Czech coalition seeks limited term for govt

PRAGUE, Aug 1 (Reuters) A three-party centre-right Czech coalition proposed today forming a cabinet with a limited mandate in an attempt to break the political stalemate that has followed an inconclusive June general election.

Civic Democrat leader Mirek Topolanek, who with two smaller allies won exactly half the seats in the lower house, said that under his plan the coalition would call an early election next year.

He said he would try to persuade outgoing left-wing Prime Minister Jiri Paroubek to accept the plan on Wednesday.

''This solution ... may not be liked by anyone, because an early election is a certain failure on the political scene, but it is constitutionally clean and proper,'' Topolanek told reporters after meeting his allies, the centrist Christian Demcorats and the Greens.

The parliamentary deadlock that followed the election has prevented Topolanek from forming a government and has kept Paroubek's outgoing cabinet in office.

Topolanek said the government's key tasks would be preparing the 2007 budget, securing development funding from the EU and changing the voting system to give extra seats to the winner of an election so that forming a majority government is easier.

He would also change the number of lower house seats to an odd number to avoid a tie and increase the representation of small parties.

Asked when he would hold an early election, Topolanek said ''That is a preliminary question, maybe April, May.'' The Social Democrats, who with the far-left Communists hold 100 lower house seats, have refused to back Topolanek's planned cabinet in a confidence vote.

The deadlock has meant the lower house has been unable to elect its speaker and other leaders, steps which normally precede the resignation of the outgoing cabinet and the appointment of a new one.

A fresh attempt to pick the speaker is due on Friday.

Financial markets have shrugged off the turmoil because of strong economic growth. Some analysts fear a prolonged dispute will delay fiscal decisions needed to narrow the budget deficit and prepare the country for adoption of the euro in 2010.

REUTERS SBA KN2136