UPDATE 1-Czech right parties make early coalition progress

* Right-wing parties push ahead in coalition talks

* President concerned about new parties, meets party leaders

* New party Public Affairs sees tough talks

(Adds second coalition meeting)

By Roman Gazdik

PRAGUE, May 31 (BestGrowthStock) – Czech right-wing parties reached
broad agreement on priorities for the next government following
a surprisingly strong win in a weekend election, but said
building a coalition would require tough negotiations.

The leftist Social Democrats won the most votes in the
election, but combined gains by the three centre-right parties,
including two new groupings, made it all but impossible for the
left to take power.

The election gave the right a strong mandate to carry out
reforms to cut the budget deficit from last year’s 5.9 percent.
Czechs also sent a clear message demanding a cleanup of politics
tainted by corruption scandals by voting for the new parties.

Markets gave a cheer to the result, sending the crown
currency 1.6 percent up to 25.45 to the euro at 1339 GMT.

Leaders of the right-wing Civic Democrats, conservative
TOP09, and centrist Public Affairs said they agreed the next
cabinet would focus on fiscal, healthcare and pension reforms,
law enforcement, corruption and justice, as well as education,
environment and farming.

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Leader Radek John of the new Public Affairs party, which has
no track record in national politics, gave indications he may
live up to a reputation as a tough negotiator.

“Today we agreed very well but of course we are aware that
there will be much more difficult topics,” he said after meeting
Necas. “On the top of that, trilateral negotiations will follow,
and that will be even more complicated.”

He said there was an agreement on cutting debt with measures
including job cuts in state bureaucracy.

Earlier, the other two groups agreed that Petr Necas, 45,
chief of the Civic Democrats, should become coalition prime
minister. Public Affairs has yet to back him.

The coalition would have 118 seats in the 200-seat lower
house, a stronger majority than any Czech cabinet has had since
the country was created in 1993.

CONCERN OVER NEW PARTIES

President Vaclav Klaus, who must ask parties to form a
government, expressed concern about the lack of track record of
TOP09 and especially Public Affairs.

“With these two parties, we cannot know how they will behave
in real politics,” he told daily Lidove Noviny in an interview.

“I have no clue how many people they have prepared to take
the posts of immense responsibility as members of the cabinet
and parliament.”

TOP09 was formed a year ago, mostly by defectors from the
Christian Democrat Party, shortly after a centre-right cabinet
fell in the middle of its term as EU president.

It is led by Karel Schwarzenberg, a pipe-smoking 72-year-old
aristocrat and former foreign minister who has a high reputation
for personal integrity and has not been tainted by any graft
scandals. Economic affairs in the party are handled by political
veteran and former Finance Minister Miroslav Kalousek.

Public Affairs was founded in 2001 but its activities had
been largely confined to Prague city politics until this
election.

Klaus separately met all party leaders on Monday including
Social Democrat acting chief Bohuslav Sobotka, and he may later
ask him to lead coalition talks.

That would be in line with Czech tradition to give the
nominal election winner the first chance to form a cabinet.
Sobotka has said the tradition should be kept even though he
acknowledges he sees little chance of succeeding.

With no realistic prospect of a left-wing government, Klaus
may also go straight to Necas and ask him to lead the talks.

Investment Basics
(Writing by Jan Lopatka; editing by Peter Graff)

UPDATE 1-Czech right parties make early coalition progress