Jan. 26 (Bloomberg) -- Czechs voted today in a presidential runoff with the leading candidate opposing the government’s economic program as the minority administration extends its austerity measures amid a recession.
Former Prime Minister Milos Zeman was favored in opinion polls over Karel Schwarzenberg, the millionaire prince and foreign minister who’s promoting closer ties with the European Union after a decade under Vaclav Klaus, a critic of the bloc and the euro. Two days of voting ended at 2 p.m. in Prague and results were expected within hours.
As the eastern EU member of 10.5 million struggles to exit its second recession since 2009, government deficit cuts were the campaign’s focus. Zeman criticized his opponent for backing increases in sales taxes and an overhaul of the pension system.
“There’s a bit of a ’Sarkozy-Hollande’ feel to the Czech presidential contest, with Mr. Zeman positioning himself as the anti-austerity candidate at a time of economic malaise,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in an e-mail. “But unlike the French presidency, the Czech head of state’s powers are much more circumscribed given the role’s largely ceremonial character.”
Voters will elect the ex-communist EU member’s third president since the country gained independence 20 years ago. Klaus, an economist who as premier oversaw the transition from a centrally-planned to market economy two decades ago, replaced the late Vaclav Havel in 2003 and is forbidden by law to seek the post again.
The government credits its austerity measures with helping to cut borrowing costs. Yields on five-year koruna notes fell 172 basis points, or 1.72 percentage points, in 2012, touching a record-low 0.66 percent on Dec. 27. The five-year rate stood at 0.87 percent yesterday, according to generic rates compiled by Bloomberg.
The president, who until now had been elected by lawmakers, selects the leader who attempts to form a government after elections and influences monetary policy by holding the sole right to name central bank board members. The position’s powers haven’t changed under the new voting system.
Zeman, 68, and Klaus were rivals in the 1990s, heading the two largest political parties. Zeman, an economist who worked as a forecaster in the academy of science after the fall of communism in 1989, won the premier’s office in 1998 when his Social Democrats formed a minority government that ruled in an agreement with the opposition Civic Democrats, then led by Klaus.
His economic program for the presidential race included calls for more state investment and restoring progressive taxation for higher earners. He has opposed Premier Petr Necas’s pension overhaul, a program designed to boost private retirement savings that was among reasons cited by Standard & Poor’s when it lifted the rating on the country’s debt two steps to AA-, its fourth-highest investment grade, in 2011.
Zeman said he would name central bankers who support economic growth and not strive only to meet the inflation and currency-stability goals mandated by law.
The run-off vote comes as a recession and corruption fuel support for the political heirs of Havel’s Communist-era jailers, who endorsed Zeman. Schwarzenberg, a former Havel aide, wants to bolster U.S. and EU ties and advocates human rights across the globe.
He supported members of Russian punk band Pussy Riot last summer when they were convicted for a stunt against President Vladimir Putin and said Necas’s view that backing the group may hurt Czech exports to Russia was “shocking.”
Schwarzenberg, whose estate includes castles and forests in the Czech Republic and Austria, defied the polls to finish a surprise second in the first round. Campaign images created by artist David Cerny, portraying the prince in a mohawk hairstyle fashioned after the U.K. punk band and screaming “Karel is Not Dead,” appealed to voters generations younger than the candidate.
While the largest Czech betting companies initially made the prince the favorite, the odds reversed this week. Zeman also led in the only opinion poll published between the two election rounds, 54 percent to 46 percent for Schwarzenberg. The survey by Ppm Factum Research company was taken among a representative sample of 1,061 Czechs and published Jan. 18.
Schwarzenberg sparked a wave of fresh publicity yesterday by failing to follow the required procedure while voting. He cast his ballot without placing it first inside the obligatory envelope, invalidating his own vote, the public Czech Television channel reported, citing spokesman Marek Prazak.
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