Eurasia Press & News
If 2021 was a test of the Czech Republic’s resilience to populism in a time of pandemic, this year will offer all parties on both sides of the divide a chance to gather their forces.
Sandwiched between last October’s parliamentary election and a presidential vote due to take place in January 2023, the coming year is set to test the strength and durability of the Czech political mainstream’s commitment to fight populist forces.
Having united to defeat Andrej Babis and his ANO party at the ballot box last year, the new centrist governing coalition – dubbed the “Democratic Bloc” – led by Prime Minister Petr Fiala must quickly get up to speed to deal with COVID-19. Urgent economic and foreign policy challenges are also on the agenda.
The hope is that these pressures will help the five somewhat diverse coalition parties stick together, for the first year at least. But for now, having finally taken office on December 17, they have the chance to press home their advantage, having wielded their eight-seat parliamentary majority to help defeat President Milos Zeman’s bid to complicate the route to government.
But as it seeks to build on these victories and roll out its centre-right agenda, the new government must keep in mind the 20 per cent or so of the electorate that voted for populist parties that failed to even make it into parliament.
The left-wing economic agendas advanced by these parties are anathema to most in the coalition, but failure to respond to the needs of the less privileged sections of society would only boost the populist cause ahead of a vital presidential vote in January 2023.
Mandatory vaccines: to be or not to be
Having finally got his hands on the levers of power after weeks of presidentially-manufactured delay, Fiala and his cabinet take over stewardship of Czechia’s coronavirus response with much to prove.
In late 2021, the country suffered some of the world’s highest infection rates. Yet while electoral timelines offered Babis and erstwhile ally Zeman the freedom to deviate from the populist line to call for mandatory vaccination, the new government has gone the other way.
Ahead of its appointment, Fiala’s government announced that it intends to immediately cancel its predecessor’s plan to impose mandatory vaccination on health workers, police and senior citizens.
It claims that there is more that can be done to persuade the 40 per cent or so of still-unvaccinated Czechs to take a jab. However, as Ziga Faktor at the Europeum think tank points out, “the big question is how – we’ve heard no details yet.”
Others worry that’s just the tip of the iceberg. Although the parties in the coalition were full of ideas while in opposition and slamming Babis’s erratic management of the pandemic, they now seem less enthusiastic to explain how they plan to quell the spread of the virus and protect the health system.
“There are deep structural problems: vaccination and hospital capacities, as well as economic problems, rising aggression in society, and the appetite of doctors and nurses to handle the crisis,” says Pavel Havlicek of the Association of International Affairs. “It’s a toxic combination.”
Babis redux
Although the parties in the new government often berated Babis for an overly politically-led response to the pandemic, the boot is now on the other foot. It seems likely that their hands-off policy is at least partly a nod towards the next face-off between the mainstream and populism.
Assuming his health doesn’t force him to step down early, Zeman’s second and final term will end in March 2023. A presidential election is therefore due in January next year.
Babis looks almost certain to throw his hat into the ring. And although not as cunning as Zeman, the billionaire could seek to replicate the chaos that his ally has manufactured over the past eight years.
The challenge for the governing alliance, then, is to repeat its trick from last year when it united as the Democratic Bloc to defeat him. It will be no small task: Babis’s political experience, economic clout and high profile would make him a serious contender.
The five-party coalition, meanwhile, is likely to struggle to agree on a common candidate, at least for the first round of the election. While Fiala has suggested that his Spolu election coalition – featuring the Civic Democratic Party (ODS), Christian Democrats and TOP 09 – could maintain cooperation for the Senate elections late in 2022, there’s been no mention of the presidential vote, nor of continuing to work with the centrist Pirate Party and STAN election coalition.
Petr Pavel, former chairman of the NATO Military Committee, has long been in the frame as a potential candidate that could win backing from across the political spectrum, but analysts worry that he lacks political knowhow. “In this post-factual age, they need someone experienced in political debate. Babis is very skilled in that,” Faktor points out.
Many liberals remain enamoured with President Zuzana Caputova in next-door Slovakia. That has helped promote support for another academic, Danuse Nerudova, who has spoken of her admiration for the Slovak head of state, to be given the chance to become Czechia’s first female president.
But Nerudova would be unlikely to find favour among the new government’s more conservative factions, while she’s also largely unknown around the country.
That’s a fundamental issue, because presidential elections are won and lost in the provinces. Hence, if the anti-populists are to rally behind a candidate, then they need to get on with it, says Otto Eibl, head of Masaryk University’s Department of Political Science.
