Czech President Vaclav Klaus appointed a right-wing government on Monday, but the new team is likely to lose a confidence vote and the country faces weeks or months of political instability and probably an early election.
The new minority cabinet is led by Mirek Topolanek, a 50-year-old former businessman whose Civic Democrats (ODS) won an election over the outgoing leftist Social Democrats in June but lack a parliamentary majority.
Topolanek has said his administration could start reforming the debt-ridden healthcare, welfare and pension systems, although it was unlikely to make any fundamental adjustments due to its limited power and aim to hold early election next year.
"The government wants its mandate to be fully fledged," Topolanek told a news conference. "We will submit such legislative norms, which the lower house can easily adopt because there will be political consensus on them," he said.
The cabinet will likely fail to win a confidence vote due by October 4, and also lacks support for its plan to hold early polls. Topolanek can at best rely on the backing of his own deputies, the Greens and the centrist Christian Democrats, but all those votes together are still one short of a majority in the lower house of parliament.
If he fails, he must resign but will stay in office until another cabinet is named, which could take weeks or even months. "I believe this is being played in a way for the Civic Democrats to last as long as possible in government so they can prepare some of the reforms or show what they want to do," said political analyst Pavel Saradin.
"If the government does not win confidence, it can work for some time until there is another attempt," he said. The country can stagger toward an early election even if they are not held under Topolanek's plan. The president can call fresh polls if three new governments fail to win confidence.
Analysts have said the stalemate would likely last beyond local and upper house elections in late October, before the parties agree on a temporary cabinet and probably new polls. Alexandr Vondra, a former anti-communist dissident and later ambassador to the United States, became new foreign minister while flat-tax fan Vlastimil Tlusty took over finance.
The Czech currency has held firm despite the political crisis, supported by record strong economic growth and exports. The crisis has, however, thrown in doubt the fate of the 2007 budget. The outgoing government has proposed a plan forecasting a deficit of 3.8 percent of gross domestic product, breaching the 3.3 percent limit set in the country's euro adoption programme aimed at euro zone entry in 2010.
Topolanek has said his interim cabinet would not set a euro entry target, and would focus on the 2007 budget and preparations for Czech EU presidency due in 2009.
The Social Democrats have said they could negotiate on the fate of the budget. If one is approved, a provisional budget capping operating spending at this year's level would come into force.