June 2, 2006

Czechs vote for 2nd day in close election

By Jan Lopatka

PRAGUE (Reuters) - Czechs will cast ballots for the second
day on Saturday, choosing between the ruling Social Democrats
promising more welfare and a conservative opposition saying the
country's prosperity is at risk without reforms.

Election officials in the capital Prague say turnout was
brisk on Friday, with many Czechs eager to escape to their
countryside homes for the weekend and abandoning the
picturesque central European city to foreign tourists.

"We have seen quite a few people, definitely more than the
last election," a Prague polling station chief told Reuters.

In eight years of leftist rule, tourism, and booming car
and electronic sectors turned the Czech Republic into the
wealthiest ex-communist European Union member, overtaking "old
Europe" Portugal.

Prime Minister Jiri Paroubek campaigned hard to convince
Czechs he can deliver more of the same but corruption scandals
tarnished his party's image.

Surveys gave the rightist Civic Democrats an edge ahead of
the vote and their victory would make the Czechs the second
central European EU nation after Poland to elect a eurosceptic
government since the bloc's eastward enlargement in 2004.

The party has campaigned hard on a pledge to root out
graft, cut taxes and reform pensions, moves that it believes
will make economic growth of more than 6 percent sustainable.

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 a Social
Democrat alliance with Communists, which would limit Paroubek's
scope for any pension reforms needed to keep the country on
track for euro zone entry in 2010.

Neither of the two parties will win a majority and several
alliances are possible among five parties expected to win

Polling stations will open at 0600 and close at 1200, when
an exit poll followed by preliminary results are due.


Despite strong growth that has brought wealth per capita to
about 75 percent of the EU average, the Czechs face the same
question as most of Europe -- how much welfare is sustainable
in an economy open to global competition.

Paroubek has pledged to continue 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.

Civic Democrats say that without reforms, the country will
fail to bring the budget deficit down to levels required for
euro zone entry when it may be desirable, growth will stall and
unemployment will remain relatively high at 8 percent.

The Social Democrats say Civic Democrat leader Mirek
Topolanek's tax cut plans would blow a hole in the budget,
benefit only the rich and force Czechs to pay for health and