In this Feb. 22, 2017 file photo Czech Republic's Prime Minister Bohuslav Sobotka addresses the media after an extraordinary meeting of the chairmen of parliamentary parties in Prague, Czech Republic. Sobotka said Tuesday, May 2, 2017 his government will resign over unexplained business dealings of his Finance Minister and rival Andrej Babis.

Start the conversation, or Read more at Houston Chronicle. </s> PRAGUE (AP) — The Czech prime minister says that his government will resign over unexplained business dealings of the country's finance minister and rival.

Premier Bohuslav Sobotka says that he will meet President Milos Zeman this week to formally submit the government's resignation.

Tuesday's move reflects tensions in the ruling coalition about six months before the parliamentary election.

Sobotka says that there are suspicions that Finance Minister Andrej Babis avoided paying taxes in the past that he didn't explain properly.

Babis, the country's second-richest businessman, heads a centrist movement that is a favorite to win October's ballot, paving the way for him to become prime minister. </s> Prague - The Czech Republic's prime minister unexpectedly announced on Tuesday that his government will resign over unexplained business dealings of the country's finance minister.

Prime Minister Bohuslav Sobotka said that he would meet President Milos Zeman this week to formally submit the government's resignation.

Sobotka's move caught political observers by surprise, but reflects tensions in the ruling coalition about six months before the next scheduled parliamentary election.

Sobotka said there are suspicions that Finance Minister Andrej Babis, the country's second-richest businessman, avoided paying taxes in the past. Doubts have also surfaced about how Babis obtained his wealth.

Babis is a rival of Sobotka's and heads a centrist movement that is a favourite to win October's ballot, paving the way for him to become prime minister. He previously denied any wrongdoing and refused to resign.

Under the constitution, the country's president fires cabinet ministers at the prime minister's request. Zeman indicated recently it made no sense to him to get rid of a government member so close to the election.

Sobotka said it would be an option to fire Babis but that would mean his rival would be given extra time to campaign ahead of the vote. </s> Czech Prime Minister Bohuslav Sobotka said on Tuesday he would resign along with the whole cabinet in response to a row with his Finance Minister Andrej Babis.

Sobotka said the resignation would allow a reformation of the cabinet with the same three-party centre-left coalition but without Babis — or lead to an early national election.

His announcement comes less than six months ahead of the next parliamentary elections, which are scheduled for October.

The Czech koruna dipped by about 0.4% in the immediate aftermath of the announcement, but has since retraced its losses. It is little changed at 24.6510 per US dollar as of 9:52 a.m. ET.

"It seems unlikely that this political realignment will have a significant impact on the economy or financial markets. The stability of Czech politics over the past three years has been the exception rather than the rule," William Jackson, senior emerging markets economist at Capital Economics, said in a note. "Prior to that, governments changed frequently. But that was never marked by sell-offs in the markets or sharp swings in the direction of policymaking."

"And unlike in other emerging markets where political instability is a concern, there are no major fiscal issues to tackle in the Czech Republic that might otherwise require a stable government," he added. "Indeed, if anything fiscal policy has been too tight."

The Czech Republic has seen the turnover of six cabinets in the past decade, according to Bloomberg data. But it has seen three years of relative stability under Sobotka's coalition government, according to the BBC. </s> Image copyright Reuters Image caption Mr Sobotka (R) has a turbulent relationship with Mr Babis (L)

Czech Prime Minister Bohuslav Sobotka has announced that he will submit his government's resignation later this week because of a disagreement with Finance Minister Andrej Babis.

Mr Sobotka is unhappy about alleged unexplained business dealings of Mr Babis, a billionaire businessman.

The announcement comes less than six months before parliamentary elections.

Mr Sobotka has said he will meet the president in the coming days to formally submit the resignations.

The BBC's Rob Cameron in Prague says that Czechs have have had more than three years of more or less stable coalition government under Mr Sobotka, a mild-mannered social democrat.

But that stability has now come to an end because of the bitter rivalry between him and Mr Babis.

Their dispute came to a head over claims Mr Babis had avoided paying taxes on bonds issued by his own company.

