News Analysis: TOP 09 and ODS clash on EU fiscal deal

Intra-government battle lines have been drawn over a European Union budget disciplinary agreement, with the coalition's two largest parties pitted against one another.

While the right-leaning TOP 09 and Civic Democrats (ODS) agree on most policy matters, their biggest difference remains attitudes toward Brussels, with the ODS playing euroskeptic to TOP 09's more europhilic leanings.

"The dispute is a serious one," said Milan Znoj, a political scientist at Charles University. "The dispute over the EU is a dispute for hegemony on the right wing on our political scene; thus, I assume the tension will grow as the elections will be coming."

Indeed many see the growing tensions as a precursor to regional and local elections slated for the autumn, with an eye on the 2014 general election.

"The government has already passed much of its agreed economic reform agenda," political analyst Jiří Pehe said. "It would be difficult for TOP 09 to preserve any individual identity if this EU agreement is simply rejected, so this is a time where the parties are seeking a way to differentiate themselves from one another."

Foreign Affairs Minister Karel Schwarzenberg, TOP 09's chairman, has been vocal in his support for an EU plan to make common restrictions on member states' deficits, even threatening to pull out of the coalition.

"I will not be a part of a government that would lead the Czech Republic aside from the mainstream of European integration," he told the daily Lidové noviny.  

Meanwhile, Prime Minister Petr Nečas' ODS has floated the idea of putting any national agreement to the EU deal to public referendum. European publics have a long history of rejecting referenda on EU agreements, including rejections of a constitution in France and the Netherlands and an initial rejection by Irish voters of the Lisbon Treaty.

"The ODS is always trying to find a way to referendum when there is something they don't agree with," Znoj said. "They think the public is clearly on their side, but I would call the attitude sanctimonious."

With some irony, the ODS is largely in favor of the concept being outlined in the EU agreement, which would call for limits on deficits. Nečas himself said he would pursue a domestic constitutional amendment to limit annual budget deficits by the government. Should that policy move forward, the Czech Republic would likely meet any EU-wide restrictions automatically.

"It's absurd," Pehe said. "Because it comes from Brussels, it is immediately demonized. Even though it is in line with the ODS's economic program, they will oppose it."

Should the ODS choose to walk a tight euroskeptic line on the issue, the collapse of the government is all but assured, analysts say, and the possibility remains for TOP 09 to ally itself with other pro-European parties in Parliament, if only on this issue. The opposition Social Democrats, who hold a majority in the Senate and are the largest single party in the Chamber of Deputies, seem an obvious potential collaborator.

"I could not see them cooperating in a government, it would be a different kind of cooperation," Pehe said. "There are two major issues for consensus building, economic and foreign policy. In this case, it is attitudes toward Europe."

Negotiations over the exact parameters of a common EU fiscal agreement continue, but the idea centers on limiting deficits by imposing an automatic set of penalties on member states that surpass spending limits.  

"From what we know now, it is possible to say that some powers will be transferred from the Czech Republic to Brussels," Vojtěch Belling, one of the Czech Republic's negotiators and an ODS appointee, said, speaking on Czech Television Jan. 15.

"It is necessary to remind people the treaty is undergoing significant changes. Every week, we get a new draft, and next week we'll get another one with changes based on meetings and negotiations."

Higher-placed officials, however, will need to sign off on final negotiations.

"The majority of the treaty has already been agreed on. There are several paragraphs that need negotiations at the level of finance ministers and prime ministers," Belling said.

This too could lead to a clash among coalition government parties as Finance Minister Miroslav Kalousek is a member of TOP 09 and Nečas of the ODS.

But Nečas is also seemingly leaving himself an exit strategy whereby he might eventually agree to an EU deal while saving face by portraying himself as able to extract exceptions for the Czech Republic. Already, this tactic was apparent on a trip to Budapest Dec. 15, just days after a Brussels summit had laid the groundwork for the common fiscal pact.

Nečas, alongside Hungarian Prime Minister Viktor Orbán, forcefully asserted that the new fiscal rules should only apply to eurozone members, a provision that had already been agreed to in Brussels days earlier.

"In the end, Nečas will find a way to join it. Otherwise, the government will fall," Pehe said.

Tensions within the tripartite governing coalition, which also includes the Public Affairs party, have been a mainstay since taking office in June 2010, but this dispute is the most substantive yet.  

"In comparison with previous skirmishes, this one is crucial and goes to the identity and future of the country," Pehe said.

- Filip Šenk contributed to this report.

Benjamin Cunningham can be reached at
bcunningham@praguepost.com