US embassy cable - 05PRAGUE1514

C O N F I D E N T I A L SECTION 01 OF 03 PRAGUE 001514 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: DECL: 10/21/2015 
TAGS: EZ, PGOV, PREL 
SUBJECT: CZECH ELECTIONS - TOO EARLY AND TOO CLOSE TO CALL, 
BUT FEW THREATS TO U.S. INTERESTS 
 
REF: PRAGUE 1447 
 
Classified By: Pol-Econ Chief Mike Dodman for reasons 1.4 b+d 
 
1. SUMMARY. (C) The Czech Republic will hold general 
elections next June.  This cable summarizes current election 
trends and possible outcomes, and assesses impact on US 
interests in the Czech Republic.  Septels will discuss in 
greater detail the positions of individual parties.  Under 
the proportional representation system, no single party is 
likely to win enough votes to form a government.  Four 
probable post-election scenarios present themselves, 
including a center-right coalition with a slender majority, a 
grand coalition of the Civic Democrats and the Social 
Democrats, a minority Social Democrat government, and the 
emergence of a new small party that makes other coalitions 
possible.  None of the outcomes would produce a stable 
government; likewise none is likely to be a remedy to the 
corruption that is sure to be a campaign issue.  Of concern 
is the possible role for the Communist party in a minority 
CSSD government, which is the only scenario that could 
produce some changes in the Czech Republic,s strongly 
transatlantic foreign policy. 
 
CSSD is back 
------------ 
2. (SBU) Until recently, few observers gave the Czech Social 
Democrats (CSSD) any chance of taking a leading role after 
the 2006 elections.  Under CSSD Prime Ministers Spidla and 
Gross, the party,s polling numbers fell sharply, reaching as 
low as 11% during the spring 2005 crisis that brought down 
Gross.  At the same time, support for the main opposition 
party (the center-right Civic Democrats, ODS) jumped to 
nearly 40%.  However, CSSD has rebounded sharply under PM 
Paroubek, and the party is now firmly in the running to play 
a role in the next government.  The latest opinion poll, 
released October 19, shows the following levels of support 
for the four parties expected to make it into the next 
parliament. 
 
      Civic Democrats (ODS)               32.3% 
      Social Democrats(CSSD)        24.5% 
      Communists      (KSCM)        15.5% 
      Christian Democrats     (KDU-CSL)    8.4% 
 
3.(C) If these four parties are the only ones that make it 
over the 5% hurdle, there are three possible scenarios for 
the next government.  The first is a coalition between the 
two center-right parties, ODS and KDU. In the October 19 
poll, under the D'hondt system, ODS and KDU would have 101 
seats in a 200 seat legislature, leaving the Social Democrats 
and the Communists in opposition with 99 seats. This would be 
the best scenario for US business interests and transatlantic 
ties.  However, an ODS/KDU coalition would present 
difficulties, which would be compounded by a very slim 
majority.  ODS Chairman Mirek Topolanek is not a proven 
leader and could have a difficult time working with the 
KDU-CSL leader Kalousek, who has been such a difficult 
partner for the CSSD. 
 
One Option: The German Solution 
------------------- 
 
4.(SBU) With CSSD,s popularity continuing to grow, there is 
a real possibility that CSSD will be in a position to form 
the next government.  One scenario would be a grand coalition 
with ODS.  Although PM Paroubek has clearly stated he does 
not favor a grand coalition, most observers discredit the 
repeated denials. An ODS-CSSD government would have both 
positive and negative consequences.  First of all, the 
current foreign policy that recognizes NATO as the main 
pillar of national defense and promotes strong transatlantic 
ties would continue.  Such a coalition might also be able to 
reach across the political divide and achieve broadly 
acceptable compromises on some long standing problems, such 
as the need for reforms in health care and pensions.  A grand 
coalition would also have enough votes to pass constitutional 
reforms, requiring 120 of 200 seats. Some analysts have 
pointed out, for example, that CSSD and ODS could change the 
electoral law in the lower house from one based on 
proportional representation, to a majority system to reduce 
the role of smaller parties, such as the Communists (in the 
Senate where a majority system is used, Communists hold only 
2 of the 81 seats). On the down side, it is widely believed 
that a grand coalition would also mean more corruption, a 
system of dividing the spoils, and a further deterioration in 
the public's confidence in government (the last period of 
ODS-CSSD cohabitation, when ODS supported a minority CSSD 
government under the terms of the 1998 &opposition 
agreement,8 was remarkable for its high level of 
corruption). Finally, a grand coalition would leave the 
Communists as the main opposition party, something the 
Communists themselves say would help them in the 2010 
elections. 
 
