NEW AUSTRIAN GOVERNMENT TAKES OFFICE; PROSPECTS

C O N F I D E N T I A L SECTION 01 OF 02 VIENNA 001772

SIPDIS

E.O. 12958: DECL: 12/02/2023
TAGS: PGOV PREL AU
SUBJECT: NEW AUSTRIAN GOVERNMENT TAKES OFFICE; PROSPECTS
UNCERTAIN

REF: VIENNA 1752 AND PREVIOUS

Classified By: ECON/POL Counselor Dean Yap. Reason: 1.4(b) and (d)

Summary
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1. (U) Austria's new "Grand Coalition" government of Social
Democrats (SPO) and Conservatives (OVP) took office the
morning of Dec. 2. While opinion polls show broad public
support for the new government, media commentary is divided
and includes much criticism of the lack of substance in the
coalition agreement. Chancellor Faymann (SPO) also published
a "letter to the readers" of populist daily "Kronen Zeitung,"
a step likely to antagonize many in the OVP. The OVP's newly
minted leader may also be suffering a lack of support from
his own party, judging from a lackluster performance at the
party's Nov. 28 convention. End Summary.

Sworn-In
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2. (U) Austria's new government - the 20th since 1945 - was
officially sworn-in by President Heinz Fischer Dec. 2. (Due
to the illness of Justice Minister-designate Bandion-Ortner,
Science Minister Johannes Hahn will temporarily fill that
portfolio.) It is headed by SPO Chancellor Werner Faymann
and OVP Vice-Chancellor and Finance Minister Josef Proell.
With only 59 percent of seats in parliament held by the new
government, it is the smallest "Grand Coalition" ever. The
government also met Dec. 2 for its first cabinet session. On
Dec. 3, the Chancellor and Vice-Chancellor will present their
government agendas to parliament for debate.

Media Politics
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3. (U) The Austrian media is divided in its response to the
new coalition. Mainstream "quality" press have sharply
criticized the coalition agreement between SPO and OVP as
lacking in substance and extremely costly for the future
taxpayer. When a journalist from the centrist daily "Presse"
raised this issue, Faymann responded "you shouldn't read the
'Presse' so much." The "quality" press's attitude may
reflect some professional jealousy, however, as Chancellor
Faymann continues to use the populist daily "Kronen Zeitung"
(the world's biggest newspaper in terms of market
penetration) to reach out directly to the public. Indeed,
Faymann published a letter to "Krone" readers on Dec. 2,
promising, inter alia, to work to bring any future EU treaty
before the voters for a referendum. This step is likely to
antagonize many in the OVP, as it parallels Faymann's early
July letter which led to the collapse of the previous
coalition and the defeat of the OVP in the September 28
election. This time, however, Faymann also released the
letter to th Asutria Press Agency, enabling other papers to
print it as well.

Conservatives Not Thrilled with New Leader
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4. (U) On Nov. 28, seeking to propel their new leader, Vice
Chancellor Josef Proell, into office with a demonstration of
loyalty, the OVP held a convention to formally elect Proell
as party leader and select a new management team for the
party. The convention, however, turned into a rather
lackluster day for Proell. Styrian OVP leader Hermann
Schuetzenhoefer, the only speaker after Proell was formally
nominated, pledged his and the Styrian OVP's support for
Proell personally, but was also (using to full advantage the
German language's preference for the passive voice) very
critical of the decision to quickly negotiate a government
with Faymann (a populist who will subordinate necessary
reforms to his own political sensibilities) rather than fully
explore other options.


5. (C) Proell's own speech was at times defensive -
justifying the coalition with the SPO as the only responsible
option - but more often vague, though progressively oriented.
He praised the Bush Administration's financial rescue
policies as examples of the "non-ideological flexibility"
that was "the best conservative tradition." His non-specific
call for party reform received moderate applause. Proell
announced his intention to focus on the development of a new
program for the party. Overall, this observer was uninspired
and the limited applause suggested many party delegates felt
the same. Proell, the only candidate, was elected party
Chairman with a seemingly impressive 89.6 percent of the
vote. However, this was reportedly the lowest vote for a
party leader in the OVP's history and was less than the 90
percent plus predicted by many delegates before the vote.


VIENNA 00001772 002 OF 002


Comment
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6. (C) Much augurs well for the new Austrian coalition -- the
two principals enjoy better relations than their predecessors
and both seem to have a better knack for managing their
respective parties. As noted, the coalition enjoys public
support. Neither party will be anxious for early elections,
both having fallen to historic lows on September 28 and given
the rising popularity of the parties of the right. Even the
financial crisis seems to have worked to move the two parties
closer together, given their limited options. However, the
events noted above highlight that the Grand Coalition faces
real challenges as well -- meeting voter expectations,
managing the critical press, possible intramural strains in
the parties, not to mention the need to pursue successful
domestic and foreign policies. This edition of the Grand
Coalition does seem likely to survive longer than its
predecessor, but it cannot be guaranteed to last its five
year mandate. End Comment.
GIRARD-DICARLO