Czechs vote in tight election race

By Jan Korselt and Jan Lopatka

PRAGUE (Reuters) – Czechs voted on Friday in a close
general election fought between ruling Social Democrats who
took the nation into the EU and promise a stronger welfare
state, and right-wingers vowing to stop corruption and slash
taxes.

The Czech Republic has enjoyed an economic boom under the
centre-left coalition of Prime Minister Jiri Paroubek but a
string of sleaze scandals damaged the government’s standing
after eight years in power.

The conservative Civic Democrats, who had a narrow lead in
most opinion polls, campaigned hard on a pledge to root out
graft and push reforms to make the ex-communist EU member’s
robust economic growth of over 6 percent sustainable.

Leaders of both parties took final shots at each other
after casting their ballots.

“Voters must choose if they want to transform this country
into the biggest laboratory in central Europe, where
experiments from around the world will be conducted on them,”
Paroubek said, referring to Civic Democrat reform plans.

No party will win a majority in the two-day vote and
several alliances are possible among five parties expected to
win seats.

Investors view the vote calmly because the booming economy,
low debt and inflation have made the country a safe haven among
volatile central European markets.

The worst election outcome for investors is that Paroubek
teams up with Communists, which would limit his scope for
fiscal or pension reforms needed to keep the country on track
for euro zone entry in 2010.

The Communists are set to end up as the third biggest
force, after years on the political sidelines following the
overthrow of communist dictatorship.

“For the first time since 1989, the Communists can grab
real power, be it directly or indirectly,” Civic Democrat
leader Mirek Topolanek told reporters after casting his ballot.

Polling stations will close at 2000 GMT and re-open from
0600 until 1200 on Saturday, when preliminary results are due.

REFORM NEEDED?

Despite strong growth that has brought wealth per capita to
about 75 percent of EU average and above that of “old” EU
member Portugal, the Czechs face the same question as most of
Europe — how much welfare is sustainable.

Paroubek has pledged a continuation of reforms at a
moderate pace while increasing social payments and sticking to
his euro adoption target of 2010. He said he might cooperate
with Communists if they back such an agenda.

Topolanek argues such policies will boost the budget gap,
expected to be 3.6 percent of GDP this year, beyond euro zone
limits and fail to reduce 8 percent unemployment.

He says that with the economy booming, pension and health
reforms should accelerate. Reflecting his party’s slightly
eurosceptic line, he is vague on when the country of 10.5
million should adopt the euro.

The Social Democrats say Topolanek’s tax cut plans would
blow a hole in the budget, benefit only the rich and force
Czechs to pay for health and education.

Many voters agree and are not swayed by the latest sleaze
allegations by a senior police officer who accused Paroubek
this week of hindering organized crime investigations.

“I can’t tell who has been objective on this from either
side so I am not deciding on the basis of the reports,” said
Katerina Spackova, a 35-year-old office worker.

“I want social security for families, and older people,
which I fear a right-wing government will not deliver.”