An Alternative: CSSD on its own, with role for KSCM 
--------------------------------------------- ------ 
 
5. (SBU) The third scenario, which PM Paroubek says he would 
prefer, is a minority CSSD government that draws ad hoc 
support from the other three parties, depending on the issue. 
This would include occasional support from the Communists 
(KSCM), which has raised concerns, in spite of Paroubek's 
repeated insistence that he will not form a formal coalition 
with KSCM.  Although the Communists cooperate with all 
parties at the municipal level, where they have hundreds of 
mayors and thousands of city councilors, and, in spite of 
being an opposition party, have from time to time voted with 
the current coalition, open cooperation with the Communists 
at the national level would be something new and a step 
closer to the relegitimization of the party. This is a 
scenario that troubles many, but not all Czechs. Jan Prokes, 
a member of the CSSD central committee told the Embassy, 
"this is an arrangement we could live with." 
 
6.(C) The Communists are currently only mildly influential at 
the national level. In either the first or second scenarios 
listed above, the Communists would have no real influence on 
national policy.  However, a minority CSSD government that 
openly deals with the Communists would increase their 
influence on certain issues, such as labor, health care, 
pensions, rent control, and tuition ) likely with negative 
long-term impact on the economy and investment climate. While 
CSSD would not give the KSCM a formal role in foreign policy, 
it is not hard to imagine that the government would be 
inclined to positions that might satisfy the KSCM, including 
favoring the United Nations and possibly reducing the Czechs 
active role promoting democracy in places like Cuba and 
Belarus.  While the broad thrust of Czech foreign and 
security policy would remain firmly transatlantic, we would 
find it more difficult to work with the Czechs on specific US 
priority initiatives. 
 
A Final Possibility: A new party? 
-------------------------------- 
 
7. (SBU) The final scenario is one in which a small party 
makes it into parliament for the first time.  The most likely 
party right now is the Green Party. Although practically 
every other country in Europe has Green party members in 
parliament, the Czech Republic hasn,t ever had any in its 
lower house.  In the past, the party was led by well meaning 
activists rather than professional politicians.  This has 
recently changed. The new leader is Martin Bursik, a former 
government minister (Minister of Environment in 1997 Tosovsky 
Government).  He is bringing other politicians and a sense of 
professionalism into the party. Political analyst Jiri Pehe 
also thinks that many of the youngest voters, who have never 
before participated in an election, could vote for the Greens 
as a kind of cool thing, a protest against the current 
corrupt system.  The Greens received 2.4% in the 2004 
elections and are now polling slightly over 3%. 
 
8. (U) Priorities for the Green party, according to Petr 
Stepanek, who is one of the leaders of the party and has 
responsibility for foreign relations, would be strengthening 
European integration and fighting corruption.  NATO would 
remain as the main pillar of Czech security.  Stepanek said 
the Greens defense and security policy would be similar to 
that of CSSD  The Greens would also do more to help the 
handicapped. If Greens make it into parliament, they couldreplace Freedom Union 
(US-DEU, which is nearly certain to 
fall short of the 5% needed for entry into the next 
parliament) in a center left CSSD-KDU-GREENS coalition. Other 
small parties, although currently polling at one percent or 
lower, could perform a similar function. 
 
9. (SBU) One threat in terms of a new party is the 
Independent Democrats (NezDem) recently formed by MEP 
Vladimir Zelezny.  The party has taken a very nationalistic 
stance, and made imposition of visas for US visitors one of 
their central proposals, along with an end to the 
&Islamicization of Europe8  One analyst described an 
ODS-NezDem or ODS-KDU-NezDem coalition as the worst possible 
scenario for the U.S. because it would lead to a government 
that was xenophobic, anti EU, and anti foreign investment. 
 
10. COMMENT. (C) The 2006 election campaign is already well 
underway.  PM Paroubek,s efforts to work with KSCM on 
socially popular legislation like the Labor Code (reftel) is 
a reflection of his determination to improve CSSD,s election 
chances; we fear that his recent statements regarding U.S. 
visas are a reflection that he, like Zelezny, sees this as a 
way to win votes.  In short, pre-election politics will mean 
more work defending USG interests.  One positive note is that 
Paroubek is committed to passage of the 2006 deployment bill, 
which includes Czech troops in Iraq and Afghanistan, and the 
ODS has likewise pledged support, which should translate into 
passage by a comfortable majority. 
 
11. (C) The Czech political spectrum is still unsettled, and 
the next eight months will surely see polling preferences 
continue to fluctuate in response to scandals and other 
developments.  However, while the 2006 election may well see 
one or more new parties enter parliament, we do not expect a 
substantial realignment of the political scene or a 
noticeable swing to either left or right.  The posturing that 
is currently taking place (such as Paroubek,s claims that he 
prefers a minority government with KSCM support over a grand 
coalition with ODS) will continue but all of this will be set 
aside once the election numbers are in and the actual 
bargaining begins.  The most likely outcome is an essentially 
centrist government that continues to broadly support U.S. 
foreign policy and other goals; but at the same time a 
government that will likely be as unstable and open to 
corruption as recent Czech governments have been.  Regardless 
of the 2006 results, the gradual emergence of the KSCM from 
the political wilderness is likely to continue, and this will 
surely become more of a factor in the run-up to the 2010 
elections. 
 
MUNTER