Shadow of the oligarch over the Czech Republic

Parliamentary elections in the Czech Republic, last October 20-21, ended with the victory of the populists, who pushed to the sidelines the traditional parties who ruled the country for a quarter of a century.

As expected, took first place founded by billionaire Andrew Babish party Action of dissatisfied citizens – ANO. She scored 29.6% of votes received 78 out of 200 seats in the lower house of Parliament and will play a crucial role in the formation of a ruling coalition. Under the question remains, will head the government himself Babish, whose fortune Forbes this year estimated at 4.1 billion dollars, or the Prime Minister will be one of his companions.

However, the mere control of the government by the oligarch, who is accused of fraud with EU structural funds and questionable relations with the officers of the security services of Communist Czechoslovakia could become a test for the Czech Republic. The country for many years is a model of democracy in the Visegrad group, but now the government may create additional risks for the European Union and Ukraine, considering that the money for the Babish are of greater importance than values.

Oligarch “beyond suspicion”

63-year-old Andrew Babish until recently was the owner of the Agrofert conglomerate is the third largest company after the Czech Republic Škoda Auto and energy companies of the ČEZ Group. At the same time from 2014 to 2017 he was Minister of Finance of the Czech Republic, which then led to numerous accusations of using his official position to lobby for the interests of their companies. At the beginning of 2017 was adopted by the so-called “Law of Babish” on conflict of interests, with the result that the oligarch had to transfer control of Agrofert trust funds, and in fact, his family and closest staff.

Agrofert is the 250 companies that operate in several EU countries and China, in areas such as agriculture – from growing seeds to poultry farms, chemical industry, manufacture of agricultural machinery, woodworking. In addition, the conglomerate includes some of the most influential Newspapers Lidové noviny and Mladá fronta Dnes, the number of radio stations.

Although the Babish is often called a self-made man, to the origin of his wealth there are a lot of questions. Babish, a native of Bratislava, the son of a senior Czech diplomat. He received a good education, studied in Paris and Switzerland, perfect knowledge of the French language, has avoided military service. Since 1978 he worked in the Czechoslovak trading company Petrimex, and later represented the interests of the Slovak chemical companies in Morocco, where they purchased phosphates.

After the Velvet revolution in 1991 Babish went back to Czechoslovakia, in 1993 after the collapse of the country created from the Prague office Petrimex company Agrofert, and in 1995 took control over it with the help of a mysterious Swiss company F. O. I. It happened by blurring Petrimex shares of a subsidiary using additional shares. As later claimed the businessman control over the company was obtained at the expense of the money received from the Swiss classmates. “It was my Swiss classmates and friends since I studied in Switzerland,” he said in 2016. Petrimex fired Babish and unsuccessfully sued for the return of control of Agrofert. The transition to Babish control over the company and then became the subject of many journalistic investigations.

The true story of the control of Agrofert is hidden in the darkness (photo – EPA)

In addition, the Babish accused of having ties with the state security Service in Communist times. According to published documents from the archives of the remembrance Institute of the Slovak nation, Babish was registered as a Trustee of the state security Service after joining the Communist party in 1980 and in 1982 was registered as an agent “buresh”, was responsible for the monitoring of international exhibitions and fairs in Bratislava, actions of foreign intelligence services against the Czechoslovak foreign trade. Babish denies cooperation with intelligence services. In may 2017 the Supreme court of Slovakia decided that he was illegally included in the list of agents of the intelligence services of Czechoslovakia, in October, the case was returned due to procedural deficiencies for review in the district court of Bratislava.

After 2014 Babish entered into a coalition with the social Democrats and became Minister of Finance, various European politicians and journalists began to Express concerns that the control over the country’s finances and European subsidies in the hands of not politics, and businessman. In December 2015, the Czech police and the European Bureau for combating fraud has launched an investigation into the Babish on charges of illegally obtaining funds from eurodate in the amount of 1.91 million euros in 2008 for belonging to him of the resort “stork’s Nest”. The resort was first derived from the ownership of Agrofert, and after receiving the subsidies returned. Eurototal were for small business and not for the company’s second richest man of the country.

