On Monday, Hungarian Prime Minister Ferenc Gyurcsany announced before parliament his “irreversible” decision to resign. Then, on Tuesday, the government of the Czech Republic narrowly lost a no-confidence vote—meaning the ruling coalition is on its way out. The economy played a major role in the fall of both these governments.

Gyurcsany first revealed his intentions of stepping down on Saturday, saying that he was ready to make way for a new government to lead the country out of the financial crisis. Hungary is in a bad situation—the Wall Street Journal reports that “Any incoming prime minister will inherit an acute economic crisis, a dissatisfied electorate, and mounting pressure from markets to implement painful spending cuts and economic changes within the next year.”

Hungary’s economy is projected to contract up to 5 percent this year. It is already relying on a credit line of $25.1 billion from the International Monetary Fund, and Fitch Ratings agency further downgraded the government’s credit rating earlier this month.

The causes of the Czech government’s collapse are less clear-cut. The government has ruled with only the slimmest of majorities since its election in June 2006—controlling 100 out of the 200 seats in parliament. It was voted out of office by 101 votes to 96, with three lawmakers being absent.

Center-right Prime Minister Mirek Topolanek’s government had been criticized for its stance on America’s ballistic missile defense plan. The no-confidence vote took place amid a media scandal where the prime minister was accused of putting pressure on a TV reporter to squash a report on an MP’s alleged subsidy fraud. Yet, as American think tank Stratfor reports, “Ultimately, it was Prague’s handling of the economic crisis that brought Topolanek and his government down” (March 24).

The Czech Republic had not been hit as badly by the financial crisis as many other Central European nations, with Czech banks being relatively unaffected. But Prague is being affected by the economic woes of the eurozone. Its economy depends heavily on the export of manufactured goods to eurozone countries. As a result of Europe’s troubles, Prague’s year-on-year industrial output fell 23.3 percent in January, the fourth consecutive monthly decrease.

Topolanek’s fall is complicated by the fact that the Czech Republic currently holds the rotating presidency of the European Union. Analysts believe that Topolanek will be allowed to continue in his post of prime minister until July 1, when the EU presidency is handed over to Sweden.

Another issue at stake is America’s ballistic missile defense installation. The Czech government was already facing major difficulties in trying to get parliament to ratify treaties relating to the missile shield. Deutsche Presse-Agentur reports that “Analysts agreed that Topolanek’s demise may deliver a final blow to the Czech-U.S. missile defense radar treaties ….”

Topolanek’s demise may also throw the whole EU into a constitutional crisis. Prague is yet to ratify the Lisbon Treaty, also known as Europe’s constitution.

The power to form a new government now rests with EU skeptic Czech President Vaclav Klaus. The president can either appoint a man of his choice as the next prime minister or call for early elections. Any prime minister he appoints must receive parliamentary approval within 30 days. If three successive attempts to form a government fail, early elections must be held.

This means there will probably be a long delay before Prague has a functioning government again. In the meantime, Klaus’s position in the country is strengthened.

Klaus is staunchly anti-EU. He is adamantly opposed to the Lisbon Treaty, which means it could be a while before Prague signs the treaty if it signs it at all. “If I cease to be in control of the situation,” warned Topolanek, “the Lisbon Treaty will not pass.”

Europe is still waiting for Ireland to ratify the treaty. Topolanek’s fall presents yet another stumbling block for Europe.

The financial crash has caused international repercussions by bringing down the governments of these two countries. And the turmoil is not over. Hungary will have to make large and unpopular cuts in spending in order to stay afloat. So will many other European countries. This will make populations even more dissatisfied with the mainstream political parties.

The financial crisis is causing political chaos and dissatisfaction. Watch for this trend to continue, setting the stage for a man to take advantage of the anger—pledging to bring order to the chaos, and rising to power in Europe. For more information, read our article “Is a World Dictator About to Appear?”