Populism Prevails

All eyes on Austria's lean to the far right

Awash with apprehension. Source: AFP/Getty Images

During the swearing-in ceremony, Austrian President Alexander Van der Bellen urged the new ministers to behave responsibly in their treatment of minorities. “Many are skeptical or even opposed to the new government,” he said.

Only about 6,000 demonstrators gathered in Vienna on Monday to protest against the inauguration of the Austrian cabinet, the only western European government to include a far-right, openly anti-immigrant party. Despite water cannons and the deployment of 1,500 police officers, it was a tangibly calmer gathering than in 2000, when tens of thousands mobbed the president’s office when the populist Freedom Party (FPÖ) first joined an Austrian government. Back then, the cabinet had to take a tunnel from the chancellery to the swearing-in ceremony even though it was just across the street.

New chancellor Sebastian Kurz of the conservative People’s Party of Austria (ÖVP) and his ministers, including Vice-Chancellor and FPÖ leader Hans-Christian Strache, were inaugurated in the imperial splendor of the burgundy-hued Maria Theresia salon, named after the 18th-century monarch. But outside the Hofburg palace, demonstrators chanted “Nazis out!” and held banners that pleaded: “Don’t let Nazis govern.”

In their coalition deal, the two parties agreed to impose more restrictions on immigration, cut benefits for refugees and lower taxes. Mr. Kurz has pledged that Austria will remain pro-European, despite supporting much of the Freedom Party’s anti-immigrant rhetoric while campaigning. He is expected to oppose plans to give the EU greater powers and to resist French President Emmanuel Macron’s proposals for deeper integration, including a separate budget and finance minister for the euro zone.

Austria’s new finance minister, former UNIQA Insurance Group Chief Executive Hartwig Löger, was only Mr. Kurz’s and Mr Strache’s second choice after Bettina Glatz-Kremsner, a board member of gaming corporation Casinos Austria, turned the job down. Mr. Löger has no political experience and faces the mammoth task of cutting taxes and welfare contributions to 40 percent of pay while reducing government spending. He is starting out with a healthy economy, though – the Austrian central bank expects GDP to expand 3.1 percent this year and 2.8 percent in 2018.

Financial markets are skeptical about the new government. Many of the reforms have no time frame, meaning they amount to good intentions rather than actual goals, said Austria’s Raiffeisen Bank International.

Chancellor Angela Merkel’s relationship with Mr. Kurz is said to be strained since he took unilateral steps to close the so-called Balkan route to refugees in 2015, when he was foreign minister. Ms. Merkel is treading cautiously, declaring on Monday that she would observe what course her 31-year-old counterpart takes on EU policy.

Hans-Peter Siebenhaar is Handelsblatt’s correspondent in Vienna. To contact the author: siebenhaar@handelsblatt.com

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