In may 2017, Prime Minister Bohuslav Sobotka has forced the Babish to resign, accusing him of tax evasion. In September 2017 in the case of “stork’s Nest” Babish was stripped of his parliamentary immunity.

Also in the spring of 2017 was extended audio conversation of Babish with a journalist-owned newspaper Dnes, where they discussed terms of posting articles against the Ministers of the social Democrats. Politician accused of meddling in editorial policy.

Protest against the Babish and other politicians accused of corruption.

Prague, may 10, 2017 (photo – EPA)

However, despite all these scandals, Babish won the election. The secret of its popularity is in decline in the authority of the traditional parties of the Czech Republic, the policy which was involved in numerous corruption scandals or have not carried out the promised reforms. The program of the party of Babish blurred, it was created as “neither left nor right”, but in fact is right with elements of social populism. And the main thing – the party is positioning itself as the anti-corruption and seeking to improve public management.

“Babish tells voters: guys, I’m one of those who does something. He does have money. And he really earns as the owner of the factories and Newspapers”, – commented on the situation with the popularity of the oligarch at the meeting with Ukrainian journalists organised by the Centre for the New Europe and the International Visegrad Fund that operates in Prague journalist Eugene Snezhkin.

Poster Babish: “to work Hard and not to razglogolstvovanie” (photo – EPA)

Will the foreign policy of the Czech Republic in favor of Russia

The control of Babish over the government may bring surprises in the foreign policy of the Czech Republic, which the social-Democrats were quite predictable and for the EU and for Ukraine.

On the one hand, the party of Babish has no clear foreign policy strategy. “In ANO there is no person who would be responsible for foreign policy. Politicians from this party I said, you know, Andrew (Babish) is not that interesting. My opinion – his foreign policy is only interested in eurototal. I think they will make the seat of the foreign Minister to someone else,” – noted in communication with journalists shortly before the election, contributing editor at Hospodářské noviny Ondrej Soukup.

On the other hand, such a scholar of Russian influence in Central Europe, as journalist Anne Applebaum, believes the Babish a conduit of Russian influence, based on the analysis of his statements such as: “the Immigration crisis threatens the us more than Russia”.

The Babish has good relations with Czech President Milos Zemanthat because of the shortage of authority can make Pro-Russian statements, but can not realize the Pro-Kremlin line in foreign policy. They brought the deal to sell petrochemical concern Unipetrol in 2001, when Zeman was Prime Minister. The government decided in favour of the company of Babish, despite the fact that the British company Rotch Energy offered for the group of 444 million euros, and Agrofert – only 361 million euros. In may 2017 Zeman did not want to sign the resignation of Babish, and wanted the resignation of Prime Minister Sobotka, who accused the billionaire of tax evasion.

Andrew Babish and miloš Zeman (photo – EPA)

Also in 2016, a scandal erupted between the Czech government and the United States. The Minister of justice of the Czech Republic Robert Pelikan, member of the party of Babish, the US has refused extradition of a Lebanese arms dealer, Ali Fayyad and made a deal for his exchange for members of the Czech special services, who lured and kidnapped in Lebanon. Fayyad is notable for the fact that he had a Ukrainian passport, communication with the much more well-known Russian arms dealer Victor bout and the terrorist group of the Shiite Hezbollah, as well as with former Minister of defense of Ukraine under Yanukovych , Salamatin Dmitry.

The Lebanese were aware of routes of supply of Russian weapons to the middle East, which is why the FBI was so happy his arrest in Prague in April 2014 the us agents who came to the meeting under the guise of Colombian FARC rebels. “There are no excuses for releasing these dangerous people, it strikes at the law enforcement cooperation of our two countries and this will only encourage criminal gangs and terrorists all over the world,” said the U.S. Embassy in the Czech Republic.

