The lover of European subsidies Andrej Babiš conquers Prague
The Czech Republic will go through a crucial parliamentary election in October, one that could shake the entire political system and the legacy of the legendary Velvet Revolution of 1989.
According to polls, the obvious front-runner is a protest movement “ANO, bude líp” (YES, it will be better) founded by Slovakian billionaire Andrej Babiš. It appears that around thirty per cent of voters will cast their votes for him. Potential coalition partners for Andrej Babiš include the communist party and “patriotic” (but in reality an extremist and anti-immigration) movement Freedom and direct democracy. The main motto of ANO is: ‘Run the state like a business’.
Andrej Babiš is the second richest man in the Czech Republic and Forbes magazine estimates his wealth to be around 3,4 billion dollars, by way of comparison, Donald Trump has “only” a hundred million more. Babiš controls the gigantic chemo-agricultural holding Agrofert and is also the biggest receiver of European subsidies in the Czech Republic. His companies receive around 33 million euro each year from the European funds. Apart from his powerful political movement, which is also considered to be a part of his personal wealth, Babiš owns the most influential media empire including two important daily newspapers, the biggest private radio station and many other media platforms.
The most shocking fact about the electoral support for Andrej Babiš, is that he is currently being investigated by Czech police and OLAF (European Anti-fraud Office) for suspicion of fraud. On the 10th of August police asked the Czech parliament to waive Babiš´s parliamentary immunity so he could be formally prosecuted.
The reason for charging and handing him to the court is clear: fraud by obtaining 1,8 million euro from European subsidies for a luxurious hotel and a farm with a romantic name: The Stork´s nest. When Babiš built this countryside residence ten years ago, he used, or rather abused, a European subsidy fond for the support of small and medium sized enterprises. Since his huge holding Agrofert would not be able to receive these subsidies, Babiš removed one smaller company from the holding and formally transferred it to unknown owners. But as it later appeared, these owners were Babiš´s own grown up children and one other family member. This firm asked for a subsidy, which it also received. After several years of mandatory supervision, this company has now returned from its “journey” and is again under formal ownership of Agrofert.
However, there are considerable doubts whether Andrej Babiš will be prosecuted. His political movement has an agile minister of justice and there are also talks of an affiliated group of state attorneys – Babiš is allegedly waging a fight against corruption in the Czech Republic. But mainly, Babiš has one considerable and open ally: the pro-Russian president Miloš Zeman, who already said he will name Babiš a prime minister in case of parliamentary victory of ANO, even in case he will face fraud charges. Moreover, the president has the authority to stop the criminal prosecution of Andrej Babiš.
This is not the only blot on the reputation of this phoney uncompromising anticorruption warrior. In early summer, Babiš was expelled from the government when prime minister Bohuslav Sobotka removed him from the position of minister of finance in the light of leaked recorded conversations between Andrej Babiš and one of his journalists. Both men were apparently discussing a pre-election campaign aimed to compromise the political opponents and contemporary coalition partners of Andrej Babiš.
How come a third of Czech voters does not mind all these scandals? It could be partly explained by the actions of previous governments. During the financial crisis between 2010 and 2012, the right wing government implemented certain unpopular austerity measures. Several scandals ignited the growing discontent in the society with traditional political parties and a hatred for “corrupted democracy”. This hysteria has been substantially nourished by irresponsible and populist Czech media, including those owned by Andrej Babiš.
Aside from this anticorruption battle, Babiš added two more important points to his political program.
The first one is migration, used so very often by the populists nowadays. In connection with the fear of refugees (even though the migration crisis has been evading the Czech Republic so far), Babiš has bestowed upon himself the role of protector of the people from the refugees. He has been assuring the countryside electorate during his meetings that under his government, no refugees shall enter the Czech Republic. It is also because of him that the Czech Republic does not participate on the sympathetic solution of reallocation quotas the European Union has agreed upon.
The second, and more dangerous plan of Andrej Babiš, is nothing less ambitious than changing the Constitution of the Czech Republic. If he achieves power, he intends to lower the number of members of the lower house of the parliament (Sněmovna poslanců) by half. As for the upper chamber of the parliament, the Senate, Babiš intends to abolish this institution altogether, thus significantly reducing parliamentary control over the executive branch. In his book What I dream about when I sleep, he claims this would increase the effectiveness of the executive power. All this comes after he has already reduced the plurality and the control function of media.
It shouldn´t come as a surprise that the representatives and supporters of democratic parties, which have been pushed to the position of helpless dwarves by Andrej Babiš, consider these proclaimed reforms to be the factual end of liberal-democratic political system in the Czech Republic. And by no means it is a coincidence that such threats to the basic pillars of democracy in our country come under the rule of our pro-Russian president Miloš Zeman.
Reasons for downfall
Have the Czech people lost their minds entirely? Before we pass such a harsh judgement, it is important to understand what is happening in the Czech society in context of the escalated relationships between the West and Russia.
Between 1993 and 2013 the Czech Republic saw a continuous rotation of coalition governments formed by democratic parties both from the left and the right. These governments have instituted a substantial liberalisation in all spheres of public life, especially in privatisation and the renewal of free enterprise. This has increased the standards of living of the Czech people. The proud Czech Republic entered the European Union and NATO and the more naive democrats rested on their laurels, thinking the history has ended for the Czech Republic, and that it has ended well.
