NEW STRAINS IN FEDERAL COALITION - BOTH SIDES

UNCLAS SECTION 01 OF 02 VIENNA 000739

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DEPARTMENT FOR EUR/AGS (VIKMANIS-KELLER) AND INR/EU

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SUBJECT: NEW STRAINS IN FEDERAL COALITION - BOTH SIDES
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1. (SBU) SUMMARY: Friction between Chancellor
Schuessel's People's Party (OVP) and the junior coalition
partner, the Freedom Party (FPO),is generating a new
wave of media speculation about the stability of the
federal coalition. Carinthian governor Joerg Haider, in
an apparent attempt to distract from a bidding scandal in
his home state, accused Schuessel and Interior Minister
Prokop of wiretapping him and other FPO officials.
Haider said Schuessel was deliberately provoking a
government crisis in order to call early elections.
Schuessel restored a measure of order by calling a
cabinet-level "security summit" to soothe bruised egos,
but FPO party manager Scheuch threatened Prokop with a no-
confidence motion. The current strains have their origin
in the Freedom Party's constant need to sharpen its
profile at the expense of the OVP. Justified concern
about its future electoral prospects is fueling real
dissatisfaction within the FPO, increasing its inherent
volatility. End summary.

SCANDAL OVER STADIUM CONTRACT LEADS TO WIRETAP CHARGE
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2. (SBU) A political maelstrom erupted in Carinthia
involving bid rigging, slush funds and financial
mismanagement when a magazine published sealed bids for a
lucrative stadium construction contract. Governor Joerg
Haider, apparently concluding that a good offense is the
best defense, accused the federal Interior Ministry of
illegally wiretapping him and 31 other Carinthian
officials and businessmen. Interior Minister Prokop
promptly denied the charge.


3. (SBU) In fact, it appears a legal wiretap instituted
in an unrelated case picked up a conversation in which an
FPO official let slip that the governor wanted the bid
for the stadium construction to go to a well-known
Carinthian construction company -- possibly in return for
promises of under-the-table contributions to the state
FPO. While Haider and the construction company flatly
dismissed the reports, the federal Interior Ministry
confirmed it had launched an investigation. However, the
Justice Ministry (which, the press noted, has a
Carinthian FPO member at its head) declined to pursue a
case, citing insufficient evidence.


4. (SBU) Haider, unconvinced, alleged that Chancellor
Schuessel masterminded these "provocations" as part of a
strategy to drive the FPO out of the current coalition in
order to call new elections. Schuessel, calling Haider's
charges "a verbal derailment," challenged Haider to
produce proof of his wiretapping accusations. Interior
Minister Prokop mused whether Haider could be suffering
from "paranoia." Federal Vice Chancellor Hubert Gorbach
and Social Affairs Minister Ursula Haubner (who is
Haider's sister),both FPO, offered him lukewarm support.


5. (SBU) Klagenfurt Mayor Harald Scheucher (OVP)
announced March 7 that the committee evaluating the
stadium bids had unanimously decided to award the
contract to Vienna-based construction company Porr.
Other bidders have two weeks to challenge the decision,
or could sue on the basis of the flawed tender procedure.
The rumor mill says that, in a typically Austrian
compromise, Porr may sub-contract some work to Carinthian-
based STRABAG, the company Haider favored.

"SECURITY SUMMIT" FAILS TO ASSUAGE BRUISED FPO EGOS
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6. (SBU) In a separate development, leading FPO figures,
such as parliamentary caucus leader Herbert Scheibner,
were sharply critical of Defense Minister Gunter
Platter's announcement of a shortening of military
service from eight to six months, saying the OVP had not
consulted them. Schuessel then called a cabinet-level
"security summit" to discuss the full range of defense
and homeland security issues, including the controversial
reform of Austria's asylum law. The meeting confirmed
most OVP positions, however, leaving a bitter aftertaste
for some, including FPO Justice Minister Miklautsch.


7. (SBU) On March 3, the FPO submitted a parliamentary
inquiry to OVP Interior Minister Prokop (OVP) regarding
the wiretapping allegation. Prokop pointed out the
difficulty of proving a negative, but said she would
respond within a month. In a March 4 interview, Freedom
Party manager Uwe Scheuch accused Prokop of ignoring FPO
proposals for more restrictive asylum legislation and
also took her to task for an interview in which she
expressed a preference for a "grand" coalition with the
SPO over the current arrangement. Scheuch darkly hinted
that the FPO might introduce a no-confidence motion
against Prokop unless Schuessel "called her to order."


8. (SBU) COMMENT: Hardly anyone outside Carinthia
appears willing to believe Haider's latest theory of a
conspiracy against him. The failure of the "security
summit" to restore outward coalition harmony, is, however
a sign of other fissures, many of them internal to the
FPO. The increasing frustration of some senior FPO
figures, not all of whom owe their careers to Haider, is
palpable. The current brouhaha appears to be below the
threshold that would lead FPO officeholders to commit
political hara-kiri by resigning from the government,
although some senior politicians tell us they see an
increasing likelihood of early elections.


9. (U) Septel reports the FPO's internal turmoil
following a debacle in local elections in Lower Austria.

BROWN