On June 23 hundreds of thousands of Czechs assembled at one of the iconic places in Prague, Letná plain, to demonstrate against the country’s Prime Minister, Andrej Babiš, and recent personnel changes in his cabinet. With more than 250,000 participants, this was the largest political protest since the Velvet Revolution in 1989. The demonstrators demanded the resignation of both Babiš and Justice Minister Marie Benešová.

This event marked yet another episode in a wider struggle between the defenders of liberal democracy and their populist foes in central and eastern Europe. Readers are most likely aware of developments in Hungary, where the battle for liberal democracy has apparently been lost, and in Poland, where skirmishes continue. But the progressive escalation in the Czech Republic deserves their attention too.

The Extremist Back Door into Government

As I wrote two years ago in Inroads, Prime Minister Babiš is a billionaire of Slovak origin whose Berlusconi-style political party ANO, founded in 2011, won the last Czech legislative election in 2017.1 Babiš owns a large conglomerate, Agrofert, which has extensive agricultural, chemical and energy interests and controls a large share of the Czech media market after having acquired leading newspapers and the most popular radio station.

In the aftermath of the 2017 election, Babiš struggled to build a parliamentary majority. Populist as he was, he did not want to openly collaborate with the two extremist parties in the Czech Chamber of Deputies – the far-right SPD and the Communist KSČM – as that would tarnish his image in western Europe, where many of his businesses operate. But the mainstream parties refused to enter a coalition with ANO given Babiš’s controversial reputation, his previous record of conflict of interest in office as Finance Minister (2013–17) and, in particular, charges he was facing for fraudulent use of European Union subsidies and tax evasion.

In January 2018 Babiš’s position significantly improved when pro-Russian President Miloš Zeman was reelected. Both for electoral purposes (to mobilize Babiš’s supporters) and strategic ones (to get leverage over Babiš), Zeman had promised to give Babiš enough time to form a cabinet. This strategy was predicated on Zeman’s securing a second presidential term, which is what happened.

In June 2018, after protracted negotiations, the Social Democratic Party (ČSSD) agreed to form a minority coalition with ANO (93 of the 200 lower-house seats), tacitly supported by the Communist KSČM (which holds 15 seats). This de facto revived the ruling coalition from the previous legislature, which at that time commanded a majority. This coalition had proved poisonous for the Social Democrats. Back then, ANO capitalized on positive coverage in Babiš’s media and was able to successfully claim credit for strong economic growth and the ČSSD-ANO coalition’s generous welfare policies. While ANO’s vote share sharply increased (from 18.7 per cent in 2013 to 29.6 per cent in 2017), the ČSSD suffered an electoral debacle (falling from 20.5 per cent in 2013 to 7.3 per cent in 2017). Should this trend continue – and there are signs of further decline in the ČSSD’s support – this mainstream left-wing party could possibly fall short of the threshold for representation in the Chamber of Deputies in the next election, a first in the history of the independent Czech Republic. The beneficiary would likely be the populist ANO and possibly even the two extremist parties.

But for those committed to the principles of liberal democracy, the current situation is bad enough. The new role of the KSČM means that, for the first time since 1989, an unreformed Communist party has indirectly gained access to executive power. Moreover, the far-right SPD has become de facto another ally of the governing ANO as, according to some analyses, the SPD deputies have voted with the ANO more often than its coalition partner ČSSD.2 Thanks to their role in supporting the cabinet (or just ANO), the two extremist parties, notorious critics of Western institutions and the European Union, secured senior positions in parliamentary committees and state control bodies, and exercise undue influence over policy. One example is January 2019 legislation, initiated by the KSČM, that taxes the compensation paid to Czech churches for property that was stolen by the Communist dictatorship before 1989.

