UPDATE 1-Czechs to scrutinise EU treaty, cracks widen in govt
* PM says govt to scrutinise treaty before final say
* Foreign minister says opt-out damages Czech interests
* Row raises tension within three-party government
By Jason Hovet and Jana Mlcochova
PRAGUE, Jan 31 (Reuters) - Czech Prime Minister Petr Necas will scrutinise an EU pact on stricter budget discipline before deciding whether to sign it, putting Prague at odds with its fellow members in the bloc and opening the way to a potential government collapse.
At a European Union summit on Monday, the Czechs and British were the only two states in the 27-member bloc to shun the deal to impose sanctions for countries breaching deficit limits and setting budget rules in national law.
The move, highlighting resistance to deeper EU integration in Necas's ruling Civic Democrat party (ODS), surprised some EU leaders and was a reversal from Prague's tentative decision to sign on to the treaty when it was outlined at a December summit.
It also drew criticism from Foreign Minister Karel Schwarzenburg, the leader of coalition party TOP09, who said the opt-out had damaged Czech interests. He has said he would refuse to be in a government that took the Czech Republic out of the European mainstream.
Necas told Czech media at a briefing in Brussels late on Monday that questions over the pact's content and uncertainty over its ratification had stopped him from committing to it.
"I could not accept the agreement now because of its content and also because of a lack of clarity regarding its ratification and the effective date," he said, according to a statement on the government's website.
"I see as extremely valuable the fact that the treaty has been changed in a way that allows for joining it in the future."
Necas's party - founded in the 1990s by the country's current president, well-known eurosceptic Vaclav Klaus - has long resisted encroaching oversight from Brussels.
The Czech Republic does not use the euro and has not set a date for its adoption.
Last week, the Czech government begrudgingly agreed to give a 1.5 billion euro loan to the International Monetary Fund as part of a package to shore up defences against the euro crisis after data showed it had been a net recipient of EU funds.
Following Necas's decision to opt-out, French President Nicolas Sarkozy expressed his surprise.
"I'm not sufficiently familiar with the ins and outs of what is going on in Prague to be able to understand why what was acceptable in December is no longer acceptable now," he said.
Schwarzenberg criticized the move.
"The view of the national-socialist wing within ODS was taken and national interests were hurt by this," he told CTK news agency.
SPLIT AT HOME
Economists say the Czechs already run one of the most fiscally responsible economies in the Union. Necas says many points of the treaty are in the government programme, which also includes a plan to balance the budget by 2016.
Necas's opt-out has widened a rift in a centre-right government that has only narrowly survived several near collapses since taking power in 2010. National disputes over how to address the euro zone crisis have already brought down governments in Greece, Italy and Slovakia.
The other ruling Czech parties say they could easily find a constitutional majority to ratify the treaty - as the opposition Social Democrats also support it - but Necas's Civic Democrats have suggested they should hold a referendum on the issue.
"There is a threat of a political crisis. If Karel Schwarzenberg wants to maintain his line he will have to clearly oppose this," said Jiri Pehe, a political analyst at New York University in Prague.
Klaus, who has final say on international treaties, has said he would not sign the pact. But his term ends in February 2013, meaning he will probably not play a role in the treaty's ratification if the Czechs eventually decide to sign up.
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