By Robert Muller
PRAGUE (Reuters) - Czech Social Democrat leader Bohuslav Sobotka took back control of talks to form a new government on Thursday, defeating a bid to oust him by party rebels unhappy over a poor election result.
The Social Democrats are the largest party in the new parliament and have a chance to build a coalition with two other groups, but their low share of last weekend's vote, at 20.5 percent, emboldened Sobotka's opponents.
The internal party squabble dented hopes the central European country of 10.5 million could quickly emerge from a political crisis that began with the fall of a center-right government in June amid bribery and spying allegations.
The party rebels led by Vice-Chairman Michal Hasek voted on Sunday to remove Sobotka from the team negotiating a new government and called on him to resign. The dissenters are close to President Milos Zeman who has the legal power to appoint prime ministers.
The normally soft-spoken Sobotka, 42, called the challenge a coup attempt and quickly rallied support from rank-and-file Social Democrats to force the rebels to back off.
"We have to quickly get back to full strength to be able to negotiate the formation of the next government," Sobotka, a former finance minister, said after a nine-member party leadership team gave him a new mandate for the talks.
"We have the key responsibility as the winning party."
He said a wider gathering of the party's central executive committee on November 10 should endorse his continued leadership.
After that date, Sobotka said official coalition talks with the anti-graft ANO movement of billionaire businessman Andrej Babis - which came from nowhere to win second place in the election - and the centrist Christian Democrats should start.
Both parties said on Thursday they might enter a coalition with the Social Democrats, or support their minority cabinet.
The three parties could agree on laws improving transparency of public tenders and property, addressing the anger at widespread corruption that propelled ANO into parliament. But ANO opposes any tax hikes, which will complicate the talks.
The Czech crown has largely shrugged off the election result and the Social Democrats' rift, but stocks have gained ground as the center-left party is unlikely now to be able to push through plans to raise taxes on banks and utilities.
SOBOTKA'S WIN IS PRESIDENT'S LOSS
The defeat of the rebels is a momentary loss for Zeman, who led the Social Democrats in 1993-2001 and still has a big influence in the party, represented by the Hasek wing.
Zeman's dislike for Sobotka stems from the party leader's efforts in 2003 to block an attempt by Zeman to become president. He has hinted he would prefer Hasek as prime minister.
Zeman has made clear since being elected president in January he would use his presidential powers to their limits.
In July, he defied the will of all parties and appointed a caretaker government of his allies, which remains in office despite losing a vote of confidence in August.
Zeman made no comment on the latest developments.
The Social Democrat rebels were weakened by the revelation that they had secretly met Zeman after the election results last Saturday and before the call for Sobotka's departure on Sunday.
Facing accusations from party officials that his actions amounted to back-stabbing, Hasek abandoned the rebellion on Thursday and said he might quit his party post.
"This is my error and I will reflect that when I decide on my message for the party's executive committee," he told reporters after declaring he would back Sobotka. "I do not insist on my position as first vice-chairman."
(Writing by Jan Lopatka; Editing by Andrew Roche)