UPDATE 2-Czech president, PM in rift over proposed govt

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By Jan Korselt

Czech President Vaclav Klaus and rightist Prime Minister Mirek Topolanek clashed on Thursday over a proposed coalition government aimed at ending more than six months of deadlock in parliament.

Topolanek's rightist Civic Democrats, the centrist Christian Democrats and the Green Party reached a deal earlier in the day to form a government, and handed the proposal to Klaus.

The three parties have just 100 seats in the 200-seat lower house, and will need the support of rebels from the leftist Social Democratic Party to survive a confidence vote required by the constitution once a government is appointed.

But Klaus, who has opposed appointing a government that would rely on rebel deputies saying it would not be stable, refused to set a date to appoint the proposed cabinet, instead asking Topolanek to strike a deal that includes the leftists.

"I have to say that I differ with the prime minister in opinion on the method of pushing through the government which he aims to take," Klaus told journalists after the meeting.

Klaus said if the parties could not reach a deal on broader support for the government, he would like to see a quick move toward early elections, and feared that Topolanek's plan would not achieve this.

Klaus is under no time limit to appoint the government, and the country has seen its strong economy ride out the current political turmoil without a hiccup. But analysts say it needs a government to cut its growing budget deficit so that it can adopt the euro currency after 2010.

"I am not sure if this path leads to the desired end, I am almost afraid that it can to the contrary lead to a continuation of this all," Klaus said.

Topolanek said the three-party government was the best way out of the crisis saying it would bring about needed reforms to public spending, as well as the pension, social and health care systems.

Analysts said that if the leftists block the reforms, the government could try to trigger early elections by blocking parliament for at least three months, an option laid out by the constitution.

Topolanek now leads a Civic Democrat-only cabinet which lost a confidence vote and resigned in October but remains in office while politicians try to form a new administration.

[PRAGUE/Reuters/Finance.cz]