UPDATE 2-Czech president to name new govt

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By Alan Crosby

Czech President Vaclav Klaus said on Monday he would name a new government led by rightist Prime Minister Mirek Topolanek though it is unclear whether he has the support to win a parliamentary confidence vote.

Topolanek has formed a three-party coalition with the centrist Christian Democrats, the Green Party and his own rightist Civic Democrats.

But the grouping has only 100 seats in the 200-seat parliament, while leftists also control 100 seats, the results of an inconclusive election last June.

Klaus had been reluctant to appoint the government saying it would not be stable since it must rely on the vote of at least one rebel deputy from the left. But on Monday he said in a statement he would do so on Tuesday at 11:00 a.m. (1000 GMT).

Topolanek said during a television debate on Sunday that he would move as quickly as possible to hold a confidence vote once Klaus finally appointed the government.

Key to the Topolanek's chances of winning a confidence vote that must be called within 30 days of the government being named will be two deputies who have left the leftist Social Democratic Party parliamentary club to sit as independents.

Neither of the deputies -- Michal Pohanka and Milos Melcak -- were immediately available to comment on whether they planned to support the government, or abstain from voting, which would be enough to give Topolanek the simple majority of those present in the lower house to win the vote.

"This could prove a tough job," said analyst Pavel Sobisek.

HEALTHCARE CONCERNS

Social Democrat leader Jiri Paroubek said last week that Pohanka was going to rejoin the parliamentary club, though Pohanka himself has not confirmed this.

Melcak, seen as being strongly leftist, said recently he was disappointed in the proposed government programme.

"It is clear at first sight that a government that has decided to include in its coalition agreement the introduction of regulatory fees in the healthcare sector cannot expect to be supported," he told journalists last week.

Topolanek could also start talks with the Social Democrats, although Paroubek has said he does not support the coalition.

Klaus was under no time frame to name a new cabinet, but investors and industrial leaders have been concerned the stalemate could drag out and slow the implementation of economic reforms in healthcare, public spending and pensions.

The Czechs have already been forced to abandon their 2010 euro adoption target during the political crisis, and the chance of quickly enacting reforms with such a split parliament and weak government are seen as low. "The long-term political stalemate makes it more difficult for fiscal reforms and the adoption of the euro," said Silja Sepping, an economist at Lehman Brothers.

If Topolanek's administration fails to win a confidence vote -- he has already failed once with a different government line-up -- it will be up to the parliamentary speaker to choose a third prime minister.

The current Social Democrat speaker, however, has pledged to step down before the third attempt, and electing a new one may be difficult in the hung parliament unless there is a wider deal among the main parties. If three successive attempts to form a government fail, the president can call early elections.

[PRAGUE/Reuters/Finance.cz]