All these cases occurred on the background of the strengthening of Russian influence in the Czech Republic. We are talking about large-scale Russian investments in real estate, energy and trade. “We need to protect our strategic sectors of the economy from the “unusual” economic activity, because it is hard to distinguish, do such investments on the basis of business development, or to spread their influence. In the Czech Republic there are no mechanisms to protect strategic industries. Comes to talking about how we don’t want to see Russian here, especially in carlsbad, where half the town bought by Russian” – said the researcher of Russian propaganda in the Prague Open Society Fund Radka Putilova.

According to her, the Russian website Sputnik and a number of other sites with unclear sources of funding is carried in the information field of the Czech Republic policies in favour of the Russian Federation. “Narrative here evolyutsioniruet to side against NATO and the EU, Angela Merkel, migrants and publishes articles for an exit from the Czech Republic to the EU,” says Putilova.

The theme of the conflict between Russia and Ukraine Babish says rare. In July 2015 in an interview with Hospodářské noviny , he said he does not feel enthusiastic about the economic war with Russia. “Sanctions have not yielded any results, but they have been extended only because of European policy bespoken”, – he stressed.

At the same time the journalist of the Czech newspaper Respekt kateřina Safarikova explains that Babish too interested in the European money to go into sharp conflict with the EU over Russia, when will be in power. “Even if Babish criticizes sanctions against Russia, it is because he sees how Czech companies are losing money. These statements focused on Czech businessmen, so they voted for him,” she notes.

Coming in Putin’s friends in the coalition

In the result of elections to the Czech Parliament passed nine parties. The results were a triumph for the Civil democratic party, the Pirates and the far-right party Freedom and Direct democracy.

Civic democratic party – conservative party which was in power in 1992 and 1997, and 2006-2013 and with a snap shot from power after corruption scandals, took second place with 11.3% of the vote. It is led by Professor of political science Petr Fiala. In 2014 he called the policy of President Zeman to justify Russia a threat to the security of the Czech Republic and its foreign policy interests. The FOC is a party of the moderate eurosceptics who oppose the transition to the Euro, mandatory quotas for the admission of refugees, the return of part of the competences of the EU to the national level.

The leader of the Pirates Ivan Bartos (photo – EPA)

Pirates from 10.8% ranked third, the number of votes cast for them have grown over 4 years from 132 to 546 thousand, and in Prague, the party took second place. The ideological platform of the Pirates – free from state regulation of the Internet, the revision of copyright, direct democracy with referenda on the Swiss model, the legalization of soft drugs, and in foreign policy – the equality of all EU countries, including issues of free movement of citizens. The pirate party youth, and most of its deputies in Parliament under the age of 35 years. In fact, it won due to fatigue of the liberal voters from the traditional parties.

Fourth-ranked far-right anti-immigrant party of Freedom and Direct Democracy is notable for its leader, Tomio Okamura. He is a migrant, born in Tokyo in which the father flows of Japanese and Korean blood, mother Moravian. As a child in school he was bullied because of origin. Okamura grew up, became a successful businessman, the Creator of the travel Agency for Japanese tourists and plush toys, has written bestsellers about the implementation of the Czech dreams and the art of management and life, and then decided to become the most successful Czech nationalist. Judging by the election results.

Okamura promised voters an extensive social program: interest free wedding loans and tax credits for young families with children, reducing the age of retirement, the simplification of taxation for small business. He put forward slogans about ending the “dictatorship of the EU”, security issues, taxes, requirements to transfer to the national level control over migration. “There is a plan to create a multicultural European superstate, where the Czech Republic will be only a small administrative unit. We cannot settle for a future in the role of the modern protectorate”, – is spoken in the program of his party. “No Islam, no terrorists,” read the numerous placards Okamura against migration.

