US embassy cable - 05PRAGUE603

C O N F I D E N T I A L PRAGUE 000603 
 
SIPDIS 
 
E.O. 12958: DECL: 04/26/2015 
TAGS: PGOV, PREL, EZ 
SUBJECT: CZECH GOVERNMENT CRISIS MOSTLY RESOLVED AS PM 
PAROUBEK TAKES OFFICE 
 
REF: PRAGUE 572 
 
Classified By: Deputy Political Counselor Mark Canning for reasons 1.4 
b+d. 
 
1. (SBU) SUMMARY  The crisis that began 14 weeks ago with an 
inquiry into the funds used by Czech Prime Minister Gross to 
purchase a luxury flat is nearly at an end.  Gross has 
resigned and Jiri Paroubek, formerly his Minister for 
Regional Development, has replaced him at the head of a 
three-party coalition with a single-vote majority in 
Parliament.  The only remaining hurdle is a vote of 
confidence, which the new government must face sometime 
within the next 30 days.  The Paroubek government consists 
largely of ministers who served Gross, including the Foreign 
and Defense Ministers.  However, after months of infighting, 
and facing elections next year, the new government will be 
even weaker than the last.  END SUMMARY 
 
2. (U) Czech PM Stanislav Gross resigned on Monday, April 25, 
following the approval of the deal reached last week (reftel) 
by his party over the weekend.  Gross had risen to the post 
after his predecessor and party colleague, now EU 
Commissioner Vladimir Spidla, lost the support of the party 
and resigned in June, 2004.  Gross became the youngest PM in 
Europe and initially drew the highest popularity ratings of 
any politician in the country.  During his 10 months in 
office, Gross saw his popularity ratings fall from 80% to 
18%.  Gross will remain as head of the coalition's main 
party, the CSSD. 
 
3. (C) The new PM, Jiri Paroubek, a CSSD Vice Chairman and 
Gross ally, spent much of his career in politics at Prague's 
city hall. He has had relatively little foreign policy 
experience, few foreign trips, and almost no contact with 
other heads of government.  It is too early to say what the 
relationship between Gross and Paroubek will be or what role 
Gross might play in foreign affairs.  Foreign Minister 
Svoboda, one of the three Christian Democrat ministers in the 
old government, will keep his post in the new government, as 
will Defense Minister Karel Kuehnl.  However, some of CSSD's 
more leftist members, including Jan Kavan and Vladimir 
Lastuvka, have openly complained that CSSD should have more 
influence in the Foreign Ministry, seeing Svoboda as too 
pro-American.  They have hinted about possible opposition to 
the new coalition's vote of confidence.  With a single-vote 
majority in parliament, Paroubek will be forced to find some 
way to satisfy their demands.  We expect tough bargaining 
over the coming days on the wording of new government's 
program (which will be voted on as part of the vote of 
confidence) -- during the transition from Spidla to Gross 
last summer, Kavan and Lastuvka led a similar, but 
unsuccessful, effort to downplay references to transatlantic 
relations.  In the coming days we intend to meet with Svoboda 
and others to encourage the new government to maintain the 
Czech Republic's traditional transatlantic policies in both 
words and deeds. 
 
4. (U) The three parties in the reconstituted coalition -- 
CSSD, the Christian Democrats and the Freedom Union -- have 
agreed on priorities and rules for cooperation.  The main 
priority will be ratification of the European Constitution 
(the CR is currently the only EU member that has not 
determined the timing or means of ratification).  The 
coalition listed a number of other priorities, though it 
isn't clear whether the remaining 14 months in office will 
give the new government time to complete work on so many 
potentially controversial bills.  The other priorities are 
lowering of taxes on middle and lower income groups, 
preparation for pension reform - though not reform itself, a 
budget for 2006, and laws on conflict of interest and 
bankruptcy.  The coalition also agreed that any initiatives 
in certain areas, to include the budget, taxes and fees, 
protection of property and foreign relations and defense, 
must be approved by all three coalition members. 
CABANISS