Czech election returns Babis to power as voters punish incumbent government

The Czech Republic's parliamentary election on 3 and 4 October delivered a decisive verdict on Petr Fiala's centre-right government. After a single term dominated by double-digit inflation, soaring energy bills and stagnant real wages, voters handed victory to Andrej Babis and his ANO movement. The result mirrors a pattern visible across the European Union: incumbent parties paying the price for a cost-of-living crisis that eroded living standards faster than any government could credibly explain, let alone fix.

A verdict on inflation and energy

Fiala's coalition, assembled from five parties spanning the centre-right to the liberal centre, took office in December 2021 promising fiscal discipline and a pro-European course. Within months, Russia's full-scale invasion of Ukraine upended those plans. The Czech economy, heavily dependent on Russian gas and deeply integrated into German industrial supply chains, absorbed a sharper terms-of-trade shock than most EU members. Inflation peaked above 17% in early 2023. Although it has since fallen back towards the central bank's 2% target, prices remain roughly 30% higher than when Fiala took office. Wages have not kept pace.

That gap between macroeconomic stabilisation and household experience created the opening Babis exploited. His campaign offered no detailed programme but a simple proposition: he had governed before, he understood business, and he would put Czech wallets first. The message resonated beyond ANO's traditional base. Exit polls showed the movement winning support across income groups and regions, including towns that had backed Fiala's parties in 2021.

The coalition arithmetic

ANO finished first but short of a majority in the 200-seat Chamber of Deputies. Babis now needs junior partners. The two most likely candidates sit to his right. Freedom and Direct Democracy (SPD), led by Tomio Okamura, campaigns on anti-immigration rhetoric and explicit euroscepticism. Motorists for Themselves, a newer vehicle built around opposition to the EU's Green Deal and motoring restrictions, draws support from rural voters and small business owners. Both parties have signalled willingness to negotiate.

A three-way coalition would give Babis a comfortable majority but would also tether him to partners who regard Brussels with hostility. That tension, between a prime minister whose business empire depends on EU structural funds and coalition allies who want to slash those same funds, will define the government's first months. Negotiations were still underway as of mid-October, with policy agreements on energy pricing, migration and the EU budget yet to be finalised.

Pragmatism over ideology

David Ondracka, who led Transparency International's Czech branch until 2023, has tracked Babis's career for more than a decade. He argues that foreign observers often misread the billionaire politician. "He is not a pro-Russian politician," Ondracka said. "He is pro-European, because that's where he sees the most money for his own pocket." The distinction matters. Babis is frequently bracketed with Viktor Orban or Marine Le Pen as part of a European populist wave. Ondracka sees a different phenomenon: a transactional operator who adopts whatever rhetorical posture serves his commercial interests.

That assessment aligns with Babis's record in his first premiership (2017-2021). He clashed with Brussels over rule-of-law conditionality and migration quotas, yet never threatened Czech EU membership. His governments drew down the full allocation of cohesion funds and recovery money. The Agrofert conglomerate, which he founded and which remains under family-controlled trusts, receives millions in agricultural and research subsidies annually. A European Commission audit in 2021 concluded that Babis's continued beneficial ownership created a conflict of interest; the Czech government disputed the finding.

The Agrofert shadow

Babis's fortune, estimated by Forbes at €3.7 billion, derives from Agrofert's sprawling portfolio: fertilisers, chemicals, food processing, construction, energy, and media. The group employs roughly 31,000 people across Europe and China. In 2017, under pressure from conflict-of-interest legislation passed during his first term as finance minister, Babis transferred his shares to two trusts, AB private trust 1 and AB private trust 2, managed by his wife, children and long-time associates. He insists the arrangement meets legal requirements. Critics, including Ondracka, describe it as a fig leaf.

A more concrete legal threat hangs over the incoming prime minister. Czech prosecutors have charged Babis with fraudulently obtaining €2 million in EU subsidies earmarked for small and medium-sized enterprises. The case concerns a conference centre and farm complex, Stork's Nest, which Agrofert allegedly disguised as a separate small business to qualify for the grant. Babis denies wrongdoing, calling the prosecution politically motivated. The trial, delayed repeatedly, is scheduled to resume in early 2026. A conviction would not automatically remove him from office but would intensify pressure from coalition partners and the president.

Visegrad Four: a vehicle without an engine

Babis's return revives questions about the Visegrad Four, the informal alliance linking the Czech Republic, Hungary, Poland and Slovakia. During his first premiership, Babis coordinated with Orban on migration and EU budget negotiations but kept distance from Orban's rule-of-law confrontations with the Commission. The group's cohesion fractured after Russia's 2022 invasion: Poland and the Czech Republic backed strong sanctions and military aid to Ukraine; Hungary and Slovakia, under Fico since late 2023, resisted both.

Ondracka is sceptical that Babis's victory restores the format's relevance. "It seems that Babis will agree on some issues with Orban and Fico," he said, "but there is also huge opposition from Poland and from Tusk, so I don't think the Visegrad Four will be a very actionable group. It will remain politically irrelevant within the EU." That assessment reflects a deeper shift. Donald Tusk's return to power in Warsaw has reoriented Polish foreign policy toward the EU mainstream and the Weimar Triangle with Paris and Berlin. Prague, under Babis, may find itself pulled in two directions: toward Budapest on subsidies and nuclear energy, toward Warsaw on security and the single market.

Russian narratives rejected at the ballot box

One striking feature of the campaign was the failure of explicitly pro-Russian parties to gain traction. The Communist Party, which had parliament representation continuously since 1990, fell below the 5% threshold. A newer formation, Law, Respect, Expertise (PRO), which echoed Kremlin talking points on Ukraine and sanctions, also failed to enter parliament. Ondracka attributes this to direct experience. "Czech elections actually showed that majority of the Czech population doesn't buy that narrative and they don't want to come back to Russian influence at all," he said.

The country hosts roughly half a million Ukrainian refugees, about 4.7% of its 10.5 million population, the highest per-capita ratio in the EU after Poland. The influx has strained schools, housing and healthcare, particularly in Prague and Brno. Yet it has also generated a widespread volunteer network and a political consensus that the refugees are fleeing a war of aggression, not migrating for economic advantage. That consensus held across the campaign. Even SPD, the most eurosceptic party likely to enter government, stopped short of calling for refugee returns.

What the result means for Brussels

For the European Commission, a Babis-led government presents a familiar management problem rather than an existential challenge. The Czech Republic is a net beneficiary of the EU budget, receiving roughly €14 billion more than it contributes in the 2021-2027 multiannual financial framework. Those funds finance infrastructure, research, and the green transition, sectors where Agrofert and its competitors are active. Babis has every incentive to keep the money flowing. His coalition partners, particularly SPD, have campaigned against the Green Deal's Fit for 55 package, which imposes costs on Czech coal regions and the automotive supply chain. The government's position in Council negotiations will reveal which imperative prevails.

Rule-of-law conditionality, the mechanism that allows the Commission to suspend funds over judicial independence concerns, was never triggered against the Czech Republic during Babis's first term. The Commission's 2021 audit on conflict of interest did not lead to financial corrections. That precedent suggests the institution will prioritise procedural compliance over political confrontation. Whether that calculus holds if Babis's trial ends in conviction is an open question.