CONTENT PREVIEW
Country Risk

Despite Communists' influence, new Czech government likely to maintain fiscally prudent, pro-EU and pro-NATO policies

28 June 2018
Prime Minister Andrej Babiš (left) pictured here with President Milos Zeman on 13 December 2017 in Prague. Source: MICHAL CIZEK/AFP/Getty Images

Key Points

  • Despite relying on KSCM support, the coalition will maintain fiscally prudent and pro-Western policy.
  • Instead of deviating from its preferred policy approach, ANO would probably opt for an early election in which its parliamentary presence would increase.
  • Government stability and longevity will depend on the level of KSCM’s and Zeman’s interference in coalition policies.

Event

Eight months after the October 2017 parliamentary election, Czech President Miloš Zeman on 27 June appointed a new government. For the first time since the collapse of the Communist regime in then-Czechoslovakia, the ultra-left Communist Party of Bohemia and Moravia (Komunistická strana Čech a Moravy: KSCM) will have an influence on central government policies.

Led by the centrist ANO 2011 (ANO) of Prime Minister Andrej Babiš, the government will rule in a minority coalition with the left-leaning Czech Social Democratic Party (Česká Strana Sociálně Demokratická: CSSD); together they control 93 out of 200 parliament seats. The coalition agreement envisages support from 15 MPs from the opposition KSCM, which agreed to leave parliament at least during the initial vote of confidence, offering the ANO/CSSD coalition a slim majority.

Historic opportunity for KSCM

So far, KSCM’s demands in exchange for its support have been relatively modest, and include a rise in the minimum wage and spending on healthcare and housing, and limits on ownership of natural resources by foreign investors. However, the party will most probably try to use its first influence on government policies to advance its anti-EU and anti-NATO agenda. Babiš is likely to offer some concessions to the Communists; his ANO has already agreed to impose tax on Church restitutions, as demanded by KSCM. Nonetheless, Babiš, who is pro-Western, has made it repeatedly clear that he would not allow significant deviations from his major policy goals.

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