Czech Prime Minister forced out by luxury flat scandal

Jiri Paroubek, a leftist, is poised to become the Czech Prime Minister, replacing Stanislav Gross, after a housing scandal tore apart his government less than a year after he took power.

Jiri Paroubek, a leftist, is poised to become the Czech Prime Minister, replacing Stanislav Gross, after a housing scandal tore apart his government less than a year after he took power.

Europe's youngest premier, at 35, stepped down as part of a deal reached last week that will allow his former three-party coalition government to reform under Mr Paroubek, the Regional Development Minister. Analysts said the decision would be welcomed by markets which had feared the crisis could drag on through the summer. But Mr Paroubek's leftist credentials have raised concerns over the pace and direction of economic reforms planned as the country aims to adopt the euro by the end of the decade.

Petr Fujcik, a spokesman for President Vaclav Klaus, told reporters that Mr Paroubek would be called to Prague Castle to be nominated as Mr Gross's replacement.

The former prime minister, a member of the leftist Social Democrats, has denied wrongdoing in the financing of a luxury Prague flat six years ago, but was forced out by the Christian Democrats, who left the government weeks ago and demanded his resignation as a condition of returning.

The deal means Mr Paroubek, also a Social Democrat, will form a government with the same coalition partners, the centrist Christian Democrats and the rightist Freedom Union, with 101 seats in the 200-seat lower house.

Mr Gross took over last August when Vladimir Spidla resigned after the government's poor showing in European parliamentary elections. He reformed the same coalition as Mr Spidla and wanted to hang on to power in part because his party refused to let a junior governing partner dictate the country's leader. With the economy in full stride, the Social Democrats wanted to stay in power to take credit for the success and turn around the party's fortunes after it plunged in the opinion polls.

The new government is seen mainly as a caretaker administration aimed at carrying through to a mid-2006 general election. But it will face tricky issues, especially ratification of the European constitution.