The victory of the two Czech opposition coalitions in October’s general election has been greeted with some relief not just around the country but also in Brussels, which is already struggling to cope with radical rightwing governments in Poland and Hungary, with whom outgoing populist premier Andrej Babis was increasingly allying himself.

But the new government could have a very short honeymoon, if any. Incoming Prime Minister Petr Fiala says his government faces “the biggest crisis in the country’s modern history”.

“I don’t think we have 100 days to play with. I think that we have never been in such a difficult situation in the existence of an independent Czech Republic: COVID, energy prices, inflation. These are problems that we must address immediately,” Fiala tweeted last month.

A cocktail of growing social disparities, widespread distrust of public institutions, soaring energy prices, a ballooning budget deficit, as well of course as the cresting fourth wave of the COVID-19 pandemic, represents arguably the most challenging context in which any government has taken over in the past 30 years.

If the centre-right government fails to get a grip on the crisis, Babis – who seems keen to shed the responsibilities of office as soon as possible – will be waiting in the wings to return, this time potentially as president.

The agro-chemical billionaire has strongly hinted that he will stand for president when his ally Milos Zeman’s mandate ends on March 8, 2023. Though his victory in the second round run-off is by no means assured, his media empire, fortune and crack marketing team will make him a very serious contender. In the meantime, his ANO party remains by far the strongest single force in the parliament, with 72 seats out of 200.

Corrupt networks

The new government has many in-built weaknesses, not least the fact that it is a coalition of five parties ranging from the Eurosceptic rightwing ODS, which is in the same European Parliamentary group as Poland’s Law and Justice party, to the socially liberal Pirate party, which sits in the Green group.

Most attention has focused on whether the Pirates would even agree to join the government, because of their unhappiness with the way their coalition partner, the centrist Mayors and Independents party (STAN), allegedly breached their agreement by encouraging their own supporters to cast preferential votes for STAN candidates on the joint party list, reducing the Pirate contingent to just four MPs.

Following the Pirates' online referendum that convincingly backed joining the government, there is now speculation that the party will quit the coalition well before the next election, frustrated with having to work with the other four more rightwing parties, particularly the ODS, with which it has fundamental differences on tax, the Central European Visegrad Group, adopting the euro and climate change policy. Yet even if the Pirates were to leave the government, the coalition would still have 104 seats in the parliament, and it would in fact be much more ideologically homogenous.

More worrying in reality is the role of the ODS, the largest party in the coalition, which Fiala has brought back to power after eight years in the political wilderness.

Before the October election, Fiala, leader since 2014, had regularly been written off as a weak figurehead, with real power supposedly in the hands of the party’s regional barons and “godfathers”, the heads of the corrupt networks for which the party had become notorious. Fiala won kudos for his performance during the election campaign but it is still not clear whether he will now really call the shots. He will have to show political strengths he has yet to demonstrate if he is to restrain the party's worst urges.

“Not Fiala, but there are lots of people in the party who are hungry to get back to ‘political business’,” Robert Casensky, editor of Reporter magazine, told bne IntelliNews before the election.

All three of the party’s past premiers have resigned amid corruption scandals. The last one, Petr Necas, resigned in June 2013 after a police raid on the government office. Necas was charged with bribing MPs to win parliamentary votes but was later acquitted.

The scandal – with lurid revelations that the premier’s chief aide was also his mistress and regularly received lavish gifts from businessmen, and that Necas’ wife was being spied on by the secret service – decimated the ODS at the subsequent general election in October, where it lost two thirds of its seats, falling to fifth place. 

That election also marked the start of the rise of Babis, who whipped up popular anger against the whole political class. Public confidence in the political system has yet to really recover.

The key question is whether the ODS is now a different party. Petr Leyer of the Prague chapter of the anti-corruption watchdog Transparency International says that ODS is certainly not under such influence of behind-the-scenes players as it was in the past. This is, however, Leyer told bne IntelliNews, partly because the ODS in opposition was not as attractive and “some of the so-called godfathers were prosecuted or imprisoned, such as Alexandr Novak or Roman Janousek”.

