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Czech Republic Prime Minister Andrej Babis: Populist or crony capitalist?

Andrej Babiš, who was elected prime minister of the Czech Republic this fall and appointed to office on December 6, is at first glance an unlikely leader of a populist, anti-Establishment party. Babiš is a billionaire. He owns a large concern, Agrofert, which in turn owns many companies in various fields - including the publishing company Mafra, which owns two of the nation’s leading newspapers. After becoming minister of finance in the previous government, Babiš put Agrofert into a trust to try to avoid conflict of interest charges.

He stands accused of crony capitalism, manipulating the media, and illegal use of EU funds.

Babiš said he founded his political party, Action for Dissatisfied Citizens (ANO), in 2011 because he could no longer bear to see the Establishment ruining the country. His opponents claim he is using politics to advance his business interests. The party is run like a private company, with Babiš clearly at the helm. While this was (and is) controversial to some people, most simply accept it. Babiš does not consider himself a populist but calls himself a pragmatist, or an anti-Establishment, politician.

Where does he stand, and what should we expect of him in office?

Political manifesto of ANO

Generally speaking, most of the ANO’s party manifesto consists of platitudes that government should be more effective. Most Czechs voted for ANO because they trust Babiš, not because of his party manifesto. However, here is where he stands on major issues of importance.

The European Union

One Czech journalist has called Babiš an “euro-opportunist,” which is perhaps the most accurate label. On the one hand, his companies get massive subsidies from EU. (More about this later.) On the other, the EU is unpopular in the Czech Republic. The manifesto says that the EU should be reformed to be more effective, but provides no details. ANO is against accepting the euro as the national currency in the short term.

As for migration, he and the manifesto staunchly oppose quotas and call for common action only in helping war-torn countries.

Economy and energy

The manifesto talks at length about making it easier to start and run a business. ANO proposes reducing red tape, instituting a more effective bureaucracy, and creating a more stable tax regime. Government should run a balanced budget in the long term. ANO proposes to eliminate tax incentives on most manufacturing and wants to encourage businesses to set up more sophisticated factories. ANO also proposes to streamline the planning system in order to build roads and railways more quickly.

ANO sounds a populist and nativist note when it comes to natural resources, calling for bigger fees on resource extraction. It also calls for as many natural resources as possible to be extracted by state-owned companies. ANO supports expanding existing nuclear power plants and expanding renewable energy sources.

Political scandals

Notice: All of the following are allegations. Andrej Babiš has never been convicted of any crime. Babiš’ response to all the scandals tends to be similar: He claims to be a victim of manufactured scandals promoted by his political opponents. But the main scandals trailing him include:

EU subsidy fraud

Čapí hnízdo (or the “Stork Nest”) is an upscale holiday resort that Babiš built near Prague – with €2 million in EU subsidies meant for small and medium-size companies. Its construction and controversy over its ownership is the biggest problem Andrej Babiš is currently facing. He and several of his closest aides and family members have been charged with EU subsidy fraud, which is punishable by several years in prison. This criminal complaint is the number one reason other parties gave for refusing to enter coalition talks with ANO.

Secret recordings

Someone has recorded several, shall we say, sensitive conversations Babiš has had.

In one of the recordings Babiš can be heard saying: “Our people knelt down on that FAU Přerov … and so it has declared bankruptcy.” The company FAU Přerov was suspected by the Czech version of the IRS, the finanční správa (FS), of tax evasion. The FS has decided to use a restraining order against FAU – a controversial tool that freezes all of the targeted company's assets, effectively bankrupting the company in the process. His opponents claim that Babiš wanted some of FAU’s assets and used the FS to bankrupt it. Babiš denies any interference with FS. As the facts unfold, the phrase “to kneel down on” someone has entered the Czech Republic’s political vernacular.

Exerting influence on the media

There is a recording of Babiš talking with one of the journalists working for MF DNES, one of the newspapers owned by Agrfoert. Among other things, they discussed exactly when MF DNES should publish articles critical of ministers from other governmental parties. This case was particularly sensitive for Babiš, given that he has repeatedly promised that he will not exert any influence over the media he owns. In this case, Babiš has claimed that it was a set-up by the journalist and that he has not done anything wrong.

Informer for the communist secret police?

In the archives of the communist secret police, the StB, Andrej Babiš is listed as an informer with the code name Bureš. (That name remains one of the favourite insults used against Babiš by his opponents.) Babiš admits that he has talked to people – whom he says he hardly knew – about his co-workers, but denies knowingly cooperating with the StB. Some years ago, Babiš filed a lawsuit in Slovakia to erase his name from the list of StB collaborators. Babiš was successful three times (at the district, appellate, and supreme court level). But, shortly before the election, Slovakia's Constitutional Court reversed all those decisions and remanded the case to district court with instructions that will make the case lot more difficult for Babiš to win.

Conclusion

The aforementioned scandals have not convinced ANO voters to turn away from Babiš. Some believe Babiš that all of these allegations are fake. Others simply do not trust media and traditional political parties. And lastly, some of those who voted for ANO probably think that Babiš is a crook – but all other politicians are, too. And Babiš’ wealth makes some see him as less likely to engage in corruption.

Andrej Babiš has now been appointed prime minister of the Czech Republic and scheduled a vote of confidence for January 10. It remains to be seen to what ends he will use his office.

(Photo credit: Jiří Vítek. This photo has been cropped. CC BY-SA 4.0.)


Michal Hejl is a political and economic analyst at the Centre for Economic and Market Analyses (CETA) and works for the Institute of Social and Economic Research (ISER), a new independent political think tank based in Prague.