AUSTRIA'S OCTOBER 1 NATIONAL ELECTIONS -- FINDING

UNCLAS SECTION 01 OF 04 VIENNA 002787

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SIPDIS
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STATE FOR EUR/AGS - SAINT-ANDRE

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TAGS: PGOV PREL AU
SUBJECT: AUSTRIA'S OCTOBER 1 NATIONAL ELECTIONS -- FINDING
"COALITIONS OF THE WILLING"


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1. (SBU) Summary: Austria's October 1 elections take place
in the context of a political shift that followed this year's
revelations of fraud in the trade union-affiliated bank,
BAWAG. This established a new political reality in which
Chancellor Wolfgang Schussel's conservative People's Party
(OVP) has consistently polled ahead of the Social Democratic
Party (SPO) by two to four percentage points. This shift,
combined with Schuessel's personal popularity, puts the OVP
in the driver's seat to lead the next Austrian government.
The campaign so far has been rather formulaic, with the OVP
appealing to trust in Schuessel, and the SPO making vague
calls for greater "fairness." The political theater has come
from the xenophobic leader of the Freedom Party (FPO) -- not
Joerg Haider, who left the FPO to form his own party and then
fade as a political force, but rather Heinz-Christian Strache.


2. (SBU) Summary continued: The uncertainty surrounding
this campaign is less one of vote numbers than of
post-election coalition negotiations. Even OVP loyalists
discount the possibility of the OVP winning an absolute
majority. One key question is whether the OVP will have
options beyond forming a Grand Coalition with the SPO. The
other is whether the SPO and Greens will together garner
enough seats to form a government, thereby depriving
Schuessel of the Chancellorship even if the OVP comes in
first. Even if Schuessel remains Chancellor, the next
coalition government could well include a non-OVP Foreign
Minister. Foreign policy would likely be subject to even
stricter constraints in a coalition agreement between the OVP
and a left-leaning party. That said, policy change would
come only incrementally. End Summary.

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Can You Spell BAWAG?
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3. (SBU) With less than two weeks to go before Austria's
national parliamentary elections on October 1, the big news
seems to be the lack of news. If it seems that the major
campaign themes are the same as they would have been six
months ago, that is because the defining event of this
campaign season occurred six months ago. That was when it
became public that the Austrian Trade Union Federation (OGB)
bank, the "Bank fuer Arbeit und Wirtschaft A.G." (BAWAG),had
involved itself in massive fraud. What is more, the OGB
bailed out BAWAG with funds from its workers' strike fund.
Although the OGB and the Social Democratic Party of Austria
(SPO) are separate entities, the relationship between the two
had been almost organic. SPO party leader Alfred Gusenbauer
did what he could to stop the bleeding. Among other things,
he declared that the SPO would no longer grant slots on its
parliamentary election list to union officials. Naturally,
this carried its own backlash. Union workers, who had
traditionally undertaken a significant share of the SPO's
electioneering work, were not amused.


4. (SBU) Chancellor Wolfgang Schuessel and his party, the
conservative Austrian People's Party (OVP),played the BAWAG
affair about as well as one could imagine. Schuessel stayed
on the high road, as, for instance, when he led the
government in granting a bailout of the OGB "in the interests
of the workers." What is more, one can barely find the
letters "BAWAG" in OVP campaign material. The result is that
no one is sick of hearing about it, and no one thinks of it
as yesterday's story. It remains the 800-pound gorilla in
the next room, emitting the occasional grunt (as when it
became public last week that the former BAWAG head had paid a
70,000 Euro "consulting fee" in 1999 to former SPO Chancellor
Fritz Vranitzky, the last truly iconic SPO politician).

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What Do The Polls Say?
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5. (SBU) Thanks to BAWAG, the strategic landscape for the
election has shifted. For the past six years, the SPO had
led the OVP in opinion polls by some two to four points. The
OVP strategy had been to stress Schuessel's personal
popularity over Gusenbauer. This had paid off in the 2002
elections, when the OVP, at 42 percent, scored far ahead of
its polling numbers and well ahead of the SPO. Now, the
parties' standings in the polls have reversed themselves. It
is the OVP that is garnering support in the range of 38-39
percent, and the SPO that is trailing at 35-36 percent. If
Schuessel again delivers an electoral "bump," the OVP could
well approach its 2002 vote share.


