Scandal over Prime Minister's finances precipitates government crisis

The scandal over the Prime Minister's private finances has come to a head. In recent weeks Mr Gross has been under intense scrutiny over how he paid for his luxury flat back in 1999 and his wife is struggling to shake off similar allegations regarding a multi-million crown loan. No sooner had Mr. Gross left on a two day visit to France on Tuesday, than strange things started happening back home. His coalition partners, the Christian Democrats have called for a crisis meeting of all parties in Parliament except the Communists to discuss the scandal; the Freedom Union, the smallest party in government, is openly considering the possibility of a caretaker government, while the opposition Civic Democrats claim that the only solution to the crisis is early elections.

Stanislav Gross, photo: CTK

Daniela Lazarova has been following the story. Daniela, is the situation as serious as it sounds - could this be the end of the road for the Prime Minister?

Well, it is early to say as yet. The Prime Minister is clearly ready to do battle. He responded to the developments at home with anger, telling the Christian Democrats that the governing coalition could do without them and that they were free to walk out. He moreover accused them of repeating the 1997 scenario, when the Christian Democrats toppled the government of Vaclav Klaus while he was on a visit to Sarajevo.

After being accused of back-stabbing, the Christian Democrats toned down their rhetoric somewhat, saying that it was not their intention to break up the governing coalition but to regain public trust. It is obvious that in view of the 2006 parliamentary elections they want to distance themselves from the Social Democrats and their political scandals as much as possible and at the same time court their potential future coalition partner the Civic Democrats.

Certainly, there are behind the scenes consultations taking place, and right now the Christian Democrats are in a position to make waves, though it is not clear how far they want to push this.

The Social Democrats will almost certainly come under pressure to sacrifice Stanislav Gross - as they sacrificed the former Prime Minister Vladimir Spidla less than a year ago- but they have shown no sign of wanting to do so.

The Communists have ruled out any support as regards a potential minority government. So - at the end of the day - the coalition partners must come to some agreement or face early elections.

If the Prime Minister were forced to resign - what would happen then?

The chairman of the Christian Democrats Miroslav Kalousek, photo: CTK

His resignation would bring down the Cabinet and the President would have to start talks on a new government set-up. That would most likely be a lengthy process. Organizing early elections would also take a few months - so either way it would mean a period of instability during which Czech politicians would be treading water.

There's also the possibility that this scenario will be played out, everything will be swept under the carpet and the three party coalition will hang on until the 2006 regular elections.

Whatever happens, it is the right wing Civic Democrats who are in a win-win situation here. If elections were held today they would win a landslide victory and if the status quo is retained then their rivals will lose more public support in the coming weeks and months.