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.

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