Czech prime minister announces government resignation

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"Prime Minister Bohuslav Sobotka will present his resignation to the president on May 4, 2017 at 1515 (1315 GMT)", President Milos Zeman s spokesman Jiri Ovcacek said in a tweet. 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.

Ranked by Forbes as the Czech Republic's second wealthiest citizen, Babis has flatly denied any wrongdoing and labelled Sobotka's decision "absolutely tragic" and "desperate".

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Babis transferred his assets to a trust fund this year to comply with new conflict-of-interest legislation.

Sobotka said the resignation could allow his three-party centre-left cabinet to regroup without Babis, a billionaire who entered politics in 2011, or possibly lead to an early national election ahead of regular polls planned for October 20-21.

Although ANO and Babis have been part of Sobotka's center-left coalition since 2013, the Slovak-born businessman has managed to cast himself as an anti-graft crusader battling a remote, self-serving political establishment in Prague. Babis has repeatedly rejected accusations from the prime minister that he evaded taxes and engaged in financial "tricks" to build his empire.

Babis is also the Czech Republic's most popular politician, with a 56 percent approval rating according to an April CVVM poll, compared with 39 percent for Sobotka, in sixth place.

Sobotka and his cabinet's resignation will give the coalition a chance to form a government again, but without Babis. Another option is for parliament to call early elections. The fact that the regular general election is scheduled for October 20-21 would play into Zeman's hands, especially in a situation where he would stage a series of separate meetings with all candidates for ministers.

Babis's harshest critics, such as the opposition TOP09 party, say he has authoritarian tendencies and threatens Czech democracy.

Analyst Tomas Lebeda said he considered that Sobotka had made a "huge political mistake" because he put Zeman, another rival, in full control.

Babis, the most popular politician in the European Union member of 10.6 million people and most likely the victor of the next election scheduled for October 20-21, is due to meet Zeman on Wednesday afternoon.

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.