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Cablegate: Government Survives No-Confidence Vote but Pm Topolanek

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UNCLAS SECTION 01 OF 02 PRAGUE 000757

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E.O. 12958:
TAGS: PGOV ECON PREL EZ
SUBJECT: Government Survives No-Confidence Vote but PM Topolanek
Faces Rift Inside His Party

REF: PRAGUE 698

1. (SBU) SUMMARY AND COMMENT: Although PM Mirek Topolanek's
coalition government survived the June 20 vote of no-confidence
called by the opposition Social Democrats, his troubles do not end
there. Not only does he have to fight a tough battle for his reform
package against opposition MPs in August (reftel), he also faces
significant opposition inside his own party. Former Minister of
Finance Vlastimil Tlusty announced the creation of a new faction
inside the Civic Democratic Party at a press conference just a few
hours after the vote of no-confidence was over. So far, eight
Members of Parliament have joined the faction. While it remains to
be seen how numerous and powerful the faction will become in the
course of time, a secession from the ODS seems unlikely. The more
likely impact is for the economic reform package itself. Although
he voted in favor of the package in its first reading on June 7,
Tlusty stated that to win his support, the government would have to
modify the package, especially the tax structure. All this will be
a subject of negotiations this summer. Having a new faction behind
him, Tlusty's political backing and chances to reach at least some
of his goals for more radical economic reforms are higher. END
SUMMARY AND COMMENT.

2. (SBU) Vlastimil Tlusty, former chief party whip and finance
minister of the short-lived ODS minority government of Autumn 2006,
has been a staunch critic of the coalition reform package since the
moment its details were released in April. Father of the ODS
economic program presented in June 2006 parliamentary elections and
proponent of a flat tax, Tlusty maintains that the reform package
prepared as a compromise by the three parties of the coalition
government is a betrayal of ODS principles. He also claims that it
unevenly burdens the middle class. Consequently, Tlusty has
repeatedly called for a return to the "roots of the ODS right-wing
policies." The announcement of a new faction inside the ODS is just
a formal expression of his long-term position. Tlusty gathers his
support mostly, though not exclusively, from among ODS politicians
in his own region, namely Central Bohemia. Out of eight
parliamentarians who have signed in so far, five are from his
district.

3. (SBU) While some journalistsand opposition politicians believe
that the new faction is a sign of internal disintegration and
weakening of the ODS, the official reaction of PM Topolanek to the
announcement of the faction was calm and forthcoming. He even
stated that all 28,000 members of his party, including him should
join the platform because they all would like to carry out true
right-wing policies of their party program. The truth is that the
results of the June 2006 parliamentary elections, which resulted in
a political tie and consequently a weak government, do not allow
them to do so. They not only depend on the agreement with the two
junior coalition parties of centrist orientation, the Christian
Democrats and the Greens, they also depend on votes from two
opposition rebels whose opinions about economic, social and health
reforms differ dramatically. As ODS Senator Tomas Jirsa told emboff,
"We can do only as much a Melcak and Pohanka [the two opposition
rebels] allow us to do." However, Vlastimil Tlusty refuses to
accept this fact.

4. (SBU) Reactions inside the party concerning the newly-created
faction have been mixed. While the majority agrees that the ODS
economic principles are being compromised, they do not consider an
internal party faction a solution. As of now, eight out of 81 ODS
MPs have signed up and only one out of 41 ODS Senators is
considering joining. The reaction of ODS regional governors, who
are becoming more and more prominent in the party politics, ranges
from neutral to negative. It does not come as a surprise that only
Petr Bendl, opponent of Topolanek and governor of Central Bohemian
region, welcomed the announcement of the platform. Pavel Bem, mayor
of Prague and deputy chairman of the ODS, acknowledged the
legitimacy of the platform saying that it is "better to have an
institutionalized platform than an individual guerilla fighting
inside the party." However, he is aware of limits to political
action caused by the election results and does not intend to join
it.

5. (SBU) Even if the platform grows in numbers, observers and party
insiders do not expect that it would split from the party as
happened in 1997 when a group of ODS members dissatisfied with party
leadership left to form the Freedom Union. The current dissenters
do not seem to have a split in mind. Moreover, PM Topolanek's
forthcoming position helped to defuse the existing tension. MP Jan
Schwippel, a member of the new faction, told emboff that in a
two-hour close meeting that he and another platform member had with
Topolanek shortly after Tlusty's announcement, the PM repeatedly
declared his readiness to work closely with the group. Furthermore,
insiders doubt that Tlusty's ultimate aim is to bring down the
government. Marek Benda, ODS member of parliament, told emboff that
he was not sure Tlusty would want to topple the government because
he did not have a plan on what to do next and lacked strong allies
inside the party. He believed that Tlusty was mainly after

PRAGUE 00000757 002 OF 002


reasserting his former strong position in the party as Finance
Minister - a position Topolanek sacrificed to bring the Christian
Democrats into the coalition.

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