement. Its support has plunged from 10.9% won in the 2010 election to just over 1%, making early polls highly undesirable for them.

The party has tried to differentiate itself from its coalition partners as the protector of poorer Czechs suffering from the austerity steps.

Public Affairs has had an internal dispute over whether to leave the cabinet and Necas has hinted he could be content with winning over a faction of the party big enough to give the cabinet a safe majorty in parliament if there is a split.

Parliamentary deputies for the Civic Democrats and the Public Affairs leadership were holding separate strategy sessions on Tuesday morning before a coalition meeting at 5.30 pm (1200 GMT).

The centre-right Civic Democrats led by Necas and the conservative TOP09 party of finance minister Miroslav Kalousek are pressuring Public Affairs to accept measures to save 42.4 bn crowns next year and twice as much in 2014.

The main measures under consideration are a 1 percentage point hike in the value-added tax, a new tax for high earners and a slowdown in the growth of pensions.

Austerity measures have combined with weak household demand to pull growth just below zero in the second half of the last year, according to preliminary figures.

“We think this government has created the types of reforms that hit the most vulnerable: families with kids, the sick, the unemployed, and those with the lowest incomes," said 28-year-old student Anezka Polaskova, as she tried to muster support for a demonstration against government reforms scheduled for 21 April.

“We want a party that is socially sensitive."

Political commentators and rivals have said Public Affairs triggered the row in part to divert attention from a trial where their most influential official, Vit Barta, is accused of bribing party colleagues to keep their loyalty.

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