Merkel plays down Prague pact veto


CZECH PRIME minister Petr Necas has said Prague will “de facto” meet the terms of the new fiscal treaty even if it doesn’t sign up.

German chancellor Angela Merkel paid a visit to Prague yesterday to paper over the cracks left by last month’s refusal of the Czech Republic and Britain to join the deal. Their blockade forced other leaders to draft an intergovernmental treaty outside of EU law.

“We are convinced that only a strengthening of competitiveness can solve the debt problems in the long term,” said Mr Necas after meeting the German leader.

Dr Merkel said there was “no pressure” and it was “not important” whether the Czech Republic signs up to the treaty now or later.

“Even if the Czech Republic has not yet signed the fiscal pact, we know that the Czech government is keeping that option open,” she said. The option could some sooner rather than later as, hours after her visit, tensions stirred once more in the three-way Czech coalition.

The smallest coalition partner, Public Affairs, set Mr Necas a May 1st ultimatum to reshuffle his cabinet and “regain the lost trust of citizens”. The party, which made a similar ultimatum last year, has lost the most support of the coalition parties since the government imposed measures to curb deficit spending. Unpopular measures include a VAT hike, increasing the retirement age and changes to the pension system.

In a nod to these efforts, Dr Merkel noted that, even without the fiscal treaty, Prague was already following a “very similar path” to Berlin.

“What is important is that the stability and growth pact in the Czech Republic is taken extremely seriously,” said Dr Merkel, referring to the existing agreement limiting government borrowing.

She said the Czech aim to meet the 3 per cent of GDP deficit ceiling next year was a “model” for others. At a joint press conference, Dr Merkel denied that, in exchange for eventual Czech participation in the fiscal pact, she would not object to the expansion of the accident-plagued Temelin nuclear power plant, near the German border.

On her flying trip yesterday, she paid a visit to Prague Castle and eurosceptic president Vaclav Klaus. Mr Klaus, founder of the ruling Civic Democrats, has described the pact as an unacceptable violation of national sovereignty.