No wonder then that many Czechs are worried that their country will follow the Hungarian and Polish path toward taming the media. The shadow coalition of ANO, SPD and KSČM may gradually take over the commissions that oversee public television and radio stations through successive appointments by the Chamber of Deputies. So far, public television and radio have provided high-quality independent journalism in a media landscape increasingly dismembered by Czech oligarchs. Recent controversial appointments to the oversight commissions give substance to fears for the future of independent journalism, along with the lack of restraint exercised by Babiš’s own media group and criticism of the public broadcasters by the leadership of the SPD and KSČM.

Babiš’s Scandals and the Attack on the Rule of Law

The criminal charges Babiš faces pose a profound democratic challenge. They inevitably lead to conflicts of interest that could undermine the independence of the justice system and the integrity of the country’s rule of law. This is why so many people came to demonstrate in June.

The catalyst came from revelations about Babiš’s Stork’s Nest resort in southern Bohemia. To receive European Union subsidies for small and medium-sized enterprises, in 2007 Babiš transferred the ownership of the future Stork’s Nest’s site from his conglomerate Agrofert to his children and wife. When the subsidies were exhausted and the resort completed, Babiš reincorporated the Stork’s Nest into Agrofert in 2014.

The public first learned about the case from the media in 2015 and the police began to investigate Babiš, his family and his partners for damaging the financial interests of the European Union, which could result in a prison sentence of up to 10 years. The European Union’s Anti-Fraud Office (OLAF) also investigated the case and, in late 2017, concluded that several national and European laws had been broken. Lacking judicial powers, OLAF sent its conclusions to the Czech authorities carrying on their own investigation. In November 2018, independent journalists broadcast a recording suggesting that Andrej Babiš may have had his son “kidnapped” and taken to Russian-occupied Crimea to avoid his being interrogated by the Czech police over the Stork’s Nest. The broadcast led to small-scale civil society demonstrations and an unsuccessful no-confidence motion in the Chamber of Deputies.

An impetus for renewed protests came in April 2019 when the police finally referred the investigation to the public prosecutor and recommended that the Prime Minister be charged with fraud. The next day, the Minister of Justice, Jan Kněžínek (an independent appointed by ANO) resigned for allegedly unrelated personal reasons. Babiš immediately replaced him with Marie Benešová, an old and controversial ally of President Zeman, a move that raised doubts about the way the Stork’s Nest case would be handled as well as fears for the independence of the judicial system. These developments triggered weekly demonstrations in Prague and, to a lesser extent, other cities across the country.

These protests intensified when the European Commission issued a preliminary report accusing Babiš, in a separate case from the Stork’s Nest, of violating conflict of interest rules. The new charge implied that the Czech Republic would have to reimburse all subsidies Babiš’s companies had received and that Babiš could face yet another criminal investigation. This gave rise to the huge June 23 protest in Prague, but given his power base, the Prime Minister easily survived a parliamentary vote of confidence initiated by the centre-right opposition.

After a summer political hiatus, the supervising public prosecutor, Jaroslav Šaroch, decided in early September to halt the investigation and not refer the Stork’s Nest case to court, abruptly ending four years of intensive police work and ignoring OLAF’s recommendation. Šaroch’s unexpected decision, which looks curious both to legal experts and to the general public, has thus further contributed to fears about the independence of the judiciary, as have the Minister of Justice’s recent plans for a reform of the system of state prosecution. For their part, Babiš, ANO, the ČSSD and most in the illiberal camp have already voiced relief that the case was over. Civil society organizations have scheduled new massive protests in November, in preparation for the verdict by the Supreme Public Prosecutor, who has three months to review the decision of the supervising public prosecutor.

