Cautious Optimism in the Czech Republic: Serenity after Scandal?

Report By: David Shuldiner. 

David Shuldiner is a senior at the University of Pennsylvania studying Philosophy, Politics and Economics. David is an intern at FPRI’s Project on Democratic Transitions.

Introduction

The Czech Republic experienced a year of political uncertainty in 2013 that continued into early 2014. This followed a difficult 2012 that saw a return to recession (-1% GDP growth for the year[1]).  Despite these economic and political setbacks, Freedom House continues to rank the Czech Republic among the most secure and consolidated democracies in the CEEE region.  

Early 2013 marked the Czech Republic’s first direct presidential election that culminated with Milos Zeman, formerly prime minister (1998-2002) and at one time leader of the leftist Social Democrats, winning in a runoff election over Karel Schwarzenberg, a former Minister of Foreign Affairs (2010-2013) long associated with former President and Velvet Revolution leader Vaclav Havel.

Scandal and Political Maneuvering

In June of 2013 a corruption scandal erupted in the Czech Republic after an unprecedented police raid on government offices, villas, and businesses, led to Prime Minister Petr Nečas’ resignation on June 17 and the Czech government’s descent into political turmoil.

Nečas’ resignation came on the heels of serious charges against his cabinet, including his former chief-of-staff Jana Nagyova, who is accused of abusing her power to spy on Nečas’ then-wife and bribing lawmakers who opposed Nečas to resign by offering lucrative positions in state-owned companies.  After his resignation, confirming rumors of an illicit relationship between the two, Nečas divorced his wife and married Nagyova.  Seven other close aides and government officials were indicted on similar charges as Nagyova and subsequently removed from office.  Ironically, the anti-corruption police unit that conducted the raids had been formed as a result of a 2010 election campaign promise by Nečas, dubbed “Mr. Clean,” to weed out political corruption.[2]

Further controversy erupted when President Zeman appointed his own former economic advisor and finance minister, Jiri Rusnok, to the prime minister position after Nečas’ resignation.   Zeman openly defied political precedent and the ruling parliamentary coalition by refusing to appoint Miroslava Nemcova, the parliamentary speaker and ranking coalition member, to the position.

Zeman’s appointment of Mr. Rusnok was widely viewed as a power grab.  In the aftermath of his victory in the presidential election, many of Zeman’s opponents feared that he would use the cover of what he called his electoral mandate[3] as the first directly elected president in Czech history to attempt to strengthen the institutional role of the president and his own power.  Zeman’s appointment of his own former advisor to the prime minister position in defiance of the parliamentary majority corroborates this view.  

Less than two months after his appointment by Zeman in June of 2013, Rusnok lost a parliamentary vote of confidence in August and offered to resign.  As a result of Rusnok’s failure to gain the confidence of parliament, the leading ODS-TOP 09 coalition joined the opposition in calling for early elections.  Shortly after, the parliament voted to dissolve itself in order to trigger new elections in October 2013.  Until a new government could be elected and sworn in, Zeman instructed Rusnok and his cabinet to stay on in a caretaker capacity.

October parliamentary elections

The parliamentary elections of October 2013 produced a shake-up of the existing political order, with the previously coalition leading Civic Democrats winning only 16 seats, down from 53 in 2010.  Many of those lost seats went to ANO, the newly formed pro-business political party led by Slovak billionaire Andrej Babiš, which garnered 47 seats.  Zeman’s former party, the left-leaning Social Democrats, won the most seats with 50.^[1]  Despite having won more seats than any other party, the party fell far short of earlier expectations and did not come anywhere close to the 101 seats necessary to form a majority government. Meanwhile, the Communist Party gained 7 seats and the Christian Democratic Party re-entered parliament with 14 seats.  

Deepening Political Uncertainty into 2014

The relatively disappointing show at the polls for the Social Democrats was followed by turbulence within the party.  Immediately after the election, several powerful members of the Social Democratic Party called for the resignation of party leader Bohuslav Sobotka.  These individuals included Sobotka’s intraparty rival Michal Hašek, the Social Democrats’ deputy chairman, who was quoted as saying that, “If I was the Social Democrat leader and the party got 20.5 percent in elections, I would resign from my post.”^[2]   Hašek, working with his old party ally Zeman, attempted to force Sobotka’s resignation from the party, and even went so far as to publically remove his official capacity to negotiate with other parties.  These actions, and the obvious collusion between Hašek and Zeman provoked a rebellion among Social Democratic Party members, and in the ensuing struggle Sobotka managed to retain and reinforce his position as party leader within the Social Democratic Party and Hašek was forced to apologize.  Sobotka quickly initiated talks with ANO and the Christian Democrats, and won them over as potential coalition partners, cementing his place at the head of the Social Democratic party and the new coalition.  In January of 2014 Sobotka was selected to serve as Prime Minister in the new government.

