Czech Prime Minister Mirek Topolanek`s minority center-right administration faced a vote of no confidence on Tuesday that could force it out of office and undermine policymaking during the global economic downturn, according to Reuters.
But the opposition Social Democrats said if the government was defeated, it could stay on to complete the EU presidency, which the Czech Republic holds until the end of June.
Analysts also noted the Czech Republic had been less affected by the global financial crisis than some of its eastern European neighbors, and despite the political turmoil the crown currency held broadly steady after recovering from a drop earlier this year.
The lower house parliament began a session at 1300 GMT, with a lengthy debate expected ahead of the vote. Topolanek canceled a meeting with Ukrainian President Viktor Yushchenko.
Even if forced out by an opposition victory, Topolanek`s team, long hampered by its weak standing in parliament, would stay in power until politicians agree what to do next, which could take weeks or months.
"This government can continue for some time as a government in resignation, it can complete the Czech EU presidency or its substantial part," opposition Social Democrat chief Jiri Paroubek told a news conference.
A government of non-partisan experts could then be formed to lead the country to early polls in the autumn or next spring, he said. Regular polls are due in mid-2010.
Topolanek said on Monday he would seek a new mandate to form a cabinet from President Vaclav Klaus if the government falls. He said early polls should be held in the summer if there was no agreement on a new government.
EVEN CHANCES
Political analyst Jiri Pehe said he saw even chances for both camps, but added that independent deputies who had defected from both sides might be discouraged by the prospect of an early election which would cut short their mandate.
"By declaring willingness to go to early elections in the summer, Prime Minister Topolanek said that he will cut their mandate by a year," he said. "Now they will think twice."
The government has 96 votes, not all of them sure, in the 200-seat lower house, while the opposition has 97. The rest are defectors from both sides. The opposition must find 101 votes to topple the government.
The Social Democrats lead opinion polls but their margin over Topolanek`s Civic Democrats has narrowed to 4.5 percentage points in the latest survey released last week.
The Social Democrats are promoting more tax-and-spend policies and have rejected the government`s reforms of the health sector, but analysts said their plans would be limited by their desire to join the euro zone soon.
They are also much more pro-EU integration and oppose U.S. plans to build a missile defense radar in the Czech Republic.
The Czech vote comes just days after Hungarian Prime Minister Ferenc Gyurcsany said he would step down and after governments fell in Iceland and Latvia under the strain of the economic crisis.
The Czech economy has suffered from a slump in exports, and figures released on Monday showed industrial output fell by 23.3 percent in January.
But its banks have needed no bailouts, the public has been calm and Czechs are not heavily exposed to foreign debt.
The crown traded at 27.05 to the euro on Tuesday, down 1.5 percent since the political crisis blew up but beating other currencies in central Europe. It has gained 10 percent from this year`s low seen in mid-February.
