Executive Summary

Controversial PM fans political tensions
The October 2017 parliamentary elections were the culmination of the meteoric rise of billionaire-turned-politician Andrej Babiš, who emerged victorious with almost 30% of the vote. However, accusations against him of fraud for misuse of EU funds and of conflict of interest for retaining effective control over his business and media interests have polarized political life and made it difficult for him to form a coalition government. In December 2017, he presented a minority ANO government including some non-party experts, but failed to win a parliamentary vote of confidence. On July 12, 2018 a minority coalition government of ANO and Social Democrats was backed by the Communists to ensure it passed a vote of confidence. Babiš was backed and helped by Miloš Zeman, who narrowly won re-election as president in January 2018. However, the precariousness of the government’s public support was demonstrated again in October 2018 in municipal and Senate elections in which the coalition parties lost ground, leaving a majority of Senate seats in the hands of their opponents. There was a significant change in municipal elections in Prague where the ANO administration was defeated by the Pirate Party and independents.
Policy continuity, but personalized politics
In terms of its stated policies, the coalition has continued with the previous Social-Democrat-dominated Sobotka government’s agenda with a focus on lowering the fiscal deficit, raising public sector salaries, increasing pensions and accelerating the drawing of EU funds. The Babiš government gives an appearance of efficiency because of the prime minister’s control over much of the media, unashamedly used to promote his image and to denigrate opponents, and because of his personal control over his party and ministers. There are signs that the economy is starting to falter and that a budget deficit is on the horizon. Time will tell whether Prime Minister Babiš, who faces constant controversy and threats of prosecution over his past and present business activities, will be able to lead a successful government.
Strong economy boosted
by EU funds; social exclusion remains
serious issue
EU structural funds, which may not be extended beyond 2020, are behind much of public investment. The past increase in R&D investment led to the creation of new capacities without a clear concept of how their use would be financed, and the R&D conducted has yet to yield results in terms of innovation and technological advance. A small increase in R&D spending, which has yet to return levels to where they were in 2015, has been due to the activities of foreign multinational companies on which the Czech economy remains heavily dependent. The economy has continued to grow, and unemployment is at a historical low, far below the level of job vacancies. However, the country continues to struggle with problems associated with social exclusion as nearly one-tenth of the adult population faces personal bankruptcy driven by the inability to keep up debt repayments. And while the number of migrant workers increased significantly without causing much concern, Czech society remains opposed to the integration of refugees.
Carving out an
active EU role
Internationally, Babiš seeks to present his government and himself as a reliable partner, taking a more pro-active role in bilateral and EU negotiations. Babiš pursues policy-based multipolar strategies that are aligned with Germany and France on fiscal policy, and with Italian Prime Minister Conte on migration policy. Czechia continues to accept some refugees under the Dublin II agreement, but cites security concerns as a reason for not meeting the relocation quota and calls for fairer EU refugee policy to help Italy.
Buštíková, L., P. Guasti, P. (2018): The State as a Firm: Understanding the Autocratic Roots of Technocratic Populism, in: East European Politics and Societies 33(2): 302-330.

Guasti, P. (2018). Swerving toward deconsolidation? in: A. Lorenz, H. Formánková (Hrsg.), Das politische System Tschechiens. Wiesbaden: Springer VS, 39-62.
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