AUSTRIA: EARLY ELECTIONS COULD BE HELD IN FALL AT THE

UNCLAS VIENNA 000404 SIPDIS SIPDIS STATE FOR EUR/AGS E.O. 12958: N/A TAGS: PGOV PREL AU SUBJECT: AUSTRIA: EARLY ELECTIONS COULD BE HELD IN FALL AT THE EARLIEST REF: A. VIENNA 274 ¶B. VIENNA 340 ¶1. Summary: Chancellor Gusenbauer (SPO) and Vice Chancellor Molterer (OVP) met March 19 in an effort to resolve the political stalemate between the two governing coalition partners. The party leaders agreed to continue the talks after Easter. The meeting came amid speculation on the possibility of early elections, possibly even before summer. Given various deadlines, early elections will likely be held in fall, at the earliest, if the conflict between the coalition parties continues. End Summary. Differing Positions -------------- ¶2. The SPO and OVP have been feuding over a number of issues, most prominently the timing of tax reform and the establishment of a parliamentary committee to investigate allegations of abuse in the OVP-led Interior Ministry (reftel A). The parties also differ over measures to counter inflation. The SPO advocates an immediate, one-time payment to low-income earners, while the OVP prefers measures with long-term impact, such as a reduction of government fees. The parties also have to reach agreement on a reform of the healthcare system. Irreconcilable Positions? -------------- ¶3. Leaders of both parties have been publicly digging in their heels in recent weeks. SPO party functionaries criticize Chancellor Gusenbauer as too willing to compromise with the OVP, and have been pressuring him to take a tougher line. There has even been talk of replacing Gusenbauer as party chairman if he does not succeed in having tax reform go into effect in 2009. The OVP, meanwhile, is in no mood to give ground, emboldened by its landslide victory in the March 9 Lower Austria provincial election (reftel B). March 19 Meeting -------------- ¶4. Chancellor Gusenbauer and Vice Chancellor Molterer -- joined by coalition coordinators Josef Proell (OVP, Agriculture Minister) and Werner Faymann (SPO, Infrastructure Minister) -- met for the second straight day March 19 to try to resolve the coalition crisis. Following the March 19 meeting, spokesmen for Gusenbauer and Molterer described the atmosphere of the talks as "very constructive," and indicated that they would be continued after Easter. Election Speculation -------------- ¶5. The March 18-19 talks had been accompanied by some speculation on the possibility of early elections, given the seemingly irreconcilable positions of the coalition partners. Since the SPO and OVP have agreed to continue talks after Easter, a spring election appears out of the question. Due to a series of deadlines in the procedures for calling early elections, the process would have to begin by March 21 in order to schedule an election by June. June 1 is the last possible date for an election before the Eurocup 2008 soccer championship opens in Austria and Switzerland. Observers believe the GOA is highly unlikely to hold an election during such a major tournament. Comment: Fall Elections Possible -------------- ¶6. It appears unlikely that the SPO and OVP can bridge their differences, given the lack of flexibility exhibited on both sides. The parties will have to agree in the fall on a budget, which may prove to be the next bone of contention. While there does not appear to be enough time to schedule a spring election, a fall election is a strong possibility. KILNER