March 26 (Bloomberg) -- The collapse of the Czech government threatened a new setback for the European Union’s stalled governing treaty, distracting the bloc’s leadership just as President Barack Obama presses for bolder European steps to confront the recession.

Czech Prime Minister Mirek Topolanek tendered his resignation today after losing a March 24 no-confidence vote, raising a new hurdle to passage of the treaty by lawmakers in Prague. A setback there may undercut a referendum in Ireland, the only other country that still hasn’t ratified it.

The defeat also hamstrung the Czech government midway through its six-month EU presidency, opening a political vacuum in the run-up to European Parliament elections and a battle over top EU appointments in June.

“The European Union over the next three months risks being where the United States was in the last three months of 2008 --a lame duck waiting for elections and a new setup, institutionally and politically,” said Antonio Missiroli, chief analyst at the European Policy Centre, a Brussels research group.

With the bloc forecasting an economic contraction of 1.9 percent this year, EU leaders last week refused to go beyond plans to pump more than 400 billion euros ($542 billion) into the economy, with all but 30 billion euros coming from member states.

‘Road to Hell’

Topolanek, set to host Obama in Prague next week, raised further questions about his management of EU affairs by yesterday accusing the new U.S. administration of deficit spending and protectionism that will put the U.S. on a “road to hell.”

The Czech parliamentary motion felled a government in charge of the EU for the first time since a 1996 handover in Italy. While the presidency has no additional votes on EU decision-making, it shapes the agenda and represents the bloc on the world stage.

A fight at last week’s EU summit over allocating 5 billion euros in infrastructure spending laid bare the fault lines in a system designed for a six-country club a half century ago, highlighting national governments’ powers and condemning the central EU authorities to a secondary role.

The answer, European leaders say, is the Lisbon Treaty -- the fourth constitutional revamp since 1991 as the EU seeks to boost its global profile, expand the 16-country region using the euro currency and complete the integration of eastern Europe.

Treaty Holdouts

Parliaments in 25 EU countries have endorsed the treaty, leaving the Czech Republic and Ireland as the only holdouts. The Czech lower house has backed the agreement, which can be killed by a single nation’s veto, setting up a decisive Senate vote.

Topolanek, 52, was demoted to a caretaker role by this week’s no-confidence vote, exposing his political weakness as he pleads with the Czech Senate to ratify the treaty.

“It will be a lot more difficult to convince people now,” Deputy Prime Minister Alexandr Vondra said yesterday. No date has been set for a Senate vote.

Czech President Vaclav Klaus, 67, a self-professed EU “dissident,” will pick a new prime minister or dissolve the parliament if efforts to form a government fail. Klaus said on Feb. 19 he was “not ready to answer” whether he will give his final approval to the treaty if it makes it through the Senate.

The political turmoil in the country of 10 million people, 2 percent of the EU’s population, illustrate how a bloc that operates on the basis of consensus is often hostage to domestic squabbles in national capitals.

Topolanek Speech

The defeat “won’t affect the presidency,” Topolanek told the EU Parliament in Strasbourg, France, yesterday.

Determined to do away with the hazards of the random rotation system, EU leaders opted in the new treaty to create the post of full-time president which would be immune to national political cycles.

Signed in Lisbon in December 2007, the treaty retained many of the innovations in a planned EU constitution that was vetoed by French and Dutch voters in 2005. It would strengthen the foreign-policy chief and give more power to the democratically elected EU Parliament.

European Commission President Jose Barroso yesterday voiced concern that the treaty may become “hostage of the domestic problems. This would not be fair to the other countries of Europe.”

Irish voters rejected the treaty by 53.4 percent to 46.6 percent last year, in the only popular vote in the bloc. Under pressure from the rest of the EU, Ireland planned a second referendum later this year.

‘More Complex’ Revote

The Czech snag upsets that timetable, making a revote “a bit more complex than we would have anticipated,” Irish Foreign Minister Micheal Martin said in an interview in Dublin yesterday. “Now we have to see how things evolve with the Czech presidency and who we will be negotiating with.”

Ireland vowed in December to hold a second vote, as long as it obtains guarantees that the EU wouldn’t interfere with tax rates, force Ireland to ease its restrictions on abortion or rope the Irish into EU military ventures.

Irish leaders aim to repeat the nation’s path at the start of the decade, when voters rejected the EU’s current treaty and reversed themselves a year later after winning assurances that the EU wouldn’t trample on Ireland’s neutrality.

To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net

Last Updated: March 26, 2009 10:53 EDT