Andrej Babis's centrist-populist ANO movement emerged as the strongest party in the Czech parliamentary election in early October.

A month later, ANO signed a coalition deal with two smaller conservative Eurosceptic parties, outlining their policy priorities.

But Babis, the billionaire businessman who hopes to become the next prime minister of Czechia, has regained sole ownership of his agriculture, food and chemical conglomerate Agrofert, which receives millions of euros in EU subsidies every year.

He has yet to explain how he plans to resolve that conflict of interest.

Babis pledges to explain all

"The atmosphere among some in the media is such that even if I die, they'll still be saying I have a conflict of interest," Babis told reporters after emerging from talks with President Petr Pavel at Prague Castle on Wednesday.

"As I've said before — and I will, of course, keep my word — I'll explain everything to him," he added, responding to media questions on the issue. "It now seems the president mainly wants me to explain it to the public, not to him."

I told him that I'm dealing with the matter and that whatever I do will be in line with the views of Czech courts and the European Commission." 

Pavel waiting for public explanation

A statement from Prague Castle confirmed that President Pavel wants a public explanation before agreeing to name Babis as prime minister.

"The president underlined to the ANO chairman that he is bound by his pledge to uphold the Constitution. He therefore expects full clarity on how Mr. Babis intends to meet his constitutional and legal obligations," a spokesman said.

"Without such assurances, appointing him would risk creating the impression that the president himself is enabling an unconstitutional situation."

For now, the two men are at an impasse, and observers see no easy way out.

'No real solution'

"Babis cannot tell the public how he will solve his conflict of interest because there is no real solution," said veteran political analyst Jiri Pehe, who worked for many years for the late former President Vaclav Havel. "He could sell his business empire, but that would take months if not years."

Pehe suggested that he could transfer it into a blind trust, but that since Czech law does not recognize these, it would require months to produce the necessary legal amendment.

"He could transfer the ownership of his business empire on to his children, but that is also very complicated," said Pehe.

"The easiest solution would be to give up the ambition to be the prime minister and propose someone else from his ANO movement, for example [former deputy Prime Minister] Karel Havlicek. But Babis seems to be reluctant to do so at this point." 

National and EU legislation require a solution

A glance at Czech and EU regulations makes clear that a solution must be found.

The Czech Conflict of Interest Act prohibits public officials from engaging in business activities or holding positions in companies that could benefit from government decisions.

The so-called Lex Babis amendment specifically bans politicians from owning media outlets or companies that receive public subsidies or investment incentives.

Did Babis resolve the conflict when he was last PM?

Although Agrofert sold MAFRA — one of the largest media groups in the country — to another billionaire in 2024, observers maintain its coverage remains favorable to Babis and ANO.

But there is no ambiguity about Agrofert's reliance on EU subsidies.

Between 2017 and 2021, during Babis's previous term as prime minister, Agrofert received billions of Czech crowns — equivalent to hundreds of millions of euros — in EU subsidies.

Babis transferred Agrofert into two trust funds in 2017 to neutralize the conflict of interest.

However, audits by the European Commission found in 2020 that despite this transfer, Babis remained the beneficial owner of Agrofert and still had de facto control, meaning that the arrangement did not sufficiently break the conflict of interest.

He has since dissolved those trusts, once again becoming the sole owner of Agrofert, making any conflict of interest even more unequivocal.

'President holds the key'

"The president holds the key to Babis's appointment, so, for now, the president is in a better position to impose his will," said political scientist Petr Just from Metropolitan University in Prague.

"In general, however, I would say that it would be in neither Babis's nor Pavel's interest to prolong the stalemate," Just told DW, adding he believed a new government could be in place by December.

Others are not so sure. President Pavel wants more clarity on the new government's policies — particularly on foreign policy and defense spending.

And questions remain over potential ministerial appointments, most notably a controversial candidate for foreign minister.

A new Czech government could well in place by Christmas, but there's no guarantee.

Edited by: Aingeal Flanagan