On the other hand, Fiala is today backed by some of the ODS politicians who were influential during the godfathers era, namely Pavel Blazek MP (Fiala’s nominee for the minister of justice) or Martin Kuba, former minister of industry and current South Bohemia governor. “I wouldn’t be surprised if behind-the-scenes players would again try to use ODS as a vehicle for personal gains,” adds Leyer.

The ODS has also helped block or weaken anti-corruption measures such as whistleblower and lobbying reforms, and has long opposed strengthening the power of the Supreme Audit Office to investigate  malfeasance in the government administration and local councils.

Leyer thinks that much will depend on the ability of the coalition to resist backsliding. “I would say that the co-operation with the coalition partners can complicate the return of the behind-the-scene actors,” he says.

The Pirates and STAN, which are in government for the first time, have made a strong stand against ANO’s corruption scandals and will not stand for it under the ODS. To illustrate their seriousness, STAN’s own candidate for the minister of industry and trade Veslav Michalik felt forced to turn down the nomination after it emerged that his wife’s company is registered in Cyprus, a favourite tax haven of many Czech oligarchs.

Already some of ODS’ coalition allies are trying to block Blazek’s appointment to the cabinet, though Fiala is so far defending his candidate for justice minister.

Mikuláš Minář, former leader of the pro-democracy movement Million Moments, claimed recently that Blazek was being investigated by the police in Brno, the country’s second largest city, as part of the Stoka corruption case there, an allegation confirmed by the liberal Aktualne.cz server. Blazek has admitted being questioned by police but denied he was formally under investigation.

The Pirates and STAN are calling for the deoligarchisation of Czech politics, pointing to the excessive power of the country’s tycoons, particularly in the energy and media sectors. However, given the ODS’ past, and the fact that many oligarchs have given their support to the party, there is little hope of progress on this front.

Sharp step to the right

The discontent with the Necas government was not just over corruption and abuse of power. It was also the long-term result of socially uncaring policies as well as the disastrous austerity measures that pushed the economy into a sharp recession in 2009 after the global financial crisis. Back in March 2013 – before the Necas corruption scandal – a STEM poll showed a record-high 89% of the population were already dissatisfied with his cabinet.

The question now is whether the party has learnt its lesson. Unfortunately the early signs suggest not. It continues to push discredited neoliberal policies on the coalition government, even though it only has 33 MPs, just one more than the more centrist STAN party. The ODS, which will hold the finance ministry, is demanding huge cuts in public expenditure (and no tax rises) to close the budget deficit. 

It also still turns a blind eye to the country’s social problems and inequalities, which have been worsened by the pandemic. This summer, for example, the ODS, together with ANO and the far-right SPD, pushed through the populist "three strikes and out" law, deducting fines of people who commit an offence directly from their benefits. It has also helped block plans to promote social housing for poorer Czechs.

Already, some of the ODS’s coalition partners are stressing that just because the Social Democrats and the Communists failed to pass the 5% threshold to enter parliament, that does not mean the centre-right parties have a mandate for radical rightwing policies.

“I don't think this government can take a sharp step to the right extreme just because a million votes have been wasted,” STAN leader Vit Rakusan told daily Denik N in a recent interview. “Being from the centre-right shouldn't mean certain groups of the population are abandoned and at risk and forgotten,” he added. “We must not forget them.”

To focus on just one of the country’s biggest social problems – one that has been ignored until the past few years – the debt collection system has caused massive economic damage to the most deprived regions and untold personal misery to many of the most vulnerable in society.

Past governments of both left and right allowed personal loan companies, lawyers and bailiffs to build a monstrous machine in which individuals who defaulted on often small loans or fines found themselves on the hook for massive debts because of interest payments and penalties.

