The center-right government of Czech Prime Minister Mirek Topolanek lost a parliamentary vote of no confidence March 24. Czech President Vaclav Klaus can now either appoint a new prime minister, who would require parliamentary approval within 30 days, or call for early elections by dissolving parliament.

The collapse comes at an awkward time for the Czech Republic, given that it currently holds the rotating EU presidency.

This is Central Europe’s second change in government in two days. (Hungarian Prime Minister Ferenc Gyurcsany confirmed March 23 that he is resigning.) It comes as no surprise to STRATFOR; The Topolanek government was shaky from its very inception in June 2006. It held exactly 100 seats in the Czech Republic’s 200-seat lower house of parliament and faced multiple problems with coalition partners along the way.

The most recent clashes between Topolanek and his coalition partners and the opposition focused on the proposed U.S. ballistic missile defense (BMD) radar installation — in July 2008, 44 percent of Czechs opposed the installation, and only 35 percent supported it — and on economic measures to deal with the economic crisis. While Prague had managed to escape the worst of the financial crisis sweeping through its neighbors in Central Europe, its dependency on eurozone demand for its manufactured goods has severely hurt its industrial output, which fell 23.3 percent year-on-year in January (the fourth straight monthly decrease). Ultimately, it was Prague’s handling of the economic crisis that brought Topolanek and his government down.

Now the question is whether Klaus, who is by no means a fan of Topolanek’s government nor of the proposed U.S. BMD plan, will allow the current government to serve out the remainder of its term as EU president, which lasts until the end of June; propose a totally new caretaker government of technocrats to deal with the financial crisis until new elections are held in 2010; or call for new elections, which would have to be held within 60 days of the dissolution of parliament.

Klaus’ well-known skepticism of the European Union — he refused to fly the EU flag over Prague Castle during the Czech EU presidency, and has vociferously opposed the Lisbon Treaty — adds a further dimension to the imbroglio. This is because Klaus will now have the chance, even the responsibility, to become much more involved in the day-to-day running of Prague’s foreign policy — and ironically, the EU presidency. The situation could become downright embarrassing for the Czech Republic when U.S. President Barack Obama and the entire EU leadership descend upon Prague on April 5 after the NATO summit. Even simple protocol issues, such as who will greet the incoming EU and U.S. leadership at Ruzyne International Airport, will become uncomfortable, to say nothing of the decision of who will represent the Czech Republic at the meeting. (The choice is between the deposed prime minister and the Euroskeptic president.)

The most likely scenario being talked about in Prague is that Topolanek will be allowed to remain in power until the end of the EU presidency in an interim capacity. Main opposition leader Jiri Paroubek of the Social Democrats confirmed as much immediately after the no-confidence vote. This will mean, however, that a weak and distracted Topolanek, pressured by an emboldened Klaus at every turn, will receive even less attention from fellow EU leaders and Russia than he already had (which was not much). Meanwhile, French President Nicolas Sarkozy has been practically salivating at the chance to return Paris to diplomacy overdrive, at one point even suggesting that because of the financial crisis and negotiations with Russia, the French EU presidency should be extended at Prague’s expense.