Power struggle in Czech election winner hits coalition talks

By Robert Muller

PRAGUE (Reuters) - Attempts to form a new Czech government after this weekend's election suffered a setback on Sunday when the winning center-left party tried to oust its leader due to an unexpectedly weak showing at the ballot box.

The Social Democrats' leadership body voted by 20 to 13 to call on chairman and candidate for prime minister Bohuslav Sobotka to quit after the party won only 20.5 percent of the vote.

But Sobotka vowed to fight on, saying his rivals, led by deputy chairman Michal Hasek, would be under the influence of President Milos Zeman, Sobotka's longtime rival and a former Social Democrat prime minister.

"I will not resign because I want to keep defending values I believe in within the (party). Among them is an independent Social Democratic party," Sobotka, 42, said.

A quarter of a century after the fall of Communism in the 1989 "Velvet Revolution", Czechs have grown disillusioned with their political class and used their votes to protest against established parties, including the Social Democrats, that have been stained by corruption scandals.

Sobotka's fate was unclear - the call to resign was not binding - but Hasek, 37, has the initiative as he will now lead the coalition talks with two centrist parties.

"Voters do not need to worry for a second about the mandate they gave the Social Democrats; our promises and commitments remain in place," said Hasek.

Hasek's faction met Zeman late on Saturday, Czech media reported. Zeman has in the past hinted he may prefer Hasek as prime minister after the election.

Zeman angered parties in July when he pushed through a caretaker cabinet made up of his allies, which will continue to rule until a new government is formed.

The Social Democrats want to start talks with the centrist party ANO, an anti-corruption movement started two years ago by food and agricultural tycoon Andrej Babis, 59, that came second in the election. They also want to negotiate with the centrist Christian Democrats to form a three-party coalition.

Center-right parties that ruled the EU and NATO member country of 10.5 million until their cabinet collapsed amid corruption and spying allegations in June suffered a crushing defeat in the vote.

POTENTIAL PARTNERS IN SHOCK

Analysts said Hasek's move was motivated by personal ambition and his fight with Sobotka was hurting the party.

"This is also the reason for lower support for social Democrats. Many centrist voters were really afraid that a vote for the Social Democrats is in fact a vote for Zeman," political analyst Vladimira Dvorakova said.

As election results trickled in on Saturday, Babis said he was against joining a government but the mood seemed to change on Sunday, although ANO has not yet committed to joining a Social Democrat-led cabinet or supporting a minority cabinet.

The turmoil in the Social Democrats was already hurting prospects for forming a coalition.

"I am shocked by what is happening in the Social Democrats," news agency CTK quoted Babis as saying. "This party, the election winner, is destabilizing the political situation."

Social Democrat leaders said on Sunday said they could agree with ANO on anti-corruption measures, such as laws requiring the publishing of public contracts.

But they will struggle to follow through on plans to raise taxes for high earners and utilities, telecoms companies and banks because of ANO's opposition to tax hikes. Babis is also cooler on adoption of the euro than the pro-European Social Democrats.

Markets have been unfazed by the election but messy coalition talks, an increasingly likely scenario, could unsettle investors. Local markets are closed on Monday for a holiday.

(Additional reporting by Jason Hovet and Jan Lopatka; editing by Andrew Roche and Giles Elgood)

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