The Czech Constitutional Court has upheld President Havel's challenge to a controversial new election law, ruling that two articles of the law violated the principle of free competition among political parties. The court said that the law, supported by the two largest political parties, unconstitutionally doubled the state subsidy per representative to CZK 1 million and was biased in favor of larger parties in the Lower House. The court also overruled an article of the law according to which a party would not be eligible for continued state support if, after one full term of receiving that support, it failed to pass the 5% parliamentary threshold. According to the law parties merit financial support from the state after crossing the 3% threshold. The ruling is a blow to the ruling Social Democrats and their opposition allies in the Civic Democratic Party, who joined forces to push the legislation through Parliament and later over-ride the President's veto.
Czech police arrested the country's top soccer boss Frantisek Chvalovsky on Tuesday and charged him with credit fraud. Police suspect Chvalovsky, who heads the Czech-Moravian Football Association, of a CZK 640 million (USD 17 million) fraud connected with debts of a company he leads. Chvalovsky was detained at the Prague airport as the Czech national team was leaving for a friendly match against Macedonia.
The Czech koruna lost ground Tuesday afternoon as the euro strengthened against the dollar. The koruna stayed at around 34.58/61 for most of the day, but in the afternoon hours, in reaction to greater dollar weakness against the euro, it weakened to 34.62/63. Late on Tuesday the koruna was trading at 34.64/65 to the euro from the morning's 34.56/60 and from 34.58/63 late Monday. Koruna/dollar up at 37.69/72 from 37.81/84 in the morning and from 37.97/99 late Monday.
The longest state 6.95/16 bond rose 65 basis points from late Monday to 105.10/40, yielding 6.41/38 percent. The state 6.75/05 up 30 points at 103.95/25, yielding 5.61/52 percent.