Mr Sobotka argues that it is unacceptable for Mr Babis to remain as finance minister.

Mr Babis's centrist ANO party is far ahead of Mr Sobotka's centre-left CSSD in the opinion polls, our correspondent says, and this act of brinksmanship will be seen very much as pre-election manoeuvring. </s> PRAGUE, Czech Republic — The Czech prime minister announced unexpectedly on Tuesday his government will resign over unexplained business dealings of his rival Andrej Babis, the country's finance minister.

Premier Bohuslav Sobotka said that he will meet President Milos Zeman this week to formally submit the government's resignation.

Tuesday's move reflects tensions in the ruling coalition about six months ahead of the parliamentary election.

Sobotka said there are suspicions that Finance Minister Andrej Babis, the country's second richest businessman, avoided paying taxes in the past. Doubts have also surfaced about how he became wealthy.

Babis heads a centrist movement that is a to win October's ballot, paving the way for him to become prime minister. He previously denied any wrongdoing.

Sobotka's Social Democrats are a distant second. The Christian Democrats are the third member of the coalition that was created in 2014.

Sobotka said it would be an option to fire Babis but that would mean his rival would be given extra time to campaign ahead of the vote.

"That's the reason I'm opting for the only reasonable solution which is available, and that's the government's resignation," Sobotka said during a hastily organized news conference.

"A trust of the public in politics is at stake," Sobotka said.

The premier said the move will give the coalition a chance to form a government again, but without Babis. Another option is for Parliament to call early elections.

The president plays a key role in a crisis like this one because he has a right to select a new prime minister.

Babis' centrist movement came in a surprise second in the 2013 parliamentary elections with an-anti corruption message

Babis, a billionaire sometimes dubbed the "Czech Berlusconi," a comparison to Silvio Berlusconi — the Italian media tycoon who until recent years dominated his nation's politics. </s> PRAGUE: Czech Prime Minister Bohuslav Sobotka announced on Tuesday (May 2) he would submit his resignation - which also entails that of his cabinet - after a row with his popular billionaire finance minister, whose business activities have caused a storm.

"I will shortly present my resignation to President Milos Zeman. It is unacceptable for Andrej Babis to stay on as finance minister," said Sobotka, in an announcement six months before an October election.

"I want to free the hands of coalition parties so they can launch negotiations on a solution to the situation or agree on the organisation of earlier elections," he added.

Having taken office in 2014, Sobotka's leftist CSSD has shared power in a three-member coalition government with Babis's centrist ANO and the smaller centre-right KDU-CSL Christian Democratic parties.



Presidential spokesman Jiri Ovcacek declined immediate comment. Under the Czech constitution, there is no deadline for the president to accept the government's resignation.



Contacted by AFP, political analysts in Prague said that an early election was unlikely to be called during the summer, pointing instead to the possibility of a minority caretaker government being installed until the October ballot.



Ranked by Forbes as the Czech Republic's second most wealthy citizen, Babis ran the sprawling Agrofert conglomerate before putting his assets into a trust earlier this year to ward off conflict of interest allegations.



Last week Sobotka asked Babis to clarify his past use of some 55 million euros-worth ($60 million) of tax-free bonds in connection with Agrofert operations.



Babis has alleged that Interior Minister Milan Chovanec, a member of Sobotka's CSSD, ordered police to investigate his business dealings, an allegation the minister has flatly denied.



Babis who has ruled out any wrongdoing, is riding high in opinion polls, with ANO scoring 33.5 percent support compared to just 16 percent for Sobotka's CSSD in a survey conducted by the CVVM pollsters in April.



Babis is also the Czech Republic's most popular politician with a 56 percent approval rating according to another April survey by the CVVM pollsters, compared to 39 percent and sixth spot for Sobotka.



The billionaire politician has insisted that Sobotka's move to question his business dealings was part of the "political battle" ahead of the October 20-21 general election and dismissed any allegations against him as "lies or half-truths". </s> Czech Prime Minister Bohuslav Sobotka unexpectedly announced on Tuesday that he will submit his government’s resignation later this week.

