Czech politics

Czechs are fiercely proud of their beer, and especially of the fast-growing range of varieties available from the explosion of independent craft and micro-breweries established in recent years in both Prague and the country’s many spa and historic towns, as an FT special report shows.

Indeed, the boom in innovative, independent brewing is being felt well outside the tourist-packed streets of old town Prague and Cesky Krumlov.

Sixty miles to the south-east of the Czech capital is Pacov, a small town in rolling hills that fails to make the tourist radar screen. But a factory on its southern fringes knows all about the current rage among restaurateurs for making hoppy Czech ales on site. 

By Dalibor Rohac of the Cato Institute

It took Czech President Miloš Zeman 95 days since the parliamentary election to appoint the new coalition government led by Social Democrats last week. But that remarkable delay has been eclipsed by the person of the new finance minister, Andrej Babis, a highly successful entrepreneur and maverick politician of Slovak origin. His rise to political prominence can mark a new era in Central European politics – an era in which close ties between big business and the government will become not only commonplace but shamelessly so. 

For most people becoming finance minister is a huge professional promotion – for Andrej Babis, whose fertiliser-to-media empire has made him the Czech Republic’s second wealthiest man, it will mark a bit of a comedown.

Under a preliminary agreement to create a new coalition government, Babis looks set to take over the finance ministry, one of his demands to bring his newly formed Ano party into the government. 

Czech elections created a confusing mess, with no party – or even grouping of two parties – able to command a majority in the country’s 200-member parliament, but the prospect of a long political stalemate is leaving most analysts unruffled. 

There was not a lot of public regret about the recent defenestration of the centre-right government of outgoing Czech premier Petr Necas in a sex-and-spying scandal. One reason is that his austerity policies are blamed for sinking the country into its longest-running recession – one that began in the third quarter of 2011.

The new caretaker administration of Jiri Rusnok aims to change that. But it may find it hard to do anything of substance. 

Tim Gosling and Nicholas Watson in Prague

A bribery and spying scandal that exploded onto television screens last week in a series of police raids on the prime minister’s office and other ministries has forced Czech premier Petr Necas to resign, in a move which will automatically bring down his government.

The resignation leaves his party and its partners scrambling to form a new centre-right coalition administration. But with the new leftist President Milos Zeman in office and an opposition riding high in the polls, early elections look increasingly likely. 

By Nicholas Watson of bne

The Czech Republic was thrown into political crisis on Thursday after the police’s organised crime unit raided government offices, including the cabinet office, the defence ministry and the agriculture ministry.

Interior Minister Jan Kubice made a statement to parliament saying that the head of the police unit and two prosecutors visited Prime Minister Petr Necas (pictured) “in relation to a criminal procedure.” Officials later said several people had been detained. Necas later insisted that neither he nor any of his close aides had done anything wrong, and that he would not be resigning. 

Poland and the Czech Republic seem to be heading in different directions over the euro.

The Czech Republic has long been one of the region’s greatest sceptics on joining the common currency, preferring to hang on to the koruna and enjoy a reputation for fiscal and monetary probity at least equal to that of the EU and the European Central Bank.

Czech governments have for years refused to set a firm date for entry. But now Milos Zeman, the country’s new centre-left president, said in a German press interview that his country could be in the euro by 2018 – a marked departure from the eurosceptic views of his predecessor Vaclav Klaus, who famously even refused to fly the EU’s blue banner over his residence. 

What does Milos Zeman mean for business?

The Czech president-elect does not have much direct power over his country’s economic policy – except for nominating members of the Czech National bank responsible for setting interest rates (the first seat there comes free only in 2014) – but his victory in last weekend’s elections does have implications for business. 

By Nicholas Watson of bne

The Czech coalition government managed to see off a confidence vote in parliament on Wednesday evening, but a perfect storm of sleaze, voter unpopularity, political infighting and a weak economy promises to make the remainder of its term in office a struggle.

The three-party, centre-right coalition held ranks long enough to defeat a parliamentary no-confidence motion, its fourth in less than two years, called by the opposition Social Democrats. The opposition required 101 votes in the 200-seat lower house to topple the government, but managed only 89. 

The centre-right Czech government has no intention of letting up on its fiscal tightening programme, a senior minister tells beyondbrics after several weeks of turmoil caused by the disintegration of one of the parties in the coalition and a vote of confidence set for later on Friday night.

The government of premier Petr Necas looks set to gain a narrow majority in the 200-member parliament after the smallest coalition member – Public Affairs – formed a breakaway grouping with enough votes to allow the two year old government to continue functioning.