UPDATE 2-Czech president names new govt, PM seeks support

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By Alan Crosby

Czech President Vaclav Klaus named a new government led by rightist Prime Minister Mirek Topolanek on Tuesday as the European Union member tries to extract itself from a seven-month crisis sparked by an inconclusive election.

Topolanek has formed a three-party coalition with the centrist Christian Democrats, the Green Party and his own Civic Democrats. But the grouping has only 100 seats, exactly half of parliament, with the other 100 controlled by leftists.

The constitution calls for a confidence vote to be held within 30 days but Topolanek has pledged to move faster.

But analysts said even if Topolanek gets the simple majority of MPs needed to survive the vote, the hung parliament will make it hard for him to push through his programme of tax and spending reforms, welfare cuts and new healthcare user fees.

"If the government wins a confidence vote, which cannot be excluded, it will not have much of a chance to push anything through," said political analyst Vladimira Dvorakova.

"The entire Czech public ... will be following how you take up your posts in the coming days. We will equally closely follow how the confidence vote in your cabinet will proceed," Klaus said at the swearing-in ceremony at the ancient Prague Castle.

"After nearly a year of no governance, our country surely deserves and needs a fully fledged government. Today's appointment act can bring us closer toward that aim."

TWO KEY DEPUTIES

Key to Topolanek's chances of winning the confidence vote will be two deputies who have left the leftist Social Democrat parliamentary club to sit as independents.

Topolanek said he would start talks with the Social Democrats on supporting him, although they have rejected that.

"If these talks are not successful, and we should know in about two days, then we will start negotiations ... with individual deputies," he told a news conference.

Topolanek has rejected a formal agreement with the leftists -- a so-called grand coalition -- and prefers an early election if a stable government cannot be formed.

The Czechs have already abandoned their goal of adopting the EU's common euro currency in 2010, since public spending reforms have not been tabled. The economy, however, has sped forward, shrugging off the lack of stable government.

This is the 50-year-old prime minister's second attempt to form a government since June's election. A minority government composed solely of his Civic Democrats failed to win a confidence vote in October.

The parliamentary speaker is empowered to make a third attempt to choose a prime minister, but the current speaker, a Social Democrat, has pledged to step down before doing so.

Electing a new speaker 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. (Additional reporting by Jan Lopatka and Jan Korselt) ((Editing by Patrick Worsnip; Reuters Messaging: alan.crosby.reuters.com@reuters.net; +420 224 190 477))

Keywords: CZECH GOVERNMENT/

[PRAGUE/Reuters/Finance.cz]