August 4, 2009 / 6:28 PM / 9 years ago

Czech election race starts, with economy at center

BRECLAV, Czech Republic (Reuters) - Czech political rivals launched their campaigns on Tuesday for an October general election that will shape the country’s response to the economic crisis and a fast-growing budget shortfall.

Chairman of the Social Democrats Jiri Paroubek (R) and Deputy Chairman Bohuslav Sobotka cover their faces after they were pelted with eggs by opponents during their party's European Parliament election campaign in Prague, May 27, 2009. REUTERS/David W Cerny

The Czech Republic slid into recession after western European demand for its exports declined, sending the fiscal gap over 5 percent of gross domestic product and delaying plans to adopt the euro.

The main right-wing party moved slightly ahead of its left-wing rivals in early summer, polls showed, but none is close to winning an outright majority in the Oct 9-10 election.

That opens several options on the make-up of the next cabinet: a center-right alliance, a left-wing minority or a grand coalition similar to the current German administration.

“Despite the recent polls, I believe the Social Democrats still have a better opening position (to form the next cabinet),” said Jan Kubacek a political analyst at Prague’s Charles University.

The left-wing Social Democrat leader, Jiri Paroubek, prime minister in 2005-2006, has promised to tackle unemployment which has climbed to 8 percent from 5 percent a year ago and is seen hitting double digits.

“(The former cabinet) showed huge incompetence when assessing the crisis’ impacts,” Paroubek said. His party toppled a center-right government in March and the country now has a non-partisan caretaker administration.

Paroubek also wants to cancel health fees and to abolish a flat income tax imposed by the previous government and raise taxes on top earners.

“Victory is the only acceptable result ... between 35-40 percent,” he told a crowd of several hundred as he launched his campaign in the town square of the southeastern town of Breclav.

The party has pledged euro adoption in 2014 or 2015 but its plans for more welfare would make this difficult, analysts said.

RUSSIA, USA

The mildly Euroskeptic center-right Civic Democrats, led by Mirek Topolanek, have been struck by the public opposition to their past reforms and have yet to release a detailed agenda.

In general they promote more conservative fiscal policies than the left-wing but are in no rush to join the euro zone.

A grand coalition of the two big parties may be a cozy option because they would share responsibility for unpopular moves, but facing little opposition, they would be tempted to partition power in the country for years ahead, Kubacek said.

The Social-Democrats have said they preferred centrist partners. But they could also turn to the Communists, descendants of the party that held totalitarian rule from 1948 until 1989 and have since been considered unacceptable by the mainstream forces.

The Communists are very unlikely to be invited to the cabinet or any formal government pact, but they could lend their votes to a minority Social Democrat administration.

Such a make-up would embolden tax-and-spend policies and cement the Social Democrats’ opposition to plans by the previous government to allow the United States to build a radar base outside of Prague as part of a missile defense shield.

The plan has angered Russia, the former dominant power in the region and a country that the Social Democrats want to improve relations with.

The campaign has opened with mutual accusations of graft and shady procurement orders, a standard fixture in the country that has slowly emerged from Communist rule which ended in 1989.

Editing by Robin Pomeroy

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