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Czechs Latest Casualty As Economic Crisis Takes Political Toll

Headaches at home and abroad for Czech Prime Minister and European Council President Mirek Topolanek
Perhaps there's never a good time to be toppled.

But the timing of the Czech government's collapse seems particularly bad -- halfway through its presidency of the European Union and just days before a visit by U.S. President Barack Obama.

Topolanek is expected to hand in his resignation on March 26, after which his cabinet will carry on governing until a new prime minister is appointed.

The no-confidence vote was greeted with glee by opposition Social Democrat leader Jiri Paroubek, himself a former prime minister, who said "this government got what it deserved."

"This government has failed to address issues presented by the [financial] crisis and the impact of the crisis on the Czech economy," Paroubek said.

Rough From The Start

To be sure, Topolanek's coalition had been shaky since it took power two years ago, after months of political deadlock that followed a stalemate election.

The three coalition parties combined only garnered 100 seats -- exactly half the 200-seat chamber. That forced the coalition to rely on support from renegade deputies from the left-of-center Social Democrats.

But there was one big catch -- Topolanek's center-right Civic Democrats and partners the Greens soon had their own renegade deputies, too. In the end, it was the votes of four of those rebels that sank the government, after they sided with the opposition in the March 24 vote.

The immediate prompt had been political squabbles, including a scandal over allegations a Topolanek aide had tried to prevent unfavorable media reports about an opposition defector.

But as Paroubek's comment indicates, the government's handling of the economic crisis played a part in its demise.

Regional Symptoms

The collapse came days after Hungary's Prime Minister Ferenc Gyurcsany resigned to allow a new government to try and lead the country out of its severe slump.

Last month, Latvia's government collapsed after violent protests amid an economic contraction that is the worst in the European Union.

"If you look at Central and Eastern Europe, the crisis is putting pressure on governments across the region," Lars Christensen, an emerging markets analyst with Danske Bank in Copenhagen, says. "We saw the resignation of the Hungarian prime minister over the weekend, clearly related to the crisis. But for the Czech Republic, it's a minor issue in terms of the collapse of the government; Mr. Topolanek always had a fragile coalition, and I don't think it's a surprise to anybody [that] it didn't come through the entire election period alive. It has more to do with the fragile foundation for this coalition rather than the crisis."

The Czech Republic is seen to be in better shape economically than others in the region, with relatively low levels of foreign debt.

But exports have been hit hard by the downturn in Western Europe and officials now say the economy could contract some 2 percent this year.

That's still a far cry from the situation in Hungary or Latvia, which both have gone to the International Monetary Fund (IMF) and others for help.

"Many countries in Central and Eastern Europe are facing not only an economic crisis but a public-finance crisis -- tax revenues are falling, expenditures are rising, social expenditure is rising due to the rise in unemployment; and that means that many of these countries will have to put through austerity measures to improve public finances in a situation where the economy is doing badly," Christensen says, "and that is likely to be very unpopular across the region and that could generate further political uncertainty."

Making Do

Political uncertainty -- albeit with fewer protests -- is what the Czech Republic faces now.

The government will likely remain in a caretaker capacity until the end of the EU presidency in June.

It's up to President Vaclav Klaus to appoint the next prime minister, and Topolanek says he should get another chance.

He says he wants to form a government that does not rely on the support of the Communists -- something he says his rivals would be forced to do.

"If I can't manage to put that government together we will not support any 'semi-political' government," Topolanek says. "We will want early elections."

Paroubek's Social Democrats say they would prefer a "government of experts" to take over until elections later this year or next.

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