6. (SBU) Both the Greens and the Freedom Party of Austria
(FPO) are flirting with double digit poll numbers. The

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Greens tend to do worse in elections than their polling
numbers indicate. This may be because those who are Green at
heart tend to decide not to "waste" their vote. The FPO's
situation is the opposite. It seems that FPO sympathizers
feel embarassed to express their true preference to a
pollster, but nevertheless pull the lever for the FPO list.
The "Alliance-Future-Austria" (BZO) party, which Joerg Haider
splintered off of the FPO, is fading fast, despite its
current status as the junior governing coalition party. The
BZO is finding it hard to reach the four percent threshold
for entry into parliament. Most observers believe that the
BZO will have to win a seat outright in order to enter
parliament. This is a tall order even in the putative BZO
"stronghold" of Haider's Carinthia. An out-and-out protest
party which formed around the person of former SPO legislator
Hans-Peter Martin is also hovering around the three-to-four
percent mark in polls. As in many mature democracies, the
wild card is the "undecided" bloc. Almost a third of poll
respondents is in that category. With so much riding on the
results at the margins, this is an important factor.

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Where Do They Stand?
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7. (SBU) Schuessel's OVP is running almost exclusively on
its record and on the person of Schuessel. Typical is one of
the party's posters that features the rather oxymoronic
slogan, "Stay better." Another common poster shows
Schuessel's smiling face with the slogan, "Because he can do
it." Outside of Vienna, OVP campaign material highlights the
more popular members of the current governing team. On the
strength of solid if unspectacular economic growth and job
creation, together with inflation and unemployment rates that
are among the EU's best, the OVP is banking on an almost
content-neutral message of "staying the course."


8. (SBU) If the OVP campaign effort seems to lack
inspiration, that of the opposition SPO seems almost
mechanical. SPO campaign material calls for "a new fairness"
in the distribution of wealth and jobs. For a party that has
been in opposition for almost six years, the SPO has
identified remarkably little substance upon which to
campaign. Part of this is because Schuessel has managed to
coopt key SPO issues. The OVP is against nuclear power,
against genetically-modified organisms (GMO) in agriculture,
and in favor of neutrality. Even more frustratingly for the
SPO, the things Schuessel has done over their objections,
such as pension reform and corporate tax cuts, have actually
worked. Also unhelpful to the SPO cause is the figure of
Gusenbauer, who is a competent party man but only an average
campaigner. Posters showing him interacting with groups of
(presumably) concerned citizens are supposed to show his
human side, but risk displaying a certain befuddlement
instead.


9. (SBU) The Greens are usually good for campaign spice.
The current publicity strategy seems to focus on solidifying
the Green base. Posters highlighting the preferences of
"real people" range from the assertive (a supposedly Turkish
man saying, "because Austria is my homeland, too") to the
pouty (a young woman saying, because (Education Minister
Elisabeth) Gehrer has saved enough on my education.") A
newer effort highlights popular party figures. For instance,
party leader Alexander van der Bellen, a professorial type
who is among Austria's most popular politicians, proclaims,
"it can be done without corruption."


10. (SBU) The days when the Greens were the wild cards are
long over. Instead, the BZO, FPO and Hans-Peter Martin's
party are vying for the protest vote. BZO standard-bearer
Peter Westenthaler has been unable to draw significant
numbers of the FPO base to his side, and no one else on the
political landscape seems disposed to jump on his rattletrap
of a bandwagon. Haider has been virtually invisible to date.
BZO election themes are hard to identify -- the BZO is
against crime and illegal immigration, and they are for a
stronger economy, but who isn't?


11. (SBU) There's no problem identifying the policy stance
of the "original" FPO. Under party leader Heinz-Christian
Strache, the FPO has grabbed the jingoist mantle. Joerg
Haider has faded into the Carinthian hills for the moment.
The xenophobic firebrand is Strache, whose assertive claim to
be the FPO's anti-everything is what drove Haider out of the
party. A typical FPO campaign slogan is "Daham statt Islam"
-- roughly, "Down Home, not Islam." Another is "Deutsch
statt Nix Versteh'n" -- a nasty swipe at immigrants roughly
on the level of "No espeak ze English." The latest

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installment from the FPO brain trust shows a bright-blue eyed
Strache (who clearly thinks his own image is a major selling
point) with titles such as "The Patriot" and "Austria First."


12. (SBU) Hans-Peter Martin's party is a final, unique
entrant into the Austrian electoral mix. Martin is a
quintessential "anti-" politican. A former SPO member of the
European Parliament, he made a name for himself by "exposing"
the excessive benefits European parliamentarians receive.
During the last European Parliament campaign, he received
significant backing from Austria's largest newspaper, the
Kronenzeitung. This has fallen off during the current
national campaign. Nevertheless, Martin has made some
headway by is banking on the fact that "none of the above"
will always do well in any democratic election.

