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Edition: U.S. Article Comments (1) Save Email Print Reprints Most Popular Most Shared North Korea cuts ties with South | Video 11:29am EDT Covert U.S. operations authorized in secret order 24 May 2010 Obama tells military: prepare for North Korea aggression 24 May 2010 UPDATE 2-U.S., European economies face major hurdles-GE CEO 24 May 2010 Government needs BP technology to "kill" oil spill | Video 9:47am EDT Commodities, stocks fall on rising risk aversion | Video 10:25am EDT Seoul shares fall 3 pct as N.Korea tensions weigh 24 May 2010 Raleigh ranked top U.S. city for quality of life: poll 24 May 2010 Seoul shares post 15-wk closing low; N.Korea weighs 3:12am EDT Clinton says China wise to buy U.S. debt instruments 1:19am EDT Euro seen heading for parity with dollar 7:38am EDT Exclusive: U2's North American tour cancelled 8:51am EDT U.S. reverses stance on treaty to regulate arms trade 14 Oct 2009 North Korea cuts ties with South | Video 11:29am EDT Raleigh ranked top U.S. city for quality of life: poll 24 May 2010 Scenarios: Europe's debt woes could weigh on U.S. recovery 24 May 2010 Obama tells military: prepare for North Korea aggression 24 May 2010 Learning a new language? Try Globish, author says 23 May 2010 Covert U.S. operations authorized in secret order 24 May 2010 WRAPUP 4-US needs BP technology in moves to "kill" oil spill 9:21am EDT Commentary Bernd Debusmann: In Mexico, a drug war of choice? Mexico's drug war history has two versions, one of which paints President Felipe Calderon in a desperate fight to legitimize his presidency by waging war on drug cartels. Is he stuck in a battle he can't win? Commentary Slideshow: Mexico's bloody drug war Rich-poor divide clouds Czech policy as vote looms Jana Mlcochova MOST, Czech Republic Tue May 25, 2010 9:39am EDT Related News Czechs tire of sleaze, embrace new parties Fri, May 21 2010 Senate fails to end debate on bank reform bill Wed, May 19 2010 Democrats, Republicans see hope in political rubble Wed, May 19 2010 Britain's two big parties court Liberal Democrats Mon, May 10 2010 Factbox: Where recent EU members stand on euro adoption Fri, May 7 2010 TV moderator Jan Puncochar gestures as Civic Democratic Party (ODS) leader Petr Necas (L) and Social Democratic Party (CSSD) leader Jiri Paroubek prepare for a TV debate in Prague, May 23, 2010. Credit: Reuters/David W Cerny MOST, Czech Republic (Reuters) - With two unemployed grandchildren and a pension she fears rightists want to cut, Jana Kysilkova is sure to vote for a left-wing party in the Czech general election this weekend. World The only question is whether to pick the frontrunning Social Democrats or the hard-left Communists, a dilemma shared by many in this gritty industrial town near the border with Germany, a region with per capita output at 61.7 percent of EU average. She recalls that 20 years ago under communist rule, everyone had a job, while the rust belt city's 20 percent unemployment rate is now the highest in a country of 10.5 million. "Thank God I'm retired. That way I have at least something -- until they take it away from us, as they say they will," the 66-year-old Kysilkova said. Opinions could not be more different 85 km (50 miles) south in Prague, the fifth wealthiest region in the EU with output at 172 percent of the EU average, where many high-earners driving SUVs resent paying for social benefits for the jobless. In the capital and other richer areas, right-wing parties have solidified support around a pledge to reorganize the welfare system with reforms they say are needed to prevent a Greek-style economic meltdown. This tale of two cities explains the deep left-right divide that has engendered a decade of weak governments which have lagged their central European peers in economic reform. Although growth has been high and the budget deficit smaller than in many other EU countries, a looming demographic crunch means changes are needed to healthcare and pension systems that show ever-growing shortfalls. But a virtually dead heat among leftist and rightist parties ahead of the May 28-29 vote could yield another weak administration and more delay in reforms. Another Czech fault line is the young-old divide. The Social Democrats and Communists draw support from the older generation while first-time voters are decidedly right-wing, unlike in many west European countries. "The Czechs will never have a government strong enough to push through fundamental reforms out of strength," said Jiri Pehe, director of New York University in Prague. "The problem of Czech politics is that they need to learn to agree on crucial reforms through the political center." RICH PRAGUE The reform deadlock in the last elected government, led by the right-of-center Civic Democrats, underscored the problem. With only 100 seats in the 200-member parliament, it was toppled in a confidence vote after party rebels teamed up with the leftist opposition. It gave way to a caretaker cabinet of technocrats having fulfilled just a fraction of planned reforms. Now