Czech President appoints adviser for PM in move likely to trigger early elections

By bne IntelliNews June 26, 2013

Czech President Milos Zeman appointed on June 25 his economic adviser Jiri Rusnok as the country’s new prime minister in an expected move that will likely trigger early elections as the new cabinet is not expected to win a vote of confidence in parliament.

Rusnok, a former leftish finance and industry minister, will replace the three-party coalition cabinet of Petr Necas who resigned last week over a corruption and spying scandal. The outgoing centre-right coalition comprising Necas’ Civic Democrats (ODS), TOP 09 and LIDEM wanted to form a new government to rule the country until scheduled general elections in May 2014 and nominated lower house speaker Miroslava Nemcova to be country’s first woman prime minister. The leftish opposition, on the other hand, wants to dissolve the parliament and call early elections. The major opposition party, Social Democrats (CSSD) is tipped to win the next elections as it holds a comfortable lead of more than 20% over the other parties. So it is unlikely that the cabinet of Rusnok wins a vote of confidence in parliament in order to stay in power until regular elections next year. A more probable variant will be for the opposition to secure the needed 120 votes in the 200-seat parliament to dissolve the parliament and force early elections likely in September.

Zeman, who has the sole right to appoint a prime minister according to the Czech constitution, said Rusnok’s government might either serve till early elections or through the end of the current parliament’s four-year term in mid-2014. As an economist and former finance minister Rusnok has the competence to prepare the country’s budget for next year, Zeman said. The government is due to submit to parliament the state budget for 2014 by end-2014.

The appointment of a caretaker cabinet is not expected to have a major effect on the market that is used to frequent cabinet reshuffles as in the past decade it saw seven governments come and go. But analysts predict that it may lead to delay in a EUR 12bn project for the expansion of Temelin nuclear plant operated by state-owned power group CEZ. The company wants to select a supplier for two more reactors at Temelin by September 2013.

The current political crisis in the Czech Republic has erupted earlier this month when Necas’ closest aide along with seven others, including former lawmakers and the current and ex heads of military intelligence, were charged with bribery and abuse of power in an unprecedented anti-graft operation. The scandal forced Necas to step down on June 17.

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