US embassy cable - 05PRAGUE348

C O N F I D E N T I A L SECTION 01 OF 03 PRAGUE 000348 
 
SIPDIS 
 
E.O. 12958: DECL: 03/10/2015 
TAGS: PGOV, PREL, EZ 
SUBJECT: WHAT IF THERE IS A MINORITY CSSD GOVERNMENT? 
 
Classified By: DCM Kenneth Hillas for reasons 1.4 B/D 
 
 
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A "temporary Cease-fire" 
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1.  (C) On March 6, PM Stanislav Gross won a decisive vote of 
confidence from the Social Democrats Central Committee, but 
the ongoing crisis in the ruling three party coalition 
government has not ended and is likely to erupt anew after 
the Easter Congress of the Social Democrats (CSSD). 
Christian Democratic (KDU-CSL) party leader Miroslav Kalousek 
has made clear that if PM Gross wins re-election as CSSD 
Chair at the Congress, the Christian Democrats will renew 
their call for Gross' resignation.  A "temporary cease-fire," 
as Kalousek has named it, will hold until then.  Kalousek's 
uncompromising approach over the last several weeks - and his 
promise of more - has surprised many Czechs, who expected 
Kalousek to use Gross' public "apology" for the scandal 
involving his wife's business affairs and his own 
contradictory explanations as opportunity to resolve the 
crisis.  Gross is clearly interested to reach an accord with 
Kalousek, whose own past financial activities and reputation 
do not mark him as the most likely person to point an 
accusing finger over impropriety.   For his part, however, 
Kalousek has shown a single-minded determination to bring 
down Gross - a stance whose toughness has surprised even some 
KDU-CSL leaders.  Kalousek's calculations appear to lie in a 
determination that it is better to be out of government for 
several months than to face the next parliamentary elections 
-- whether in summer 2006 or earlier -- as an opposition 
party.  He may have reached an understanding with ODS leader 
Miroslav Topolanek about KDU's role in the next government, 
which is widely expected to be led by the ODS.  He made also 
have decided that some planned privatizations, such as Cesky 
Telecom, could preferably be delayed for at least another 
year.  Within the month, it is possible that either Gross 
will throw the KDU-CSL out of the ruling coalition, or 
Kalousek will take them out on his own. 
 
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Pressure to Reach a Resolution 
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2.  (C) In any event, President Klaus' public remarks that 
the government crisis cannot continue to drag on adds 
pressure on Gross, and to a lesser extend Kalousek, to find a 
resolution through a vote of confidence.  Whether the 
coalition could succeed depends on Kalousek and the Freedom 
Union, some of whom have also started to clamor for 
abandonment of the coalition.  The ODS reportedly will hold 
off on a no-confidence motion until after the CSSD Congress. 
According to sources in the PM's office, Gross has come to 
the conclusion that he cannot maintain the coalition. Gross 
has been exploring with Klaus and the ODS some kind of grand 
bargain involving a CSSD minority government, early elections 
and the timing of a referendum on the EU Constitutional 
Treaty.  There are indications that it will be hard to 
conclude and implement such a big compromise.  The 
alternative is a minority CSSD Government with the external 
support of the communist party (KSCM). 
 
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Are the Communists Still to be Excluded? 
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3.  (C) Gross has said that he would refuse to lead a 
government that depends on KSCM support.  For more than 10 
years, this has been a bedrock CSSD principle, adopted at the 
famous CSSD Bohumin Congress.  The "Bohumin Accord" in effect 
walls off nearly a quarter of the parliamentary votes (41 of 
200) from any effort to form a government based on a 
parliamentary majority, a serious complication for any 
political leader but one in the immediate post-Velvet 
Revoltuion period that enjoyed broad consensus.  An 
unwillingness to cooperate with the communists in government 
is one reason why the CSSD and the right-wing ODS entered 
into the infamous "oppposition agreement" of 1998-2002.  The 
exclusion of the communists from the levers of power at the 
national level was a natural position of the centrist and 
right-wing parties as well. 
 
