Czech PM resigns after home loan scandal and waning support

The Czech prime minister, Stanislav Gross, offered to resign at the weekend following a damaging corruption scandal over the financing of his luxury apartment.

Mr Gross, who at 35 is Europe's youngest prime minister, announced on Saturday that he was stepping down to make way for a new coalition government. So far he has not specified when he will quit.

His resignation follows months of political crisis in the Czech Republic, prompted by a scandal over how Mr Gross managed to buy a luxury family apartment in Prague.

The scandal broke in January when a Czech newspaper pointed out that the flat, bought in 1999 for the equivalent of £97,000, had cost more than Mr Gross had earned in his entire life. He initially claimed he paid for it using his salary, savings and a mortgage. Later, however, the Social Democrat prime minister conceded that his uncle had lent him a £28,000 deposit.

It then emerged that the uncle had mysteriously borrowed the money from a former journalist. Mr Gross has denied wrongdoing and has apologised for how he handled the crisis. But he has been struggling to hold his government together ever since.

Last week he narrowly survived a no-confidence vote. But in the past week five ministers have resigned from his cabinet, while his two coalition partners have demanded that he steps down.

Announcing his decision to leave, Mr Gross nominated his Social Democrat colleague Jan Kohout, the Czech ambassador to Brussels, to replace him. "This concept could be a way out of the current stalemate," Mr Gross said on Saturday.

Yet it was not clear last night whether the choice would be acceptable to the Christian Democrats, who walked out of his three-party coalition on March 31.

If no agreement is reached, Mr Gross may continue in power at the head of a minority government, but only with the controversial support of the communist party, KCSM.

Before his resignation announcement, Mr Gross, who studied law at university and early in his career worked as a driver and electrical engineer for the railways, had also been battered by allegations concerning his second wife, Sarka, whom he met when she was a waitress in the parliament canteen. She is accused of receiving a loan from a woman allegedly linked to insurance fraud.

Yesterday Mr Kohout said that talks with the Christian Democrats and the other coalition partner, the Freedom Union, on forming a new government, should start in the next few days. The country's Eurosceptic president, Václav Klaus, has given his support to the plan.

Under the Czech constitution, President Klaus has to accept any resignation and appoint a new prime minister.

Mr Kohout, meanwhile, said that if selected he would make seeking approval for the EU constitution a priority.

It is not yet clear whether the document will be ratified by the Czech parliament or put to a referendum. EU leaders signed the draft constitution in October in Rome after more than two years of acrimonious debate between governments of the 25 member states. The European parliament overwhelmingly approved it in January, but all EU member countries must ratify it before it comes into force.

The next election is due in mid 2006. Calling an early ballot is difficult under the Czech constitution.