Prospect of a new Czech government recedes as Ano-CSSD talks collapse

Prospect of a new Czech government recedes as Ano-CSSD talks collapse
Ano leader Andrej Babis' role in a potential new government and the question of who will control the finance and interior ministries were at the core of the failure of Ano and the CSSD to strike a deal.
By bne IntelliNews April 6, 2018

Talks between Ano and the Czech Social Democratic Party (CSSD) on the formation of a new government collapsed late on April 5 as the two parties failed to strike a deal over how ministries would be shared out. 

Ano leader and the Czech Republic’s caretaker prime minister, Andrej Babis, had planned to create a government with the CSSD and the silent support of the Communists (KSCM). After the collapse of the talks with the CSSD, early elections might be one of the possibilities how to get out of the crisis. 

Appointed to head a minority government in late 2017, Babis then lost a confidence vote in January with most parties refusing to back him while he is under investigation for EU subsidy fraud. Although political instability is not, for now, negatively affecting the markets since the economic boom in Czechia is stable, Czechs are becoming weary of the political goings-on, with the risk of further polarisation of society and the neglect of the question of serious reforms. 

Until recently, everything looked promising with Ano and the CSSD getting closer with their policy statements, and the Social Democrats looking set to make a decision on whether to govern alongside Ano at their party’s national congress on April 7. “I see no policy disagreements that cannot be overcome,” said Ano’s vice chair Richard Brabec on April 5, after negotiations with the CSSD. In recent talks, the two parties had agreed on lowering VAT on water and sewage and basic foodstuffs.

But by the evening, everything had turned upside down. CSSD leader Jan Hamacek announced the two parties had clashed over the presence of Babis — who is being criminally prosecuted over fraudulent EU funding claims by his Capi hnizdo (Stork’s Nest) farm and conference centre — in the new government, as well as which party would take the interior and finance ministries. 

Together with his second in command Jiri Zimola, Hamacek stated that the talks are dead. “There was an opportunity to have a stable government, which could start working for this country. Ano rejected this chance,” said Hamacek.

Hamacek and Zimola had two main problems in trying to strike a deal with Ano. Some of their party members didn’t want to be connected with Ano, or more accurately its populist leader Babis, finding the fraud allegations hard to stomach. 

Hamacek had proposed a compromise in the form of a government without the chairman of either party, but this was rejected by Ano. The CSSD’s alternative proposal, for it to take five cabinet seats including at least one connected to the investigation – either the interior ministry or the finance ministry — was also turned down, with Ano instead offering the justice portfolio, work and labour, agriculture, foreign affairs and culture.

CSSD leaders are also understood to have feared that, as in the previous coalition government, Ano would take all the credit for any successes. Their previous collaboration saw Ano’s poll numbers hiked, while CSSD's popularity plummeted. 

But at the core of the disagreements seems to be Babis, the Stork’s Nest case and his role in the new government. Although the policy agendas of CSSD and Ano did start coinciding, the two parties’ basic values and fundamental trust could not. One crucial aspect was confirmed by the latest development: Ano is Babis and Babis is Ano. Babis is the one holding the power and party members follow his decisions. Indeed there were reports in Czech media this week that none of Babis' ministers is allowed to take anything like a significant decision without deferring to him first.

Babis himself claimed not to fathom why the CSSD insisted on keeping him out of government or taking over either the finance or the interior ministry. “Our movement showed great flexibility and tolerance. We approached the negotiation with an offer of three cabinet posts. We were also forthcoming in the points of programmes,” he said. 

Two dates are now crucial. On Saturday, April 7, the CSSD holds its congress. And on April 10, Babis wants to discuss the issue with the Ano parliamentary political group. Babis will also request a meeting with President Milos Zeman, who is visiting Slovakia until April 6.

There are a number of possible outcomes. One is that one or other of the parties will back down; Ano could offer the interior ministry to the CSSD, or the CSSD could come back to the negotiating table. This is, however, very unlikely.

The second possibility is the rather more likely option of an early election. The Communists have already stated that they are ready for this step. Babis, still with good popularity ratings, may also come down in favour of this option.

However, Zeman has declared that he won’t allow it. The Chamber of Deputies can also ask for an early election, but it’s not clear whether there would be enough support. Polls show modestly increasing support for the CSSD and the Communists, and steadily improving results for the Civic Democrats (ODS) and the Pirates. But other parties, including the neo-nazi Freedom and Direct Democracy (SPD) and the democratic parties around the political centre would lose significantly.

The third possibility is that Ano will form an indirect coalition with the SPD and the Commumists. 

The SPD is clearly keen on this option; the party welcomed the collapse of the negotiations with the CSSD and said it would be happy to govern. “The breakdown of negotiations is because the CSSD is negotiating mainly a gravy train for [top CSSD figures [Lubomír] Zaoralek, [Milan] Chovanec, Hamacek and [Kateřina] Valachova. This behaviour doesn’t protect the interests of the Czech people but protects the interests of spoilsmen and mafia inside CSSD. It is up to Ano to choose negotiations over a positive programme, i.e. return to negotiations with the SPD,” stated SPD chairman Tomio Okamura.

But having two extreme and anti-systemic parties, albeit indirectly, in the government, would raise many eyebrows in Europe, where Babis is trying to prove his liberal credentials. Even indirect reliance on the SPD would also be impossible for many within Ano to accept. 

The fourth, and maybe the most probable option, is that Ano will govern without a majority in parliament for as long as possible and Zeman - a Kremlin-friendly president who has shown sympathy with the SPD by even speaking at their last congress - will try to do everything in his power, including bending the constitution, to allow this.

The next developments are not easy to predict, but the mirage of a stable and responsible government in Czechia has once more disappeared into hot air.