Dec. 17 (Bloomberg) -- One year after the death of former Czech President Vaclav Havel, a global icon in fighting dictatorship, his persecutors’ political heirs have national power in their sight for the first time since 1989.
The Communist Party of Bohemia and Moravia is riding a protest wave similar to anti-austerity parties across Europe such as Greece’s Golden Dawn and polls show it could form a majority with the Social Democrats were elections held now.
“In voting for the Communists out of protest, Czechs are implicitly saying they consider the former regime acceptable,” said Jiri Pehe, a former adviser to Havel, who died at 75 a year ago tomorrow.
The party, whose leader eulogized North Korea’s Kim Jong-il after his death last year, is winning support as Prime Minister Petr Necas cuts investments and raises taxes amid the second recession since 2009. His government is also struggling to fight graft, with the nation ranked worse than Georgia and Rwanda in Transparency International’s 2012 Corruption Index.
The KSCM, shunned by parties after the 1989 transition to democracy, finished second in October regional voting and now co-rules in 10 of 13 regions with the Social Democrats.
“Much of our work was done by the government,” said Jiri Dolejs, 51, the KSCM’s shadow finance minister. “People are unhappy and don’t trust politicians.”
While former Marxists have held power in neighboring Poland and in Hungary, the Czechs have the only “unreformed” communist party in the EU’s east, according to David Ondracka, who heads Transparency International’s Prague branch.
The KSCM wants to boost taxes and welfare spending and beef up regulation of the financial industry, Dolejs said, policies that are similar to proposals by the Social Democrats. Unlike them, the KSCM wants to exit the North Atlantic Treaty Organization, he said.
For now, investors are unmoved by the success of the Communists. The nation enjoys borrowing costs similar to higher-rated France, with the yield on the 10-year benchmark bond at 1.958 percent at 4:50 p.m. in Prague, down three basis points from yesterday. The koruna, which has gained 1.4 percent to the euro this year, was little changed on the day at 25.232.
At the same time, the Communists “may be more dangerous than most think,” said Martin Lobotka, an economist at Ceska Sporitelna AS in Prague. KSCM measures may boost debt and “set off alarm bells at major rating agencies” and lead to “Czech yields rising and the koruna weakening,” he said.
Havel and other Velvet Revolution leaders rejected banning the Communists and argued they should be defeated in elections, Pehe said. Most Czechs weren’t bothered by the KSCM’s regional success, a Nov. 20 survey by polling company STEM showed.
The Social Democrats, who vowed in 1995 never to govern nationally with the KSCM, may welcome communist backing for a government should both parties combine to win a majority in the next election, Social Democrat head Bohuslav Sobotka said in an Oct. 15 interview in the newspaper Pravo.
His party and the KSCM would together win a majority in the 200-seat lower house of parliament, according to a Dec. 13 Internet survey of 11,739 adults by polling company SANEP. The Social Democrats would finish first with 115 seats and the KSCM second with 99, according to the poll, which had a margin of error of 1.5 percent.
The Civic Democratic party led by Necas, whose term ends in 2014, would claim 36 seats, according to the poll. Necas’s Cabinet counts on 99 deputies for support and early elections remain a possibility as he tries to push through additional austerity measures by year-end.
The KSCM in government would be “uncharted political waters and could be the trigger for a reassessment of Czech credit,” Nicholas Spiro, head of Spiro Sovereign Strategy in London, said by e-mail. Still, communists in national office “would come under enormous pressure, politically as well as externally, to act responsibly.”
KSCM argues that too-fast fiscal consolidation has choked domestic demand, which makes up half the economy. The party would slow the pace of deficit reduction, invest in projects with a “multiplying” effect on growth and repeal the overhaul that partly privatized pensions, Dolejs said. KSCM also seeks an end to environmental limits on brown coal to boost jobs.
With Czech debt at 45 percent of economic output, less than half the euro-area level, “markets would generally tolerate a less hawkish” fiscal policy, said Neil Shearing, an economist at Capital Economics Ltd. in London. Still, repealing the pension overhaul “could well provoke bond markets.”
Last year, KSCM leader Vojtech Filip wrote Pyongyang after Kim’s death, praising his “sacrifice for the good of his people.” Lawmaker Marta Semelova has lauded Cold War-era border guards who shot at fleeing Czechs and urged the party’s “Bolshevization.” She was among four KSCM deputies to refuse to join a parliamentary ceremony honoring Havel after his death.
Dolejs sought to downplay such incidents, saying they are inevitable in a party with 66,000 members.
“We’re not about a return to the past, but finding a new way forward,” he said.
Last year, thousands of Czechs braved winter’s onset to pay their last respects to Havel. The playwright, imprisoned for almost five years by the Soviet-backed regime, once installed a neon heart over the Prague Castle as a symbol of “love, understanding and decency.”
Post-1989 communists never followed the “cult of Havel,” Roman Janouch, editor of KSCM newspaper Halo Noviny, said in an interview. They opposed Havel’s embrace of NATO and backing of U.S. foreign policy in Iraq, and accused him of facilitating the 1993 breakup of Czechoslovakia, he said.
“I too was once a believer and even had a Havel poster over my bed,” Janouch said. “I soon threw it away because I realized this man’s noble words about truth, love and freedom never matched his actions.”
To contact the reporter on this story: Jeffrey Donovan in Prague at firstname.lastname@example.org
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