Europe News

Prague sees its biggest protest since the fall of communism. Here's why

Key Points
  • Prime Minister Babis, head of the anti-establishment and centrist party ANO, is being investigated at the national and European level.
  • At home, he is facing a criminal investigation for allegedly misusing 2 million euros ($2.28 million) in EU subsidies.
TOPSHOT - A man holds a Czech National flag during a rally demanding the resignation of Czech Prime Minister Andrej Babis on June 23, 2019 in Prague.
MICHAL CIZEK | AFP | Getty Images

The Czech capital saw the biggest protest since the fall of communism on Sunday, but an analyst told CNBC that the public demonstration might be for nothing.

The protest gathered more than 250,000 people, according to media reports, making it the largest show of anger among the general public since the 1989 Velvet Revolution which brought down Communism in the Eastern European country.

Hundreds of thousands of Czechs took to the streets calling on Prime Minister Andrej Babis to resign amid allegations of conflict of interest and criminal fraud. Sunday's rally was the culmination of different and smaller protests in recent weeks.

The situation is "very noisy", Otilia Dhand, senior vice president at research firm Teneo Intelligence, told CNBC Monday. However, she added that different political parties are willing to deal with a lot of public pressure, suggesting that the massive protest may not lead to any practical changes in government.

Why are people protesting?

Prime Minister Babis, head of the anti-establishment and centrist party ANO, is being investigated at the national and European level. At home, he is facing a criminal investigation for allegedly misusing 2 million euros ($2.28 million) in EU subsidies. Shortly after the police announced the investigation, a new justice minister was appointed – this led to different protests, with some people suspicious the prime minister was trying to influence the proceedings.

The European Commission has also raised concerns related to a conflict of interest over the prime minister's conglomerate – Agrofert. The European Commission, the EU's executive arm, has reportedly determined that Babis should return about 17.5 million euros ($19.94 million) in subsidies, the BBC reported. The Commission's investigation is not public, but the commissioner in charge of budget and human resources, Gunther Oettinger, said earlier this month that this is an "ongoing procedure."

PRAGUE, CZECH REPUBLIC - JUNE 23: Protesters attend an Anti-Government protest at the Letna plain on June 23, 2019 in Prague, Czech Republic.
Getty Images | Getty Images News | Getty Images

"It started in January and February…Now it is up to the Czech authorities, they are invited to react to our draft audit report and then we have to analyze again, and (then) we have to come to a decision," Oettinger said in a press conference earlier this month.

Prime Minister Babis has so far denied any wrongdoing and refused to resign.

The organizer group, A Million Moments for Democracy, is running an online petition demanding the prime minister's resignation. At the time of writing, more than four hundred thousand people had signed the petition.

What next?

The Prime Minister is facing a no-confidence vote on Wednesday in the Czech parliament. However, opposition parties do not have enough votes to oust the current government.

In the European elections, held in late May, ANO was the most voted party with 21.18% of the vote, strengthening its position in the European Parliament, Politico reported.

"It is worth watching but for now I see the government holding," Dhand from Teneo told CNBC over the phone.

The Czech Republic has taken a vocal stance in recent discussions at the European level. It was one out of four countries that blocked last week an EU-wide agreement to be carbon neutral by 2050. But it has also played a role in plans to distribute refugees across the EU as well as on ongoing discussions over the allocation of top jobs at the EU level.

The Czech Koruna has been mostly trading flat against the dollar on a year-to-date basis.