* Czechs start voting in tightly contested two-day election
* Risk of lengthy talks, weak government
* Debt, corruption dominate campaign
(Adds polls open, quote, newspaper comment)
By Robert Mueller and Jan Lopatka
PRAGUE, May 28 (Reuters) - Czech voters wary of debt and
angry about graft voted for a new government on Friday, with
polls forecasting a tight result that could lead to protracted
coalition talks and extend a decade of delays to reforms.
The two-day election pits poorer and older voters against
younger and wealthier city-dwellers who clash over how to handle
the Czech Republic's budget, thrown into deeper deficit by the
economic crisis.
Rightist parties warn of a Greek-style economic meltdown,
while leftists pledge to cut spending but boost taxes for high
earners and firms to fund higher welfare payouts.
The leftist Social Democrats lead opinion polls. But they
will fall short of a majority and may find it difficult to find
coalition partners to form a strong government and push through
its welfare agenda. It may even be forced into opposition.
Analysts fear an inconclusive result will lead to months of
political wrangling over a new cabinet, rattling markets and
causing further delays to pension, welfare and healthcare
reforms where the Czechs have long lagged their peers.
The central European country, a member of the European Union
and NATO, has been slowly recovering from a 4.1 percent economic
drop under a caretaker cabinet led by Prime Minister Jan Fischer
for the past year. The 2010 budget deficit is projected at 5.3
percent of gross domestic product.
Heather Conley, director of the Europe Program at the Center
for Strategic and International Studies in Washington, said
lengthy talks would hold back the needed policy changes.
"I hope it's quick and I hope they can develop an enduring
platform to pursue continued reforms," she said.
Polling stations opened at 1200 GMT and were to close at
2000, and voting will continue from 0600 until 1200 GMT on
Saturday. Early results are expected by Saturday evening.
LACK OF CLARITY
Mainstream Czech newspapers have been highly critical of
Social Democrat leader Jiri Paroubek for his divisive style and
for overthrowing a centre-right cabinet last year to throw the
country into chaos during its term as EU president.
Leading daily Mlada fronta Dnes called on voters to block a
Social Democrat cabinet backed by the Communists, heirs to the
totalitarian party whose rule ended in 1989.
"Such a result would bring unbearably high risks for the
country's politics, economy and foreign relations," it wrote in
an editorial. Paroubek has accused the media of being biased.
The country of 10.5 million people has government debt
equivalent to 35 percent of GDP, just half the EU average.
But economists say that figure will grow fast without
reforms and could threaten the country's solid credit ratings
that are higher than some euro zone states. They say a rightist
government would better implement badly needed cost cuts and
reforms to a pension system burdened by an ageing population.
"We will make deep structural reforms and balance the budget
by 2017," Civic Democrat leader Petr Necas said in the final
television debate late on Thursday.
A string of corruption scandals has hit the big established
parties, especially the Civic Democrats, who trail the Social
Democrats 3.4-11.5 points in polls.
Disillusionment at mainstream parties have helped lift
smaller groupings such as the conservative TOP09 and the
anti-graft Public Affairs party. Analysts say the Civic
Democrats could potentially form a majority coalition with them.
"What can I do? As an entrepreneur, I will vote for the
right, but I don't have a particularly high opinion of it, and
anyway the whole situation sucks," said Jan Novak, 35.
(Additional reporting by Roman Gazdik, editing by Mark
Trevelyan and Mark Heinrich)
