* New cabinet led by president's ally Jiri Rusnok
* Parties have rejected choice, accuse Zeman of power grab
* Rusnok's government unlikely to win confidence vote
* Rusnok says will negotiate with parties to get backing
By Jana Mlcochova
PRAGUE, July 10 Czech President Milos Zeman
swore in a cabinet led by a longtime ally on Wednesday but it
faces almost certain rejection by parties in parliament, raising
the spectre of prolonged political uncertainty in the central
That would increase the risk of gridlock in policymaking
which could hold up a 2014 budget plan and rattle investors, who
have long viewed the Czech Republic as a safe haven among
Zeman, a leftist, confirmed economist Jiri Rusnok as prime
minister, hoping that he can pull the economy out of a recession
now into its second year and lead the country into an election
due next year.
But the cabinet is likely to lose a vote of confidence, due
within 30 days, as Rusnok's appointment has infuriated both the
three parties of the outgoing centre-right coalition and the
leftist opposition, who all view it as a power grab by Zeman.
Rusnok said after the swearing-in that he would negotiate
with parties to try to win support for his government in the
confidence vote expected early next month.
Rusnok, who served as finance minister in a Zeman-led
cabinet a decade ago, replaces Petr Necas, who resigned last
month after a close aide was charged with bribery and illegal
spying on Necas's wife, whom he is divorcing.
Prosecutors have asked parliament to lift the former
premier's parliamentary immunity so he can be charged as well.
Necas said he would fight the charges.
Zeman said Rusnok's government should ensure prosecutors'
independence in the investigation.
"The government's task will be to prevent any political
pressure in the ongoing investigations and to fully respect the
independence of the police and state attorneys," Zeman said at
the swearing-in ceremony. "I believe that you will be a
guarantee that affairs will not be swept under the carpet."
ZEMAN CITES STRONGER MANDATE
Zeman was elected in the country's first direct presidential
election in January and says has a stronger mandate than
predecessors chosen by parliament, allowing him to take bold
action against the deeply unpopular outgoing coalition.
The three former ruling centre-right parties say they
command 101 seats in the 200-member lower and demand they be
given a chance to form a new government.
If Rusnok loses the confidence vote, Zeman would need to
appoint another prime minister. But there are no time limits and
rival politicians fear Zeman could drag out the process to keep
his favourites in power longer.
The opposition Social Democrats, who lead opinion polls by a
wide margin, are pushing for an early election before the next
general vote scheduled for May 2014.
The centre-right's candidate for prime minister, house
speaker Miroslava Nemcova, called the new government "toxic" and
left the swearing-in ceremony early to avoid a glass of wine
with the new ministers.
The cabinet includes several people who have worked as
advisers to Zeman and current and former members of a pro-Zeman
faction of the Social Democratic party, which the current
president led until 2001. The party leadership has asked them to
suspend their party membership.
For finance minister, Rusnok picked Jan Fischer, an
economist and former technocrat prime minister in 2009-10.
The Czechs have the highest credit rating among emerging
European countries, rated AA- by Standard & Poor's, and their
budget deficit is set to fall below the EU-prescribed limit of 3
percent of economic output this year.
But the government's budget-cutting drive in the last three
years has pushed the Czech economy into its longest recession in
two decades. Fischer and Rusnok have said that returning the
country to growth is a top priority for the new government.