Czech Republic: ANO wins regional elections, setting up return to government in 2025

• ANO almost doubles regional council seats, leads in 10 out of 13 regions
• The party will likely have more than the 3 governors it currently has
• Most ruling parties do not so poorly, except the Pirates, who were decimated again
• The Pirates' leadership resigned, and the party could leave the government before the next general election
• ANO will likely return to power in 2025, and it no longer discards ruling with the SPD and the KSCM

The Czech Republic held regional and partial Senate elections on Sep 20-21, leading to a big upset for the ruling coalition, according to?official results . While the Czech Republic is a unitary state, so it doesn't matter much who runs regional governments (unlike Germany, for example), the election results are a good early indicator of how the general election next autumn could pan out. We will not dwell too much on the Senate election here, as there are run-offs for most Senate seats, as usual, so a more thorough analysis can be made a week from now when the run-offs are over. Meanwhile, the regional elections were a big upset for the ruling coalition, whose chances to hold on to power at the general election in 2025 do not appear that great.

A few notes on how regional governments work. Direct elections are held only for regional councils, which then must appoint a regional governor. The system copies the parliamentary system at national level, where parties must form a majority to rule. Thus, the part that ends up in first place doesn't always manage to run a region, provided that the rest manage to establish a majority. Coalitions tend to be very diverse, and often parties that are allies at the national level enter an alliance at the regional one, or vice versa. There have been several occasions where ANO and the ODS, strong rivals nationally, rule together at lower government levels. Furthermore, coalitions tend to change from one election to another, which is why we are monitoring only the total number of seats won, rather than percentages or separate regions.

ANO wins convincingly, extending its lead in many places

The most immediate take from the regional elections is the much stronger victory for ANO, the leading opposition party. ANO won 292 seats in regional councils, almost doubling them from 178 in 2020. While the party won in 10 of the 13 regions that held elections, the same as in 2020, its lead was much stronger than four years ago. There are some regions where ANO can rule entirely on its own, and in others, establishing a majority will be an easy task. Expectations are that ANO will have a lot more governors than the current three it has. The potential is to get at least twice as many governors, though there are already regions where other parties have been allying against ANO.

Nevertheless, ANO appears to have run the most successful campaign, and the results did not disappoint. ANO leader Andrej Babis was visibly happy, and he even made implications about the general election next autumn. He strongly implied he may not return as prime minister, instead putting forward Karel Havlicek, who used to be minister of industry and trade in the last Babis government. Havlicek is currently first vice president of ANO, and it appears Babis would rather have a similar model as in Poland's PiS, where Jaroslaw Kaczynski took a back seat and pushed Mateusz Morawiecki to the front.

There are other changes coming, as Havlicek did not rule out alliances with the SPD, a nationalist populist party, in some places. This is significant, as it indicates a shift in ANO's approach, which has shunned the SPD thus far. Given how national polls have been going, the odds are that ANO will be able to establish an absolute majority with the help of the SPD at the national level. Thus, setting this up now will be an early warning of what is to come next year. In all fairness, this shouldn't come as a surprise, as ANO chose to found a new European Parliament group with parties like France's RN, the Netherlands' PVV, and Hungary's Fidesz.

Most ruling parties did not do that poorly ...

Most of the ruling parties did not do that poorly, as Spolu and STAN reported modest gains. Spolu got 10 more seats in regional councils, up to 181, while STAN won 104, more by 13 than 4 years ago. Yet, expectations were much stronger, given that these parties have been in power for almost three years. The fact that Spolu and STAN are leading in only 3 out of the 13 regions that held elections is disappointing, and there was a visible shock among ruling party leaders. Voters are clearly unhappy with the conservative fiscal policy led thus far, and many local economists see the regional election results as removing the incentive for further fiscal consolidation. We don't share that view as strongly, but the government will certainly avoid any major fiscal shocks from here on, as the political cost may only rise.

The most striking change is that the ruling parties barely manage to match ANO at these elections, while they had twice as many seats 4 years ago, when still in opposition. If the 2020 regional elections are used as a foreshadowing of what is to come, the odds are that the best the ruling parties can hope for is to end up at par with ANO. This doesn't make the situation any better, as the current ruling coalition has reached the limit of its alliances. Any other parties likely to enter the Chamber of Deputies, the lower house of the Czech parliament, are likely to be on the political fringe, and wiling to work with ANO, rather than the current coalition. Thus, it is certainly not looking good for the current ruling coalition.

... except the Pirates, who were decimated again

The biggest upset in the ruling coalition was undoubtedly for the Pirates, which were decimated in a second consecutive election, after their poor showing in the European Parliament election in June. The pirates lost 96 of their 99 seats, keeping regional councillors only in the Pilsen region. This was an enormous slap to the party, and its leadership immediately resigned after the election. The Pirates have been doing poorly in all elections during the latest electoral cycle, but this one was the biggest shock, without comparison. It appears that voters are no longer perceiving the party as a bringer of change, given that it hasn't managed to do much at national level, either. The botched digitalisation of the building permit system did not play the party any favours, which is why voters are going elsewhere.

There have also been remarks in the party that the decision to ally with more conservative formations has not paid off. Expectations are increasingly towards the Pirates staying in opposition in the next parliament, no matter how the results pan out, and maybe even leaving the government before the next general election. If the latter happens, it will not affect the government's majority, as the Pirates have only 4 seats in the Chamber of Deputies, so their departure will reduce the government's majority to 104 out of 200 seats. A lot will depend on who takes over at the Pirates leadership, a question that will be decided soon, possibly before the end of October.

Voters clearly wish to push out the current coalition out of power

The implications of these elections are clearly in favour of ANO returning to government next year. Remarks made that ANO would entertain ruling with parties like the SPD and KSCM at the regional level will likely translate to the national level as well. It will still not be an easy coalition, as the SPD wants the Czech Republic to leave both the EU and NATO, while the KSCM is content with staying in the EU but not NATO. We don't believe anyone in the Czech Republic would imagine leaving the EU, however weakening NATO will be likely a consequence of a government that includes the SPD and the KSCM.

Regarding fiscal policy, neither ANO nor its potential allies have any interest in fiscal consolidation, so the odds are that spending will become much looser. The only scenario when it isn't the case is if ANO and the ODS manage to agree an alliance, though we may be in a situation where ANO may see it more profitable not to do that. An ANO-ODS alliance will be inevitably on ANO's terms, and we doubt that the ODS will take such a deal, as it will likely lead to its long-term demise, similar to what the CSSD (now SOCDEM) did in 2014 and 2018.

Thus, the odds are getting stronger that the Czech Republic will get a government very similar to the one in Slovakia next year. While it will not immediately mean a switch to a regime like the one in Hungary, it will likely lead to undermining the EU and support for Ukraine. It will also reduce fiscal stability and likely lead to dubious political appointments at many levels.