Foreign Policy

The Czech Republic Is Caught in a Nuclear Tug of Warfare

When U.S. Secretary of State Mike Pompeo landed in Prague in mid-August, the first stop on a tour of U.S. allies in Central and Eastern Europe, he had two things on his mind: China and Russia. Over the last decade, the two Eastern giants have won significant influence among the region’s young democracies. And the Trump administration, reversing its predecessor’s blacklisting of recalcitrant regimes in Central and Eastern Europe, seeks to reengage and quash the pair’s sway.

The minority government of Czech Prime Minister Andrej Babis, who founded the ruling ANO 2011 party, has welcomed U.S. President Donald Trump’s embrace. But his stance looks less than certain as the country prepares to face one of its sternest geopolitical tests since the fall of communism 30 years ago: choosing a partner to expand its Soviet-built nuclear power capacity.

A controversial billionaire who toes a populist—albeit centrist—line, Babis has earned brownie points with the White House by becoming Europe’s loudest critic of the Chinese telecommunications firm Huawei, which Washington insists is a security risk. Although many allies have ignored the United States’ calls to bar the firm, the Czech leader (who reportedly dislikes comparisons to the U.S. president) blocked it from working on his country’s critical communications networks in late 2018.

Part of Pompeo’s mission to the Czech Republic was to convince Babis that it would pose a similar risk as Huawei should China or Russia win an upcoming tender to build a new 1.2-gigawatt reactor at the Dukovany nuclear power plant, at an estimated cost of over $7 billion. “If you choose one of these countries, it will jeopardize your freedom and sovereignty,” Pompeo reportedly stressed to the Czech leader.

However, Babis’s government is weak, and he faces building pressure at home and abroad to lean east. In turn, he has declined to exclude Chinese and Russian state-owned companies from bidding for the project and, despite welcoming Pompeo enthusiastically, demurred on signing a proffered cooperation agreement on nuclear energy.

Energy is a leading issue in the U.S. drive to reengage in Central and Eastern Europe, not least because Russia has traditionally dominated the sector there. In turn, the Dukovany bidding is a bellwether, a competition that puts the government under deadline to make a definitive statement on the Czech Republic’s geopolitical stance.

“I’m surprised,” Vaclav Bartuska, the country’s longtime ambassador for energy security, said at an event in late 2018, “that 30 years after the Velvet Revolution we’re still working on where we belong.” Yet like many similarly small countries, the Czech Republic has long sought to perch precariously on the geopolitical fence. And so, although European Union and NATO membership are cornerstones of the government’s official foreign policy, political and business ties to the East remain numerous.

The ambiguity has heightened as the populist tide has swept the country. Russia and China have seized on rising public mistrust in the political class, earning greater sway and provoking a domestic political tussle over just where the Czech Republic’s interests lie.

Babis does not have a free hand. He’s reliant on President Milos Zeman, a crude and outspoken populist nationalist, and associated extremist parties on the left and right for support in Parliament. In turn, Babis has generally failed since he was elected in 2017 to challenge the efforts of Zeman and the shadowy cabal of political and economic figures surrounding him to deepen ties with Beijing and Moscow.

Into this void has stepped a rump liberal political establishment, consisting of the security services and media, as well as the opposition. The media have enthusiastically picked up ever more urgent warnings from the security services of the threat of growing Chinese and Russian influence. And spats spurred by opposition politicians have provoked such anger in Beijing and Moscow that one senior foreign ministry official complained in off-the-record comments last November that his job has become significantly more difficult.

In the face of public mistrust of the East, especially China, Babis has stiffened his resolve a little, for example by blocking Huawei, which infuriated Zeman. However, the nuclear project puts the Czech prime minister in another tight spot. “Zeman and his advisors would not like to exclude China and Russia from the tender, and Babis needs the president’s supporters politically,” Ivana Karaskova, a specialist on Czech-Chinese relations at the Prague-based Association for International Affairs, said in August. “At the same time, Babis is under significant pressure from the U.S. and other bidders.”

The expansion of the country’s two nuclear power plants—Dukovany and Temelin—are at the center of the Czech Republic’s long-term energy strategy. However, the government has struggled for years to find a financing model agreeable to the minority shareholders at state-controlled energy group CEZ, which is tasked with building and running the nuclear energy infrastructure.

The disagreement over funding saw plans to build two new units at Temelin scrapped in 2014. The two finalists in that race—which also brought a U.S. secretary of state to Prague—were the Russian state nuclear agency Rosatom and U.S.-based Westinghouse.

They’ve sat in the background in Prague since, awaiting the starting gun for new projects. In the Dukovany showdown, they’re set to be joined by bidders from China, France, and South Korea.

For Beijing, the project would be a way to showcase the reliability of its low-priced nuclear technology to European customers. For Russia, nuclear is a rare high-tech, value-added export. As such, these bidders, which “do not have purely economic motivations, can put in a lower price,” Jan Lipavsky, an opposition member of the Czech Parliament and vice chair of its foreign policy and security committees, said in August. A representative from Rosatom said that it will “be happy to provide our best offer and create healthy market competition with maximum localization in partnership with Czech companies.”

For the West, the fear is that such a partnership could turn the Czech Republic, a NATO ally, into another Hungary. Russia agreed in 2014 to fund and build the expansion of Hungary’s Paks nuclear plant.

In the meantime, Budapest’s illiberal government has drawn closer to the East, helping disrupt attempts to pull Ukraine closer to NATO and opposing EU attempts to pressure Beijing on human rights and security issues.

“I think the U.S. understands the risk of the Hungarian scenario,” Lipavsky said. “When a state becomes too entangled with China and Russia then they have a problem in NATO.”

For his part, Lipavsky rues the fact that the Czech government has not found the “political will” to oust the Russian and Chinese suitors from the bidding. At the same time, it has resisted Zeman’s encouragement to replicate the “Paks model.” All of this will come to a head this year, according to Rene Nedela, deputy industry and trade minister for energy, with the selection of a vendor due by the end of 2022.

In the wake of Pompeo’s trip to Prague, lobbying around the nuclear plant will ramp up. “Russia has been extremely active in lobbying for the past couple of years,” Karaskova said. “The U.S., through Mike Pompeo’s comments, also showed a strong interest, probably the first time so openly and publicly.” Petr Trescak, an opposition MP, veteran of the nuclear sector, and member of the government committee for new nuclear plants said that he expects intense lobbying will soon start.

Lipavsky said that the tender is already a regular topic with representatives of those countries that will bid, including the French and U.S. ambassadors. Public opinion is also key. Following Pompeo’s visit, Westinghouse launched a search for new senior PR operatives.

Babis sits squarely in the path of this approaching maelstrom. His instincts draw him to the West, not least because his agrochemicals empire Agrofert stretches throughout the EU. The premier, who dominates the ruling ANO party, also seems to enjoy consorting with world leaders, a trait that may be key to preventing a democratic decline in the Czech Republic similar to those in neighboring Hungary and Poland. But his survival instincts also keep him wary of Zeman’s power, the maintenance of which could also prove his last chance to escape a jail sentence stemming from alleged EU subsidies fraud.

The key to surviving this political squeeze could be in the timing. Zeman’s second and final term will end in March 2023. If Babis can delay the selection of a contractor until the president is gone, he would be free to elbow Russia and China out of the way. Indeed, “Babis is doing whatever he can to postpone the decision until after the next presidential election, when Zeman will be around no longer,” Karaskova noted. “That looks like a sensible strategy.”

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