Examples of Zeman’s efforts to extend his presidential powers outside the historical purview of the office are not limited to his attempt to defy the parliamentary majority in appointing a prime minister and his co-orchestration of a party coup attempt.  Shortly after the election, President Zeman stated that he would take the unusual step of requiring “lustration certificates,” or proof of having not been a secret service collaborator or Communist Party functionary, of all prospective ministerial appointments.  Demanding lustration certificates for ministry appointments is not required under the law and was widely perceived as an attack on ANO leader Andrej Babiš, whose inclusion in the Slovak National Memory Institute’s list of former StB agents, a designation that Babiš is fighting in court, has prevented him from obtaining the certificate.

Noteworthy alongside the turmoil facing the Social Democrats is the surprising resurgence of the Communist party.  Active but marginalized since the Velvet Revolution of 1989, the Czech Communist Party is the only communist party in Central Europe to retain the party name and remain ideologically unreformed since Soviet times.[3]  Winning 26 seats in 2010 and 33 seats in 2013, the Communist party has continued to gain ground politically as the more dominant post-1989 parties have faltered.  The historical exclusion of the Communists from coalition governments may soon come to an end, however,  as current Prime Minister Sobotka stated in 2012 that his party would consider a coalition with the Communist party in a future government.

Structure of the Ruling Coalition

Since January 6^th, a new center-left coalition of the Social Democrats, ANO, and the Christian Democrats has controlled a majority in parliament.  The official policy platform of the coalition, which was not announced until mid-February, promises to support the business and labor markets, continue the fight against corruption in the government, and bring the country back into the European mainstream. 

Despite Zeman’s political orchestration attempts, rivals both within and outside of the party have largely marginalized him. Zeman agreed to appoint Sobotka Prime Minister and Babiš both Deputy Prime Minister and Minister of Finance in the new government in early 2014, moves which confirm the parliament as the locus of power in the Czech Republic.

On February 18^th, nearly nine months after the resignation of Nečas, the new government received a vote of confidence from the parliament, ostensibly putting an end to the period of political instability which had plagued the country.

Economic Growth and a Shift in Orientation

Deputy Foreign Minister Petr Drulák described recent Czech governments as having a “‘No, but” orientation, in other words rejecting most European initiatives while often supporting some elements of their policies. Drulák states that the new centrist government led by Sobotka, “would like to do the opposite, to say ‘yes, but’,” adopting a more European-friendly orientation while still upholding positions important to the nation. Whether this represents a real shift in direction and not merely a change in rhetoric remains to be seen. Substantive change seems likely, however, as Sobotka has announced that the country will support the EU’s fiscal pact limiting government spending, something previous euro-sceptic governments and former two-term president Václav Klaus refused to do.[4]  The credibility of the new government’s desire to return to the European mainstream was further bolstered when Lubomír Zaorálek, the Minister of Foreign Affairs, was one of the first EU ministers to support EU sanctions against the late Ukrainian government for alleged human rights violations in the early 2014 political protests and later among the most vociferous in calling for sanctioning Russia for troop movements into Ukraine.

In spite of the political corruption scandal that brought down Nečas and his center-right political coalition, and the regular interference into parliamentary politics by President Zeman, the Czech Republic is poised for stronger growth. GDP growth of 1.8% is expected in 2014[5], in what would be the largest expansion of the Czech economy since 2011.  The substantial increase in growth in 2014 is fueled largely by a positive outlook for the Czech export sector, a major driver of the economy, as the Czech Central Bank continues to reaffirm its commitment to keep the koruna competitive against the euro and other regional economies continue to recover from the financial crisis,[6] increasing aggregate demand.

Conclusion

Despite years of recession and lackluster growth since 2008, and nearly eight months of political turmoil exacerbated by a president with autocratic tendencies, the Czech Republic remains a highly consolidated democracy.  With a government coalition that appears stable, an economy forecast to enjoy positive economic growth, and a substantive move to return to the European mainstream, democracy in the Czech Republic appears safe from the autocratic backsliding that has recently characterized certain other post-communist countries, such as Hungary, Romania and Bulgaria and, until the deposition of Yanukovich, Ukraine.