Whatever the outcome of the Stork’s Nest affair, it is increasingly clear that Babiš’s dominant role in Czech politics constitutes a possible threat to the country’s democratic institutions and the rule of law. An economic conflict of interest – Babiš influencing public decisions in favour of his businesses – has gradually given way to a judicial one, where Babiš sits at the apex of the system charged with investigating his alleged wrongdoing. Not only can he replace the Justice Minister, but he could also dismiss the Supreme Public Prosecutor through a vote of his cabinet. It is already clear that he was able to head off any police investigation into the alleged kidnapping of his son and, at least temporarily, into tax evasion accusations related to the Stork’s Nest case.3

The Illiberal Triangle

In their efforts to weaken liberal democratic institutions, the populist ANO and extremist SPD and KSČM can count on the support of President Zeman, forming an illiberal triangle that operates in mutually beneficial symbiosis. Zeman’s illiberal stance and pro-Russian and pro-Chinese foreign policy orientation make him a natural ideological ally of the two extremist parties, which he increasingly openly supports and thus legitimizes. The reciprocal backing of these parties not only helped Zeman’s reelection but also means that Zeman cannot be held responsible for his maverick behaviour as President. When a liberal democratic majority in the Senate (the upper chamber) voted in June to bring charges before the Constitutional Court against the President for violating the constitution, the KSČM and SPD’s votes helped bury this initiative in the Chamber of Deputies.

As another side of the triangle, Zeman can also count on Babiš’s nearly unconditional support. A case in point is the Prime Minister’s refusal to file a constitutional complaint when Zeman clearly went beyond his legal authority and refused to appoint a new Minister of Culture from the ČSSD. Similarly, when Zeman erratically criticized Kosovo’s independence on his recent visit to Serbia, the Prime Minister, acting against the country’s long-term foreign policy, said that his cabinet would consider whether the Czech Republic should revoke its recognition of Kosovo. In return, the Czech President insinuated not only that he would back Babiš as Prime Minister no matter what but also, shockingly, that he would give him a presidential pardon should the Supreme Public Prosecutor reverse the decision in the Stork’s Nest case.

Note that the illiberal triangle is something of an alliance of circumstance. President Zeman, the far-right SPD and the far-left KSČM, from what we know, dream of withdrawing the country from the European Union and NATO and bringing it back into the Russian (or, perhaps, now the Chinese) orbit. With his business interests firmly in the European Union, Babiš is wary of following the others’ foreign policy orientations. Where all three sides of the triangle line up, though, is their desire to weaken key institutions of Czech liberal democracy, in particular the justice system and independent public sector media, which stand in the way of their aspirations. As noted, Babiš’s new Justice Minister’s actions suggest an effort to eliminate the first of these obstacles. As for the second obstacle, Zeman recently talked about stripping the public sector media of their financial independence by scrapping the broadcast receiving licence, which is currently paid by all Czech media consumers.

Such illiberal developments are likely to spark a new wave of massive protests, which could potentially deter Babiš, who remains eager to cultivate a good image in the West. However, he may choose instead to follow the example of Hungary’s Viktor Orbán. A dose of illiberal reforms may cause relatively little tangible damage in Czech-EU relations in areas that matter to him while strengthening his political position at home. The 250,000 who demonstrated on June 23 were mostly liberal voters, who represent a minority in the country. At this point, the favourable economic conjuncture, generous (and, according to critics, irresponsible) redistributive policies and anti-immigration positions keep ANO well above 30 per cent in the polls despite all of Babiš’s scandals.

In the months to come, the crucial question will be the attitude of Babiš’s supporters. If the liberal camp is able to present a positive vision (not solely based on opposition to the incumbent’s populism), some could be won over, especially if Babiš’s pending cases are properly handled by the European institutions as well as the national police and public prosecutors.

Finally, an economic recession, which is considered imminent by some forecasters, would also hurt Babiš. But this could have the perverse effect of playing into the hands of the extreme parties, which would then be in a position to capitalize on any illiberal reforms. Indeed, some fear the emergence of a new far-right party, Trikolóra, around Václav Klaus, Jr., the son of the former populist president. This party has already received backing from pro-Russian disinformation media. Clearly, while this battle over liberal democracy remains largely hidden from international public view, it is gathering momentum, and the stakes are high.

Continue reading “The Czech Republic’s Crisis of Liberal Democracy Escalates”

On October 20 and 21, Czech voters headed to the polls to choose the members of the Chamber of Deputies, the lower house of parliament. This ninth lower-house election since the fall of Communism in 1989 confirmed some of the gloomy forecasts for liberal democracy. The Czech Republic is another country in Central and Eastern Europe (CEE) that has succumbed to populist appeals. Yet it’s not quite as clearcut as in some other CEE countries, giving us some grounds for optimism.

