Power struggle in Czech election winner hits coalition talks

Reuters

* Social Democrats in chaos as party splits after election

* Leader Sobotka refuses to heed call to resign

* Rivals take control of government talks

* Party aims to form coalition with two centrist parties

By Robert Muller

PRAGUE, Oct 27 (Reuters) - Attempts to form a new Czechgovernment after this weekend's election suffered a setback onSunday when the winning centre-left party tried to oust itsleader due to an unexpectedly weak showing at the ballot box.

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

But Sobotka vowed to fight on, saying his rivals, led bydeputy chairman Michal Hasek, would be under the influence ofPresident Milos Zeman, Sobotka's longtime rival and a formerSocial Democrat prime minister.

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

A quarter of a century after the fall of Communism in the1989 "Velvet Revolution", Czechs have grown disillusioned withtheir political class and used their votes to protest againstestablished parties, including the Social Democrats, that havebeen stained by corruption scandals.

Sobotka's fate was unclear - the call to resign was notbinding - but Hasek, 37, has the initiative as he will now leadthe coalition talks with two centrist parties.

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

Hasek's faction met Zeman late on Saturday, Czech mediareported. Zeman has in the past hinted he may prefer Hasek asprime minister after the election.

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

The Social Democrats want to start talks with the centristparty ANO, an anti-corruption movement started two years ago byfood and agricultural tycoon Andrej Babis, 59, that came secondin the election. They also want to negotiate with the centristChristian Democrats to form a three-party coalition.

Centre-right parties that ruled the EU and NATO membercountry of 10.5 million until their cabinet collapsed amidcorruption and spying allegations in June suffered a crushingdefeat in the vote.

POTENTIAL PARTNERS IN SHOCK

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

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

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

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

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

Social Democrat leaders said on Sunday said they could agreewith ANO on anti-corruption measures, such as laws requiring thepublishing of public contracts.

But they will struggle to follow through on plans to raisetaxes for high earners and utilities, telecoms companies andbanks because of ANO's opposition to tax hikes. Babis is alsocooler on adoption of the euro than the pro-European SocialDemocrats.

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

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