Wednesday

8th Jul 2020

Opinion

Questions for Czech PM Babis on Agrofert

  • Czech prime minister Andrej Babis is accused of exerting control over Agrofert Company, which receives EU subsidies, while at the same time being actively involved in the implementation of the EU budget for the Czech Republic

Today (Friday 19 June) the European Parliament will vote on a resolution that strongly condemns the Czech prime minister Andrej Babiš' conflicts of interest.

He is accused of exerting control over Agrofert Company, which receives EU subsidies, while at the same time being actively involved in the implementation of the EU budget for the Czech Republic.

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The resolution "deplores" this situation and calls "into question the impartial and objective exercise of his functions in contravention of Article 61(1) of the Financial Regulation".

The parliamentary resolution also urges the European Commission to take firm action to end Babiš' malpractices.

In meticulous detail it exposes the ways that the prime minister has obscured the fact he remains the sole beneficiary of his agrochemical corporation, Agrofert; how he has essentially captured the Czech state in order to serve his corporate interests; and how he has been fraudulently accessing subsidies both on the European and the national level.

The resolution lays out dozens of recommendations for concrete actions that the commission and EU Council must take to halt the abuse of EU subsidies in Czech Republic.

This includes new control mechanisms for conflicts of interest, a policy of zero-tolerance, ending funding for Agrofert, preventing oligarch politicians from participation in decisions that concern their interests, and last but not least, it insists that the commission must publish its audit report on Babiš' conflicts of interest without further delay.

These echo the demands of Czech civil society, which has been protesting the takeover of the Czech state by Babiš in unprecedented numbers in last two years – culminating in 300,000 people joining the November 2019 demonstration in Prague, the largest since 1989.

The resolution gives damning evidence of how the Czech state is failing its own citizens and has allowed many of its institutions to become vehicles serving the interest of the Czech oligarch-turned-Prime-Minister; as well as how Babiš uses his executive power to coerce public servants into pretending that his personal interests are in fact equivalent to the interests of the state.

The resolution states that the EP: "Strongly disapproves of the creation and establishment of oligarch structures drawing on EU agricultural and cohesion funds whereby a small minority of beneficiaries receive the vast majority of EU funds".

The resolution has been sponsored by politicians of all major EP groups, including MEP Ramona Strugariu of Babiš' own Renew group.

Should the resolution be adopted – and swiftly implemented – it would show the EU is capable of living up to its own standards and can ensure member states maintain the democratic norms they agreed to abide by when joining the union.

This is an impressive initiative by the European Parliament, but it is important to understand the context and circumstances that have led to this terrible situation in the first place.

2004 enlargement mistakes

Since the enlargement of the European Union in 2004 (and in many cases even before), EU subsidies have too often been used not to foster the stated aim of economic and social convergence of the post-communist countries with the western democracies, but rather to build local, regional and national mafia-like structures.

These structures have invented sophisticated methods in order to meet the regulatory demands of EU and at the same time build their clientel-ist arrangements at home.

Back in the 1990s the late Czech president Václav Havel coined the term "mafia-capitalism" to describe this kind of business structure which makes profits by siphoning off public budgets.

The EU institutions failed to ensure that the quality of democracy, a flourishing civil society, and a free press would be guaranteed as a part of the enlargement process.

As a result many of the new member states have seen the ruthless and well-resourced becoming ever richer and more powerful. But the EU have also failed the public in their own countries.

The reason for this is perhaps twofold.

First, the EU institutions have been lured into believing that as long as formal democratic procedures are upheld, the political representatives of the post-communist countries still reflect the true democratic will and interests of their societies.

But in many cases this is simply not true.

Almost no attention was given to the role of civil society and free media, and virtually no independent checks were put in place to monitor the quality of democracy and to take care of its nourishing and development.

In this sense the sacrosanct principle of subsidiarity has failed the EU, because in fact it has in many cases supported structures by their nature completely hostile to the values on which the European Union is supposedly based.

It is not to say that EU funds have not generated an enormous volume of public good in the new member states. But the collateral costs of money diverged to oligarchs and their ilk are unacceptably high.

The default response – to make bureaucratic safeguards to access EU money ever more complicated – has not improved the situation much because it discourages many of the smaller, genuinely eligible potential recipients of the subsidies, while the big murky players usually find their way around the rules.

The second reason why the EU was ill-prepared to manage the enlargement properly is that Western European countries themselves – as well as the EU in general – have a striking democratic deficit of their own, given their own decision-making processes are too prone to be influenced by undue financial and corporate interests.

In reality the case of Babiš – or for that matter, Hungary's Victor Orbán and his network of cronies – is different only in scale, but not in principle, to the situation in EU, where for example 'Big Pharma' corporations can buy influence (via lobby spending, revolving door hirings, etc) to set the priorities of EU medical research, the car industry can buy influence over the EU transport policy priorities, or the large fossil-fuel and nuclear industries trying to impose their outdated concepts on EU energy policy.

The eye-watering difference between the way the EU Institutions treated Greece for diverging from the neoliberal economic orthodoxy during the early years of the Syriza government, and the lenient way they are treating the failing central European democracies in the Visegrad countries, bears painful witness to the EU's real priorities.

Time and time again, we see economic and corporate interests favoured over the quality of democracy and the rule of law.

This EP resolution must be followed by a whole-hearted effort to significantly strengthen the quality of democracy, in the Czech Republic, but also beyond that, in all parts of Europe.

Author bio

Jakub Patočka is on the board of Corporate Europe Observatory, an NGO investigating and exposing corporate lobbying in Brussels.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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