Czech Premier Withdraws Offer to Resign as Turmoil Deepens

Czech Premier Bohuslav Sobotka said he will withdraw his offer to resign and will instead propose to dismiss billionaire Finance Minister Andrej Babis from the government, deepening the political turmoil six months before scheduled general elections.

Sobotka’s surprise reversal of an earlier pledge came Friday after he clashed with President Milos Zeman over explanations of constitutional procedures related to the government’s resignation. Sobotka reiterated that Babis needs to leave the cabinet as he has failed to explain his past business practices. The finance minister has refused to step down.

Bohuslav Sobotka

Photographer: Martin Divisek/Bloomberg

The post-communist European Union member fell in a political chaos this week as Sobotka’s conflict with Babis escalated. The premier’s Social Democrats are trailing Babis’s ANO party by a wide margin in opinion polls as the two are set to face off in October elections. Even though they have squabbled in the past three years, their cabinet has been the longest-serving Czech administration in 15 years and managed to restart economic growth and balance state finances.

The premier said his initial offer to quit was meant as a resignation of the entire cabinet, which has traditionally been the practice in the past. But he changed his mind after the president signaled he would only dismiss him. Sobotka’s latest decision was “a desperate move,” Jiri Ovcacek, the president’s spokesman, said on Twitter.

So far, the turmoil has sparked minor market reaction, with the koruna trading little changed at 26.83 to the euro as of 10:54 a.m. in Prague. Government borrowing costs were also flat, with the yield on the 10-year note at 0.66 percent.

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