The leader of the far right are also regularly praised trump, who had hoped for a reconciliation with Russia, and Putinjustified the annexation of Crimea. “Historically, Crimea was never Ukrainian: for centuries it belonged to Russia and always was Russian. By the way, Kiev is Russian built, and originally it was the capital of ancient Russia. In the referendum the people of Crimea freely and overwhelmingly voted for joining back to mother Russia, and it was a reaction to the fanatical anti-Russian actions of the Nazis in Kiev after Kiev, the Parliament adopted laws against the Russian minority”, – he said in December 2016 in an interview Parlamentni Listy.

Poster Okamura “No Islam. No terrorists” in Prague (photo – EPA)

The civil democratic party and the Pirates are the most likely partners of the party of Babish in the coalition, although the first repeatedly came into conflict with him personally. “We are close to the Civic democratic party, the movement STAN (“Mayors and independent”, received a little more than 5% of votes – ed.) and Pirates. Of course, some of the points of the program, Tomio Okamura we appreciate the good the law on referendum, the politicians… the cessation of migration,” said Babish iDNES.cz.

However, the creation of a coalition with the far-right party of Freedom and Direct democracy and the Communists Babish was expelledimmediately after the announcement of the election results, although such format of the coalition was the subject of speculation during the election campaign.

The billionaire asked the media and politicians to stop scaring the Czechs turn to the East. “We are a movement for all, we Pro-European”, – he said. Member of the ANO, the Minister of defence Martin Stropnicky, commenting on the possibility of a coalition with the party Okamura, said: “the Politics of fear, hatred, intimidation, policies that openly says that we should withdraw from the EU is unacceptable”.

Thus, it is likely that an openly Pro-Russian parties have no chance to participate in the Czech government. On the other hand, journalist, Respekt, kateřina Safarikova notes that a coalition of Babish will be difficult to build some of the party during the campaign and refused to create the coalition. “Babish said that I will not go into a coalition with Okamurai. But if the other parties don’t want to go into a coalition with the Babish, he may not be a choice,” she said.

Wrong turn

Even if Babish will fulfill the promise not to form a coalition with the Pro-Russian parties, the bad, the very fact that in a country with such democratic traditions, the billionaire will gain control over the government. This is reminiscent of the transition of Italy under the control of oligarch Silvio Berlusconi in the 2000s, the years that ended the country’s monopolization of the media, with a string of scandals, one of the worst economic crises in history, whose consequences are still being felt, flirting with the Kremlin.

In the history of post-Soviet Czech Republic, corruption scandals have repeatedly led to the fall of governments, and it was a sign of maturity of democracy. In 1997, because of the scandal with the non-transparent financing of the ruling party resigned Prime Minister Vaclav Klaus. In 2005, because of the history with an unclear origin of the loan to buy an apartment shared its fate, the Prime Minister Stanislav gross. In 2013 Prime Minister Petr Necas was accused of corruption and it was found that the head of his office Jana Nadeva who had relationships with the boss, put a tail on his wife with the help of military intelligence officers. The soap Opera ended with the resignation of the Prime Minister and probation for a mistress.

Now the Prime Minister of the Czech Republic could become the oligarch c a dubious past, who is accused of fraud. And it’s a real challenge for Czech democracy, which can disappear only when Babish lose access to power. And all the examples of civic engagement in the Czech Republic – Prague spring, Velvet revolution, many protests against ohotnichiego in front of the Kremlin and China President Zeman, the creation of numerous anti-corruption NGO, which monitors the spending of the European funds, give us hope that if Babish decides to use his position to further enrich, the Czechs will give him a real fight.

Comments from the Czech journalists and political scientists taken during the visit of a group of Ukrainian journalists in Prague, organized by the Centre for the New Europe, the Visegrad Fund and the Centre for Euro-Atlantic Intagration and Democracy.

See also: Master of scandal. In the Czech Republic say about the President Zemane

Sign up for an account LIGA.net in Twitter, Facebook and Google+: one tape – all that is worth knowing about politics, economy, business and Finance.