Tension builds within future Czech ruling coalition days before new cabinet takes power.

By bne IntelliNews January 27, 2014

Tension within the future Czech ruling coalition is mounting just days before the three-party government takes power as finance minister designate Andrej Babis refused to accept a nominee from Social Democrats (CSSD) for his deputy, CTK news agency reported.

PM Bohuslav Sobotka, who is also leader of CSSD, insisted Babis accept the nomination referring to the coalition pact CSSD signed with Babis’ ANO and the Christian Democrats, according to which the parties will be able to propose their experts as deputies in the ministries run by the other two partners.

The disagreement between Sobotka and Babis over the ministry posts suggests the coalition is fragile and more infighting may soon be in store. ANO and CSSD already clashed over tax policy and the price CSSD had to pay to form a coalition deal with the pro-business movement was to give up pre-election pledges to raise taxes for big companies and high-earners to finance increased public spending aimed kick-starting the economy that emerged from a record-long recession in mid-2013.

Political analysts say ANO may become an instable partner in the coalition as has often happened in the Czech coalition governments with the smaller partners. But ANO has the strength to challenge CSSD.

The market, which is used to the frequent cabinet reshuffles in the country, has largely ignored the political stalemate in the last seven months thanks to a low - but rising - debt, which is less than half of the EU average.

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