* Klaus sees no harm to EU presidency
* Cabinet seen as being at mercy of biggest two parties
* Small party backs out, impact unclear
(Adds Christian Democrats backing out, paras 8-9)
By Jana Mlcochova
PRAGUE, April 6 (Reuters) - Czech President Vaclav Klaus
said on Monday he was satisfied with a deal between the main
political parties to appoint a non-partisan cabinet that will
run the country until an early election in October.
Party leaders agreed late on Sunday that the outgoing
centre-right cabinet of Prime Minister Mirek Topolanek would be
replaced on May 9 by a team led by Jan Fischer, the head of the
country's statistical office.
Topolanek's three-party minority government resigned after
it lost a no-confidence vote two weeks ago, halfway through the
country's European Union presidency, sparking worries about a
leadership void in the bloc.
"In principle I am satisfied with this agreement," Klaus,
who has the right to appoint the prime minister, said in a radio
interview. "I think (Fischer) is a considerate man, who never
had any radical political orientation."
Fischer was a member of the Communist party in the 1980s,
like many professionals who sought to further their careers.
The agreement between the government parties and the
opposition Social Democrats is still subject to approval by
individual party leaderships later on Monday or on Tuesday.
A small party from Topolanek's coalition, the centrist
Christian Democrats, decided on Monday not to propose any
ministers to the cabinet. It was not clear whether the decision
could hurt the overall agreement.
"We decided we will not be personally represented in this
cabinet, but also we feel responsible for the economic situation
in our country at a time of crisis, and therefore we are
prepared to consider ad hoc the proposals the government will
present," Vice-Chairman David Macek told Czech Radio.
The agreement foresees an early election, probably on Oct.
9-10. The next poll would normally have been due in mid-2010.
A March survey showed the Social Democrats led Topolanek's
right-wing Civic Democrats but the margin narrowed to 4.5
percentage points from the double digits seen last year, with
most of the catch-up coming since the country took over the EU
presidency in January.
The new cabinet's EU role will likely be limited, given that
it will lead the bloc for less than two months.
Klaus -- a Eurosceptic who has repeatedly played down the
significance of the EU presidency -- said he had no doubt the
Czechs would complete it without any problems.
WEAK CABINET IN PARTIES' HANDS
The new cabinet will be in charge of preparing a budget for
2010 and steering the country through a sharp economic downturn.
This may be tough, given that the cabinet will be at the
mercy of the two big parties, who can stop measures they do not
like or push through their own with an eye on the election.
"Pushing through anti-crisis legislation will be a problem.
I would expect that the anti-crisis policy will be whatever is
agreed by the two biggest parties," political analyst Tomas
Lebeda said.
The opposition Social Democrats propose measures to combat
the economic crisis through boosting consumption, while the
ruling Civic Democrats want to help business by cutting taxes.
Before the last election, both the left and right-wing
parties voted to adopt a range of spending measures that
Topolanek's government later partially rolled back in its drive
to slash the budget deficit.
The government expects a gap of four percent of gross
domestic product this year, sharply up from 1.5 percent last
year, as the economy shrinks by up to two percent.
The Czech crown, which is the only central European currency
to show a gain against the euro this year, was 0.4 percent
firmer at 26.55 on Monday, helped by the government agreement
but also by improved sentiment for emerging market assets.
(Editing by Mark Trevelyan)