But the thinner years of American and European financial crisis and stubborn fighting on the Czech political scene, including increasing number of scandals, have later turned the public away from democratic parties. Several peculiar new formations have emerged on the political scene, most of them with heavy populist leanings.
After 2010, this frustration has been heavily used by strong Russian propaganda, more and more picturing the western allies as a demoralised and valueless world that economically uses hopeless eastern states. The massive influx of European funds to renew the Czech infrastructure (approximately 3,5 billion euro every year) has been completely overshadowed by hysteria strongly supported by irresponsible media. This included a series of alleged corruption scandals which were subsequently not proven in most cases.
It is necessary to emphasize that the renewal of Russian influence in the Czech Republic has been happening in correlation with the collective departure of German publishing houses and other western media institutions, which strongly supported the restoration of Czech professional journalism and media plurality for two decades. Their departure and the transition of media under the ownership of Czech billionaires caused an immediate downfall of media in terms of their democratic and professional standards. Once prevalent liberal journalism and commentary has gradually sidetracked out of the media mainstream and has been replaced by populist and crypto-fascist notions. In other words, the arrival of oligarchs into media has pushed the character of public discussion towards the Russian model.
And this transition from liberal democracy to some kind of “popular democracy” that leans on populism, purposeful defamation of inconvenient people and efforts to manipulate the justice system or the police, has been dominated by two strongest political players: Miloš Zeman and Andrej Babiš.
Miloš Zeman, once a social democratic prime minister who left his party in bad blood, won the presidential election in 2013 over a pro-Western oriented Karel Schwarzenberg, a member of a respected aristocratic family, a supporter of anti-communist opposition and a long-time friend and ally of Václav Havel. Havel was imprisoned by the communist regime, became the most vocal opponent of the communist rule and was later elected to be the first president of democratic Czechoslovakia. After the dissolution of the Czechoslovak Federative Republic, he became the first president of the Czech Republic.
Miloš Zeman led an utterly malicious presidential campaign, using phantasmagorical lies to label his opponent as a servant of the German interests. Zeman became the president with an obvious support of entrepreneurs connected to Russian firms. His inauguration speech was an aggressive declaration of war against the journalists. But only those protecting the values of liberal-democratic regime.
Subsequently, a controversial entrepreneur Andrej Babiš emerged on the political scene.
The Eastern oligarch phenomenon
Shortly after the Velvet Revolution in 1989, Andrej Babiš acquired the state company Agrofert which was dealing with fertilizers and chemical products. It happened under the utmost suspicious circumstances. It was a former state firm for international trade and the communists used it to make deals with capitalist foreign countries. The selection of employees for such organizations was under careful scrutiny of the communist rulers. The employees mostly consisted of agents of the secret communist police, who had access to western merchandise like cigarettes, video recorders or jeans.
Babiš used his business contacts and relationships from the communist sphere and transferred the firm to himself during an evidently manipulated general meeting of shareholders by hiding behind an alleged Swiss investor. However, after several years Babiš acknowledged his ownership of the company and began building his empire thanks to his political connections. His agro-chemical empire now consists of roughly 200 companies including the biggest chemical plant in the Czech Republic, as well as similar enterprises in Germany and Slovakia.
The centrefold of Babiš´s entrepreneurship is biofuels. If you look at the Czech Republic from an airplane, you can see it is notably yellow, thanks to Andrej Babiš, who is growing rape plants used by his chemical plants to produce biofuels. This whole business is financed from European funds and the Czech budget, thanks to agriculture subventions and tax reliefs for biofuels. The essential business partner and purchaser of Babiš´s companies was the Czech state and most of it were public contracts. This is why Babiš always wanted the state to be represented by people who favoured him.
The eastern oligarch phenomenon does not have much in common with entrepreneurs of the western world. It is rather a post communist parody of capitalism. After the fall of communism, it was not the traditional business families who returned to the top of the economic sphere of eastern European countries (the same families that have been robbed by communist regimes), but in most parts they were high ranking communists and affiliated people, including an abundance of former employees of the notorious StB, the communist state security. An eastern oligarch gained his wealth thanks to his head start carried over from the communist regime and by taking over state property and, subsequently, doing business with the state itself. And this is exactly the case of Andrej Babiš.
The oligarchs always have had a sworn enemy. It is the free media, that have informed about clientelist relationships of oligarchs and politicians in the Czech Republic. That is why the newspaper crisis did not come amiss to these billionaires, since the number of readers and advertisement incomes dropped even more sharply in the Czech Republic than in western states. People turned massively to free online news on the internet, which severely damaged the financial performance of pivotal publishing houses. Thus began a process with immeasurable consequences for not only the free democratic competition, but, in a broader sense, for the foreign policy of the country itself. The Russian type oligarchs bought all the liberal newspapers from four German and one Swiss publishers.