Over the past four years, the country was ruled by a coalition of three parties. A classic social democratic party (ČSSD) held the majority of cabinet seats including the prime minister’s office. Its partners were the centrist Christian Democrats (KDU-CSL) and Action of Dissatisfied Citizens (ANO), a new Berlusconi-style business party founded in 2011 by the second-richest Czech, Slovak-born Andrej Babiš.1 Running on a populist and anticorruption platform, ANO unexpectedly came second in the 2013 legislative election.

Between 2013 and 2017, the ruling coalition benefited from an extremely favourable economic conjuncture, which allowed it to fulfil many of its election pledges and, in 2016, to end the year with a budgetary surplus, the first since 1995. The GDP growth rate was among the highest in the European Union and unemployment reached a record low. Yet, in the 2017 legislative election (table 1), the leading Social Democrats were decimated: their vote share declined by 13 percentage points and they lost 35 seats in the 200-member Chamber of Deputies. The Christian Democrats also lost ground (one percentage point and four seats). In contrast, ANO clearly won the election, with an increase in vote share of 11 percentage points and 31 seats more than in 2013. At the same time, several new parties, including the far-right SPD, achieved respectable results. In all, parties that had not been in the lower house prior to 2013 won 65 per cent of the seats in 2017.

What can explain this paradoxical outcome in times of economic prosperity, and what are its implications for Czech democracy and European politics?

Causes of the electoral earthquake

A number of factors contributed to the failure of the Social Democrats, including a relatively weak and contested leader in Bohuslav Sobotka. Perhaps the most important factor, however, was that ANO claimed responsibility for all of the government’s achievements. Its leader, who owns a giant conglomerate consisting of hundreds of companies, boasted about applying his business skills in his position as Minister of Finance.2 The good performance of the economy lent credibility to Babiš’s populist claims that the state should be run as a business enterprise and that the traditional “corrupt” political parties only “blather” instead of working for their voters’ well-being.

This claim, and ANO’s electoral performance more generally, was significantly strengthened by Babiš’s media group, which he acquired after he had entered politics and includes the main Czech dailies and most popular radio station. In the 2017 election campaign, these media did little to conceal their pro-ANO bias.

The current economic and international contexts also played an important role in the outcome. Strong economic growth, rapidly rising wages and redistributive social policies enacted by the incumbent coalition shifted the nature of the main conflict from the economic sphere to the cultural one.

At the same time, the refugee crisis in conjunction with Islamic terrorism in Western Europe increased the salience of cultural issues. The combination of refugee quotas adopted at the European level in 2015, despite opposition from the Czech government,3 and graphic pictures of terrorist attacks in large Western cities that received considerable play in the media gave many Czechs the impression that European institutions were imposing on ethnically homogenous Czech society a multicultural model that does not work well in the West. Perceptions of the European Union (EU) quickly deteriorated. Eurobarometers (regular EU public opinion polls) revealed that while in May 2015, 37 per cent of Czech respondents had a positive image of the EU and 20 per cent had a negative image (the rest were neutral), by November of the same year only 27 per cent had a positive image and 31 per cent had a negative image.4

This was fertile ground for nativist and Eurosceptic populists. The competition among several xenophobic groups to capture the issue was won by the SPD (Freedom and Direct Democracy), a typical populist radical party built around an opportunist leader of Czech-Japanese origin, Tomio Okamura. Several mainstream parties, and especially the ČSSD, tried to preempt the SPD’s rise by adopting its antirefugee and authoritarian rhetoric. This strategy backfired and contributed to the mainstream parties’ defeat. As the notorious founding father of the European far right, Jean-Marie Le Pen, once put it, “Voters prefer the original to the copy.”