Why would a prime minister disband his own government, which has been in place and relatively stable since 2014?

There are two reasons, and they both have to do with Czech Finance Minister Andrej Babis, the second richest man in the Czech Republic and the leader of the anti-establishment, pro-business party, ANO. Sobotka’s center-left Czech Social Democratic Party, CSSD, and ANO are currently in a governing coalition together.

Babis is under investigation in the Czech Republic over suspicion he avoided paying taxes, and questions related to how he made his money. The European Union is also investigating Babis for fraud. Babis is owner of the massive Agrofert chemicals. Although he put the company in a trust in early 2017 to comply with conflict of interest laws known as “Lex Babis”), the EU’s anti-fraud office is concerned that Agrofert controlled a small, anonymously owned company called Stork Nest Farm, which in 2008 received a $2.06 million EU subsidy. The subsidy was meant for small and medium sized companies, which Agrofert is not. Babis denies any wrongdoing.

Having the minister of finance under investigation over financial improprieties reflects poorly on the prime minister. Yet Sobotka said he’s resigning his whole government, and not just dismissing Babis, because he doesn’t want to make his minister of finance a martyr. But there is another reason, too.

“This move needs to be understood in the context of the pre-election campaign,” Jakub Janda of the Prague-based European Values think tank told Foreign Policy.

Czech parliamentary elections are scheduled for late October, and Babis is the country’s most popular politician. Babis’s ANO is currently polling well ahead of Sobotka’s party.

For Sobotka, “this is the last possibility” to draw voters’ attention to issues surrounding Babis,” Filip Horky, a Czech journalist for DVTV, told FP. The elections are less than six months away, and CSSD is lagging in the polls. “This is his last chance.”

“The Social Democrats have a huge problem,” said Milan Nic of the German Council on Foreign Relations. ANO is polling at around 30 percent and growing. The Social Democrats are polling at around 12 percent — and has lost roughly ten percent of its voters to ANO. With this stunt, “they’re aiming at their own voters. The ones they lost to Babis,” Nic told FP in an interview.

But whether Sobotka is able to capitalize on this gamble is not entirely up to him. Czech President Milos Zeman will control what happens next.

Zeman openly admired Russian President Vladimir Putin and U.S. President Donald Trump (Zeman’s first phone call with Trump after the inauguration apparently went better than anyone expected). He is also widely understood to prefer Babis to Sobotka. But Zeman has more of an incentive than just personal preference. Zeman faces his own elections in January. The only politician in the Czech Republic who could run against him and win is Czech Defense Minister (and former actor) Martin Stropnicky — who, as a member of ANO, answers to Babis. It is possible, Nic said, that some sort of deal could be struck between the president and the potential next prime minister, one in which Stropnicky doesn’t run and the scenario most advantageous to Babis plays out.

What does that mean? It’s unlikely snap elections would be held — that could be too risky with elections looming. And, though Zeman appointed his own caretaker government in 2013, it’s unlikely he’ll do that now (see: elections looming). The likeliest option could be that Zeman simply doesn’t accept the resignation and lets the next five months or so play out on its own. Or he could allow the resignation for Babis alone, leaving the finance minister with free time to campaign, while still painting himself martyred man — exactly what Sobotka was trying to avoid.

Neither scenario is good for Sobotka or his party. In the fight to convince voters Babis is unfit to lead, the Social Democrats, “lost this argument long ago,” says Nic.

“But when you’re desperate,” he added, “you do whatever.” </s> Czech prime minister: government to resign over business dealings of finance minister. </s> Hundreds of thousands of protesters have taken to the streets of the Czech capital Prague demanding the resignation of Prime Minister Andrej Babis.

He is currently facing a criminal investigation over alleged fraud and is also the subject of an EU conflict-of-interest investigation.

Organisers say 250,000 people attended the rally, however this has not been confirmed.
Czech Prime Minister Bohuslav Sobotka has announced that he will submit his government's resignation because of a disagreement with Finance Minister Andrej Babiš.