In the spring of 2013, it was Andrej Babiš himself who purchased essential liberal daily newspapers MF DNES and Lidové noviny from a Düsseldorf based publishing house RBVG (Rheinische Post). Babiš simultaneously announced his endeavour to enter the parliament and the government with his political protest movement ANO.
Taking down the government and the catastrophe of democratic parties
High ranking police officers from specialized units have maintained their relationships with Babiš, some of them even becoming leaders in his holding. In the early summer of 2013, the police raided the government office in a spectacular fashion that got a lot of media attention. The police officers dragged the chief of the government office, who was also the lover of the centre right prime minister Petr Nečas, in handcuffs in the middle of the night. The media gave a significant amount of attention to the police version of the case. During a dramatic press conference, a leading police officer close to Andrej Babiš announced that the raid against three members of the parliament, two high ranking officers of the military intelligence service and chief of the government office was motivated by an unprecedented and organized corruption and criminal activity. This whole monstrous undertaking, that led to immediate fall of the government and early elections, has not brought any serious indictments in courts. From today´s perspective, the political motivation behind this police action seems more than probable.
There are two people who benefited from the police raid on the government office: Miloš Zeman and Andrej Babiš. Zeman named a white-collar government without political mandate, and sustained it for more than six months, while Andrej Babiš organized a massive campaign shielded by slogans about reckoning with the corrupted regime of the traditional political parties, and he also led his movement into the parliament, finishing second only behind the victorious social democrats. Social-democratic prime minister Bohuslav Sobotka subsequently succumbed to a naive notion that Babiš´s movement can be integrated into a democratic political system and formed a government coalition with him. For more than three years, Babiš, the billionaire and media mogul, occupied the position of minister of finance whilst facing criticism from the remaining liberal forces because of his unprecedented conflict of interest, for he as a minister also represented the state in business relations with his own companies. And for three years, he was also the one responsible for fairness in distributing European subsidies, whilst receiving more funds than any other Czech company. His holding received around 900 million Czech crowns (approximately 33,4 million euro) in subsidies every year.
The situation in the Czech Republic is complicated by the fact that previous democratic parties had low support among journalists because of perceived corruption. Hence the resistance against media takeover by Andrej Babiš and other oligarchs (who constitute some sort of information cartel with him) has not led to protests similar to those in Poland and Hungary, which were also fuelled by attacks on media freedom. Liberal journalists once holding important positions in daily newspapers created their own small internet projects, whilst big media, including the so-called serious and public media, supported Babiš´s anticorruption efforts. This support weathered down this spring, when independent internet projects brought information about Babiš´s tax machinations and his abuse of media to defame his opponents.
The social democrats opposed Andrej Babiš only in the battle for essential police units during the reorganization of police and when it became apparent that Babiš is organizing a discrediting campaign against them.
Now, Andrej Babiš is a hot candidate to become the prime minister. He camouflaged his conflict of interest by transferring Agrofert holding, including his media, into a trust fund, which he keeps under control through his wife and other associates. In other words, he merely obscured the essence of the problem. He keeps using his media for discrediting campaigns and he keeps intimidating his opponents with unsubstantiated accusations and defamations. All this while presenting himself as a warrior against mafia.
Also, Babiš is supported by a string of pro-Russian websites, which speak out strongly against the post 1989 democracy and pro-western liberal forces. The public media and the media of other oligarchs are mostly toothless against Babiš.
“Liberal Babiš” and European money
However, Andrej Babiš eludes the stereotypical model of an eastern European autocrat. Using a very subtle and skilful tactic, he hired dozens of personalities with liberal leanings on the domestic scene, who successfully pretend, both at home and abroad, that his political movement is pro-European, thus supporting the pro-Europe image of ANO. Babiš has even managed to fool Guy Verhofstadt, the chairman of liberal centrist political group ALDE in the European Parliament, who is still trying to excuse some of Babiš´s scandals. But it must have been very unpleasant for him when the European Parliament debated the threat to media plurality in the Czech Republic this May. The liberal mask of Andrej Babiš was peeled off, revealing a sheer autocrat underneath.
The Czech situation differs from Hungary and Poland, at least in the nature of antidemocratic tendencies, but not so much in the level of possible danger. That may be even higher in the Czech Republic. In Poland and Hungary, there are conservative and nationalistic political forces trying to divert the society from the liberal-democratic path. But they are less dangerous, since we already know them very well. They belong to the traditional value spectrum, albeit situated in the far end of it. Babiš, however, is completely outside this traditional spectrum.
The attack on democracy, the plurality of media, the traditional concept of liberal democracy, is far more elaborate in the Czech Republic. It is being led under the banners of anticorruption efforts and protection from the immigrants. And the intended destruction of the constitutional system and reduction of the parliamentary control is supposed to bring more effective governing. It comes as no surprise that such an attack is being led by a political party that elects its leader with one hundred percent of the vote, a party with no visible mechanisms of democratic control.
The phenomenon of Andrej Babiš is first and foremost a challenge for the supporters of democratic and liberal tradition in the Czech Republic. However, it is also very important for Europe to watch this eastern oligarch, who wants to lead a country that is a part of the European Union. It is not reasonable for richer countries to finance the dangerous authoritarians and predators of the poorer ones.