Czechs take EU helm as economy and Mideast crises loom

1/01/2009 - 0:39

By Michael Winfrey

PRAGUE (Reuters) - The Czech Republic took the helm of the European Union on Thursday for a six-month stint in which it must help the bloc tackle its worst economic crisis in generations and deal with renewed conflict in the Middle East.

Following the initiative-filled tenure of France -- whose President Nicolas Sarkozy jousted with issues from financial turmoil to climate change -- the Czechs have raised concern among some EU states over their ability to lead.

The Czechs have tried to quell those fears, identifying main priorities as the economy, external relations and energy, the last of which may come into play soon as Russia threatens to stop gas supplies to Ukraine, a major transit state to the EU.

"Sarkozy has already called Prime Minister Topolanek and he congratulated him," Deputy Prime Minister for European Affairs Alexandr Vondra said on live television.

He then lit a huge metronome above Prague, the symbol of the Czech presidency, although the ceremony was relatively low key and the official launch will take place on January 7.

The ex-communist state of 10 million people has suffered only a glancing blow from the economic crisis that has wreaked havoc across the rest of the bloc's 495 million population in the form of plummeting markets, bank bailouts, and job losses.

Prime Minister Mirek Topolanek's minority centre-right government has dragged its heels on the Lisbon reform treaty, a charter designed to streamline EU decision making, making the Czechs one of just three EU members who have yet to ratify it.

Czech President Vaclav Klaus is a staunch eurosceptic who has campaigned against deeper integration with other EU members, even if his post is largely ceremonial.

Topolanek, who will chair the Czech presidency, will have to tackle those issues along with the already long list of challenges he faces in the new year.


On Sunday Foreign Minister Karel Schwarzenberg expected to travel to the Middle East to work towards a cease-fire in the Gaza Strip, where Israel has killed nearly 400 and wounded 1,600 in an offensive it says is to halt rocket attacks from Hamas.

"As soon as he takes over (for) the presidency, he feels it is his duty to fly there and start handling it," said Schwarzenberg's spokeswoman, Zuzana Opletalova.

Schwarzenberg, a close ally of Washington and pro-Israel, defended the strikes on Tuesday. He put the onus of the conflict on Hamas and said Israel had a right to defend itself.

That was a different message from France's condemnation of aggression from both sides' and call for an immediate cease-fire.

Those stances may be thrown in stark relief when Sarkozy visits Egypt and the Palestinian territories on January 5 and Syria and Lebanon on January 6 in a bid to secure a peace deal.

On the economy, the Czechs' expect slight growth next year and see unemployment rising to around 6 percent. They have derided other EU governments for ramping up state spending with big stimulus packages to counter falling private sector growth.

That could put them at odds with big euro zone countries that are already fighting recession, or Spain, where some economists say unemployment could hit 20 percent.

But pundits said the Czechs' success as EU presidents will depend on whether they use the EU as a platform, and that either the EU's executive Commission or the "big three" -- Germany, France and England -- would take control if Prague does not.

"The EU presidency actually has very little formal power," said Charles Grant, director of the London-based Centre for European Reform. "With the Commission and the big three, in a way, if some awful crisis emerges, having a more inexperienced country in the EU presidency need not cause too many problems."

(Additional reporting by Jana Mlcochova; Editing by Matthew Jones)

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