Grand coalition government formed in Austria

By Markus Salzmann
20 January 2007

Three months after the Austrian parliamentary elections in October 2006, a new government has been sworn in. While Social Democrat Alfred Gusenbauer has replaced Wolfgang Schüssel of the conservative Austrian People’s Party (ÖVP) as chancellor, everything otherwise remains the same. Gusenbauer leads a grand coalition that is dominated by the ÖVP and that will consistently pursue the policies of its right-wing predecessor.

Seldom in recent Austrian history have the wishes of the voters been ignored in such a manner. Last October, the ÖVP suffered its greatest ever losses at the polls. This followed Schüssel’s six-year alliance with the extreme right-wing Austrian Freedom Party (FP) of Jörg Haider, which implemented a programme of radical welfare cuts and law-and-order policies. Now the ÖVP will continue to direct government affairs with the help of the Social Democratic Party of Austria (SPÖ).

Gusenbauer’s SPÖ, which emerged as the strongest party in the elections, also lost some 200,000 votes in the October poll. The two parties that lost the most votes have now formed a government and will continue to implement policies that the electorate had clearly rejected.

Although Schüssel will not hold a ministerial portfolio in Gusenbauer’s cabinet, his close and trusted friend William Molterer will become vice-chancellor. Molterer, who has supported Schüssel throughout every past political crisis, has always been regarded as an eager proponent of an alliance with the extreme right-winger Jörg Haider.

Schüssel will lead the ÖVP parliamentary faction. In this capacity he is not tied by cabinet discipline and can pressure the government from the outside, hoping for the chance to regain the chancellorship.

The allocation of ministerial offices provides a clear picture of the dominance of the ÖVP within the new government. Over the course of three months, Gusenbauer haggled away all the key posts. Vice-chancellor Molterer heads the Finance Ministry. Martin Bartenstein remains as economics minister. The Interior, Foreign and Health ministries all went to ÖVP representatives. Five of the new ÖVP ministers had belonged to the old cabinet.

Moreover, the most important departments in the Social Affairs Ministry, which is led by the social democrat Erwin Buchinger, are to be assigned to the ÖVP-led Ministry of Economic Affairs. This decision, unique in the post-war Austrian republic, again underlines who holds sway in the coalition.

The social democratic ministers and state secretaries were all hand-picked by Gusenbauer. Defence Minister Norbert Darabos, Social Affairs Minister Buchinger, Infrastructure Minister Werner Faymann and Women’s Minister Doris Bures all belong to the so-called “new leadership generation”—i.e., they began their political career when Gusenbauer headed the Young Socialists.

Shaped by the Kreisky era—when SPÖ leader Bruno Kreisky served as chancellor between 1970 and 1983—with its economic and social reformism and political opportunism, they all climbed up the party ladder. When Jörg Haider’s FPÖ gained ground as the political wind turned sharply to the right, Gusenbauer & Co. implemented a complete break by the SPÖ with even the most limited policies of social reforms.

In the meantime, Gusenbauer and the SPÖ no longer have a connection to traditional social democratic voters. When the new government was sworn in, there were fierce protests in Vienna’s Heldenplatz, in scenes that recalled the swearing in of the ÖVP-FPÖ coalition seven years earlier. Only a massive police presence allowed Gusenbauer to avoid entering the Hofburg Imperial Palace, the official residence of the Austrian president, by an underground passage, as his predecessor Schüssel had been forced to do.

Whereas seven years ago the protests were directed against the entry into government of right-wing extremists, this time they were directed against the continuation of the outgoing government’s policies and the SPÖ’s manifest breaking of all its election promises. In particular, students protested loudly against the retention of tuition fees, which the SPÖ had promised to abolish during its election campaign.

The SPÖ and ÖVP previously governed together in a grand coalition for many years in the 1980s and 1990s. At that time, they shared out the ministerial offices between themselves and kept the working class under control thanks to the collaboration of the trade unions and by granting some modest social concessions. With the economic and social shifts in the 1990s, this became increasingly impossible. The ÖVP then formed a right-wing coalition with Haider’s FPÖ in 2000, and the SPÖ went into the opposition.

Now the SPÖ and ÖVP, who have a two-thirds a majority in parliament, are acting together to eliminate the last remnants of the welfare state, as laid down in the coalition government’s programme.

The programme of the coalition government

Strict austerity measures form the main plank of their programme, with a zero-deficit budget forecast by 2010. Over €600 million in savings are planned through so-called “administrative reforms.” Although the government programme is very vague in this area, this is to be achieved mainly through a reduction in personnel and public sector wage cuts.

The university tuition fees introduced by the previous government, which Gusenbauer had promised to withdraw, will remain. The purchase of Eurofighter combat aircraft, which had been initiated by the previous right-wing coalition, will be carried through. In its election campaign, the SPÖ had promised to cancel the purchase. Meanwhile, it has been revealed that the first instalment has already been paid.

The new ÖVP health minister, Andrea Kdolsky, has said that the “watering can principle” in the health service belongs to the past, with the ÖVP announcing that cuts in health spending will be accompanied by increases in additional health insurance payments. According to the new government, savings in health spending will amount to €310 million.

The anti-foreigner immigration and asylum policies of the last government, largely dictated by Jörg Haider, also remain untouched. The previous coalition government of the ÖVP and Haider’s FPÖ had launched several attacks on the rights of asylum-seekers and immigrants—which were regularly criticized by the social democratic opposition at the time.

The privatisation of state-owned enterprises is also to be continued. Molterer told the press that the OMV oil company and Telekom Austria were now being considered as candidates.

Needless to say, the boasts of the SPÖ during the election campaign that it was planning a form of “wealth tax” in order to reorganize public finances find no mention in the programme of the coalition government.

Many commentators and government critics have described Gusenbauer’s obvious concessions as just “caving in.” Gusenbauer is said simply not to have been able to match the deft negotiation skills of Schüssel, who repeatedly indicated he could just as well form a government with the liberals and extreme right.

However, the government programme actually corresponds to Gusenbauer’s own intentions. When asked, Schüssel baldly stated that Gusenbauer had “not had to be persuaded of anything” and that the political course of the coalition had been largely marked out at the beginning of the negotiations.

Despite internal party criticism of the coalition contract nobody in the SPÖ leadership has raised any serious opposition to it, and only restrained criticism is to be heard from the trade union federation (ÖGB).

The formation of a grand coalition will substantially accelerate the rapid decline of the Austrian Social Democrats. In the mid 1970s, the SPÖ still had approximately 700,000 members; today they only number about 300,000. Some regional party organizations have already expressed fierce criticism of the coalition contract. The regional party leaders know that the policies being pursued at federal level will have devastating consequences on a regional level in the next elections.

Youth and student organizations nominally close to the SPÖ have spoken out against the policies of the new government. In Salzburg, members of the Federation of Socialist Students (VSStÖ) barricaded the entrance of the SPÖ headquarters in protest against tuition fees. The organisation has threatened to break from the SPÖ. VSStÖ chair Sylvia Kubu and the leader of the Austrian University Students Association, Barbara Blaha, announced their resignation from the SPÖ, saying they could not support Gusenbauer’s course.

The SPÖ rank and file is also becoming increasingly agitated. Hundreds of letters and emails were received at SPÖ party headquarters in reaction to the formation of a grand coalition. It is reported that around 1,000 members have since resigned from the party in Vienna alone.

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