New Czech coalition reduce Klaus to team player or the sideline

"CAN Klaus be a team player?" The question was headlined on the front page of the Prague Post, a weekly English-language newspaper…

"CAN Klaus be a team player?" The question was headlined on the front page of the Prague Post, a weekly English-language newspaper, after the Czech election four weeks ago. Mr Vaclav Klaus, who has dominated federal and national politics for the last seven years, has suffered a major personal setback as a result of the coalition agreement reached, after nearly four weeks of negotiation, early yesterday morning.

If he was not a team player before, he will have to be one now or risk a quick return to the electorate, which may in any case be inevitable. The two other parties in the coalition, Mr Jan Kalvoda's Democratic Alliance and Mr Josef Lux's Christian-Democratic Union, have only half as many seats in parliament as Mr Klaus's Civic Democratic Party, but they have forced him to concede half the government ministries.

He has also had to make concessions to the opposition Social Democrats, whose leader, Mr Milos Zeman, is a bitter enemy but holds the balance of power because the coalition parties fell short of an absolute majority by two seats.

Mr Zeman has been rewarded with the speakership of parliament and the dismissal of one of Mr Klaus's oldest political friends, Mr Karel Dyba, the economics minister, in return for not voting the government out of office.

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If Czech politics have been transformed by the election on May 31st and June 1st, it is almost entirely the result of Mr Klaus's enigmatic personality. He is arrogant, most Czechs will tell you. He is both the greatest asset of his party, which won nearly 30 per cent of the vote, and also its chief liability. His sternly Thatcherite views have been the driving force of the Czech Republic's extraordinary success in adopting the free market economy, but he is generally perceived as insensitive and maladroit as a politician.

There is a more questioning mood among voters than four years ago. The beneficiaries, however, have not been post-communists, as in Poland and Hungary, but the Social Democrats, whose roots lie in the moderate politics of pre-war Czechoslovakia.

Mr Zeman, in the first flush of excitement at quadrupling his party's vote, extravagantly declared that he would not support any minority government that contained Dr Klaus and demanded the heads of three or four of his more radical ministers.

Even without these changes, no one doubts that Czech politics will be fundamentally altered. Firstly, the electorate administered a substantial and unexpected jolt to the prime minister personally; secondly, the parliamentary opposition is no longer fragmented, and the Social Democrats, if they play their cards right, could soon start to look like an alternative government.

What happens now depends largely on how Dr Klaus manages the next stage of economic transformation. In spite of his rigorous free-market orthodoxy, the Czech Republic has been spared some of the social traumas in other former communist states because mass lay-offs have generally been avoided.

But this is changing, an economist in Prague says: "Now we are in the process of rectification of the micro economy. I wouldn't describe it as downsizing of companies, it is mostly a question of adapting new technologies and becoming more efficient. Maybe in the future it will mean a reduction of labour."

Already, the fear of job losses has had a political impact. One of the reasons for the coalition's failure was an incautious remark Dr Klaus made last February. Czech unemployment, at less than 3 per cent, is one of the lowest in Europe. It was, in fact, far too low, Dr Klaus declared. He had good economic reasons for saying this, but the statement was disastrously open to misinterpretation.

"Here in Prague," one of his senior advisers, Mr Jiri Weigl, explains, "there is no unemployment and if you try to open a business, it is often difficult to get staff. This is a deterrent for new investors."