Central Europe: The Czech Republic Steers Clear of Populist Tide, for Now

On 9 March, the new Czech President Petr Pavel, a retired army general, was inaugurated after he defeated the populist Andrej Babiš in the January election. Can the Czech Republic keep bucking the populist trend underway in Central European countries like Poland, Slovakia and Hungary?

The Czech Republic has twice thwarted populists’ rising to power. Firstly, in autumn 2021 when the populist and extremist forces were defeated in general elections and the current center-right government was formed. Secondly, they lost again with Pavel’s presidential victory. The current government is composed of five parties that remains united and has a stable majority in the Chamber of Deputies, even if they are not entirely homogeneous parties.

The Czech government also made a good job of its recent stint at the European Union presidency. It was well regarded at home and abroad and managed to tackle the energy shortage and price crisis, support defending Ukraine, as well as finding agreement within the Council on its position on Hungary’s erosion of the rule of law. Its six-month presidency also pushed forward EU legislation, especially on the climate sector, where it, for example, managed to seal a difficult agreement on the EU ETS revision.

Despite this backdrop, not all in the Czech Republic is so rosy.

Even though populism failed to prevail in the latest ballot, the fact is that Andrej Babiš’s, a billionaire ex-prime minister, ran a presidential campaign that was more populist and mendacious than all his previous performances. Meanwhile, his support climbed significantly compared to previous votes, and he attracted two million four hundred thousand votes in the second round, out of a total of five million seven hundred votes.

Meanwhile, many people are concerned about the economic situation and the country’s financial outlook. High inflation (in January 2023 it was 17.5% year-on-year) and soaring prices is a reality that disproportionately affects the low-income households and could fuel social discontent. Sociological research suggests that Czech society views the future with apprehension, uncertainty, fear and fatigue.

The social schism widens, regional gaps persist

And to top it all off – the government plans to embark on tax and pension reforms promised in its manifesto. Implementation has been delayed by the start of the war in Ukraine and the EU presidency, which ran until the end of December. But now that the government is headed by the liberal-conservative Prime Minister Petr Fiala, who is sympathetic to this agenda, they cannot delay any longer.

As the 2022 Bertelsmann Transformation Index (BTI) Country Report for the Czech Republic pointed out, the 2020 tax cuts have had devastating effects on the health of Czech public finances. Its experts warn the measures “… could lead the country into a debt trap. The central and the regional governments will see a significant decrease in revenue and thus lack funds.” Moreover, the fiscal reform will also imperil necessary investments in education and health care, which are both sectors with striking regional disparities. However, this reduction was pushed through by the then ruling party ANO in cooperation with the then opposition, the now main ruling party ODS – the Civic Democratic Party – of Prime Minister Fiala. For this reason, repealing the policy would therefore be politically inconceivable.

Mainly people with higher incomes benefited from this tax adjustment and as a rule, low-income people do not vote for the parties of the current coalition. In general, social inequality is on the rise in the Czech Republic, while the gap between developing and underdeveloped regions in both economic performance and the quality of public services are increasing.Such a situation may lead to more dissatisfied citizens and the subsequent endorsement of extreme populists. After all, if people are convinced that the current system is unfair, they are more likely to seek radical answers and demand fundamental change.

Can the government maintain its reputation?

The Czech Republic now looks ahead to 15 months without elections. Given the challenging economic environment and the pending reforms, the coming months will test whether the government can retain its popularity, implement its promised policies and maintain its current cohesion.

However, the country’s solid international political position could hold out. Unlike his predecessor, Petr Pavel looks set to be a strong yet cooperative actor in foreign policy, taking a genuine interest in transatlantic relations, the European agenda, supporting Ukraine and confronting autocratic regimes.

Together, this could make the Czech Republic a partner of choice in Central Europe. But, with two elections pending in the region, things could change fast. The long-term political crisis in Slovakia is coming to a resolution in the form of snap elections. Its outcome is highly uncertain, and the rise of the pro-Russian former Prime Minister Róbert Fico is rightly a cause for concern. The Polish parliamentary elections in the autumn will show whether Jarosław Kaczyński’s reign will continue or whether his Law and Justice party will be defeated.If both Fico and Kaczyński win, Central Europe will be a very complicated region and the Czech government will face increased pressure from neighbouring populists

While many observers within the Czech Republic and beyond view its recent political developments as forging a positive example in Central Europe, in a year’s time everything may be different. Slovakia and Poland may opt for non-populist change, but the Czech Republic may be wracked by coalition disputes. Amid ongoing inequality, Czech society may seethe with even greater discontent, making it increasingly fertile ground for populism.

A version of this article was first published by Social Europe