During the noughties and the early 2010s, personal loan companies such as Home Credit of the PPF Group of the late oligarch Petr Kellner, or Profi Credit of the millionaire Rudolf Beran, promoted loans with little regard to whether customers could afford them. When clients defaulted, courts speedily enabled the loan companies to choose executors who, together with bailiffs, were incentivised to rack up huge fees persecuting those who were among the most vulnerable members of society.

Many debtors were left with little option but to work in the black economy because so much of their legal earnings were grabbed by the debt collection companies. In the most egregious cases, vulnerable children in care found when they turned 18 that they were responsible for the huge debts racked up by their spendthrift parents or that they owed tens of thousands of crowns because of some ancient fine for dodging a tram ticket.

Fuelling divisions

Despite ANO’s pledges to bring about changes, major reform has never taken place, largely because of opposition by the ODS – citing the inviolability of the free market and the need for personal responsibility – as well as politicians linked to the debt collection lobby.

For example, ANO parliamentary leader Jaroslav Faltynek lobbied for certain bailiffs to receive debt-collecting jobs from the Prague transportation authority, as Seznam Zpravy's revelations of the contents of Faltynek’s private diary showed. He has denied any wrongdoing.

Blazek, the future ODS justice minister, has also opposed deep reform, with critics accusing him of having a conflict of interest because his wife is a prominent bankruptcy administrator in Brno.

The ODS’ combination of a harsh attitude towards the poor – blaming them for their own mistakes and frequently invoking abuse of the welfare system (which the far-right SPD blames on the marginalised Romani communities) – and the identification of freedom with an unregulated market have long fuelled divisions within Czech society. 

Today Czechia has somewhere between 700,000-800,000 adults trapped in enforcement proceedings, according to the Map of Enforcements, a huge number in a population of 10.7mn.

As well as being a social scandal, this has deepened regional divisions. This impoverished constituency in the regions (now also hit by soaring energy prices) could quickly become a political danger, because they are often influenced by disinformation websites (consequently refusing vaccination) and vote for the far-right SPD party of political entrepreneur Tomio Okamura – though he only whips up their anger and has little concrete to say about how he will solve their problems. “The only one who represents them is the ‘semi-fascist’ Okamura,” says Casensky.

A reform passed in July, advocated by the opposition Christian Democrats and the Pirates, addressed some of the most pressing issues. It created a jubilee period running from October 28 to January 28 to give those subject to enforcement proceedings an opportunity to be freed from hefty late fees and charges for bailiffs, which often exceed the size of the original debt.

However, Radek Habl, the author of the Map of Enforcements, says that though it put an end to some of the worst abuses, the July reform did not address one of the cornerstones of the Czech debt crisis:  the provision enabling bailiffs to operate across the whole Czech Republic, which effectively turns debt collecting into a “private business enterprise”.

Moreover, the jubilee period concerns only the debts to state institutions, and is in place only for a limited period of three months. As Daniel Hůle of the NGO People in Need pointed out in a recent interview for the Alarm website, the limited period was the “price of having the parliamentary parties support” the legislation.

More radical reform is needed. “I do expect some kind of debate about a general pardon,” says Casensky. However, it is difficult to see the ODS and its new justice minister agreeing to anything that looks radical.

The danger now is that if the ODS dictates the coalition’s economic policies and pushes through a return of discredited neoliberal policies, this will quickly dash the hopes of many struggling Czechs, generating massive dissatisfaction.

A record 19% of Czech voters at the last election supported parties – including the two main leftwing parties, the Social Democrats and the Communists – that fell below the 5% threshold to enter parliament. This pool of one million disappointed voters could provide a ready constituency for populists such as Babis and Okamura, who offer no real solutions but divide society and worsen popular disillusionment with democracy. If Babis is able to unite these disillusioned voters with his existing electorate for his presidential bid, polls show he could go on to beat the candidate of the government coalition by a significant margin.

Albin Sybera is a Czech freelance journalist based in Slovenia specialising in Czech media discourse, business and politics.