Czech coalition's survival instincts triumph again

By bne IntelliNews October 31, 2012

bne -

The teetering Czech government looks to be inching its way to survival, after parliament agreed on October 30 to delay a vote on a raft of tax increases - which comes with a confidence motion attached - by a week. That should allow ODS - the senior party in the coalition - the chance to resolve the political conniving that's blocking the bill, enabling the government to escape almost certain annihilation in any early election.

With Prime Minister Petr Necas admitting defeat yet again in his struggle to win backing for the coalition's latest piece of austerity legislation, which looks to raise VAT and tax on higher earners, to the surprise of none the coalition managed to come together to delay the vote, which was set for this week. The lower house adjourned its session and shifted the vote for at least a week. Lawmakers will resume deliberations at 2:00pm on November 6, according to proceedings at the legislature, reports Bloomberg.

"We failed to find an agreement at the morning meeting of our working group, and at this point the most rational way is to propose an interruption of the parliamentary session until next Tuesday," the chief of the ODS parliamentary faction Zbynek Stanjura said, according to Reuters. "We will vote next week no matter what, even with the risk that the government will not survive," he added, echoing the macho stance that the government has made throughout the collapse scares this year that have seen its majority scaled back to a single seat. However, when it comes to the crunch, a "compromise" has always been found.

With that strong sense of self-preservation in mind, it was always a practical certainty that the warring ODS factions would come together to delay the vote until they get the chance to thrash things out this weekend. To do otherwise would be political suicide. Early elections would see the right-wing parties in the coalition - whose popularity has been hit by its harsh austerity programme, as well as a series of corruption scandals - beaten badly, as thrashings in local and senate elections this month confirmed.

Investors welcomed confirmation of smooth progress in the government's plan to survive its latest self-inflicted wobble, with yields on five-year koruna bonds falling to a record-low 0.95% in afternoon trading, according to Bloomberg data.

While six ODS rebels claim to have voted against the first attempt to push the bill because they consider the government's austerity drive is now holding back economic growth, it's the worst kept secret in the country that the real debate is between Necas and outgoing President Vaclav Klaus, an ODS founder who is building up his power base within the party ahead of leaving Prague Castle in January.

The government has been backpedaling on the vote furiously to push it beyond the ODS party assembly, which starts on November 2. That is sure to be a feisty event, with some ODS rebels having made public their bid to replace Necas, although no figure has thrown their hat into the ring. Despite the fact that Czech law would allow the coalition to continue to rule with a different cabinet, Necas has pushed the point by attaching the no confidence vote in a bid to see off the attack. However, he's done that several times this year already - and is still in the PM's chair; for this week at least.

Related Articles

UK demands for EU reform provoke fury in Visegrad

bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more

Czech food producer Hame seen next on the menu for Chinese giant

bne IntelliNews - Following a smorgasbord of acquisitions in late summer, China Energy Company Limited (CEFC) is eyeing yet another small Czech purchase, with food ... more

INTERVIEW: Babis slams coalition partners, but Czech govt seems safe for now

Benjamin Cunningham in Prague - Even as the Czech governing coalition remains in place and broadly popular, tensions between Prime Minister Bohuslav Sobotka and Finance Minister Andrej Babis remain ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.