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Inroads in Recent Years 
----------------------- 
 
4.  (C) However, Klaus' 2003 election as President with 
communist votes in parliament underscored the progress the 
KSCM has made in getting back into the political game. 
Unlike former President Havel, Klaus has formally consulted 
with KSCM Chairman Grebenicek, giving him a more equal status 
than the KSCM previously enjoyed.  As a result, for the first 
time it is possibl to imagine a minority government kept in 
office by the KSCM.  Althouugh the communists have said they 
are prepared to support to a minority Gross Government should 
the KDU-CSL and Freedom Union withdraw their ministers, Gross 
has said he would resign rather than depend on the 
communists.  If faced with the stark choice of resign or 
carry on with quiet communist support, it is difficult to 
imagine Gross throwing in the towel.  If he cannot strikke a 
bargain with the ODS to allow a minority government a 
shortened term, reliance on the KSCM is the other alternative 
to Gross' resignation, which would bring down the Government. 
 
 
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Communist Influence on a Minority Government 
-------------------------------------------- 
 
5.  (C) The USG needs to consider the implications of a CSSD 
minority government for U.S.-Czech relations.   This message 
shares some assessments and recommendations for Washington to 
consider.  External communist support of a CSSD government 
led by Gross - or almost any senior CSSD figure - need not 
represent a serious setback in our ongoing cooperation in the 
War on Terrorism, including current deployment commitments in 
Iraq and Afghanistan, nor in our bilateral relations on 
defense and foreign policy.  A minority government would, of 
course, face increased pressure on military/intelligence 
resources during the autumn budget deliberations, adding to 
pressures for cuts in expenditures, but those were expected 
regardless of the outcome of the current crisisre.  It would 
be important at an early stage for the USG to signal to Gross 
that it is prepared to continue to work with a minority CSSD 
government in maintaining our current levels of cooperation, 
while making clear our priorities.  If Deputy Secretary 
Zoellick were to visit Prague this spring, he could expect 
his Czech interlocutors to convey a message of reassurance 
abouut continuity in Czech foreign and defense policies. 
 
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Protecting Priority Interests 
----------------------------- 
 
6.  (C) There would, of course, be a price to pay for outside 
communist support of a minority government, but the KSCM's 
priorities are not likely to lie in the exercise of influence 
on foreign, security and defense policies.  Rather, the KSCM 
can be expected to look to satisfy its party base in the 
run-up to the 2006 general elections.  Housing, eduction, 
labor and social affairs are the areas on which the 
communists would most likely focus.  None of these are at the 
core of US-Czech relations.  Communist influence in these 
areas would be noxious but tolerable in the short term, if 
the Gross Government were prepared to make a commitment to 
wall off national security affairs from communist influence. 
 
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Staying in Tune with Key Allies 
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7.  (C) It will be key for the US response to a CSSD minority 
government, should one emerge, not to diverge dramatically 
from that of our key allies, especially the UK, which has 
been a touchstone for the Czechs on ESDP.  British diplomacy, 
which is also wrestling with the "what if" question of a 
Gross minority government, can be expected to keep its 
relations on an even keel if the Czechs ensure continuity on 
foreign and defense policy.  If the US and UK send a 
consistent message to Gross in such a situation, this would 
have a multiplier effect and strengthen the chances that 
communist influence is contained. 
 
8.  (C) It is time to begin to think about such questions 
should not be taken as a sign that a minority government with 
communist external support is in the cards.  Indeed, Klaus is 
not likely to fancy the idea of a minority government, 
especially one kept in office by the KSCM, one of the few 
unreconstructed hard-line communist parties in Central 
Europe.  In his public remarks, Klaus has stressed the need 
for a solid and enduring government majority.  But such a 
scenario is no longer inconceivable, and Gross' choices may 
be very constrained if Kalousek makes good on his promise to 
renew his demand for Gross' resignation after the end of the 
month. 
CABANISS