March 24 (Reuters) - The main Czech opposition party has
called a no-confidence vote for Tuesday to try to unseat Prime
Minister Mirek Topolanek halfway through Prague's EU presidency.
The Social Democrats have failed four times in the past to
topple the minority centre-right cabinet, but the administration
has become more shaky due to a string of defections. Below are
key issues that could be affected by a government collapse.
EU PRESIDENCY
The Czech Republic holds the six-month EU presidency until
June, with the bloc struggling to address the economic crisis.
In the event of a new cabinet being appointed, it would take
ministers and their teams time to get up to speed on EU issues,
which could weaken the presidency.
The presidency would also be hurt politically if Topolanek's
cabinet is voted down but stays in power until the end of
presidency -- a possible scenario. Under the Czech constitution,
a government that resigns stays in power until a new cabinet is
appointed, which could take months.
The Czechs will host an EU-U.S. Summit in April with the
highest representatives of all 27 EU member states and U.S.
President Barack Obama. As EU president, the Czechs should lead
the debate between the two on how to tackle economic crisis.
In April, the Czechs will host EU finance ministers
(ECOFIN). They also plan several more top-level EU summits and
meetings with Russia and China.
LISBON TREATY
The Czechs have not ratified the EU's Lisbon treaty aimed at
reforming the bloc's institutions and decision-making process.
The treaty has been approved by parliaments in 25 out of the
27 EU members states, though in Poland it still has to be signed
by the president and it faces a legal challenge in Germany.
Ireland rejected it in a referendum, but will hold a new vote.
The pact has been approved by the Czech lower house but has
been stuck in the Senate, in which the ruling Civic Democrats
hold nearly half of all seats. Many Civic Democrats have baulked
at approving the treaty and have tied it to the approval of the
U.S. missile defence radar, which the Social Democrats oppose.
Analysts say Civic Democrat support for Lisbon would likely
drop if Topolanek is voted out, threatening ratification.
U.S. RADAR
The government temporarily withdrew treaties on hosting the
radar site from a parliament ratification process last week in
the face of an opposition threat to vote them down.
It highlighted the government's weakness in parliament and
may delay the ratification, or even put it on ice indefinitely.
Former U.S. President George W. Bush's government agreed to
put a radar base southwest of Prague as part of a plan to expand
its missile defence shield. The new U.S. government has,
however, been cooler on the plan and its future is uncertain.
FINANCIAL CRISIS AND THE EURO
The Czech Republic has avoided a financial sector meltdown
thanks to low exposure to non-performing foreign assets, low
foreign debt exposure and relatively low government debt.
It has been deeply hit by a collapse in west European
demand, and growth is expected to contract this year.
The government has adopted supply-side measures -- such as
tax deferrals and acceleration of asset depreciation -- worth
1.9 percent of gross domestic product. It expects a budget gap
of about 4 percent of GDP this year but has spoken against large
spending packages and refrained from demand-side steps, saying
they would not help in a country that imports lot of goods.
The Social Democrats have called for bolder steps, such as
radically cutting value added tax and boosting welfare payments
including pensions, measures that would boost the deficit.
The government has said it would set a new euro adoption
date in November but the financial crisis has strengthened its
rather sceptical view towards quick entry.
The Social Democrats are in favour of quick euro entry.
(Compiled by Jana Mlcochova)
