Czech entrepreneur turned politician Andrej Babis. Demotix/Petr Studničný. All rights reserved.

The newly elected Chamber of Deputies of the Parliament of the Czech Republic sat down for its first session on Monday, November 25. Although a formal coalition deal has not yet been struck, three parties will probably govern the country together – the Social Democrats, the Christian Democrats and the political movement ANO ("Yes"), led by the second-richest man in the country Andrej Babis whom The Economist already labelled “Central Europe’s Berlusconi”.

Being the winner of the general elections, the Social Democrats (CSSD) should potentially have the strongest position in forming a new coalition government. However, despite aspiring to gain 30 percent of the overall vote, the party only took 21 percent, with Babis’s ANO closely behind with 19 percent of the vote. The result gave CSSD fifty seats – only three more than ANO’s forty-seven. Furthermore, the Social Democrat’s position was somewhat weakened due to internal party power struggles.

As was already obvious prior to the October elections, CSSD members were slowly beginning to split into two factions – those supporting party leader Bohuslav Sobotka and those aiming to strengthen the party’s ties with President Milos Zeman. The very evening of the election, as votes were being counted and it was becoming obvious that CSSD would not reach the desired 30 percent, first deputy chairman of CSSD Michal Hasek and four high-ranking party officials from the party visited President Zeman without the knowledge of party chief Sobotka. Allegedly, Hasek and his colleagues met with Zeman to arrange details of post-election coalition building and the formation of the new government – in their scheme, party chief Sobotka played no role. Probably the CSSD apparatus planned to vote down Sobotka as party leader so that Hasek might take over the party reins and become prime minister. Despite spurious media proclamations and strained attempts to keep the meeting secret, the information leaked out and the five “putschists” were eventually punished by being stripped of their party functions. Bohuslav Sobotka has withstood the attempt of a fraction of his party colleagues to bring him down - he is now poised to become the next prime minister.

Due to this power struggle episode, coalition negotiations were stalled for over two weeks after the elections. This was an opportune moment for ANO to straighten out its party programme and its political priorities. October’s early elections caught ANO not fully prepared to run in a race for parliamentary seats. The party (or movement) lacked any standard party structures and a coherent political programme. It was built more around well-known personalities than big political ideas and proclamations – and perhaps this was its key to success. Given the various shifts of opinion and political stances of the party and Babis himself, commentators, analysts and even the public seemed to have a hard time making out whether ANO is a centre-right or centre-left party.

The Christian Democrats (KDU-CSL), with 14 seats, are likely to complete the coalition government, which will henceforward have 111 seats in the lower house of the parliament. Despite being a small party (in terms of current mandates), the Christian Democrats may in the end cause more trouble for the Social Democratic party in its attempts to put together a coalition agreement. The former government of Petr Necas, which was forced to resign after a political scandal, passed a law of property restitution for churches. This law gives back land, properties and financial compensations to the churches, whose properties were nationalized by the Communist regime after 1948. The Social Democrats do not agree with the current version of the law and have claimed in their pre-election statements that the party will struggle to amend it. Clearly, the Christian Democrats stand behind the current approach to church restitution and so far claim that they will not negotiate about amending the law.

Another contentious issue for coalition negotiations will be the general approach to taxation. The Social Democratic party aims to sustain higher taxes in order to finance a comprehensive state welfare system. ANO, profiling itself as a party of hard-working, middle-class individualists favourable to “small business” (being headed by a representative of “big business”) will aim to maintain lower tax rates - especially for businesses. So far it seems that ANO and the Christian Democrats will be pulling the Social Democrats towards the centre of the political spectrum and thus in the outcome we are likely to see a generally centre-left government emerge from coalition negotiations.

A third issue, which at this point seems to be most pressing for Andrej Babis and his ANO, is the so-called lustration process. Lustration is a process through which the government examines the past of potential cabinet members to determine if they have been informants or members of the communist secret police – in which case they become blacklisted for office. President Zeman has explicitly stated that he will not name any minister without a proper lustration certificate. According to certain archives, Babis has indeed cooperated with the communist secret police. Although he strictly denies this allegation, if his cooperation with the secret police is proven true, he may find it a major obstacle to obtaining his requested position of Minister of Finance.

Why does Babis wish to be Minister of Finance? Right or wrong, the Berlusconi analogy brings the notion of “conflict of interest” to mind. Andrej Babis is the owner (and director) of Agrofert Holding – a conglomerate that operates companies in the agricultural, chemical and food processing sector. Babis is also making inroads into the media business – recently making the acquisition of one of the biggest Czech media groups (MAFRA) and planning to acquire popular radio stations. A closer contact with the state legislature can potentially carry many benefits in helping Agrofert expand its business. It is interesting to note that in its pre-election rhetoric ANO has often highlighted the importance of supporting Czech food products in Czech stores and limiting the import of low-quality foods from other countries. Although this is a generally positive strategy to support Czech business and bring products of higher quality to Czech supermarkets, the inherent protectionism in such a policy would undoubtedly benefit Babis’ industries.

The combination of Babis’ business and political force arguably makes him the most powerful man in the Czech Republic. But how will he use this “power”? Maybe he'll use it in a positive light – doing away with corruption and non-transparent government procurements or using his business skills to uplift the lagging Czech economy. But there is also the “Berlusconi way” of using this power – let’s hope that The Economist used the wrong analogy.