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FILE PHOTO - The leader of ANO party Andrej Babis speaks to the media at Prague Castle after a meeting with President Milos Zeman in Prague, Czech Republic November 28, 2017. REUTERS/David W Cerny(reuters_tickers)
PRAGUE (Reuters) - Czech parties launched talks on Tuesday on a law making it easier to call national referendums, presenting a tricky balancing act for the ruling ANO party as it seeks support for a new government while preventing an unthinkable Czexit vote.
Since Britain voted in 2016 to exit the European Union, European officials have been determined to avoid more anti-EU votes elsewhere, including the Czech Republic, one of the bloc's most eurosceptic countries according to polls.
Governments in Prague have been largely cool to deeper EU integration and the bloc's migration policies, although membership has not yet come into question.
But with ANO, the party of billionaire businessman Andrej Babis, struggling to win backing to form a government despite being the runaway winner in an election last October, the issue of referendum rules has gained steam, pushed by anti-EU parties signalling a willingness to support an ANO government.
Most other parties have so far shunned Babis due to pending police allegations that he illegally hid ownership of a farm and convention centre a decade ago to get a 2 million euro (£1.7 million) subsidy involving EU funds. Babis denies wrongdoing.
ANO has given backing to the referendum initiative but does not want it to cover foreign policy issues like EU membership.
"We maintain our position that the subject of a referendum should not be exiting the EU," ANO Senator Helena Valkova said after talks.
ANO is meeting the far-right, anti-EU SPD party, the far-left Communists, and the protest Pirates party on the referendum legislation, which would need three-fifths support in the lower house and backing in the Senate that is not certain.
Talks will continue next week and face questions over what turnout would be needed to validate a referendum and how many signatures are needed to initiate a vote.
SPD leader Tomio Okamura, who has pushed referendum legislation, said the question of EU membership was an obstacle in talks but there was a willingness to move forward.
President Milos Zeman, who has courted stronger ties with Russia and China, has also backed referendum legislation and holding a vote on EU membership, but says he would vote to stay in the bloc.
While ANO took a tough line against Brussels before the election, Babis - the country's second richest person whose firms have also benefited from EU development funds - has praised the EU's role as guarantor of a peaceful Europe and calls himself a pro-European politician.
ANO won 78 of 200 seats in the house in the last election, more than three times as many as its nearest challenger, with the rest of the seats divided among eight other groups.
Mainstream parties reject a government led by Babis while he faces police allegations. His party has held talks about getting support for a single-party government from the SPD and Communists. Some ANO members are against relying on the SPD for government support.
ANO also wants talks with its former ruling partners the Social Democrats but is waiting until new leadership of the party is elected at a convention later this month.
(Reporting by Jason Hovet and Jan Lopatka; Editing by Peter Graff)