Checking the populist tide—for now

Can the Czech Republic keep bucking the populist trend in central Europe affecting Poland, Slovakia and Hungary?

The Czech Republic has twice thwarted populists’ rise to power. In autumn 2021 extremist forces were defeated in a general election, after which a centre-right government was formed, led by the Civic Democratic Party (ODS). Composed of five not entirely homogeneous parties, it remains united and has a stable majority in the Chamber of Deputies. And on March 9th this year, a new president, Petr Pavel, a retired army general, was inaugurated, having defeated the populist Andrej Babiš in January’s election.

The Czech government made a good job of its stint as president of the Council of the European Union in the latter half of 2022. Well regarded at home and abroad, this managed to address the energy shortage and the cost-of-living crisis, support Ukraine and find agreement on Hungary’s erosion of the rule of law. It also pushed forward legislation, especially on climate, including sealing a difficult agreement on revision of the EU Emissions Trading Scheme.

Not all rosy

Yet not all in the Czech Republic is rosy. Though Babiš failed in his presidential bid, the billionaire ex-prime minister ran a campaign more populist and mendacious than all his previous outings—and his support climbed significantly. He attracted 2.4 million votes in the second round, out of a total of 5.7 million.

Many are concerned about the economic situation and the financial outlook. High inflation—in January the annual rate was 17.5 per cent—is disproportionately hitting low-income households and could fuel social discontent. Sociological research suggests Czech citizens view the future with apprehension and uncertainty, fear and fatigue.

Adding fuel to the fire, the government plans to embark on tax and pension reforms promised in its January 2022 policy statement, which included meeting the Maastricht criteria on the public finances ‘as soon as possible’ while creating a ‘tax brake’. Implementation had been postponed by the onset of the war in Ukraine and the EU presidency. But the government headed by the liberal-conservative Petr Fiala, sympathetic to this agenda, will not delay any longer.

As the 2022 Bertelsmann Transformation Index report for the Czech Republic pointed out, tax cuts in 2020 have already had devastating effects on the health of the public finances. Its experts warned the measures ‘could lead the country into a debt trap’, with a ‘significant decrease in revenue’ for central and regional government. Necessary investments in education and healthcare—both sectors with striking regional disparities—would be imperilled.

Yet as the reduction was pushed through by Babiš’ then-ruling ANO in co-operation with the then-opposition ODS, repealing the policy would be politically inconceivable. The promised tax reform would likely not significantly change the current system nor bring a long-term remedy for the public finances.

Mainly those on higher incomes benefited from the tax adjustment to date and, as a rule, low-income citizens do not vote for the parties of the current coalition. In general, social inequality is on the rise in the Czech Republic, while the gaps between developing and underdeveloped regions—in economic performance as well as quality of public services—are increasing. More dissatisfied citizens could bring more endorsement of extreme populists: for those convinced the current system is unfair, ostensibly radical answers will be more appealing.

Challenging environment

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 cohesion.

The country’s solid international political position could though be sustained. Unlike his presidential predecessor, Pavel looks set to be a strong yet co-operative actor in foreign policy, taking a genuine interest in transatlantic relations, the European agenda, supporting Ukraine and confronting autocratic regimes. This could make the Czech Republic a partner of choice in central Europe. But, with two elections pending in the wider region, things could change quickly.

The long-term political crisis in Slovakia is coming to a resolution in the form of snap elections. Their outcome is highly uncertain and the rise of the pro-Russian former prime minister, Róbert Fico, is a cause for concern. The parliamentary elections in Poland in the autumn will meanwhile show whether Jarosław Kaczyński’s de facto reign will continue or whether his Law and Justice party will be defeated. Were Fico and Kaczyński both to win, central Europe would be a very complicated region and the Czech government would face increased pressure from the 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 could opt for non-populist rulers but the Czech Republic be wracked by coalition disputes. Against the backdrop of inequality, Czech society may seethe with even greater discontent—making it increasingly fertile ground for populism.

Vít Dostál

Vít Dostál is executive director of the Association for International Affairs (AMO), a think-tank based in Prague.