“Any candidate will have to start working almost immediately to get into people’s hearts and minds,” Eibl says. “Babis is universally known, which gives him a clear advantage.”
Czech EU presidency looms
Yet January 2023 is not the only urgent presidential issue facing the Democratic Bloc. Despite time being short, it will be desperate to put on a decent show when in July Czechia takes over from France the presidency of the Council of the European Union.
The country has never quite lived down the disaster of its last turn in the chair when, during its six-month tenure in 2009, the government collapsed. The episode left an impression in Brussels that Prague is not a serious player, and the approach of successive governments since has done little to improve this image.
Babis was openly dismissive of the coming honour, and even reportedly labelled it as little more than an expensive exercise in “blathering with sandwiches”. Hence, the project starts 2022 disorganised and badly underfunded.
“The risks are quite clear,” says Havlicek, worrying that, given the tight deadline, issues over financing, capacity and strategy will blight the effort.
Yet the new government has made much of its intention to rehabilitate Czechia’s image in Brussels by engaging much more fully in the bloc.
That sounds remarkably similar to the words that Babis used when he took power in 2017, and Fiala et al will need to dedicate the full governmental term if they are to overturn Czechia’s poor image among EU partners. But the presidency offers the opportunity, say analysts, to make some early headway.
“However, I wouldn’t overestimate the potential effects,” says Eibl. “The presidency won’t improve the perception of the EU here in the Czech Republic.”
The short deadline means that the priorities of Czechia’s presidency will remain largely those designated by Babis. That list is topped by the EU’s Eastern Partnership program as well as the accession process for Western Balkan states. Further liberalisation of the single market is another earmarked topic, which is unsurprising for an export-driven economy in an era of increased protectionism and tightened borders.
A fine line for the economy
Like Czech politics, industry is also set to gather its forces this year as the economy recovers from the extreme shocks produced by the pandemic.
The disruption of supply chains, the spike in energy prices and associated inflation are all weighing on economic growth as the year opens. The saving grace is the strength of the labour market, which despite the spiralling prices, is a shield for much of the population.
The path towards recovery should become smoother in the second half of the year, suggests Michal Brozka, senior economist at Komercni banka, “assuming there are no significant pandemic restrictions that will impact the economy.”
“That’s the major risk,” he adds, “and no one can really know what will happen.”
Regardless of the challenges, Fiala arrived in office with firm intent to implement his party’s traditional belt tightening. Backed by his coalition partners, he plans to start slashing the huge budget deficit that has developed over the past two years, due both to the exceptional demands of the pandemic and Babis’s determination to capture the support of left-wing voters with raised pensions, wages and benefits.
One of the new government’s first policy moves will be to reduce the planned 2022 deficit of 377 billion koruna (around 15 billion euros) to a nice round 300 billion. Even in the shadow of the fourth wave’s uncertainties, Brozka says this shouldn’t threaten the economic recovery.
“Fiscal policy remains highly supportive, even though the impact of the pandemic has faded, and will remain so for some time,” he asserts. “300 billion koruna is still a significant deficit. The consolidation will remain relatively small this year. The talks will be complex, these things take time.”
Alessandro Cugnesca at the Economist Intelligence Unit also expects a year of recovery, suggesting GDP growth will accelerate to around 4 per cent from 3 per cent in 2021. However, while Fiala’s conservative fiscal policy is unlikely to upset the economic recovery, he worries that the rapid tightening of monetary policy might.
“The Czech National Bank, which is one of the most hawkish central banks in the CEE region, has started an aggressive tightening cycle even though part of the current inflationary pressures that we see are driven by external cost factors, which are not susceptible to monetary policy,” he points out. “A rapid increase in interest rates could lead to an excessive tightening of financing conditions in 2022, derailing the economic recovery.”
All of which suggests the new government could find itself walking a fine line when it comes to the poorest in Czech society. And apart from the obvious need to reduce poverty, there’s a strong political need to support that part of the population.
While the Democratic Bloc may have defeated Babis, the election result illustrated that populism and nationalism are still alive and well in Czechia. All told, just under 50 per cent of the vote went to populist and extremist parties.
The new government suggests that, despite its goal of slashing spending, it understands its responsibilities towards those sections of society that tend to be attracted by populist economic agendas. However, it has yet to detail any policy moves that would make that concern concrete.