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Putting Humpty Together
--------------


13. (SBU) Observers do not expect huge swings in opinion in
the last two weeks of the campaign. The real question is
what the parties make of the final result. One or two
percent of the vote will determine whether two parties -- the
BZO and Hans-Pater Martin's party -- enter parliament at all.
If they do not, almost eight percent of the vote could be
"wasted." Whether these two make it or not, possible
coalitions reflecting current vote predictions include a
"Grand" Coalition (OVP-SPO),an OVP-Green coalition, or an
SPO-Green coalition. The OVP and SPO have said that they
rule out coalitions with the FPO or with Hans-Peter Martin.
However, in a Vienna where political pragmatism rules the day
and alliance shift like liaisons in the operetta "Wiener
Blut," anything is possible.


14. (SBU) OVP sages tell us they hope the OVP and the FPO
together win over half the seats in parliament. That is
not/not to say they would cooperate in government. Instead,
the calculation is that this would make it impossible for the
SPO to form a government without the OVP.


15. (SBU) The prospect of an OVP-Green (or "Black-Green")
coalition, seems to intrigue Schuessel. There is a precedent
in the state government of Upper Austria. Van der Bellen is
a reasonable and experienced figure who could well serve
successfully as Foreign Minister. The Greens have some depth
for staffing ministerial slots, although they are thin beyond
the first level. In fact, Schuessel probably prefers a
relatively weak partner. In his governing alliance with the
FPO, he was able to marginalize his junior partner. The
objection to a Black-Green government is less likely to come
from the OVP than from the Greens. The Greens' Vienna
branch, which forms roughly half of the national party,
represents a "fundamentalist" wing that demonizes Schuessel
and the OVP. In the rest of Austria, Greens generally come
from a more conservative, conservationist background. Van
der Bellen has toyed with the question of entering government
with the OVP in the past, and this has always had the result
of stirring a hornets' nest on the substantial left-wing of
the party.


16. (SBU) Most Austrians like Grand Coalitions. They are
comfortable with the idea of broad consensus, even at the
expense of effectiveness. For all the water that has gone
under the bridge since 2000, may Austrians still see
Black-Red as a "natural" government. Some observers question
whether Gusenbauer could stand playing second fiddle to
Schuessel. Others point out that Gusenbauer spent most of
his political career under Grand Coalitions. It is not so
much Gusenbauer as Schuessel who would chafe at this
configuration. Schuessel values his freedom of action,
especially on foreign policy. He would not relish having to
share significant executive power with a major party.
Erhardt Busek, the former OVP Vice Chancellor under Vranitzky
told us recently that the problem with Grand Coalitions in
Austria is that it is hard to make progress except at the
level of the lowest common denominator.

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What Does It Mean for U.S. Interests?
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17. (SBU) Interestingly for Schuessel, a former Foreign
Minister who takes personal charge of the foreign affairs
portfolio, foreign policy has been practically invisible
during the current campaign. Iraq, Iran, the fight against
terrorism, the spread of democracy in Eastern Europe -- none
of these issues has made it to any party's campaign material.
Of course, Strache's FPO has highlighted the fear of Turkish

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entry into the EU (with posters showing St. Stephen's
Cathedral replaced by Hagia Sophia). He has also taken a
swipe at the EU, calling for "Homeland instead of Schuessel
and Brussels." But there is no depth beyond fear-mongering,
and the other parties have practically ignored the issue.


18. (SBU) Unless a foreign policy issue arises in the next
two weeks -- always a possibility, of course -- the impact of
the upcoming election on Austrian foreign policy will be
largely a matter of personalities. Even if Schuessel retains
the Chancellorship -- and he is the odds-on favorite -- it is
hard to see how he could avoid turning the Foreign Ministry
over to a Green or SPO coalition partner. (Naturally, if the
BZO manages to enter parliament and the OVP does well enough
to form a coalition with its current partner, things would
continue much as they are. But even Vice Chancellor Hubert
Gorbach, the BZO Transportation Minister, has already lined
up a private sector job -- or so we hear.) With van der
Bellen or Gusenbauer as Foreign Minister, Austrian foreign
policy would probably hew even more closely to the narrow
constraints of the coalition agreement establishing the
government. This would make it even less likely than it is
now that Austria would join bold new initiatives in the
world. Nevertheless, there still remains a solid cadre of
officials with SPO affiliations in government service,
including in the Foreign, Interior and Defense Ministries.
(Austrian Ambassador to Washington Eva Nowotny is one.) We
have worked well with such officials in the fields of law
enforcement cooperation, for instance, as well as other
areas. These individuals further increase the likelihood
that continuity will be the watchword in foreign policy,
regardless of who leads the next Austrian government.
McCaw