Czech parliament votes to return confiscated church property

Czech Republic's Prime Minister and Chairman of the Civic Democratic Party (ODS) Petr Necas gives a speech during the party's congress in Brno November 4, 2012.

PRAGUE (Reuters) - The Czech parliament on Thursday approved an ambitious plan to return billions of dollars worth of church property that was confiscated by the communists in a vote that represented a victory for Prime Minister Petr Necas.

The law envisages handing churches land, property, and financial compensation worth about $7 billion over a period of 30 years. Under the plan, the churches would become independent from the state and gradually stop getting government financing.

The agreement should unlock about 6 percent of the country's forests and fields that once belonged to mostly Christian churches but which have been tied up pending a resolution of the restitution question.

That land, which was confiscated by the communists after 1948, could in future be developed, rented or sold.

The 200-seat lower house of parliament approved the necessary legislation with 102 MPs voting in favor, overturning a veto by the Senate, the upper house, which opposed the move.

After two decades of negotiations among politicians led by the Roman Catholic Church, the churches are delighted with the agreement, hoping it will restore their fortunes and reverse their declining role in Czech society.

The vote was a victory for Necas, whose unstable coalition quelled a backbench rebellion on Wednesday, rushing through tax hikes and changes to the pension system.

The deal was supported by Necas and his conservative allies, but is highly unpopular among the mostly atheist Czech populace and the centre-left opposition.

The financial compensation component comes to about only $100 million per year but has huge symbolic value at a time of tax hikes and austerity measures that the government has adopted to try to cut the budget deficit.

The law will now go to President Vaclav Klaus, who has voiced reservations about the bill. He can veto the law once more after the Senate's rejection, but the 102 votes Necas won in the lower house of parliament on Thursday would be enough to overturn any presidential veto too.

The law may lead to a one-off jump in this year's budget deficit of around 1.5 percentage points of GDP, to cover the compensation payments which are due to be spread out over 30 years.

(Reporting by Jan Lopatka; Editing by Andrew Osborn)