the Civic Democrats and an upstart rightist party TOP09 have called for measures to slash the budget deficit to prevent what some have warned could lead to national bankruptcy. They are particularly targeting mandatory guaranteed spending that includes welfare and unemployment benefits and drains nearly 65 percent of the overall budget. Their stronghold is Prague, a city with a jobless rate of just 4 percent and gross domestic product per inhabitant that exceeds Vienna and Stockholm, according to Eurostat data. Voters here are bombarded with warnings that public debt, very low at 35 percent of GDP, half of the EU average, could spike due to high social spending costs. "I can say quite certainly that I will vote for the right," said 30-year old Vladimir Konecny, a bank employee, on a glitzy Prague avenue studded with shops like Hugo Boss and Lacoste. "I don't want higher taxes and I'm concerned over further growth in (national) debt." While many people in poorer regions accuse dwellers in the capital of arrogance and ignorance of their problems, Konecny said most leftist voters were unaware of economic realities. "The average voter doesn't understand much and easily falls for populist rhetoric," he said. The right faces a tough task to win the election and push through its agenda. Most recent polls show the Civic Democrats trailing the Social Democrats 22.9 percent to 26.3 percent and needing support from smaller parties for any chance of ruling. A Reuters poll of analysts found the most likely outcome was a Social Democrat-led cabinet and the biggest post-election risks were the budget deficit and a weak government with insufficient backing for reforms. LEFTIST REGIONS In Most, a McDonald's restaurant and a new Tesco supermarket are symbols of material progress since the fall of communism, but a majority of the population live in run-down communist era flats and 60 percent work in manual labor. Once favored under communism with its coal-mining workforce considered the aristocracy of the working class, the city of 67,000 depends on a chemical factory and a remaining coal mine. The communist government even moved a Gothic church by 841 meters in 1975 to make room for a mine shaft. Many here point to media stories of corruption scandals said to have cost millions of euros and say the country's budget woes originate in the halls of the political elite in Prague. Oldrich Maly, director of Most's labor office, said a lack of development over the past 10 years has left many in the town with no other choice than to rely on the state, and reducing social benefits would bring unacceptable pain. "The more cuts the worse," said Maly. "Bluntly put, cuts mean higher uncertainty, rising aggressiveness and crime... We are seeing people beginning to steal from their employers." The Social Democrats pledge to preserve welfare and want to tax the rich to reduce the debt, even though many economists say that could lower economic demand and sap growth. Mother-of-eight Marie Mikulova has been unemployed for nine years. She sees no alternative to taking ever dwindling dole cheques and feels no one in Prague understands the situation in Most. "People don't have enough money to pay the rent... and before they know it they're homeless," she said. (Editing by Michael Winfrey and Paul Taylor) World Comments See All Comments (1) | Post Comment May 25, 2010 10:50am EDT It should be noted that this article cites wealth as GDP at PPS purchasing power standard. In term of real GDP, Prague would be at 106% of the EU average – still a high figure for an East European city, but well below Vienna and Stockholm, which were cited for comparaison. Relying on Eurostat’s PPS figures to define reginonal wealth is questionable, since these are defined country-wide and do not take into account the disparities between central metropolitan regions (for example the Prague regions), and less wealthy ones (such as the Czech Severozápad region). This has the effect of exagerating the purchasing power of the primary metropolitan areas in this case, of east european countries. urbanismes Report As Abusive See All Comments (1) Add a Comment *We welcome comments that advance the story directly or with relevant tangential information. We try to block comments that use offensive language or appear to be spam and review comments frequently to ensure they meet our standards. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. © Copyright 2010 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United States Reuters Contact Us Advertise With Us Help Journalism Handbook Archive Site Index Video Index Analyst Research Mobile Newsletters RSS Podcasts Widgets Your View Labs Thomson Reuters Copyright Disclaimer Privacy Professional Products Professional Products Support Financial Products About Thomson Reuters Careers Online Products Acquisitions Monthly Buyouts Venture Capital Journal International Financing Review Project Finance International PEhub.com PE Week Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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