By Robert Mueller
CERVENA RECICE, Czech Republic (Reuters) - Wires hang out of the walls, windows are smashed and the grass grows tall in the gardens of the once-elegant archbishop's residence in Cervena Recice, a 16th-century chateau left to rot after the communists took over in 1948.
Bent on building a society free of religion, the communists seized the chateau, of the diocese of Prague, and thousands of other church properties and threw clergymen into labor camps and prisons or forced them into exile.
When Communist rule ended in 1989, the residence was caught up in a disagreement over who it belonged to, part of a bigger dispute that has tied up about six percent of the Czech Republic's total forests and fields that once belonged to mostly Christian churches.
Now the government plans to return $4 billion of property and pay $3 billion in financial compensation over 30 years - about 3.5 percent of the country's gross domestic product combined - to the churches, about four-fifths of it to the Catholic church.
The plan, which a clear majority of Czechs oppose, was approved by the lower house of parliament in an initial vote in February when the government was enjoying the strongest majority in 20 years. Although a political crisis in April has reduced that majority to a handful of votes, the bill is still expected to pass.
"What has been stolen, has to be returned, otherwise there is no meaningful democracy here," said Petr Gazdik, caucus leader of the coalition's conservative TOP 09 party, the main backer of the restitution plan.
Crucially for small- and mid-sized towns, where the TOP 09 party is strong, the deal could unlock 2,535 sq km of forests, land and buildings to development, rental or sale.
Cervena Recice, a sleepy town about 100 km (60 miles) southeast of the capital, was denied European Union development funds to build a bike route because the planned path crossed a narrow strip of land tied to the former archbishop's estate.
"We have development plans for housing and business activities on the church property. Our location is favorable and people are interested in the land here," said the city's mayor, Zdenka Beckova, in a phone conversation with Reuters.
Jan Boruvka, secretary general at the national Association of Realtors, said freeing up the land would be a huge boost for investment in the local economy.
"This will allow for managing property which has been mostly falling apart," he told Reuters. "It will allow investments without fear of losing the money."
Other former communist countries in the region resolved their issues with churches years ago. In Poland, for instance, the state returned property and paid compensation worth roughly 5 billion Polish zlotys ($1.58 billion) in total. In Slovakia the churches got back around 60 percent of their property, and the government still finances clergy salaries.
The Czech plan would not only give back the property but also gradually make churches independent from the government.
Under Communism, the clergy essentially became state employees, and the government still pays $70 million a year in clergy salaries. Under the restitution plan, that amount will fall gradually to zero over 17 years.
"I wish to see the Church independent, not financed by the state. That is impossible without the restitution," Gazdik said.
The churches are delighted with the plan, hoping the scheme will not only restore their fortunes but also reverse their declining role in Czech society.
"Keeping the present state... would lead (the church) further into insignificance," said religion sociologist Roman Vido from the Masaryk University in Brno.
Among the highly secular public, however, the scheme is deeply unpopular, not least because it comes at a time of economic stagnation, tax hikes and cuts in welfare.
Respected polling agency STEM found in December that seven out of 10 Czechs are against the plan.
Religion, history and politics all play a part.
Many former communist countries saw a resurgence in religious belief after the end of communism, but in the Czech Republic the surge waned fast.
In a 2010 Eurobarometer study, 37 percent of Czechs said "no" when asked whether they believed in God, the highest percentage in the European Union and up from 30 percent five years earlier. In neighboring Poland, that number is 5 percent, and in Slovakia 14 percent.
A 2011 census showed the number of Catholics shrank to 1.1 million from 2.74 million a decade earlier. The total number of Christians is estimated at about 11 percent of the 10.5 million population.
There is also historical resentment of the church's riches. The region has experienced religious turmoil for centuries, starting with calls by Hussite reformers for the Catholic church to be more modest as early as the 15th century.
Austrian emperor Joseph II closed many convents and monasteries in a modernization drive. Anti-Catholic feelings were at the base of nationalistic movements in the 19th century and at the foundations of independent Czechoslovakia in 1918.
Church leaders are pleased that restitution could open the way for them to boost activities like opening parochial schools, ramping up their modest media presence and assisting the poor.
"This matters a lot, because it opens the way for people to encounter the gospel," said Tomas Holub, secretary of the Czech Catholic Bishops' Conference.
Czech governments have wrestled with the issue for years. When the government fell halfway through the Czech EU Presidency in March 2009, one of the main reasons some coalition MPs defected was disagreement over an earlier restitution plan, which offered the churches twice as much compensation than now.
Writer and former anti-communist dissident Lenka Prochazkova feels so strongly about the issue that she filed a criminal complaint against the government in January, accusing it of attempted theft.
She has become one of the most vocal opponents of the deal, saying the churches never owned the property, only looked after it, so they should not get it back.
"What they call mending of the relationship with churches, means rather that the state is bending its back," Prochazkova said. She also wrote a letter of protest to the Pope.
The leftist opposition argues that the government should be more concerned about the economy. The country slipped back into a recession in the second half of 2011, and the cabinet has so far frozen almost 1 billion euros in spending this year.
"In the midst of a financial crisis, when the economy is slowing down and heading for stagnation, the government should prefer spending which strengthens employment and social cohesion," said Bohuslav Sobotka, chairman of Social Democrats.
The bill is expected to pass a second and third vote in the lower house in June. Although it is almost certain to face rejection in the opposition-dominated Senate, that can be overturned by the lower house, making final approval of the bill by the end of the year likely.
Supporters say although the vote will be tight, the government should seize the opportunity and unload a burden which has weighted on almost all its predecessors.
"The church restitutions have destabilized coalition governments since the 1990s," said Jan Outly, political analyst at the Hradec Kralove University. "Finishing this is important."
($1 = 18.7565 Czech crowns)
($1 = 3.1663 Polish zlotys)
(Editing by Jan Lopatka and Sonya Hepinstall)