* Leftist parties pull plug on early election plan
* Focus on 2010 budget, savings plans
* Delay could help budget approval
(Adds Communists, analyst, updates market)
By Jan Lopatka
PRAGUE, Sept 15 (Reuters) - Czech leftist parties torpedoed
chances of a November early election on Tuesday, deepening
uncertainty over eroding state finances that the caretaker
cabinet warned could eventually cause a meltdown.
The leftist Social Democrats and the far-left Communists
rejected an earlier agreed plan to dissolve the lower house of
parliament on Tuesday and allow for an election, effectively
killing the motion before it got to a vote.
The expected delay deepens weeks of political turmoil and
launches Jan Fischer's non-partisan cabinet originally set up to
prepare for an early vote into a government that must try coerce
parties into tax hikes and savings.
It also deepens acrimony between the two main parties, the
centre-right Civic Democrats, whose government fell during its
European Union presidency in March, and the Social Democrats.
Despite those factors, however, analysts said putting the
vote off until next summer could potentially give quarrelling
parties room to reach an agreement to mend the crisis-hit budget
deficit, which has tripled this year and is still rising.
Social Democrat chief Jiri Paroubek said his party had
scuppered the election plan because it could be legally
challenged, an unacceptable risk after the constitutional court
killed a previous attempt to hold early polls last week.
"This option...is unacceptable for the Social Democrats,"
Paroubek said. "The Czech Republic now needs a stable government
more than ever and the cabinet of Jan Fischer must assume this
responsibility."
Political analysts said that while Paroubek may be right
about some legal risk to the election, there was also a
political motive -- hopes that the economic crisis and rising
unemployment could boost support for the left by the time the
regular term ends next June.
The interim government expects the 2010 budget gap to reach
7.4 percent of gross domestic product, a gap that it proposed to
tame to about 5 percent through tax hikes and spending cuts.
DELAY COULD HELP BUDGET
The delay could actually help the budget situation, as the
parliament would stay in place and could approve the budget.
Dissolving parliament and re-instituting the chamber after
the election would almost certainly push the vote into early
2010. Pre-election campaigning also dampened chances of any
belt-tightening changes.
Ivan Gabal, the head of an independent political
consultancy, said the parties would now have to agree on some
unpopular steps, deflecting some blame onto Fischer's cabinet.
"The (parties) will have to perform in parliament in some
way. If they block everything, it will be a real disaster in
terms of public perception," he said.
The leftists have so far rejected any welfare cuts, proposed
by the cabinet, while the right-wing parties back the interim
government's measures.
The Social Democrats' about-face was the latest move sowing
deep political chaos in recent months.
The country originally called an early election for October,
but that was invalidated by the Constitutional Court last week.
Parties then agreed to dissolve parliament and hold the
election on Nov. 6-7.
The Czech crown was virtually unchanged after the decision,
and later traded firmer alongside other regional currencies.
(Additional reporting by Jana Mlcochova, Robert Mueller and
Michael Winfrey; Editing by Sonya Hepinstall)
