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Czech leader Babis defies inquiry, protests and EU audit

Czech leader Babis defies inquiry, protests and EU audit
FILE PHOTO: Czech Republic's Prime Minister Andrej Babis reacts as he arrives for the European Union leaders summit in Brussels, Belgium, June 20, 2019. REUTERS/Yves Herman/File Photo -
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Yves Herman(Reuters)
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By Jan Lopatka

PRAGUE (Reuters) – Czech Prime Minister Andrej Babis has dug in to resist a criminal investigation, a slap from European auditors and possibly the biggest protests in three decades of democracy.

He seems safe for now – but pressure could grow soon.

Police proposed in April that Babis, a 64-year-old billionaire businessman and founder of populist ANO party, should be formally charged for fraud in tapping a European Union subsidy a decade ago. He denies any wrongdoing.

The appointment of a new justice minister just after the police announcement prompted rallies by demonstrators suspicious that he was trying to influence proceedings.

On Sunday, protest organisers – a group with no political affiliation, started by a theology student – expect 250,000 to converge at Letna park in view of the Prague Castle presidential office.

That would be the biggest protest since a pro-democracy gathering at the same spot in the 1989 “Velvet Revolution” against communism.

Another hit to Babis came from leaked preliminary results of an audit by the European Commission, which determined he is in conflict of interest as the beneficiary of trust funds where he had transferred his business valued at $3.7 billion by Forbes.

The group, which employs some 35,000 people in farming, chemicals, food and media, is among leading Czech recipients of EU subsidies – which include project financing awarded by various government bodies.

Babis disputes the audit and says no subsidies need to be returned. In a June 10 interview with MF Dnes daily, he said he had not given a “a picosecond’s thought” to resigning.

ANO slipped in a June 9 opinion poll by Kantar agency, but is still by far the most popular party with 27.5%, 10 points ahead of the opposition Pirate Party.

The ruling party is aided by record-low unemployment, years of economic and wage growth as well as generous pension hikes, and Babis’s image of an able, hard-working manager.

His political marketing, which experts say is far better than rivals, and the fractured opposition’s inability to propose a viable alternative, also give Babis breathing space.

“Unlike the previous politicians he can at least steer the country … when there is someone better, people will be able to tell,” said farmer Josef Roub, 68, from Dobrickov, south-east of Prague.

ANO rules in a minority coalition with the centre-left Social Democrats, who have been uneasy about the partnership.

A vote of no-confidence called by the opposition for next week can only succeed if the Social Democrats or the Communists, who back the coalition in parliament, switch sides.

TROUBLEBREWING?

The Social Democrats won under 5% in the May European election, failing to win any seats. A party source said their survival instinct suggested staying in government.

One reason why the Social Democrats are hesitant to quit is that their departure may not topple Babis – as he could turn to the far-right, anti-European Freedom and Direct Democracy (SPD) party as an alternative backer willing to keep ANO in power.

If Babis rides out the protest and the no-confidence vote, a period of calm is likely throughout the summer holidays.

But the end of the year could bring him more trouble.

The country celebrates the 30th anniversary of the end of communist rule in November, when large protests are expected.

A state attorney will decide within months whether Babis must stand trial in the subsidy investigation.

He has said he would not quit even if charged, but it could again dent ANO’s popularity.

The EU audit is expected to be finalised late this year.

If it confirms Babis is in conflict of interest, and companies in the trust funds lose access to EU funding, he may be forced to react.

Babis could step aside and form a cabinet with a loyalist prime minister, while holding the strings from behind – similar to Poland where ruling PiS party leader Jaroslaw Kaczynski stays out of government.

Possible replacements would be Finance Minister Alena Schillerova, Industry and Trade Minister Karel Havlicek, or Environment Minister Richard Brabec.

Such a government could be backed by the same parties, or Babis could turn to the far-right SPD.

“At this point he has good chance to survive all this. What happens in half a year or a year is an open question. A cumulation of these factors can lead to him resigning,” said Lubomir Kopecek, political science professor at the Masaryk University.

“Which does not mean the coalition will not continue. That is in my view quite a probable alternative.”

An early election is unlikely as it would require three failed attempts to form a cabinet or 120 votes which are hard to be found in the 200-seat lower house.

The next vote is due in the autumn of 2021.

(Reporting by Jan Lopatka; Additional reporting by Robert Muller; Editing by Andrew Cawthorne)

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