Finally, the low salience of economic questions also gave prominence to issues such as corruption and direct democracy. This again harmed the established parties with a long record of political scandals and benefited the political newcomers, especially the Pirate Party, whose manifesto emphasizing civil liberties, transparency and direct democracy attracted many young and urban voters.

Why the Czech Republic is unlikely to become the next Poland or Hungary

Although a number of commentators have drawn parallels between the Czech election result and recent developments in Hungary and Poland, there are important differences. ANO, the election winner and likely the leading party in the next government, is not a conservative or nationalistic party. Nor is there the same degree of ideological polarization in the Czech Republic as in Poland or Hungary. Babiš is essentially a businessman or, as some commentators aptly noted, a Berlusconi without bunga bunga. He is chiefly interested in expanding his business empire and, generally, adopts relatively centrist and moderate positions.

A Polish- or Hungarian-style reform of democratic institutions to the detriment of the opposition is not Babiš’s primary goal and is, in any case, virtually impossible in the short term. A potential coalition of ANO with the two most extreme parliamentary parties, the far-right SPD and the communist KSČM, would fall five seats short of the constitutionally required majority (120 seats) in the Chamber of Deputies. Furthermore, any constitutional reform would have to be accepted by the Senate, an upper chamber that is dominated by more traditional and culturally liberal democratic parties. Its electoral system – one third of its members elected every two years, in single-member constituencies by majority vote with a runoff – makes it impossible for ANO to control the Senate any time soon.

In terms of foreign policy and the struggle between the West and Russia over influence in CEE,5 the election did mark a setback for distinctively pro-Western and pro-European forces (in particular TOP 09 and ČSSD). However, the group of increasingly vocal hard-line Eurosceptics also decreased in size (from 47 to 37 seats).6

As regards ANO, its pragmatic attitude toward European integration occasionally leads to opportunistic criticisms of European institutions and policies, specifically EU sanctions against Russia. We can thus expect the incoming cabinet to show more openness to Russia and China.7 Yet unless the international context radically changes, Babiš, whose priority is economic stability and whose companies are major recipients of EU subsidies, has no interest in seriously questioning the country’s EU membership or fundamentally altering its pro-Western political orientation – far less than his Hungarian or Polish counterparts.

The democratic risk associated with ANO’s victory is, at least for now, more subtle. Babiš is clearly in a conflict of interest.8 There are signs that he uses his political clout not only to enrich himself – according to Forbes magazine, his fortune doubled between 2013 and 2017 – but also to force out competing businesses. While in control of the ministry of finance, he was able to do so perfectly legally.

However, Babiš now faces charges for fraudulent use of EU subsidies and tax evasion.9 Moreover, there is evidence that, unsurprisingly, he uses his media empire to discredit his opponents.10 If Babiš (or a member of his party) becomes the next prime minister, he will be under even less constraint. Furthermore, the tycoon’s appetite for political power combined with the growing effectiveness of his party’s political marketing team is worrisome. He was thus able to rise politically despite his troubled Communist past, suspect circumstances in which he acquired his businesses and the abundant evidence of current wrongdoing.11

Of course, the future of Czech politics will depend a lot on the outcome of postelection coalition negotiations. At the time of writing (end of October), no moderate political party is yet willing to govern with ANO and Babiš is publicly contemplating the possibility of a minority government. This could harm ANO’s capacity to push through legislation but, at the same time, would allow Babiš to blame the moderate parties for a dysfunctional government.

The direction of Czech politics will also be affected by the next presidential election, to be held in January 2018. Oddsmakers are betting that current President Miloš Zeman, a populist and pro-Russian Eurosceptic sympathetic to Babiš, will be reelected. This would benefit ANO and, probably, draw the party closer to the extremist forces in the Chamber of Deputies. In contrast, the victory of a pro-Western candidate, which is not impossible, would place an additional constraint on the tycoon’s political ambitions – as would a slowdown in economic growth. The 2017 election result was a triumph for populism, but Czech democracy and pluralism are not dead yet.

Continue reading “A Muted Triumph for Czech Populism”