Czech president does not prefer early election - PM quoted

(Reuters) - Czech President Milos Zeman does not favour the option of an early election following the government's resignation, news agency CTK quoted outgoing Prime Minister Petr Necas as saying on Monday after he met the president.

Necas resigned after prosecutors charged his close aide with bribery and illegal spying. The president is in charge of appointing a new prime minister.

 President accepts prime minister's resignation

* Talks on new PM scheduled for weekend and next week

* Czechs anxious to get new government installed fast

By Robert Muller and Jan Lopatka

PRAGUE, June 17 (Reuters) - Czech Prime Minister Petr Necas formally handed in his resignation on Monday after a bribery and spying scandal that centred on an aide, but it will take at least a week of horse-trading before a replacement is put forward.

President Milos Zeman's approval is needed for the next prime minister but he has fractious relations with the governing coalition. Czechs are anxious to avoid a damaging period of political paralysis in their country of 10.5 million people, which has been in recession for a year and a half.

"The worst thing to happen to this country would be weeks of agony," said Petr Gazdik, one of the leaders of the TOP09 party, a junior partner in the governing coalition.

Under the constitution, the whole government must now step down along with Necas. His administration will stay on as caretakers until a new government is in place.

Necas quit after prosecutors charged the director of his office, Jana Nagyova, with illegally ordering agents to spy on people including Necas's wife, according to lawyers for two defendants in the case.

He said he was not aware of any surveillance, but the fall-out from his aide's arrest undermined his position. Nagyova was also charged with bribing members of parliament to drop a rebellion against Necas last year.

After accepting Necas's resignation, the president scheduled a series of talks with political parties for this weekend and next Monday, to try to identify a candidate for prime minister who could win support in the divided parliament.

 

POTENTIAL CANDIDATES

The outgoing prime minister's Civic Democratic party wants to form a new government, under a different leader, with their two junior partners and see out their regular four-year term that expires next May.

The party's leadership met on Monday but it did not reveal who its possible candidate would be. One choice would be Martin Kuba, the 40-year-old industry minister. He became the party's acting chairman after Necas quit his other job, as party leader.

Miroslava Nemcova, lower house speaker and Civic Democrat vice-chairwoman, said she believed the coalition could cobble together 101 votes in parliament, which would give it a clear majority.

But for that plan to work, they need the consent of Zeman. He has only limited powers under the constitution, but they include the sole right to appoint the prime minister.

A former prime minister himself and a leftist opponent of the Necas government, Zeman is likely to bring his own political agenda to the negotiations with the parties.

"It is possible he will push his people; that is politics," said political analyst Vladimira Dvorakova.

The European Union member country needs a stable government in place, among other things, to complete its biggest-ever public procurement tender.

The tender is to build two new nuclear reactors at the Temelin plant in the south of the country, estimated to cost $10-15 billion. A consortium including Russia's Atomstroyexport is competing against Toshiba Corp unit Westinghouse.

Whoever takes over from Necas will also face the task of lifting the country out of a recession caused by the euro zone debt crisis and the outgoing government's focus on bringing down the budget deficit.

If repeated attempts to form a new cabinet fail, or if coalition and opposition parties agree to dissolve parliament, an early election would be held, possibly in the autumn.

A lawyer for Nagyova, who is in custody, says she denies some of the allegations against her, while on others she argues that she acted in good faith.

Under the Czech constitution, the whole government will now have to step down, and there is likely to be horse-trading between the governing coalition, the opposition and the president before a replacement is in place.

Necas quit days after prosecutors charged the head of his office, Jana Nagyova, with bribing members of parliament and ordering intelligence agents to spy on people.

The scandal has a personal element for the prime minister: one of the surveillance targets, according to lawyers involved in the case, was the prime minister's own wife, Radka. The two are filing for divorce.

Necas has said he knew nothing about the surveillance, but the charges were so toxic that his coalition partners signalled they could no longer support him.

"I will resign as prime minister tomorrow," Necas told a news conference after meetings with his Civic Democratic party and with the leaders of other parties in the governing coalition.

"I am aware fully aware how the twists and turns of my personal life are burdening the Czech political scene and the Civic Democratic Party," he said.

He said his party would try to form a new government, led by a different person, to rule until a scheduled election next year. However, it was unclear if that plan could muster enough support in parliament.

Two decades ago, Czech dissident Vaclav Havel led a "Velvet Revolution" that overthrew Communist rule and turned his country into a beacon of liberty. But in the years since then, the Czech Republic has been mired in corruption.

Necas and his administration will stay on as caretakers until a new government is installed. President Milos Zeman will have an important say in who takes over. If after three attempts there is no viable government, or the parliament agrees to dissolve itself, an early election will be held.

PRESIDENTIAL POWER

Forming a new government will be tough for the current coalition because it does not have an outright parliamentary majority. At the moment, it falls at least two votes short.

The only way to cobble together a majority is to win over independent members of parliament. Some independents have in the past voted with the cabinet, opening the possibility they may pledge their support.

The constitution gives the president the authority to appoint a prime minister. He is a political opponent of Necas, and could refuse to endorse the coalition's nominee for prime minister.

"If the government has majority support, I believe that he (the president) would accept that majority. If that attempt is not successful, there should be a quick agreement on an early election," said Miroslav Kalousek, deputy chairman of TOP09 and finance minister in the outgoing cabinet.

An early election would favour the opposition Social Democrats, who, according to opinion polls, are more popular than the government.

The anti-corruption operation that brought down Necas was the biggest in the Czech Republic, a country of 10.5 million people in eastern Europe, for 20 years.

About 400 police officers raided government offices, bank safe deposits and other locations, conducted 31 house searches and seized at least $6 million in cash and tens of kilograms of gold. They did not say who it belonged to.

A lawyer for the prime minister's aide Nagyova, who is now in custody, says she denies some of the allegations against her, while on others she argues that she acted in good faith.

Czechs have been increasingly irritated by media reports of kickbacks and tainted deals in the public sector and the inability of the police and justice to punish the perpetrators.

Last week's operation was, in part, the result of Necas's own reforms: under his watch, newly appointed prosecutors were given a free hand to go after corruption cases.

(Additional reporting by Jan Lopatka and Mike Winfrey; Writing by Christian Lowe; Editing by Alison Williams)